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Î-ÏRRARY
room

5030

JUN 1 4 1972
TREASURY DEPARTMENT
'+•*—

TREASURY 05PÂHTIÉBNT
WASHINGTON

/^VlM
PRESS SERVICE
No.
N o. ¿/S-»

/
::4
7 .
The Treasury Department has received numerous inquiries as to
whether dental gold, ceramic gold, gold wire, gold leaf and gold
foil are considered to be "fabricated gold", as that term is used in the
Provisional Regulations issued under the Gold Reserve Act of 1934.
The Department has considered this matter and has determined
that dental gold, ceramic gold, gold wire, gold leaf, gold foil and
other similar types of gold of which not more than 80^ of the total
value is attributable to the gold content and which meet the re
quirements of the definition contained in Section 4 of the Provisional
Regulations will be considered to be "fabricated gold" for all pur
poses of the Provisional Regulations issued under the Gold Reserve Act
of 1934.
Any inquiries as to the applicability or the effect of this
determination on particular situations should be addressed to the
Bureau of the Hint, Washington 25, D. C.

oO o

TREASURY DEPARTMENT
WASHINGTON

F O R RELEASE, M O R N I N G N E W S P A P E R S
Saturday,- A u g u s t 19, 1944_____
S-I8-44

PRESS S E R V I C E
No. 45-0

The T r e a s u r y D e p a r t m e n t has r e c e i v e d n u m e r o u s inquiries
as to w h e t h e r dental gold, ce r a m i c gold, g o l d wire, gold l e a f
a n d g o l d foil are c o n s i d e r e d to be ’’f a b r i c a t e d g o l d ” , as that
term is u s e d in the P r o v i s i o n a l R e g u lations i s sued u n d e r the
Gold Reserve A c t of 1934.
The D e p a r t m e n t has c o n s i d e r e d this m a t t e r a n d has d e t e r 
m i n e d that d e n t a l gold, ceramic gold, gold wire, gol d leaf,
g o l d foil a n d o t her s i m ilar types of g o l d of w h i c h not more
than 80% of the total value is a t t r i b u t a b l e to the g o l d content
a n d w h i c h m e e t the requ i r e m e n t s of the d e f i n i t i o n c o n t a i n e d in
S e c t i o n 4 of the P r o v i s i o n a l Regu l a t i o n s w ill be c o n s i d e r e d to
be ’’f a b r i c a t e d g o l d ” for all p u r p o s e s of the P r o v i s i o n a l
R e g u l a t i o n s issued u n d e r the G old Reserve A c t o f 1934.
A n y inquiries as to the a p p l i c a b i l i t y or the effect of
this d e t e r m i n a t i o n on p a r t i c u l a r s i t u a t i o n s .should be a d d r e s s e d
to the B u r e a u of the Mint, W a s h i n g t o n 25, D. C.

-oQo

.,

TREASURY DSPARTMINT

Washington
FOE RELEASE, MORNING NEWSPAPERS,
Tuesday, August 22. 1944*

Press Service

The Secretary of the Treasury announced last evening that the tenders for
H ,200,000,000, or thereabouts, of 92-day Treasury bills to be dated August 24 and to
mature November 24* 1944* which were offered on August IS, were opened at the Federal
Reserve Banks on August 21«
The details of this issue are as follows)
Total applied for - #1,850,697,000
Total accepted
- 1,209*047*000
Average price

(includes $61,878,000 entered on a fixedprice basis at 99.905 and accepted in full)
- 99*904/ Equivalent rate of discount approx. 0.375% per annua

Range of accepted competitive bids:
High
Low

- 99*908 Equivalent rate of discount 0*360$ per annum
- 99*904
*
*
*
*
approx. 0.376$ per annum

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

Federal Reserve
District

Total
Applied for

Total
Accepted

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

*
a , 945,000
1,294,890,000
27,553,000
37*710,000
25,500,000
13,279,000
274,197,000
8,025,000
7,961,000
17,420,000
16,787,000
8?,430,000

*

$1,850,697,000

61*209*047,000

TOTAL

27 ,505,000
810,270,000
18,873*000
35,270,000
23*100,000
13,279,000
170 ,127,000
6,985,000
7,561,000
17,180,000
16,787,000
62.UO.000

TREASURY DEPARTMENT
Washington
Press Service
Ho* 43-1

F OR RELEASE, M O R N I N G N E W S P A P E R S ,
T ues d ay y: A u g u s t 22, 1944«________
.8-21-44

T h e S e c r e t a r y of t h e T r e a s u r y a n n o u n c e d last
the t e n ders

f or $ 1 , 2 0 0 ,000,000,

u r y b i l l s . t o be dated A u g u s t

or thereabouts,

The details

of 9 2 - d a y T r e a s 

24 a n d to m a t u r e N o v e m b e r 24,

w h i c h w e r e o f f e r e d on A u g u s t 18,
R e s e r v e B a n k s on A u g u s t

e v e n i n g that

1944,

w e r e o p e n e d at t h e F e d e r a l

21.

of this

issue are as follows;

Total a p p l i e d for - $ 1,850,697, Ö OO
Total accepted
1 , 2 0 9 , 0 4 7 , 0 0 0 . (includes $ 6 1 , 8 7 8 , 0 0 0
en t e r e d on a f i x e d - p r i c e basis at 9 9 . 9 0 5 a n d a c c e p t e d in
full)
Average price

- 9 9 . 9 0 4 / E q u i v a l e n t r a t e of di s c o u n t a p p r o x
0+3-15% p o r a n n u m

R a n g e of a c c e p t e d c o m p e t i t i v e bids;
High

- 9 9 - 9 0 8 E q u i v a l e n t r a t e of discount 0 . 360$
per annum
- 9 9 . 9 0 4 E q u i v a l e n t rate of d i s count a p p r o x
0.376$ per annum

Low

(60 p e r c e n t of t h e a m o u n t b id fo r at the l o w p r i c e was accepted)
Federal Reserve
District

T o tal
A p p l i e d for

Boston
New York
Philadelphia
Cleveland
Richmond
AtlantaChicago
St, Louis
Minneapolis
Kansas C i t y
Dallas
San *Fr a n c i s c o

$41,945,000
1,294,890,000
27,553,000
37,710,000
25 , 500,000
13,279,000
274,197,000
8,025,000
7,961,000
17,420,000
16,787,000
85,430,000

$
27 , 505,000
' 810,270,000
■18,873,000
35 , 270,000
23 ,100,000
13,279,000
170 ,127,000
6,985,000
7,5-61,000
17,180,000
16,787,000
62,110,000

§1,850,697,000

$1,209,047,000

TOTAL

-0O0-

Total
.A c c epted

¡¡¡¡S I l s

Q

W
T
£
S i n c e the i n t r o d u c t i o n o f m i l i t a r y c u r r e n c y c o i n c i d e n t w i t h the^
l a n d i n g s o f A l l i e d troops

in Europe,

/ f ^ y-

the T r e a s u r y D e p a r t m e n t h a s r e 

c e i v e d n u m e r o u s i n q u i r i e s as to the p e r m i s s i b i l i t y o f p h o t o g r a p h i n g
and printing reproductions of b o t h All i e d an d enemy invasion and
o c c u p a t i o n curr e n c i e s *
S e c t i o n 2 75 o f T i t l e 18 o f the U n i t e d S t a t e s C o d e p r o h i b i t s
s u c h r e p r o d u c t i o n s u n l e s s s p e c i f i c a l l y a u t h o r i z e d b y the S e c r e t a r y
o f the T r e a s u r y *

A f t e r consultation w i t h mili t a r y authorities,

Treasury Department,

the

f or reasons o f s e c u r i t y t h e n existing, a d o p t e d

a p o l i c y o f d e c l i n i n g to m a k e s u c h a u t h o r i z a t i o n s .
T h e c h a n g i n g m i l i t a r y s i t u a t i o n h as n o w p e r m i t t e d a re-examlnatio
o f this question, and, a f t e r f u r t h e r c o n s u l t a t i o n w i t h m i l i t a r y
officials,

it h as b e e n d e t e r m i n e d that, w i t h c e r t a i n l i m i t a t i o n s ,

per

m i s s i o n f o r s u c h r e p r o d u c t i o n s m a y n o w b e g r a n t e d b y the S e c r e t a r y

of

the T r e a s u r y to r e s p o n s i b l e p u b l i c a t i o n s *
T h e s e l i m i t a t i o n s a re that the r e p r o d u c t i o n s m u s t b e for educatio
p u r p o s e s solely,

or i n c o n n e c t i o n w i t h items o f i n t e r e s t to collectors

that the r e p r o d u c t i o n s b e in b l a c k a n d white, a n d less t han t h r e e f o u r t h s o r m o r e than o n e a n d o n e - h a l f times the
notes;

size o f the o r i g i n a l

that the p l ates u s e d d u r i n g the c o u r s e o f the r e p r o d u c t i o n s

be s u r r e n d e r e d to the n e a r e s t f i e l d o f f i c e o f the U n i t e d S t a t e s
S e c r e t S e r v i c e ; a n d tha t the r e p r o d u c t i o n s be a c c o m p a n i e d b y a printed
n o t i c e to the e f fect tha t t h e y a r e m a d e b y special p e r m i s s i o n o f the
S e c r e t a r y o f the Tre a s u r y , a n d that f u r t h e r reproduction,
in part,

in w h o l e o r

is s t r i c t l y p r o h i b i t e d *

T h e s e cond i t i o n s a r e i n t e n d e d to s a f e g u a r d a g a i n s t counte r f e i t i n g
a n d o t h e r p o s s i b l e abuses*
Requests to r e p r o d u c e s u c h c u r r e n c i e s s h o u l d b e m a d e in writing,
a n d s h o u l d set f o r t h the u se to w h i c h the r e p r o d u c t i o n is to b e made,
the p u b l i c a t i o n f o r w h i c h it is intended, a n d w h e r e possible,
p a r t i c u l a r issue*
reproduction*

the

Separate permission must be obtained for each

fl

TO:

____ Mr;«

Is this o*k.?

Chas, P* Shaeffer

Mr. Shaeffer

TREASURY DEPARTMENT
Washington
F o r The I n f o r m a t i o n of The P r ess
N ot f or P u b l i c a t i o n

August

22,

1944

S i n c e the i n t r o d u c t i o n of m i l i t a r y c u r r e n c y coincident
w i t h the landings of A l l i e d troops in Europe, the T r e a s u r y
D e p a r t m e n t has r e c e i v e d n u m e r o u s inquiries as to th e p e r 
m i s s i b i l i t y of p h o t o g r a p h i n g a n d p r i n t i n g r e p r o d u c t i o n s of
b o t h A l l i e d a nd enemy invas i o n a nd o c c u p a t i o n currencies.
S e c t i o n 275 of T i t l e 18 of t he U n i t e d States code p r o 
hibits s u c h r e p r o d u c t i o n s u n l e s s s p e c i f i c a l l y a u t h o r i z e d by
t h e S e c r e t a r y of t h e Treasury.
After consultation with
m i l i t a r y authorities, t h e T r e a s u r y Department, f or reasons
of s e c u r i t y then existing,
a d o p t e d a p o l i c y of d e c l i n i n g
to m a k e s u c h a u t h o r i z a t i o n s .
The c h a nging m i l i t a r y s i t u a t i o n has n o w p e r m i t t e d a
r e - e x a m i n a t i o n of this question, and, a f t e r f u r t h e r c o n s u l 
t a t i o n w i t h m i l i t a r y officials, it has been d e t e r m i n e d that,
w i t h c e r t a i n limitations, p e r m i s s i o n f o r s u c h r e p r o d u c t i o n s
m a y n o w be g r a n t e d b y t he S e c r e t a r y of th e T r e a s u r y to r e 
s p o n s i b l e p u b l i cations.
These l i m i t a t i o n s are t hat the r e p r o d u c t i o n s m u s t . b e
f o r e d u c a t i o n a l pur p o s e s solely, or in conn e c t i o n w i t h items
of interest to collectors; t h a t t he r e p r o d u c t i o n s b e in b l a c k
a n d white, a n d less than t h r e e - f o u r t h s or more t h a n one a n d
on e - h a l f t i mes th e siz e of t h e o r i ginal notes; t h a t t h e plates
u s e d duri n g t h e course of t h e r e p r o d u c t i o n s be s u r r e n d e r e d to
the n e a r e s t f i e l d office of t h e U n i t e d States S e c r e t .Service;
a n d tha t t h e r e p r o d u c t i o n s be a c c o m p a n i e d b y a p r i n t e d noti c e
to t h e effect that t h e y a re made by s p e cial p e r m i s s i o n of t h e
S e c r e t a r y of t h e Treasury, a n d that f u r t h e r r e production, in
w h o l e or in part, is s t r i c t l y p r o h ibited.
T h e s e conditions are i n t e n d e d to s a f e g u a r d a g a i n s t
f e i t i n g a n d o t her p o s s i b l e abuses.

counter-

R e q u e s t s to r e p r o d u c e s u c h currencies s h o u l d be made in
writing, a n d s h o u l d set f o r t h t h e use for w h i c h t he r e p r o d u c 
t i o n is to be made, t h e p u b l i c a t i o n f or w h i c h it is intended,
a n d w h e r e possible, th e p a r t i c u l a r issue.
Separate permission
m ust be o b t a i n e d f o r each r e p r o d u c t i o n .

- 0O 0-

The p r o g r a m o n w h i c h the

U n i t e d S t ates d e l e g a t e s

and

tech n i c i a n s a p p e a r e d is the first of a series of e d u c a t i o n a l
f§* 1
a
***
bro a d c a s t s d e s i g n e d to
/the A m e r i c a n people w i t h the
Monetary Fund and H

i

International, B a n k p r o p o s a ls.

Mr. Morgenthau w
a
aMiejiBp M kmm Teafls '*
airman of the United States delegation**^'

m

2
a n d m i l i t a r y spheres m u s t he u n d e r t a k e n to h e l p the p e o ples
of

w a r - t o r n l a n d s , a n d to stamp out the basic c a use s o f

war.
1

® he T r e a s u r y S e c r e t a r y has just r e t u r n e d f r o m a v i s i t
—
areas
to the "p u l v e r i z e d ” b a t t l e £ M t a i x of F r a n c e and the warn
sections
r o bot b o m b d e s o l a t e d ii-tTffffir of England,
V’One c a n n o t see suc h sights w i t h o u t a c k n o w l e d g i n g two
a b s o l u t e imper a t i v e s " , he said,
j--^/"The f i r s t o f these, is t h a t w e m ust h e l p

tb© peoples of

these w a r - t o r n lands to r e b u i l d their homes; w e m ust h e l p
t h e m to b e g i n a g a i n the i n d u s t r y and a g r i c u l t u r e t h r o u g h which
they w i l l be a b l e to p lay their parts in a h e a l t h y r e b ival
of c o m m e r c e t h r o u g h o u t the world.

T h e r e c a n be no l a s t i n g

s e c u r i t y or p r o s p e r i t y for a n y of us u n l e s s
^Beyond

this is done.

this is the b r o a d e r i m p e r a t i v e that we must

stamp out the basic causes

of this fe a r f u l

scourge of war.

/ "The F u n d and the B a n k d e v i s e d at B r e t t o n W o o d s are
^
>
mutual
i n s t r u m e n t a l i t i e s for
a id a m o n g n a t i o n s and for
creation

o f economic order."

S e c r e t a r y M o r g e n t h a u tonight told al
F o r u m of the A i r a u d i e n c e that the m o n e t a r y a g r e e m e n t reached'
" an irrefutable demonstration

at B r e t t o n W o o d ^ ^ o n ^ t i t u t e s

that m e n w h o c h o o s e to live ifiPat peace w i t h one a n o t h e r
are c a p a b l e of f i n ding w a y s

to do so'l

T h e T r e a s u r y y r r f t r r j i xftid that the spirit in w h i c h
m e n f r o m \ 4 4 Apffereiiti

tfe® m o n e t a r y pro b l e m s o

the w o r l d is a h o p eful a u g u r y for the success of the s e c u r i t y
c o n f e r e n c e w h i c h opened

t o d a y at D u m b a r t o n Oaks ih

Washington,
Mr.

M o r g e n t h a u spoke over the M u t u a l n e t w o r k
^
results
a ggeBSSBR r o u n d t a b l e d i s c u s s i o n of the iwiftiV of the
United Nations

, on

M o n e t a r y an d F i n a n c i a l C^nference.£Apt>earing

a l s o on the programs^ w e r e D e a n Acheson, A s s i s t a n t S e c r e t a r y
of S t a t e f ^ E d w a r d E. Brown,

President,

of C h i c a g o ^

C h a i r m a n of the C o m m i t t e e on

B r e n t Spence,

B a n king and Currency,

F i r s t N a t ional B a n k

H o u s e of R e p r e s e n t a t i v e s ^ Charles

W. Tobey, Wamimmmmx m e m b e r ,C o m m i t t e e on B a n k i n g and C u r r e n c y ,

m m H a r r y D . W h i t e , A s s i s t a n t to the
secretary a

tne Treasury,

all me m b e r s cf the U n i t e d States

D e l e g a t i o n to the C o n f e r e n c e ?

and Ansel F.Lu x f o r d , A s s i s t a n t

General Co u n s e l , T r e a s u r y D epartment.
Mr.

Morgenthau

Monetary Fund,and
and D e v e l o p m e n t
lasting

said that the pr o p o s e d I n t e r n a t i o n a l
I n t e r n a t i o n a l B a n k for R e c o n s t r u c t i o n
but f i r s t steps toward

p e a c e a nd « » w o r l d

the goal of

economic well-being.

o t h e r m e a s u r e s of i n t e r n a t i o n a l

cooperation m m

He said
in e c o n o m i c

TREASURY DEPARTMENT
Washington

P O R RELEASE, 9i30 P.M., E.W.T.,
T u e s day y A u g u s t 22, 1944._______

Press Service
No. 43-2

S e c r e t a r y M o r g e n t h a u t o n i g h t t o l d a " F o r u m of t h e Air"
a u d i e n c e that t h e m o n e t a r y a g r e e m e n t r e a c h e d r e c e n t l y at
B r e t t o n Woods, N.H., c o n s t i t u t e s "an i r r e f u t a b l e d e m o n s t r a t i o n
t hat men who choo s e to l i v e at p e a c e w i t h one a n o t h e r a r e c a p a 
ble of f i n d i n g ways to do so."
T h e T r e a s u r y c h i e f t a i n sai d t h a t the spirit in w h i c h men
f r o m t h e 44 p a r t i c i p a t i n g n a t i o n s a p p r o a c h e d t he m o n e t a r y p r o b 
lems of t h e w o r l d is a h o p e f u l a u g u r y for the success of t he
s e c u r i t y c o n f e r e n c e w h i c h opened t o d a y at D u m b a r t o n Oaks in
Washington.
Mr. M o r g e n t h a u s p oke over t he M u t u a l network, on a r o u n d 
t a b l e d i s c u s s i o n of t h e r e s ults of t h e U n i t e d N a t i o n s M o n e t a r y
and Financial Conference.
A p p e a r i n g also on t h e p r o g r a m w e r e D e a n Acheson, A s s i s t a n t
S e c r e t a r y of State; E d w a r d E, Brown, President, F i r s t N a t i o n a l
B a n k of Chicago; B r ent Spence, C h a i r m a n of t he C o m m i t t e e on
B a n k i n g a n d Currency, H o u s e of R e p r e s e n t a t i v e s ; C h a r l e s W. Tobey,
member, C o m m i t t e e on B a n k i n g an d Currency, U n i t e d States Senate,
a n d H a r r y D. White, A s s i s t a n t to t he S e c r e t a r y of t h e Treasury,
a l l m e m bers of t he U n i t e d S t ates D e l e g a t i o n to the Conference;
a n d A n s e l F. Luxford, A s s i s t a n t G e n e r a l Counsel, T r e a s u r y
Department,
Mr. M o r g e n t h a u s aid t h a t t h e p r o p o s e d I n t e r n a t i o n a l M o n e 
t a r y Fund, a n d I n t e r n a t i o n a l B a n k f o r R e c o n s t r u c t i o n a n d D e v e l o p 
m e n t ’, are but first steps t o w a r d t he goal of l a s t i n g p e a c e and
w o r l d e c o nomic w e l l - b e i n g .
He s aid o t her m e a s u r e s of i n t e r 
n a t i o n a l c o o p e r a t i o n in economic a n d m i l i t a r y spheres must be
u n d e r t a k e n to help the pe o p l e s of w a r - t o r n lands, a n d to stamp
out t h e b a s i c causes of war.
T h e T r e a s u r y S e c r e t a r y has just r e t u r n e d f r o m a visit to
the " p u l v erized" b a t t l e areas of F r a n c e a n d the r o b o t bomb
d e s o l a t e d s e c tions of England.

[)r

- 2 "One cannot see s u c h sights wi t h o u t a c k n o w l e d g i n g t wo a b s o 
lute imperatives", he said,
"The f i r s t of t h e s e is tha t we must hel p t h e p e oples of t h e s e
w a r - t o r n lands to r e b u i l d t h e i r homes; we must hel p t h e m to b e g i n
a g a i n t h e i n d u s t r y a n d a g r i c u l t u r e t h r o u g h w h i c h t h e y w i l l be a ble
to p l a y t h e i r parts in a h e a l t h y r e v i v a l of co m m e r c e t h r o u g h o u t
th e world.
T h e r e can be no l a s t i n g .s e c u r i t y or p r o s p e r i t y for a n y
of us unle s s this is done.
" B e y o n d this is t h e b r o a d e r i m p e r a t i v e tha t we must
out t h e basic causes of this f e a r f u l s c o u r g e of war.

stamp

"The B u n d a nd th e B a n k d e v i s e d at B r e t t o n W o o d s are i n s t r u 
m e n t a l i t i e s f or m u t u a l a id a m o n g n a t i o n s a nd for cre a t i o n of
economic order."
T h e p r o g r a m on w h i c h t h e U n i t e d S t a t e s del e g a t e s a n d t e c h n i 
cians a p p e a r e d is t he f i r s t of a series of e d u c a t i o n a l b r o a d c a s t s
d e s i g n e d to f a m i l i a r i z e the A m e r i c a n p e o p l e w i t h t h e M o n e t a r y B u n d
a n d I n t e r n a t i o n a l B a n k proposals-.
Mr. M o r g e n t h a u was chairman of t he U n i t e d States d e l e g a t i o n
by d e s i g n a t i o n of P r e s i d e n t Roosevelt, a n d was el e c t e d P r e s i d e n t
of the C o n f e r e n c e at B r e t t o n Woods.

-0O0-

•j

»

I U J jlJ L j

J___

\***4~~*\-*^\

(Pj ^LA^L)

FOR IMMEDIATE RELEASE
August 23, 19*4
3

yfCAs^*-

y u > . t/ 3 - 3

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1, 19*1-3» provided for in the Intex*American Coffee Agreement, proclaimed by the President on April 15, 19*J-1,
as follows:

Country of Production

:

Quota Quantity
(Pounds) ]J

Authorized for entry
_______ for consumption
As of (Date) : (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 ,621,630,1*79

>n-Signatory Countries:

1/

51*9,261,936
3*1,873,77*1
13,9*19,562
20,881,883
26,155,330
10l*,621,321
93,287,381*
117.951,373
3 ,1*86,928
82,825,279
31*,001,91*3
“1,359,288
73,23*1,872
6l.900.935

August 12, 19*4 1 ,101,053,262
(Import quota filled)
August 12, 19*4
29,378.61*6
it
8,192,396
August 19» 19*4 2/ 18,37*1,957
August 12, 19*4
21,358,789
N
96,121,71*9
M
81,560,02s
N
38,919.365
(Import quota filled)
(Import quota filled)
August 12, 19*14
28,881,23**
11
3,029,059
n
39,998,652
H

*1,193.312

Quotas as established by action of the Inter-American Coffee Board on
April 21, 19*14.

£?/ Per telegraphic reports.

* 0

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
Wednesday, August 23, 1944

Press Service
No. 43-3

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the

12

months commencing October

1,

1943, provided for in the Inter-

Anerican Coffee Agreement, proclaimed by the President on April 15, 1941,
as follows:

Country of Production :
a~ ~ ________________ :

Quota Quantity :______orized^for entry
(podnds) ]J
1 As of (Date) ? (Pounds)

Signâtoiy CountriesV
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador'
G-uatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non*-Signatory Countries:

1,621,630,479
549,261,936
34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47,951,373
3,486,928
82,825,279
34,001,943
4,359,288
73,234,872

August 12, 1944 1,101,053,262
(import quota filled)
August 12, 1944
29,378,646
it
8,192,396
18,374,957
August 19, 1944 2/
21,358,789
August 12, 1944
it
96,121,749
ii
81,560,028
ti
38,919,365
(import quota filled)
(import quota filled)
28,881,234
August 12, 1944
it
3,029,059
it
39,998,652

61,900,935

ti

4,193,312

1/

Quotas as established by action of the Inter-American Coffee Board on
A£ril 21, 1944,

2/

Per telegraphic reports.

oQo-

TREASOfBT DSPARTM&iT

Washington

FOR M LM SZ , MORIIIRG S m M F M t ,
Thursday. August 24« 1944.______

Press Senrice
Vc£ *
3~ f

Secretary of the treasury Morgenthau today announced an offering, through
the Federal Resenre Banks, of 7/8 percent Treasury Certlfieates of Indebtedness
of Series F-1945, open on an exchange basis, par for par, to holders of treasury
Certlfieates of Indebtedness of Series £»1944, maturing September 1, 1944« At
the same time, the Secretary offered holders of Treasury Rotes of Series C-1944
and of Treasury Rotes of Series 0*1944, maturing September 1$, 1944, an oppor
tunity to exchange such notes for Treasury Rotes of Series A-1946.
The certificates now offered mill be dated September 1, 1944, and will bear
Interest from that date at the rate of seven~eighthe of one percent per annum,
payable semiannually cm March 1 and September 1, 1945« They will mature Septem
ber 1, 1945« They will be Issued In bearer form only, with two Interest coupons
attached, in denominations of §1,000, §5,000, §10,000, §100,000 and §1,000,000.
The notes now offered will be an additional issue of the series originally
Issued on Rovember 1, 1941, with interest front September 15, 1944« Exchanges
will be made par for par as of September 15, 1944* The notes bear Interest at
the rate of one percent per annum, payable semiannually cm March 15 and Septem
ber 15 in each year. They will mature March 15, 1946. They are issued in bearer
form only, and in denominations of H 0 0 , §500, $1,000, §5,000, §10,000 and
§100,000« For this exchange offering, and for future transactions In notes of
this series, the additional denomination of §1,000,000 will be available.
p
Pursuant to the provisions of the Public Debt Act of 1941, Interest upon
the securities now offered shall not have any exemptions, 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 will be received at the Federal Reserve Banks and Branches
and at the Treasury Department, Washington, and should be accompanied by a Ilka
face amount of the maturing securities. Subject to the usual reservations, all
subscriptions will be allotted in full«
There are now outstanding §4,121,783,000 of the Series #-1944 certificates,
$283,006,000 of the Series 0 X 9 4 4 notes, and §635*064,400 of the Series 0 1 9 4 4
notes#
The texts of the official circulars follows

TREASURY DEPARTMENT
Washington
EOR RELEASE? MORNING NEWSPAPERS,
Thursday,, »August 34, 1944._____
8-23-44

Pr0SS Service

43„.4

Secretaiy of the Treasury Morgenthhu today announced an offering,
through the Pederal Reserve Banks, of 7/8 percent Treasury Certificates
of Indebtedness of Series F-1945, open on an exchange basis, par for par,
to holders of Treasury Certificates of Indebtedness of Series E-1944,
maturing September 1, 1944. At the same time, the Secretaiy offered
holders of Treasuiy Notes of Series C— 1944 ahd of Treasury Notes of Series
D-1944, maturing September 15, 1944, an opportunity to exchange such notes
for Treasuiy Notes of Series A*-1946,
The certificates now offered will be dated September 1, 1944, and
will bear interest from that date at the rate of seven-eighths of one per
cent per annum, payable semiannually on March 1 and September .1, 1945.
They will mature September 1, 1945. They will be issued in bearer form
only, with two interest coupons attached, in denominations of $ 1,000,
$5,000, $10,000, $100,000 and $1,000,000.
The notes now offered will be an additional issue of the series
issued on November 1, 1941, with interest from September 15,
1944. Exchanges will be made par for par as of September 15, 1944. The
notes bear interest at the rate of one percent per annum, payable semi
annually on March 15 and September 15 in each year. They will mature
afe iss,lle<* in bearer form only, and in denominations
$500, $1,000, $5,000, $10,000 and $100,000. For this exchange
offering, and for future transactions in notes of this series, the ad
ditional denomination of $ 1,000,000 will be available.
Pursuant to the provisions of the Public Debt Act of 1941, interest
uppn the securities now offered shall not have any exemptions, as such,
under Federal -tax Acts now or hereafter enacted. The full provisions re
lating to taxability are set forth in the official circulars released
today.
Subscriptions will be received at the Federal Reserve Banks and
Branches and at the Treasury Department, Washington, and should be ac
companied by a like face amount of the maturing securities. Subject to
the usual reservations, all subscriptions will be allotted in full,
There are now outstanding $4,121,783,000 of the Series ÏK1944
certificates, $283,006,000 of the Series C-1944 notés, and $635,064,400
of the Series D-1944 notes.
/
The texts of the official circulars follpw:

UNITED STATES'OF AMERICA
7/3 PERCENT TREASURY CERTIFICATES OF INDEBTEDNESS OF SERIES F-1945
Dated and bearing interest from September 1, 1944

1944
.
Department Circular No. 743
____

Due September 1, 1945

TREASURY DEPARTMENT,
Office of the Secretary,
Washington, August 24, 1944.

Fiscal Service
Bureau of the Public Debt
I.
1.

OFFERING OF CERTIFICATES

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 certificates of indebtedness of the United States, designated
7/3 percent Treasury Certificates of Indebtedness of Series' F-1945, in exchange for
Treasury Certificates of Indebtedness of Series E-1944, maturing September 1, 1944.
II.
1.

DESCRIPTION OF CERTIFICATES

The certificates will be dated Seotember 1, 1944, and will bear interest

from that date at the rate of 7/3. percent per annum, payable semiannually on March 1
and September 1, 1945.

They will mature September 1, 1945, and will not be subject

to call for redemption prior to maturity.
2.

The income derived from the certificates shall be subject to all Federal

taxes, now or hereafter imposed.

The certificates shall be subject to estate, in

heritance, gift or other excise taxes, whether Federal or State, but shall be exempt
from all taxation now or hereafter imposed on the principal or interest thereof by
any State, or any of the possessions of the United States, or by any local taxing
authority.
3.

The certificates will be acceptable to secure deposits of public moneys.

They will not be acceptable in payment of taxes.
4.

Bearer certificates with interest coupons attached will be issued in

denominations of $1,000, $5,000, $10,000, $100,000 and $1,000,000.

The certificates

will not be issued in registered form.
5.

The certificates will be subject to the general regulations of the Treasury

- 2 -. ;.

•V

Department, how or hereafter prescribed, governing United States .certificates.
III.
1.

.SUBSCRIPTION A$D ALLOTMENT

Subscriptions will be received at the Federal Reserve Banks and Branches

and at the Treasury Department, Washington,

Banking institutions generally may

submit subscriptions for account of customers, but only the Federal Reserve Banks
and the Treasury Department are authorized to act as official agencies..
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 certificates applied
for', and to close the books as to any or all subscriotions at any time without
notice; and any action he may take in these respects shall be final.
these reservations, all subscriptions will be allotted in full.

Subject to

Allotment notices

will be sent out promptly upon allotment.
IV.
, 1.

PAYMENT

Payment .at par for certificates allotted hereunder must he made on or

before September 1, 1944* or on later allotment, and may be made only in Treasury
Certificates of Indebtedness of Series E-1944, maturing September 1, 1944, which
will be accepted at par, and should accompany the subscription,
V.
1.

GENERAL PROVISIONS

As fiscal agents of the United States, Federal Reserve Banks are authorized!

and requested to receive subscriptions, to make allotments bn 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 cer
tificates allotted, to make delivery of certificates on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive
certificates.
2.

The Secretary of the Treasury may at any time, or from time to time, pre

scribe 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 OF AMERICA
1 PERCENT TREASURY NOTES OF SERIES A-1946
Dated November 1, 1941, with interest from September 15, 1944

Due March 15, 1946

Interest payable March 15 and September 15

ADDITIONAL ISSUE
x944
Department Circular No. 749
----

TREASURY DEPARTMENT,
Office ©f the Secretary,
Washington, August 24, 1944.

Fiscal Service
Bureau of the Public Debt
I.
1.

OFFERING OF NOTES

The Secretary of the Treasury, pursuant to the authority of the Second

Liberty Bond Act, as amended, invites subscriptions, at par, from the people ©f the
United States for notes of the United States, designated 1 percent Treasury Notes
of Series A-1946, in exchange for Treasury Notes of Series C-1944, or Treasury
Notes of Series D-1944, which mature September 15, 1944»

The amount of the offering

under «this circular will be limited to the amount of such maturing notes tendered
and accepted.
II.

DESCRIPTION OF NOTES

f

1. 'The notes now offered will be an addition to and will form a part of the
series of 1 percent Treasury Notes of Series A-1946 issued pursuant to Department
Circular-No. 671, dated October 23, 1941; will be freely interchangeable therewith;
and (with the exception that interest on the notes issued under this circular will
accrue from September 15, 1944) are.identical in all respects therewith, and; except
that the $1,000,000 denomination will be provided, are described in the f©ll©wing
quotation from Department Circular No. 671:
nl. The notes will be dated November 1, 1941,- and will bear- interest
from that date at the rate of 1 percent per annum, payable ©n a semiannual
basis ©n March 15 and September 15 in each year until the principal amount,
becomes payable. They will mature March 15, 1946, and will not be subject
to call for redemption prior to maturity.

-

2

-

,f2. The income derived from the notes shall be subject to all
Federal taxes, now or hereafter imposed. The notes-.shall be subject tp
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 pos
sessions ©f the United States, or by any local taxing authority.
"3. The notes will be accepted at par during such time and under
such rules and regulations as shall be prescribed or approved by the
Secretary of the 'Treasury in payment of income and profits taxes payable
at the maturity of the notes.
”4. The notes will be acceptable to secure deposits of public
moneys, but will not bear the circulation privilege,
M5. Bearer notes with interest coupons attached will be issued in
denominations of $100, $500, $1,000, $5*000, $10,000 and $100,000. The
notes will not be issued in registered form.
,*

.
6.
The notes will be subject to the general regulations of the
Treasury Department, now or hereafter prescribed, governing United States
notes.”
III.
1.

SUBSCRIPTION AND ALLOTMENT

Subscriptions will be received at the Federal Reserve Banks and Branches

and at the Treasury Department, Washington.

Banking institutions generally may

submit subscriptions for account of customers, but only the Federal Reserve Banks
and the Treasury Department are authorized to act as official agencies.
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 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.
tions, all subscriptions will be allotted in full.
» *
•’ •
.
out promptly upon allotment.

Subject to these reserva

Allotment notices will be sent
*
" . . .
#

IV,
1.

PAYMENT

Payment at par for notes allotted hereunder must be made on or before

September 15, 1944, or on later allotment,* and may be made only in Treasury Notes

- 3 -

of Series C-1944,or in Treasury Notes of Series D-1944, maturing September 15, 1944,
which will be accepted at par, and should accomoany the subscription.
V.
1.

GENERAL PROVISIONS

As fiscal agents of the United States, Federal Reserve Banks are authorized

and requested to receive subscriptions, to make allotments on the basis and up to
the amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks
of the respective districts, to issue allotment notices, to receive payment for
notes allotted, to make delivery of notes on full-paid subscriptions allotted, and
they may issue interim receipts pending delivery of the definitive notes.
2.

The Secretary of the Treasury may at any time, or from time to time, pre

scribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.

HENRY- MORGENTHAU, J R .,
Secretary of the Treasury.

Page *4
Comparison of principal items of assets and liabilities of national banks - continued
(In thousands of dollars)

’June 30»
19*4*4
LIABILITIES
Deposits of individuals, partner
ships and corporations:

Postal Savings deposits.........
Deposits of U. S. Government....
Deposits of States and political
subdivi sions.............. .
Deposits of banks.... .........
Other deposits (certified and
cashiers1 checks, etc.)........

Total surplus, profits, and
reserves.............. .
Total capital accounts.......
HTotal liabilities and capital
v accounts...................
Rati& of loans to total deposits

June 30»

19^3

Increase or decrease
since Apr» 13« 19*4*4
■Amount
Percent

. $32.71+5.581+ $53,557,069 $30,518.11+6 -$S11 ,US5
. 11 ,056,51+8 10,1+91+,797
s,971.178
561,751
5.1»!1»
5.531
6,918
-117
10.819.711» 7 .196,133
b,5$z,k3& 3.623.581

Bills payable, rediscounts & other
liabilities for borrowed money...
Other liabilities...............
Total liabilities, excluding
capital accounts............
CAPITAL ACCOUNTS
Capital Stock:
Preferred stock.......... .
Common stock................ . .
Total.... ..................
Surplus.........................
Undivided profits...... .........
Reserves........... ......... .

April 13.
19^

-2.*42
5.35
-2.12
50.35

$2,227,1+38
2,085,370
-1 .50!+
6,237,278

7-30
23.25
-21.7*4
i36.ll

97.991

2,99^,352
7,1i03,55i

2,9^7,639
6,985.579

2,900,361
7 ,156,360

*+17,972

1.72
5.98

2>+7,i9l

3.38
3.>»5

80*4,090
65.833.253

623,232
61,809,980

633,962
5*+,769,361

180,858
U,023,273

29.02
6.51

170,128
11,063,892

26.8*4
20.20

6,205

56,600
*400,750

i+,231
373.355

-50,395
50,128

-89.0*4
12.51

l,97>+
77.523

*46.66
20.76

>+,023,006

6. *46

u.ll+3,389

20.21

-5.75
.88

-2*4,856
80, *426
55,570

-18.13
5.91
3.71

217,>+99
20,029
-7.891»

i>+.75
3->+3
-2.9*4

*450,878

66,290,336 62,267,33° 55,l

W ^

50,713

Increase or decrease
: since June 30 1 19*43
Amount
Percent

112,220

119,066

1,1+1+1,358

137,076
1,360,932
l.M-98,008

-6,8*46
12,6*4*4
5.798

i ,1+71+,673

260,661

1, *428,71*4
1.5*17.780
1,628,622
613,17^
276,228

58>+,l69

63,550
-8,976

268,555

-15.567

2,557,031
*4,110,609

2,518,02*4
*4,065,80*4

2,327,397
3,825**405

39,007
*4*4,805

1.55
1.10

229,63U
285,20*4

9.S7
7 .*46

66.333.131» 58,972.352

i+.Oeî.Sll

6.13

ll,1+28,593

19.3S

1,553.578
1,692,172
' 60*4,198

îo.i+oo.g^

•37

3.90
-1.Î46
. -5 .6*4

Page 3
Statement showing comparison of principal items of assets and liabilities of active national hanks
as of June 30, 1944, April 13, 1944, and June 30, 19^3
(In thousands of dollars)

i June 30, :
: 1944
*
«
______ t
5.Ò1+2
Number of banks....................
ASSETS
Loans on real estate..............
$2,038,770)
Other loans, including overdrafts...
9,190,910)
Total loans................ .
11,229,680
U. S. Government securities:
Direct obligations.............
38,156,365)
Obligations fully guaranteed....
63^.50»+)
Total U. S. securities.........
3s.790.g69
Obligations of States and political
subdivisions...................
2,032.998
Other bonds, notes and
debentures.....................
1 ,318,4S8
Corporate stocks, including stocks
of Federal Reserve Banks........
l46,l6s
Total securities..............
1*2,288,523
Total loans and securities.....
53,518,203
Currency and coin.................
820,570
8,277,71+3
Reserve with Federal Reserve Banks..
Balances with other banks..........
6,961,1*21
Total cash, balances with other
banks, including reserve bal
ances and cash items in process
of collection.... ......-.....
16.059,731+
Other assets......... ............
823,008
«V, Total assets.... ............
70,1+00,91+5

April 13 * : June 30,
1944
:
19U3
»
5,048
5,066

:Increase or decrease :Increase or decrease
:since Apr. 13, 1944 :since June 30, 19^3
»Amount : Percent
»Amount » Percent
-6
-*12
-24
-.47

$9,950,1+86

($2,136,260)
( 7 ,053,883) $1 ,279,191+

9,950.1+86

1 ,279,19)+

9,190,11+3

36,732.082
36,732,082

(28,5il+,63i+)
( 1,675.768)
30,190,lK)2

1 ,996,461

12.86
12.86

( -$97.1+90
(2,137.027
2,039,537

-4.56

30.30
22.19

33.81
( 9.61+1,731
(-1 ,01+1 ,261+ -62.14
8,600,467
28.49

2,058,727

5 .6O
5.60

2,026,333

36,537

1.83

6,665

.33

1,291,048

i,31+o,099

27,440'

2.I3

- 21,611

-1.61

146,186

171.71+1+

1+0 ,165.777
50,116,263
892.932

33,728,578
42,91s ,721
806,546
7 ,853.296
6,567,51+9

8,169,152
6,337.1+25

15,399,509

817,362
66,333.131+

15,227,391
826,240'
58,972.352

2,058,787

-18
2,122,746

-.01

-25,576

-11+.89

5-28

3 ,1101,91+0
-72.362
108,591
623.996

3 ,559.91+5

6.79
-8.10
1.33
9 .85

10,599,1+82
14,024
424,447
393,872

25.38
24.70
1.74
5.40
6.00

660,225

1+.29

5,646

.69
6.13

4,067,811

832.31+3
-3.232

5 .1+7
-.39

11,428,593

19.38

-

2

-

$38*156*000,000 and $635»000,000, respectively.

Other bonds, stocks and

securities held of $3*^98,000,000, which included obligations of States and
political subdivisions of $2 ,033*000,000, increased $6^,000,000 since April,
but decreased $Ul,000,000 since June of last year.
Cash of $821,000,000, balances with other banks, including cash items in
process of collection, of $6,961,000,000, and reserves with Federal Reserve banks
of $8 ,278,000,000, a total of $l6 ,060,000,000, increased $660,000,000 since
April and $832,000,000 since June a year ago*
The unimpaired capital stock of the banks on June
including $112,000,000 of preferred stock.

30, lÿ+U,

was $1,55^,000,000,

Surplus of $1,692,000,000, undivided

profits of $60^,000,000, and reserves of $261,000,000, a total of $2 ,557,000,000,
increased $39»000,000,since April and $230,000,000 since June of last year.
The percentage of loans and discounts to total deposits on June
was 17.06, in comparison with l6*10 on April

13 , I9V+,

30, 19^*

and l6*7*> on June

30, 19^3#

TREASURY DEPARTMENT
Washington

N&WSpA f£R% y

POR RELEASE,

Press Service
No.

A . u ^ a j f > g f iq%ly

The total assets of national hanks on June

30

of this year amounted to

more than $70*000,000,000, it was announced today hy Comptroller of the Currency
Preston Delano.

Returns from the call covered the 5,042 active national hanks

in the 0nited States and possessions.

The assets reported were greater hy

$4,000,000,000 than those reported hy the 5»048 active national hanks as of
April

13,

1944, the date of the previous call, and an increase of nearly

$11,500,000,000 over the amount reported hy the
June 30,

5,066

active hanks as of

1943.

The deposits of national hanks on June

30, 1944,

were nearly $66,000,000,000,

an increase of $4,000,000,000 since April 1944, and an increase since June of
last year of $11,000,000,000.

Included in the current deposit figures are demand

and time deposits of individuals, partnerships and corporations of $32,746,000,000
and $11,057,000,000, respectively, United States G-overnment deposits, including
War loan accounts, of $10,820,000,000, deposits of States and political subdivisions
of $2 ,992,000,000, postal savings of $5 ,000,000, deposits of hanks of $7,403,000,000
and certified and cashiers1 checks, cash letters of credit and travelers* checks
outstanding of $804*000,000.
Loans and discounts were $11,230,000,000, an increase of $1,279,000,000, or
13 percent, since April, and an increase of $2,040,000,000, or 22 percent, since
June a year ago.
Investments in United States G-overnment obligations, direct and guaranteed,
of $32,791»000,000, showed an increase of $2 ,059*000,000, or more than

5 percent

since April, and an increase of $8,600,000,000, or more than 28 percent, since
June of last year.

The direct and indirect obligations held on June

30» 1944,

were

TREASURY DEPARTMENT
Washington
EO R RELEASE, M O R N I N G N E W S P A P E R S ,
Monday, A u g u s t 28, 1944*
8-24-44

Press Service
No, 43-5

T h e t o t a l assets of n a t i o n a l banks on June 30 of this
y e a r a m o u n t e d to mor e t h a n $70,000 , 0 0 0 , 0 0 0 , it was a n n o u n c e d
t o d a y b y 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 Delano. R e t u r n s
f r o m t h e call c o v ered t h e 5,042 a c t i v e n a t i o n a l banks in
t h e U n i t e d States a n d p o s s e s s i o n s .
T h e asse t s r e p o r t e d
w e r e g r e a t e r b y $ 4 , 0 0 0 , 0 0 0 , 0 0 0 t h a n t h ose r e p o r t e d by t he
5 , 0 4 8 a c t i v e n a t i o n a l b a nks as of A p r i l 13, 1944, t h e date
of t h e p r e v i o u s call, a n d an inc r e a s e of n e a r l y
$ 1 1 , 500 ,000,000 o ver t h e a m o u n t r e p o r t e d b y t h e 5,066 a c t i v e
b a n k s as of June 30, 1943*
T h e d e p osits of n a t i o n a l b a nks on June 30, 1944, w e r e
n e a r l y $ 66,000 , 0 0 0 , 0 0 0 , an i n c rease of $ 4 , 0 0 0 , 0 0 0 , 0 0 0 since
A p r i l 1944, a n d an i n c rease s i nce June of last y e a r of
$11,000,000,000.
I n c l u d e d in t he current d e p osit f i g ures
a re d e m a n d a n d t i m e deposits of individuals, p a r t n e r s h i p s
a n d c o r p o r a t i o n s of $ 3 2 , 7 4 6 , 0 0 0 , 0 0 0 a n d $ 1 1 ,057 ,000 ,000 ,
r e s p e ctively, U n i t e d States G o v e r n m e n t deposits, inc l u d i n g
W a r loa n accounts, of $ 1 0 , 8 2 0 , 0 0 0 , 0 0 0 , de p o s i t s of States
a n d p o l i t i c a l s u b d i v i s i o n s of $ 2 , 9 9 8 ,000,000, p o s t a l savings
of $5,000,000, deposits of b a n k s of $7,403, 0 0 0 , 0 0 0 , a n d
c e r t i f i e d a n d cashiers* checks, c a s h letters of credit a nd
t r a v e l e r s ’ checks o u t s t a n d i n g of $8 0 4 , 0 0 0 , 0 0 0 .
Loans a n d discounts w e r e $ 1 1 , 2 3 0 , 0 0 0 , 0 0 0 , an increase
of $1,279 , 0 0 0 , 0 0 0 , or 13 percent, since April, a n d an
in c r e a s e of $2, 0 4 0 , 0 0 0 , 0 0 0 , or 22 percent, s i nce June a y e a r
ago.
Inv e s t m e n t s in U n i t e d States G o v e r n m e n t obligations,
direct a n d guaranteed, of $38 , 7 9 1 , 0 0 0 , 0 0 0 , s h o w e d an i n c rease
of $2 , 0 5 9 , 0 0 0 , 0 0 0 , or m o r e than 5 pe r c e n t s i nce April, a n d an
in c r e a s e of $8, 6 0 0 , 0 0 0 , 0 0 0 , or m o r e than 28 percent, since
June of last year.
The direct a n d indirect o b l i g a t i o n s held
on June 30, 1944,, w e r e $38,156,000,-000 a n d $635,000,000,
respe c t i v e l y .
O t h e r bonds, stocks a n d s e c u r i t i e s h e l d of
$3,498 , 0 0 0 , 0 0 0 , w h i c h i n c l u d e d o b l i g a t i o n s of States a n d
p o l i t i c a l s u b d i v i s i o n s of $ 2 ,033 ,000 ,000 , i n c r e a s e d
$ 6 4 , 0 0 0 , 0 0 0 s i nce April, but d e c r e a s e d $ 4 1 , 0 0 0 , 0 0 0 since
June of last year.

-

2-

C a s h of $821,000,000, ba l a n c e s w i t h o t her banks, inc l u d i n g
cash items in p r o c e s s of collection, of $6,961, 0 0 0 , 0 0 0 , and"
r e s e r v e s w i t h F e d e r a l R e s e r v e banks of $ 8 , 2 7 8 , 0 0 0 , 0 0 0 a t o t a l
of $16 , 0 6 0 , 0 0 0 , 0 0 0 , i n c r e a s e d $ 6 6 0 , 0 0 0 , 0 0 0 s i n c e A p r i l a n d
$ 8 3 2 , 0 0 0 , 0 0 0 since June a y e a r ago,
T h e u n i m p a i r e d ca p i t a l s t o c k of the banks on June 30, 1944,
was $ 1 , 5 3 4 ,000,000, i n c l u d i n g $ 1 1 2 , 0 0 0 , 0 0 0 of p r e f e r r e d stock*
Surplus of $1,692, 0 0 0 , 0 0 0 , .u n d i v i d e d pr o f i t s of $604,000,000,
a n d r e s e r v e s of $261,000,000, a t o t a l of $2,557 , 0 0 0 , 0 0 0 ,
i n c r e a s e d $ 3 9 , 0 0 0 , 0 0 0 s i nce A p r i l a n d $ 2 3 0 , 0 0 0 , 0 0 0 since June
of last year.

t
T h e p e r c e n t a g e of loans a n d dis c o u n t s to t o tal deposits
on June 30, 1944, was 17.06, in c o m p a r i s o n w i t h 1 6 . 1 0 on
A p r i l 13, 1944, an d 1 6 . 7 8 on J une 30, 1943♦

Page
Statement showing comparison of principal items of assets and liabilities of active national hanks
as of June 30y 1 9 ^ » April 13, 1944, and Jane 30, 19^3
(In thousands of dollars)
June 30,
1944
Number of banks....
ASSETS
Loans on real estate,.......... ..
Other loans, including overdrafts.*..
Total loans..... * ♦...............
U.S. Government securities:
Direct obligations..........*.....
Obligations fully guaranteed......
Total U. S. securities..... .
Obligations of States and political
subdivisions......................
Other bonds, notes and
debentures...... ..... ...........
Corporate stocks, including stocks
of Federal Be serve. Banks..........
Total securities.......... ......
Total loans and securities.......
Currency and coin....'.... ..........*
Deserve with Federal Eeserve Banks..*
Balances with other hanks............
Total cash, balances with other
banks, including reserve bal
ances sind cash items in process
of collection........ ...........
Other assets....... ............ ..y.
Totcil assets* *« •» •
••> •
••#

57042

April 13,
1944
5,048

June 30»
19U3

5,066

3

1Increase

or decrease:Increase or decrease
:since Apr. 13, lp44 :since June 30, 1943
:Amount
Percent
:Amount : Percent
------- 1 .12
-24
-.47

$2,038,770)
9,190,910) $9,950,U$6
11 ,229,680 9.950.U86

($2,136,260)
( 7,053.883) $ 1 ,279,19U
9.190.1U3
1.279.19U

12.86
12.86

U-$97,U90
(2,137.027
2*039*537

-4.56
30.30
22.19

38,156,365) 3§,732,PS2
63U.50U)
38,790,869 36,732,082

(2S,5lU,68U)
( 1 ,675,768)
30,190,402

( 9,6Ui ,731
(-l,0Ul,26U
8*600,467
' 5.60

33*81
-62.14
28.49

?,fi§S,7$7
2,058,787

5;6q

2,032,998

l,996,U6l

2,026,333

36,537

1.83

6,665

*33

1,318,488

1,291,048

l,3Uo ,099

27,440

2.13

- 21,611

- 1.61

146,168
42,288,523
53,518,203

146,186

171,7UU
33,723.578
42,918,721

-18
2,122,746
3,401,940
- 72,362

-*01

-25,576
8.559.9U5
;10,599,482
14,024
424,447
393.872

-14*89

832,343
-3,232

5 .U7

820,570
8,277,743
6,961,421

16.059.73U
823,008
70*400,945

Uo, 165,777
50,116,263

892,932
8,169,152
6.337.U25

15,399,509
817,362
66,333,13U

806,546
7,853,296
6.567.5U9 :

5.28
6.79
- 8.10
108,591 1*33
623,996 9.85

15,227,391

660,225

826,240
58,972,352

5,646
U,067,811

4.29
.69
6.13

11.U28.597

25.38
24.70
1.74
5*40

6.00

•>*39
19*38

Page 4
Comparison of principal items of assets and liabilities of national banks - continued
(In thousands of dollars)
June 30 , • April 1 3 , : June 30 ,
1944
• 1944
* 19^3
f
•
LIABILITIES
Deposits of individuals, partner-«
ships and corporations:
Demand, .......... .........

«Increase or decrease • Increase or decrease
:since Apr. 1 3 , 1944 : since June 30, 1943
*Amount
: Percent
: Amount :: Percent

$32 .7 ^5 .58^ $33,557,069 $30,518,146
1 1 ,036,548 10 ,494,797
8 ,9 71,178
5,5
3
1
6,918
Postal Savings d e p o s i t s . •
5 A 1H
7
,
196,133
4
,
582,436
10
,
819,714
Deposits of U. S. Government..... *
Deposits of States and political
2,947,639
2 ,900,361
subdivisions.. .............. .
2,996,352
7 ,403,551
8 ,985,579
7 ,156,360
Deposits of hanks.... .
Other deposits (certified ahd
623,232
633,962
804,090
cashiersf checks, etc.)..... ..
Total deposits........... .
65 ,833.253 61,809,920 5^,769,361
Bills payable, rediscounts & other
6,205
56,600
4,231
liabilities for borrowed money...
400.750
373,355
Other liabilities.....
450*878
Total liabilities, excluding
capital accounts............ . 66,290,336 62,267,330 55,146,947
CAPITAL ACCOUNTS
Capital Stock:
119,066
137,076
112,220
Preferred stock...............
1 ,428,714
1 ,360,932
1,441,358
Common stock...............
1,547,780
1,498,008
1,553,578
1
,
628,622
1,474,673
1
,
692,172
Surplus............ ..... .
613,174
584,169
604,198
Undivided prof its. ........ .... .
260,661
276,228
268,555
Reserves..........................
Total surplus, profits, and
22518,024
2,327,397
2,557,031
rreserves. ...... .
4,065,804
3,825,405
4 ,110,609
Total capital aecouhts........
Total liabilities and capital
acconnt s♦••*•#»»• #*• *»•
70,^00,9^5 66,333,134 58,972,352
1 7 .06$
16.10 $
16 .78$
Ratio of loans to total deposits

561,751
-1 1 7
3 ,623,581

-2.42
5*35
-2.12
5C*35

$2 ,227,438
2 50855370
-1,504
6 ,237 ,27s

50,713
417,972

1*72
5.98

247,191

180,252
U,.023,273

29.02
6,51

170,128
1 1 ,063,892

26.84

-50,395

i,97>+
77.523

46.66

50,128

-89.04
. 12.51

4,023,006

6.46

11,143,389

20.21

-6,846
12,644
5,798

-5*75

-24,856
80,426

-$811,485

..88

97,991

55,570

7*30
23.25
-2 1.74
i36 .ll

3-38
3.4 5
20.20
20.76

- 18.13
5-91
3 -7 1 ....
ik.7 5
3.*»3
-2.94

-15,567

•37
3*90
-1.46
-5.64

39,007
44,805

1.55
1.10

229,634

285,264

9.S7
7,46

4,067,811

6.13

11,428,593

19.38

63,550
- 2,976

217,499

20,029
-7.894

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 trdinarj^ gain or loss.
Treasury Department Circular No. 418, as amended, and this notice,.pre
scribe 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.

ml

1
-

2

-

Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of the amount and orice range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final.
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

August

1944______

The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under Federal tax Acts now or hereafter enacted.

The

hills shall be subject to estate, inheritance, gift, or other excise taxes, whether
Federal or State, but shall be exempt from all taxation now or hereafter imposed
on the principal or interest thereof by any State, or any of the possessions of
the United States, or by any local taxing authority.

For purposes of taxation the

amount of discount at which Treasury bills are originally sold by the United States
shall be considered to be interest.

Under Sections 42 and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration, as capital assets.

Accordingly, the

owner of Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

M l

_____ |_|p | |
TOH*B h S 3 v M g 5 h 5 n S s PAPERs 7 ‘' \
Friday, August 25 f ,19ZuL ______♦ )

1 •
~~"™“

-"■'-' ,

The Secretary of the Treasury, by this public notice, invites tenders
f°r $ 1»2(X3,000,000 > or thereabouts, of
91 -day Treasury bills, to be issued
&2&
~m ~
on a discount basis under competitive and fixed^-price bidding as hereinafter pro*vided.

The bills of this series will be dated

August 31, 1944

I
mature

Hovember 30» 1944

interest.

, and will

Si

, when the face amount will be payable without

They will be issued in bearer form only, and in denominations of $1,000,

$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock p. m., Eastern War time,

Monday, August 28, 1944

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.
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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 securi
ties.

Tenders from others must be accompanied by payment of 2 percent of the face

amount of Treasury bills applied for, unless the tenders are accompanied by an
express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal

TREASURY DEPARTMENT
Washington

F O R RELEASE, M O R N I N G NEWSPAPERS,
F r i d a y , >A u g u s t 25, 1 944
8- 2 4 - 4 4

The S e c r e t a r y of the T.reasury, b y this p u blic notice,
invites tenders f o r $ 1 , 2 0 0 , 0 0 0 , 0 0 0 , or thereabouts, o f 91d a y T r e a s u r y bills, to be i s sued on a d i s c o u n t b a sis u n d e r
c o m p e t i t i v e a n d f i x e d - p r i c e b i d d i n g as h e r e i n a f t e r provided#
The b i l l s of this series will be d a t e d A u g u s t 31, 1944, and
w i l l m a t u r e N o v e m b e r 30, 1944, w h e n the face a m o u n t w i l l be
p a y a b l e w i t h o u t interest#
T h e y w i l l be i s s u e d in b e a r e r f o r m
only,, a n d in d e n o m i n a t i o n s of $1,000, $5,000, $10,000, $100,000,
$500,000, a n d $ 1 , 0 0 0 , 0 0 0 ( m a t u r i t y value)#
T e n d e r s w ill be r e c e i v e d at F e d e r a l Reserve B a n k a an d
B r a n c h e s up to the closing hour, two o fclock p. m # , E a s t e r n W a r
time, Monday, A u g u s t 28, 1944#
T e n d e r s will no t be r e c e i v e d
at the T r e a s u r y D e p a r t m e n t , W a s h i n g t o n #
E a c h t e n d e r mus t be
f o r an eve n m u l t i p l e of $1,000, a n d the p r i c e o f f e r e d m u s t be
e x p r e s s e d on the b a sis of 100, w i t h n o t m o r e than three decimals,
e»*g#', 99.925#
F r a c t i o n s m a y n o t be used#
It Is u r g e d that
tenders be mad e on the p r i n t e d forms a n d f o r w a r d e d in the special
envelopes w h i c h w i l l be s u p p l i e d b y F e d e r a l Reserve B a nks or
B r a n c h e s on application, therefor#
T e n d e r s w i l l be r e c e i v e d w i t h o u t de p o s i t f r o m i n c o r p o r a t e d
b a n k s a nd trust c o m panies a n d f r o m r e s p o n s i b l e and recognized'“
dealers In i n v e s t m e n t securities.
T e n d e r s f r o m otherk m u s t be
a c c o m p a n i e d b y p a y m e n t of 2 p e r c e n t of the face a m o u n t of
T r e a s u r y bills a p p l i e d for, u n l e s s the tenders are a c c o m p a n i e d
b y an e x p r e s s g u a r a n t y of pa y m e n t b y a n i n c o r p o r a t e d b a n k or
trust company#
I m m e d i a t e l y a f t e r the c l o s i n g hour, tenders w i l l be o p e n e d
at the F e d e r a l R e s e r v e Banks a n d Branches, f o l l o w i n g w h i c h
p u b l i c a n n o u n c e m e n t will be m a d e b y the S e c r e t a r y of the T r e a s u r y
of the a m o u n t a nd p r ice range of a c c e p t e d bids#
Those submitting
tenders w i l l be a d v i s e d of the a c c e p t a n c e o r r e j e c t i o n thereof#
T he S e c r e t a r y of the T r e a s u r y e x p r e s s l y reserves the right to
accept or reject a n y or all tenders, in w h o l e or in part, a nd
his a c t i o n in a n y s u c h respect shall be final#
S u b j e c t to these
r e s e r v a t i o n s , tenders for $ 1 0 0 , 0 0 0 o r less f r o m a n y one b i d d e r
at 9 9 . 9 0 5 en t e r e d on a f i x e d - p r i c e b a sis w i l l be a c c e p t e d in
full#
P a y m e n t of a c c e p t e d tenders at the prices o f f e r e d m u s t
be m ade or c o m p l e t e d at the F e d eral R e s e r v e B a n k in c a s h or
o t h e r i m m e d i a t e l y a v a i l a b l e funds on A u g u s t 31, 1944#
43-6

(Over)

2
The i n come 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 interestor g a i n f r o m the sale or o t h e r d i s p o s i t i o n o f the bills, shall
n ot have a n y exemption, as such, a n d loss f r o m the sale 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 lls shall n o t have a n y specialtreatment, as such, u n d e r Federal tax A c t s n o w or h e r e a f t e r
enacted«
The b i l l s shall be s u b j e c t to .estáte,, inheritance,
gift, or o t her excise taxes, w h e t h e r F e d eral or State, but
shall be e x empt f r o m all 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 on
the pr i n c i p a l or interest t h e r 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 the Ü n i t e d States, or b y a n y local t a xing a u t h o r 
ity«
F o r p u r p o s e s of t a x a t i o n the a m o u n t o f d i s c o u n t at w h i c h
r T r e a s u r y b i l l s are o r i g i n a l l y sold b y the U n i t e d Stat e s shall
be c o n s i d e r e d to be interest«
U n d e r S e c t i o n s 42 a n d 117 (a)
(1)
o f the Internal 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 115 of
the Revenue A c t o f 1941, the amourit of d i s c o u n t at w h i c h b i l l s
i s sued h e r e u n d e r are s old shall n o t be 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 bills shall be 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 nd such bills are 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 capital
assets«
A c c o r d i n g l y , the o w n e r of T r e a s u r y b i lls (other than
life in s u r a n c e companies) issued h e r e u n d e r n e e d include in. his
, income tax r e t u r n o n l y the d i f f e r e n c e b e t w e e n the p r i c e pai d
for s u c h bills, w h e t h e r on ori g i n a l issue or o n ,sub s e q u e n t
purchase, a n d 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 sale
or r e d e m p t i o n at m a t u r i t y during the taxable y e a r for w h i c h
the r e turn 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« 418, as amended', and this
notice, p r e s c r i b e the terms of the T r e a s u r y b i l l s a n d ’g o v e r n
the c o n d i t i o n s o f their issue«
C o pies of the c i r c u l a r m a y be
o b t a i n e d f r o m a ny F e d eral Reserve B a n k o r Branch*

oOo-

TREASUHT DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday, Augmt 25,
______

Pres* Service
// 3 “ 7

Secretary of the Treasury Morgenthau announced today that the subscript
tlon books for the current offering of 7/8 percent Treasury Certificate» of
Indebtedness of Series F-1945 end of 1 percent Treasury Notes of Series A-1946
will close at the close of business tomorrow, August 26. The certificates
are open for the exchange of Treasury Certificates of Indebtedness of Series
£»1944,

maturing September 1, 1944# end the notes are open for the exchange

of Treasury Botes of Series 0-1944 and Treasury Botes of Series D-1944#
maturing September 15# 1944*
Subscriptions addressed to a Federal Reserve Bank or Branch, or to the
Treasury Department, and placed in the mall before 12 o*clock midnight,
Saturday, August 26, will be considered as haying been entered before the
dose of the subscription books.
Announcement of the amount of subscriptions and their division among the
several Federal Reserve Districts will be made later.

TREASURY DEPARTMENT
Washington
F O R RELEASE, M O R N I N G NEWSPAPERS,
Friday, A u g u s t 25, 1944.
8 - 2 4-44

Press Service
N o . - 43-7

S e c r e t a r y of t h e T r e a s u r y M o r g e n t h a u a n n o u n c e d t o d a y
that the s u b s c r i p t i o n books f or the
7/8 p e r c e n t T r e a s u r y C e r t i f i c a t e s

current

o f f e r i n g of

of I n d e b t e d n e s s

Seri e s F - 1 9 4 5 a n d of 1 p e r c e n t T r e a s u r y N o tes

of

of Series

A - 1 9 4 6 w i l l close at t h e close of b u s iness tomorrow,
August

26,

T h e c e r t i f i c a t e s a re open f or t he

of T r e a s u r y C e r t i f i c a t e s
m a t u r i n g S e p t e m b e r 1,

of Inde b t e d n e s s

1944,

exchange of T r e a s u r y N o tes
Notes

of Series D-1944,

ex c h a n g e

of Series E-1944,

a n d t h e notes are open f o r the
of Series C - 1 9 4 4 a n d T r e a s u r y

m a t u r i n g S e p t e m b e r 15,

1944.

S u b s c r i p t i o n s a d d r e s s e d to a F e d e r a l R e s e r v e B a n k or
Branch,

or to t h e T r e a s u r y D epartment,

m a i l b e f o r e 12 o ’c l ock midnight,
be c o n s i d e r e d as h a v i n g b e e n

a n d p l a c e d in t h e

Saturday,

August

26,

will

e n t ered b e f o r e t h e close of

t h e s u b s c r i p t i o n books.
Announcement

of t he a m o u n t

of s u b s c r i p t i o n s a n d t h e i r

d i v i s i o n a m o n g the s e v e r a l F e d e r a l R e s e r v e D i s t r i c t s w i l l
be m a d e later.

- 0O 0-

n^'
i m m m m
mm mum&, m m i m m m m m *

Fra«« Sereioe

August 881 1144. -------- s

m * 43-8

pbo i m i u r / and 'nar tmpartmeats today announced that remit
tances forXiving expenses may now be effected be pwmma in the il%
and Province of tate* At the came time it m i aoueunoed that faellitio» for living expense reaibtaaoes Haro alee boom provided for tho
meatily liberated Italian Provinces of Litteria* Prosinene and
Chmpebasso* Italttanees of this typo ham» previously boon authorised
for 3ieily* Sardinia* and the Province* of Coa©n»a* Beggio Calabria*
Petenfta* Foggia* Bari* Brindisi* Catansaro* Mstera, Awlliae* faraate* ■
Lww, Staples* Salerno and Bencvesto* It la expected that ia tho near
future «idler facilities will ho wade available for othor portion« of
liberated Italy*
s© imxlcaea «mount« which nay ho remitted and the procedures
m4 m m prescribed In Oonoral Ueense ie* 32A a« «mended
today by tho treasury* .treasury official* called attention to tho faet
that tho amount which nsy be remitted under tho Oeneral Li©«use to any
one pay«« or Hi« household haa been $ m m m ® 4 to i£OQ*0O par jsenth*
Existing procedures haw not boon «hanged by today*« mindmnt and the
restrictions against withdrawal« from blocked accounts aro «till effectiw* Bandttanoo« ’to tho now aroa« addod by today'« «mendnent will bo
channeled through correspondent bank« of tho Hank of iaples* .Persons
desiring to effect remittance» to any aroa In tho liberated portiaaa of
Italy should oonault their looal banka*
§

(treasury official« again «trussed tho fa©i that the regula
tions do not author!*© tho «ending of chocks* drafts* securities or
currency to Italy* Cable facilities are not available and ©ccomnioa*
ticnc relating to financial* ooeswroial or business matters other than
those tm connection with living expense remittances .continue to be
prohibited*

»0O0-

J ¿Jones iBSoott fXQAlkt 8-26-44

TREASURY DEPARTMENT
WASHINGTON

F O R RELEASE, M O R N I N G N EWSPAPERS,
Tuesday, A u g u s t 29, 1944,________

Press S e r v i c e
No. 43-8

The T r e a s u r y a nd W a r D e p a r t m e n t s t o d a y a n n o u n c e d that
r e m i t t a n c e s for l i v i n g expenses m a y n o w be e f f e c t e d to p e r s o n s
in the C i t y a n d P r o v i n c e of Rome.
At the same time it was
a n n o u n c e d that f a c i lities for living expense r e m i t t a n c e s have
a l s o Aieenj?rovided for the r e c e n t l y l i b e r a t e d I t a lian Pro v i n c e s
of Littoria, F r o s i n o n e a n d Campobasso.
R e m i t t a n c e s of this
type h a v e p r e v i o u s l y b e e n a u t h o r i z e d f o r Sicily, Sardinia, and.,
the P r o v i n c e s of Cosenza, Reggio Calabria, Potenza, Foggia,
Bari, Brindisi, Catanzaro, Matera, Avellino, Taranto, Lecce,
Naples, S a l erno a n d B e n e vento.
It is e x p e c t e d that in the n e a r
future s i m i l a r fac i l i t i e s w ill b e m a d e a v a i l a b l e f or o t h e r
p o r t i o n s of l i b e r a t e d Italy.
The m a x i m u m a m o u n t s w h i c h m a y be r e m i t t e d a n d the p r o c e d u r e s
to b e fo l l o w e d are p r e s c r i b e d in General L i c e n s e No. 32A as
a m e n d e d today b y the Treasury.
T r e a s u r y o f f i c i a l s call e d
a t t e n t i o n to the fact that the a m o u n t w h i c h m a y be r e m i t t e d u n d e r
the General L i c e n s e to a n y one p a y e e or his h o u s e h o l d has b e e n
i n c r e a s e d to $ 5 0 0 . 0 0 p e r month.
E x i s t i n g p r o c e d u r e s have not
b e e n c h a n g e d b y t o d a y ’s a m e n d m e n t and the r e s t r i c t i o n s a g a inst
w i t h d r a w a l s f rom b l o c k e d ac c o u n t s ar e still effective.
Remit
tances to the n e w a r e a s a d d e d by t o d a y ’s a m e n d m e n t will be
c h a n n e l e d th r o u g h c o r r e s p o n d e n t banks of the B a n k o f Naples.
Persons desi ring to e f f e c t r e m i t t a n c e s to a n y area in the l i b e r 
a t e d p o r t i o n s o f Italy should c o n s u l t t h e i r local banks.
T r e a s u r y officials a g a i n stressed the fact that the r e g u l a 
tions do not a u t h o r i z e the sending of checks, drafts, securities
or c u r r e n c y to Italy.
Cable faci l i t i e s ar e not a v a i l a b l e a nd
c o m m u n i c a t i o n s r e l a t i n g to financial, commercial or b u s i n e s s
m a t t e r s o t her tban those in c o n n e c t i o n w i t h l i v i n g expense
r e m i t t a n c e s con t i n u e to "be p r o h i b i t e d .

oOo

Treasury officials said the new procedure
deterring effect on redemptions»
'W

hare a
% a considerable

v^jfmhk

number of bond holders have cashed their bonds well in advance of expected
A

financial needs which actually never materialized, or have cashed bonds
in larger amounts than, as later events proved, they actually needed»
With the new method providing for immediate payment of eligible bonds upon
their presentation to any qualified bank, it is believed many redemptions
such as those herefofere made in anticipation of delay in payment, and later
found unnecessary, will be avoided*
Another effect, Treasury officials said, may be to encourage the
purchase of Series £ bonds by persons who have money on hand and are
uncertain as to whether it will be needed for personal or family expenses»
Knowing that Series £ bonds can be turned into cash immediately if
emergency requires, they probably will resolve their doubts in favor of
bond-buying»

The new redemption regulations are "based on
which Congress enacted last year®

legislation
^he privilege

of cashing the Series A-to-B "bonds at commercial "banks is not extended
to such classes of holders as corporations, associations, partnerships,
fiduciaries, a person named on a "bond as a "beneficiary, and a person whose
name , as inscribed on a "bond as owner or co-owner, has been changed in
any

manner other than by marriage« Banks are not authorized to make partial

payments on bonds»

l

J
2

the bond holder received u
SettéHg-up of the simplified redemption procedure, eliminating delay
and saving trouble, w

ov>

War Bond* puscha iops

now estimated to total about 60 percent of the

country^ population.

of the huge increase in the number of

nml ef the resulting
■headings

“fEe earlier system of handling redemption applications through the
Federal Reserve Banks will be continued for all Savings Bond issues where
the bond owner prefers to use these facilities, and as the only author!
V
method of redeaqption of Series F and G bonds and, in a few cases, of the
Series A-to-E issues.
All incorporated banks and trust companies are permitted, under the
new rules announced today, to qualify as bond paying agencies, and it is
believed a large majority of them will do so« The Treasury will compensate
them on a quarterly basis, at the rate of 15 cents for each of the first
thousand bonds paid, 12 cents each for the second thousand, and 10 cents each
for all in excess of 2,000,
Proper identification, satisfactory to the bank, is all that any
qualified bank will require of a person desiring te redeem an eligible bond«
The new system will not affect in any way, however, the stipulation
that Savings Bonds are non-transferable« Nor does it affect the requirement
that Series S bonds be held for 60 days from the issue date before they
become redeemable*

0

TREASURY DEPARTMENT
Washington

Press Service
No«

FOR RELEASE, MORNING NEWSPAPERS
Tuesday. September 5« 1944

The Treasury Department has completed plane te r jfflretl'lnitiag^a
ig Seri
Series
'-erf red
redeeming
6 E War Bonds,
simplified? and men e eoav eni
eaA enfr.m aths d -

Secretary Morgenth.au announced today,

Beginning October 2, the Secretary said« WiaiVi'aUK^p^SewF'Wliu awe
owners or co-owners

fi11'' T 1

a

tm

nsm

i™*

+*

turn

¿113$ irf them into cash ean de-se hy presenting them to any commercial
bank which has qualified for this service, ,-Eapaaat^y-*h«e-ba®is»ai^4h«
redemption value of the bonds ¿wii"ih be imdSfediate^ add without charge to
the bond holder.
The arrangement applies also to the Series A, B, C and D Savings Bonds
which were sold from 1935 to 1941, It does not apply to Series F and G
Savings Bonds, It is of potential benefit, Secretary Morgenthau pointed out,
to a great majority of the estimated 80,000,000 persons to whom some
600,000,000 bonds of Series E have been sold in the last three years.
vnry*-*. |4s-t
cq ru-oi-Ovw-h^H-A (a a 4* *-v-f
'•However,M said the Secretary, »we heps theea bends will" net be

C'Vwty« .

u ^ iw p t

*^tfa
a »«»Tly "If tfre m atey » basamas this..
gfrhs ewmra.
are
fyN
frira n> ***
lg^ftnr TTIJIli Him| »mi Bugs sums, still be be required. Tm
bwfsra
‘ ' ^ Urbs— «
A
mgrarp- Every bend owner should remember, too, that his bonds become

presen

^JU ~

Increasingly valuable as investments the longer they are held«14

N

Heretofore,
fVl/^
'fírr'^ h*8 been
rriwnptinn
mntrn
/*>
v thf eslmniiti
í
/NA^C
^to h a v e " r e q u e s ^ f e r payment certified before an authorized officer,
and

forward them to a Federal Reserve Bank or present them direct to

A
Otu

y

the Treasury. K » * e necessarily
a certain amount oí delay

befor,

- 3 -

of

S as corporations, associations, partnerships, fiduciaries,

a person named on a bond as a beneficiary, and a person whose name,
as inscribed on a bond as owner or co-owner,v has been changed in
any manner other than by marriage.

Banks are not authorized to make

partial payments on bonds. .
Treasury officials said the new procedure might have a
.eterring effect on redemptions, since a considerable number of
bond betters in the past have cashed their bonds well in advance
of expected financial needs which actually never materialized, or have
cashed bonds in la rger amounts than, as later events proved, they
actually needed.

With the new method providing for immediate payment

of eligible bonds upon their presentation to any qualified bank, it is
believed many redemptions such as those heretofore made in anti
cipation of delay in payment, and later found unnecessary, will be
avoided.
Another effect, Treasury officials said, may be to encourage
Le purchase of Series E Bonds by persons who have money on hand
and are uncertain as to whether it will be needed for personal or
family expenses.

Knowing that Series E Bonds can be turned into

cash immediately if emergency requires, they probably will resolve

\their

doubts in favor of bond-buying.

\
- 0O 0-

still r e q u i r e d ^ o ^ for fe&o w-ar.

Every bond owner should remember

M

*

too, that his bonds become increasingly valuable as investments
am

i

9

the longer they are held.1*
Heretofore, it has been necessary to have requests for redempt

H

ions certified before an authorized officer, and after certification
forward them to a Federal Reserve Bank or. present them direct to
1

Si

the Treasury.

This necessarily caused a certain amount of delay befoi

the bond holder received payment.
All incorporated banks and trust companies are permitted, under
the new rules announced today, to qualify as bond paying agencies,
and it is believed a large majority of them will do so.

The Treasury

will compensate them on a quarterly basis, at the rate of 15 cents for
each of the first thousand bonds paid, 12 cents each for the second
thousand, and 10 cents each for all in excess of 2,000.
Proper identification, satisfactory to the bank, is all that
any qualified bank will require of a person desiring to redeem
an eligible bond.

The new system will not affect in any way, however

the stipulation that Savings Bonds are non-transferable.

Nor does

it affect the requirement that Series E Bonds be held for 60 days
from the issue date before they become redeemable.
The new redemption regulations are based on legislation which
Congress enacted last year.

The privilege of cashing the Series

A-to-E Bonds at commercial banks^ is not extended to such classes
p®

I

TREASURY DEPARTMENT
Washington
FOR RELEASE, MOMING" NEWSPAPERS
TnestrayT'Sefittliiliei1
' Uy 1944

Press Service
No.

The Treasury Department has completed plans for simplifying
redemption of Series E War Bonds, Secretary Morgenthau announced
^±^day.
^
'^‘¡j&fc******•*1«#$
„^fuaiSs**
M
|| 11

..s/^!r' N^' was deemed advisable to set up the simpliffed redemption^''
\wDcedure, eliminating delay and saving troubllk beStfse of the

\

«MSBBWîSiâWf
huge increase in the number of War Bond holders —

now estimated to

total about 60 percent of the country1s population;^
#

i♦ s/ ?

Beginning October 2, the Secretary said, owners or co-owners

A
of Bonds can turn them into cash by presenting them to any commercial
bank which has qualified for this service.

The bank will pay the

redemption value of the bonds immediately following satisfactory
identification, and without charge to the bond KSSSfeer.
arrangement applies also to the Series A,B, C and D Savings
Bonds which were sold from 1935 to 1941.
Series i?‘ and G Savings Bonds.

It does not apply to

It is of potential benefit,

Secretary Morgenthau pointed out, to

^

the esti

mated 80,000,000 persons to whom some 600,000,000 bonds of Series E
have been sold in the last three years.
"however," said the Secretary, ■"We hope the simplification of
redemption will not encourage bond MAws-s to present bonds for
0^

I payment except in cases of absolute necessity.

Huge sums are

TREASURY DEPARTMENT
BUREAU OF THE PUBLIC DEBT

(KPf Ik VK/v
¥

MR. KILBY

Pf

TREASURY DEPARTMENT
Washington

.FOR IMMEDIATE RELEASE
August 29, 1944

" *

PreSs Service
No. 43-9

The Treasury Department has completed plans for simplifying
redemption of Series* E War Bonds,, Secretary Morgenthau announced today,
”H o w e v e r s a i d the Secretary, 1,We hope the simplification of
redemption will not . encourage bond owners to present bonds for payment
except in cases of absolute necessity. Huge sums are still to be required
before we can return to a normal period. Every bond owner should remember,
too, that his bonds become increasingly valuable as investments the longer
they are held,*But because
now estimated to
deemed advisable
delay and saving

of the huge increase in the number of War Bond holders —
total about 60 percent of the country’s population, it was
to set up the simplified redemption procedure, eliminating
trouble.

Beginning October 2,. the Secretary said, individual owners or co-owners
of ^Bonds can turn them into cash by presenting them to any commercial bank
which has qualified for this service. The bank will pay the redemption
value of the bonds immediately following satisfactory identification, and
without charge to the bond owner.
The arrangement applies also to the Series A, B, C and D Savings
Bonds which were sold from 1935 to 1941, It does not apply to Series F and
G Savings Bonds,
It is oi potential benefit, Secretary Morgenthau pointed
out, to the estimated 80,000,000 persons to whom some 600,000,000 bonds of
Series E have been sold in the last three years.
Heretofore, it has been necessary to have requests for redemptions
certified before an authorized officer, and after certification forward
them to a Federal Reserve Bank or present them direct to the Treasury*
This necessarily caused a certain amount of delay before the bond holder
received payment.
All incorporated banks and trust companies are permitted, under the
new rules announced today, to qualify as bond paying agencies, and it is
believed a large majority of them will do so. The Treasury will compensate
them on a quarterly basis, at the rate of 15 cents for each of the first
thousand bonds paid, 12 cents each for the second thousand, and 10 cents
each for all in excess of 2,QOO,
Proper identification, satisfactory to the bank, is all that any
qualified bank will require of a person desiring to redeem an eligible
bond. The new sys tern will not affect in any way, however, the stipulation
that Savings Bonds are non-transferable, Nor does it affect the require
ment that Series E Bonds be held for 60 days from the issue date before
they become redeemable.

-

2

-

The new redemption regulations are based on legislation which
Congress enacted last year.
The privilege of cashing the Series A-to-E
Bonds at commercial banks is available to individuals in their own right
and is not extended to such classes of owners as corporations, associations,
partnerships, fiduciaries, a person named.on a bond as a beneficiary, and
a person whose name, as inscribed on a bond as owner or co—owner, has been
changed in any manner other than by marriage.
Banks are not authorized to
make partial payments on bonds.

*

The earlier system of handling redemption applications through the
Federal Reserve Banks will be continued for all Savings Bond issues where
the bond owner prefers to use these facilities, and as the only authorized
method of redemption of Series F and G bonds and, in a few cases, of the
Series A-to-E issues.
Treasury officials said the new procedure might have a deterring effect
on redemptions, since a considerable number of bond owners in the past have
cashed their bonds well in advance of expected financial needs which
actually never materialized, or have cashed bonds in larger amounts than,
as later events proved, they actually needed. With the new method provid
ing for immediate payment of eligible bonds upon their presentation to any
qualified bank, it is believed, many .redemptions such as those heretofore
made in anticipation of delay in payment, and later found unnecessary, will
be avoided.
.
Another effect, Treasury officials said, may be to encourage the
purchase of Series E Bonds by persons who have money on hand and are
uncertain as to whether it will be needed for personal or family expenses.
Knowing that Series E Bonds can be turned into cash immediately if emergency
requires, they probably will resolve their doubts in favor of bond—buying.

0O0

REGULATIONS GOVERNING PAYMENTS BY INCORPORATED
BANKS AND TRUST COMPANIES IN CONNECTION WITH
THE REDEMPTION OF .UNITED STATES SAVINGS BONDS

1944
Department Circular No. 75©

TREASURY DEPARTMENT,
Office of the Secretary,
Washington, September 5, 1944.

Fiscal Service
Bureau .of the Public Debt

Pursuant to the authority of the Second Liberty Bond Act, as amended, the
following regulations are hereby prescribed to govern payments by incorporated banks
and trust companies in connection with the redemption of United States Savings Bonds
on and after October 2, 1944 •
Subpart A - AUTHORITY TO ACT

Sec. 321.1. Banks and trust .companies authorized to act. - All banks and trust
companies, incorporated under general or special laws of the United States, the
District ©f Columbia, any State, territory or insular possession of the United
States, or the Canal Zone, are eligible and are hereby authorized, on and after
October 2, 1944, to make payments in connection with the. redemption of United States
¡Savings Bonds, subject to the provisions of this circular and any instructions
issued hereunder: Provided, however, That each bank or trust company must be duly
qualified by the Federal Reserve Bank of the districti/befere it may make any such
payment. ''Federal Reserve Banks, as fiscal agents of the United States, are author
ized to qualify eligible banks and trust companies hereunder, and to terminate any
such qualification as hereinafter provided.
Sec. 321.2. Application and qualification. - Any eligible bank or trust com
pany which desires to qualify to make payments in connection -with the redemption
of United States Savings Bonds should make application to the Federal Reserve Bank
of the-Federal Reserve District in which it is located on Application-Agreement
Form. PD 195B (see appended exhibit A), copies of which may be obtained from the
appropriate Federal Reserve Bank. If the application is approved, the Federal Re
serve Bank will forward to the bank or trust company a Notice of Qualification
Form PD 1959 (see appended exhibit B), establishing that it is qualified to make
payments in connection with the redemption of the United States Savings Bends here
inafter specified. If the application is not approved, the bank or trust company
will be so advised in writing by the Federal Reserve Bank of the District.
Sec. 321.3
Termination of a bank*s qualification to pay bonds. - The Secretary
of the Treasury or under authority of the Secretary the appropriate Federal Reserve
Bank, as fiscal agent of the United States, may, by written notice, at any time and
without previous demand or notice, terminate the qualification of any bank or trust

I/*' 'For the purpose of this circular, banks and trust companies in Puerto Rico, the
Virgin Islands and the Canal Zone shall be considered as being within the Second
Federal'Reserve District and shall make application to the Federal Reserve Bank of
New York, and banks and trust companies in Alaska and Hawaii shall be considered as.
being within the Twelfth Federal Reservé District and shall make application to the
Federal Reserve Bank of San Francisc©.

-

2

-

company to pay United States Savings Bonds. A duly qualified bank or trust company
may discontinue making payments at any time upon written notice to the Federal Re
serve Bank, and its qualification’shall thereupon cease.
Subpart B - GENERAL
Sec; 321.4. Meaning of terms in this circular. - Hereinafter, for the purposes!
of this circular,•unless otherwise indicated'specifically, or by context, the terms: I
(a) "Bank(s)" shall mean any eligible incorporated bank or trust company duly
qualified pursuant to the provisions af this circular to make payments in connection I
with the redemption of the United States Savings Bonds hereinafter specified, in
cluding such branches and facilities thereof located within the United States (in
cluding the territories and insular possessions of the United States and the Canal
Zone) as it may desire to utilize for this purpose. The term "facilities,” as used
herein, is defined as those bank facilities at army and navy installations and at
defense plants which have been established for the duration of the war. with the
specific approval of the Treasury Department.
(b) "Bond(s)" shall include only United States Savings Bonds of Series A, B, C,

D or E , including bonds of Series E designated "Defense Savings Bonds" or "War Sav
ings Bonds." (SAVINGS BOTJDS CL SERIES P AND G ARE NOT INCLUDED.)
~
T
(c) "Owner(s)" shall mean an individual (natural person) whose name is in
scribed as an owner (or coowner) in his own right on a bond which is registered in
any of the following forms:

m

in the name of a single individual in his own right, e.-g,
"John A. Jones;"

(2) in the names of two individuals as coowners, e.g. "John A.'
Jones or Mrs. Ella S. Jones" (each is considered as an "owner,"
and payment may be made to either without the consent of the
other); or
(3) in the name of one individual, payable on death to another,
e.g-. "John A. Jones, payable on death to Mrs. Ella S. Jones,"
or "John A. Jones, p.o.d, Mrs. Ella S. Jones." (in this
example, John A, Jones is the "owner" and Mrs. Ella S. Jones
is the beneficiary. Payment under this circular to a bene
ficiary is not authorized.)
(d) "Federal Reserve Bank" includes each-Federal Reserve Bank and each Branch
of a Federal Reserve Bank which has been or may hereafter be utilized by such
Federal Reserve Bank to conduct any of the transactions in connection with which
the term is used in this circular.
Sec. 321,5. Reimbursement of banks’ costs. - A bank shall not make any charge
against the owners of bonds for payments made hereunder. However, each bank shall
be entitled to receive, for its service in paying bonds hereunder, reimbursement f»r
bonds Paid and forwarded to the Federal Reserve Bank each calendar quarter according
to the following scale, which shall be applicable separately to each bank and each
of its branches and facilities, if utilized, and if the bonds paid by each are
separately scheduled and.accounted for:
15 cents each for the first’1,000 bonds.
12 cents each for the second 1,000 bonds
10 cents each for all over 2,000 bonds

- :
3 —
The daté such bonds are 'forwarded to the-Federal Reserve Bank will govern the rate
of reimbursement, and the payment of such- amount as the bank is entitled to receive
shall be made.by the Federal Reserve Bank on behalf of the Treasury Department«
Sec. 321; 6., Announcements etc, of authority to.pay bonds. - Any announcement
of or any reference to a bank’s authority to pav savings bonds may be made only in
a form or manner or contain such statements or substance as may be approved by the
Secretary of the Treasury or, under authority of the, Secretary, by the Federal Re
serve Bank of the District, as fiscal agent of the United States/ A bank shall not
make such announcements or references unless and until it is officially qualified
to pay bonds.
Subpart C - SCOPE OF AUTHORITY OF'BANKS
Sec. 321.7. General. - In order to protect the interests of the owners and to
insure receipt by the proper persons of the proceeds thereof, savings bonds are
registered, are not transferable, and are payable only to the owner named on the
bond (except as otherwise specifically provided in the regulations governing the
bonds), This policy must be understood and effectuated by each bank*, notwithstand
ing the authority granted herein to make payments of bonds, since it is of the ut
most importance that payment of the- appropriate redemption value of the bonds be
made to and received by only the persons entitled under the terms and conditions of
the bonds and applicable regulations.
Sec. 321.8. Payments authorized.
Subject to the terms of the bonds and to
the provisions of the regulations ;governing them (Treasury Department Circular
No. 530, as currently in effect oh the date of payment) and the provisions of this
circular, a bank may make payment of any United States Savings Bond of Series A, B ,
C^D^or^E, to the individual (natural person) whose name is inscribed as 1the owner
(or coowner) in his own right on the bond: Provided, That such individual presents
the bond to the bank for payment and that the individual is'known to the bank or
establishes his identity to the complete satisfaction of the bank. This authority
to make payments to the owner named on the bond will be held to include the follow
ing exceptional cases:
(a) /here the name of the owner as inscribed on the bond has been changed
by marriage and the bank knows or can establish to its;complete satis
faction the identity of the Owner whose name has been so changed. The
signature to the request for payment should show both names, far
example - ’’Miss Mary T. Jones, now. by marriage Mrs. Mary J. Smith.”
A BANK IS NOT AUTHORIZED TO PAY A BOND FOR AN OY/NER "THOSE .NAME AS
INSCRIBED ON THE BOND HAS BEEN CHANGED IN ANY OTHER MANNER.'
(b) Where the name of the owner inscribed on-the bond is that of a minor
child who is not of sufficient competency and understanding to execute
the reouest for payment and comprehend the nature of such act but upon
whose behalf request for payment is made by a parent with whom the •
child resides: Provided, however, That the form of registration does
not indicate a guardian or similar représentative of the estate of the
minor owner has been appointed or is otherwise legally qualified. The*
parent requesting payment on behalf of the minor child must be known
©r his or her identity established to.the complete satisfaction of the
bank, and the parent must sign the request for payment in the form -

- 4 "John A. Jones, on behalf of John C. Jones" 'and affix an endorsement in
substantially the following form, which may be typed on the back of the
bond: "I certify that I am the
•
(father or mother) of
John C. Jones and the person with whom he resides. He i s ; _ years of
age and is not of sufficient competency and understanding -to sign the
request." Such a payment may:not be made to any person other than a
father or mother. .
.
.
Sec, 321.9. Specific limitations of payment authority. - A bank is not
authorized hereunder to pay a bond?
(a) 'If the bond is presented for payment prior to the expiration of 60 days
from the issue date (the issue date should not be confused with the date
appearing in the issuing agent*s dating stamp),
(b) If the bank does not know or can not establish to its complete satis
faction the identity, of the person requesting payment as the owner of
the bond (including the establishment of the identity of parents re
questing payment on behalf of minor children, as set forth in Sec.
321.8 (b)).
'
•
:
(c) If the owner requesting payment (form for which appears on the back of
each bond) does not sign his name in ink as it is inscribed on the face
of the bond and show his home or business address. (See also Secs.
321.8(a) and (b) and 321.10(d)).
(d) If. the bond appears to bear a material irregularity, for example, an
altered, illegible, incomplete or unauthorized inscription, issue date
or issuing.agent's validating stamp impression; or if a bond appears
to be altered, or Is mutilated or defaced in such a manner as to create
doubt or arouse suspicion with respect to the bond or any essential
part'thereof,
' & •'
(e) If the bond is marked "DUPLICATE,"

.

:

I

(f) If Treasury Department regulations require the submission of docu
mentary evidence .to support the redemption of the bond, as in the case
of deceased owners, incompetents or minors under legal guardianship
or the change of an owner's name as inscribed on a.bond if for any
reason other than marriage.
• (g) If the owner named on the bond and renuesting payment Is a minor
who, in the opinion of the bank, is not of sufficient competency
and understanding to execute the request for payment and comprehend
the nature of such act. (Note the authority granted to banks to
make payments of bonds to either parent on behalf of a minor child
under the provisions of Sec.. 321.8(b)).
(h) If it is known to the bank that the owner has been declared, in
accordance with law, incompetent to manage his estate.
•(i) If partial redemption is requested.
Attention is directed to Sec. 321.17 hereof for handling bonds of tW& foregoing
classes of cases which may not be paid by banks,

yy
::

-5 -

■

Subpart D - PAYMENT AND ACCOUNTING

Sec. 321.10. Examination of, bonds presented for payment* - Before making pay
ment of bonds presented hereunder the bank:
(a) Shall-determine that 'the person--requesting- payment as the "owner" (as
defined in this circular) is known or his identity is established to
the satisfaction of the bank.
(b) Shall examine the bond and determine that it is a bond which the bank
is authorized to pay under the provisions of this .circular,'
(c) If the reouest for payment on the back of the bond is already executed,
shall determine that the request is.properly signed by the registered
owner presenting the bond' and that his home or business address is shown.
(d) If the request for payment on,the back of'the bond has not been executed
or has been improperly executed by the owner presenting the bond, shall
require such owner to properly sign the request and show his home or
business address.
Sec. 321.11. Certification of requests for, payment. - In view of the provi
sions of this circulap.governing payment of bonds and the requirements as to the
data to be endorsed on each .bond, under Sec. 321.12, a bank will'not be required ,, %
in the case of any bond oaid by it to complete the certification form at the"'énd
of the request for oayment, nor determine the authenticity of any certification
which may arpear on the bond at the time it is. Presented for payment: . Provided,
however, That each bank submitting paid bonds shall be understood by such submis
sion to have ‘
represented and certified that the identity of the owner requesting
payment has been duly established to the satisfaction' pf the bank by.one of its
officers or by an employee duly authorized by the. bank.
Sec. 321.12. Determination of redemption values and payment"of bonds. - The
redemption value of a bond is determined from the period of timé' (years and full
half-year)'that it has been outstanding, and the table, of redemption values on
each bond. The Federal Feserve Bank of the district will furnish each bank with
a table of redemption values from.which it will be possible, after determining the.
month and year of issue of any bond, to immediately establish its current value.
After establishing such value, payment thereof to the owner requesting payment shall
be made in cash. No objection will be made to an arrangement between the owner and
the bank under which the owner accepts in lieu of cash, a credit to hid checking
savings account with the bank, or a check or similar instrument payable to his ,,
order. Each bank shall place on'the face of each bond paid by it the word "PAID-",.
the amount and date of payment and the name, location and transit (or code) number ■
of the bank. Other data pertinent to the payment Procedure of a bank may be in- •
eluded-if approved by:the Federal Reserve Bank of the District.' The Federal Ré- ‘3
serve Bank will furnish rubber stamps for this purpose or, in lieu thereof, willapprove suitable-stamps prepared by a.bank. The affixation of such data shall be
construed by and between the b^nk and the Treasury Department to be- a certification
by the paying bank that the bond has been paid'-ip accordance with the terms and
requirements of this circular and that payment: of the proceeds.of the bond has
. .
been made to the owner.
•

- 6. Sec. 321.13* Forwarding paid bonds to the Federal Reserve Bank. - After pay
ment* the bonds shall be forwarded to the Federal Reserve Bank of the district in
accordance with instructions issued by such Federal Reserve Bank.
Sec. 321.14. Redemption of paid bonds by Federal Reserve Banks. - Uoon re
ceipt of the paid bonds the Federal Reserve Bank will make immediate settlement
with the forwarding bank for the total amount of payments made on such bonds; how
ever, such settlement shall be subject to adjustment if any discrepancies are dis
covered at a later date.
Sec. 321.15. Losses resulting from payments. - Section 22 of the Second
Liberty Bond Act, as amended, provides:
”(i) Any losses resulting from payments made in connection with the re
demption of savings bonds shall be replaced out of the fund estab
lished by the Government Losses in Shipment Act, as amended, under
such régulations^/.as may be Prescribed, by the Secretary of the
Treasury. The Treasurer of the, United States, any Federal Reserve
Bank, or any incorporated bank or trust comoajiy authorized or per
mitted to make payments in connection with the redemption of such
bonds, shall be relieved from liability to the United States for
such losses, upon a determination by the Secretary of the Treasury
that such losses resulted from no fault or negligence on the part
of the Treasurer, the Federal Reserve Bank, or the incorporated
bank or trust company ** ** *. The provisions of Section 3 ^ of the
Government Losses in Shipment Act, as amended, with respect to
the finality of decisions by the Secretary of the Treasury shall
apply to the determinations made pursuant to this subsection.** *
(a) Consideration of facts concerning loss. - In any case in which a loss
occurs, the paying bank shall be afforded ample opportunity to present all of the
facts pertaining to the circumstances of the payment for consideration by the.
Secretary.
Sec. 321.16. Preservation of rights. - Nothing contained in these regulations
shall be construed to limit or restrict any existing rights which holders of sav
ings bonds may have acquired under the circulars offering such bonds for sale and
the regulations Prescribed thereunder.
Sec. 321.17. Redemption of bonds not payable by banks. - Any bonds which a
bank is not authorized to pay pursuant to the provisions of this circular should
be forwarded by the owner, or his agent, after certification of the requests for ,
payment, to the Federal Reserve Bank or Branch of the;, District for redemption.
2/ Regulations governing replacement of losses resulting from payments made in con
nection with the redemption of United States -Savings Bonds are. set forth in Treasury
Department Circular No. 751.
3f The provisions of Section 3 of the Government'Losses in Shipment Act, as amended,
with respect to the finality of decisions by the Secretary of the Treasury are nNotwithstanding any provision of law to the contrary, the decision of the Secretary
of the Treasury that such loss, destruction, or damage has occurred or that .such ship
ment was made substantially in accordance with such regulations shall be final and
conclusive and shall not be subject to review by anjr other officer of the United
States.Tl

- 7 If à bank should undertake to forward such unoaid bonds at the request and in behalf of the ■•person entitled to payment, such bonds must be sent separate and apart
from bonds which the bank has paid. Any documentary evidence required to support
the redemption should accompany the bond or. bonds when forwarded to the Federal
Reserve. Bank.
Sec. 321.18. Functions of Federal Reserve Banks. - The Federal Reserve Banks,
as fiscal agents of ...the' Uhi ted States, are authorized, to perform such duties, and
prepare and issue such forms and instructions, as may be necessary to the fulfill
ment of the. purpose and requirements of this circular. The Federal Reserve Banks,
in their discretion, may utilize any or all of their Branches in the performance
of these duties.-, .
Sac.- 321.19. Supplements, Amendments, etc. - The Secretary of the Treasury
may at any time dr from time to time.supplement, amend, or withdraw, in whole or
in cart, the provisions of this circular, or of any amendments or supplements
thereto, information as to which will be furnished promptly to the Federal Reserve
Banks'and to the.banks qualified hereunder.

HENRY MORGENTHAU, JR.,
Secretary of the Treasury.

>
v
*
Form PD 1958
. TREASURY DEPARTMENT
-...
Fiscal Service
Bureau of the Public Debt...

é i '•

EXHIBIT ffl
.:
APPLI CA TION-AGREEMENT

’

- --» 'k••,.

Payments by Incorporated Banks and Trust Companies
in connection with the redemotion of United States
Savings Bonds
Dated

, 194

TO THE FEDERAL RESERVE.BANK OF
As fiscal Agent of the United States
The undersigned, eligible under the provisions of Sec. 321.1 of United'States
Treasury Department Circular No. 750, hereby applies for Qualification to make pav.ments in connection with the redemption of United States Savings Bonds, as provided
m the said Circular No. 750, and, upon being so Qualified, hereby agrees:
1.

T. be bound by and to comply with the provisions of Treasury Depart
ment^ Circular No. 750, including all supplements and amendments thereof
and instructions as may be issued thereunder.

2.

That the Secretary of the'Treasury, or the Federal Reserve Bank of
— r-- -—
---------- > by
notice, may, at any time, and with
out previous demand or notice, terminate the Qualification of the
undersigned, if such authority is granted pursuant to this application;
• and that in the event of such termination the undersigned, after receiot of such notice or after the date of termination soecified therein,
will not thereafter nay any United States Savings Bonds. 1

It is understood, that the undersigned .may withdraw from this.Agreement at any
time upon written notice of such intention to the Federal Reserve Bank of
, ' IN WITNESS WHEREOF, the undersigned'has caused this Agreement to be executed
under seal^by the officer below named, thereunto duly authorized by a resolution of
its governing boahd or committee adopted on the ___ _ day of
194
(Name)
(Address)
By

1

(Signature of Officer)
"Oliti è of Officer)
State of
County of

)
)

A CKNPWLEDGMENT

On this ____ day
of,'
t I9.4___, before me appeared
________
,
to me personally known, who, being b^ me duly sworn, did say that he is the '
of the
_____
and that the seal affixed to
(Title of Officer)
(Name of In stituti on)
the above instrument is the corporate seal of said institution, and that the ab.ve
instrument was signed and sealed in behalf of said institution by authority of its
governing board or committee, and said officer acknowledged said instrument to be
the free act and deed of said institution.
Notary Public

1

- 9 EXHIBIT HBH
' Form PD 1959
TREASURY DEPARTMENT
Fiscal Service
Bureau of the Public Debt
NOTICE OF QUALIFICATION OF AN INCORPORATED
BANK OR TRUST COMPANY TO MAKE PAYMENTS IN
CONNECTION WITH THE REDEMPTION OF UNITED
STATES SAVINGS BONDS*

_
Ts: ______

, _____ I_________ *_______

•

Your Applicati©n-Agreement Form PD 195$, dated
approved as of this date,

___________194

■

_______ _ has been

You are hereby notified that you are qualified to

make payments in connection with the redemption of United States Savings Bonds
pursuant to the provisions of Treasury Department Circular No, 750, and any
supplements or amendments thereof and instructions issued pursuant thereto.

FEDERAL RESERVE BANK OF _ _ _ _ _
Fiscal Agent of the United States

REGULATIONS GOVERNING REPLACEMENT OUT OF THE FUND
ESTABLISHED BY THE GOVERN®!! LOSSES IN SHIPMENT
ACT, AS AMENDED, OF ANY LOSSES RESULTING FROM PAY-.
MENTS MADE' IN CONNECTION IfITH THE REDEMPTION OF
UNITED STATES SAVINGS BC>NDS
1944
Department Circular No. 751
____
Fiscal Service
Bureau of the Public Debt

TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
Washington, September 5, 1944.

I. REGULATIONS PRESCRIBED
1. Pursuant to the authority of the Second Liberty Bond Act, as amended
the following regulations are hereby prescribed for the replacement out of
the fund established by.the Government Losses in Shipment Act, as amended, of
any losses to the United States resulting from payments made in connection
with the redemption of United States Savings Bonds, and shall apply to losses
resulting from payments made (l) by the Treasurer of the United States,
(2) by the Federal Reserve Banks and Branches, as fiscal agents of the United
States, and (3) by incorporated banks and trust companies qualified pursuant
to Treasury Department Circular No, 750, to pay savings bonds.
II.

REPORTS OF LOSSES

1. A loss to the United States may result from an erroneous (or unau
thorized) payment in connection with the redemption of savings bonds.
2. If an incorporated bank or trust company, qualified to pay-savings
bonds, after returns have been made to the Federal Reserve Bank finds an
erroneous payment to have been made, immediate report should be made to the
Federal Reserve Bank, Any such erroneous payments so reported, and any
other erroneous payments found by a Federal Reserve Bank in returns from an
incorporated bank or trust company shall, so.far as possible, be adjusted be
tween the Federal Reserve Bank and the incorporated bank or trust company
concerned.
3. Any such erroneous payments which are not adjusted•and any other
erroneous payments otherwise found after the account of the Treasurer of the
United States has been charged shall immediately be reported to the Treasury
Department, Division of Loans and Currency, Merchandise Mart, Chicago 54,
Illinois.
III.

FINAL DETERMINATION OF LOSSES

1. Following receipt of the report of an erroneous payment the Treas
ury Department will appropriately advise the paying agent concerned, unless
such action is unnecessary. The Department shall determine whether or not
appropriate adjustment may be effected with.the persons concerned in the
erroneous payment and in this connection will expect the cooperation of the
paying agent, if necessary.
(a)
If it is determined that no loss to the United States will occur
the paying agent will be so advised.

-

2

-

(b)
If it is determined that à final loss to the.United States has oc
curred, the paying agent will be given every opportunity to present the full
facts relating to the payment for consideration of the Secretary of the
Treasury. If the Secretary shall determine that the final loss resulted
from no fault or negligence on the part of the paying agent, the paying
agent shall be relieved from liability ta the United States. If, however,
the Secretary of the Treasury finds fault or negligence on the part of the
paying agent, notice to that effect will be given such paying agent who will
make prompt restitution;
2. In no case will the Treasurer of the United States, a Federal Re
serve Bank or Branch, or the banking institution which made the erroneous
payment be called upon to make restitution unless and until it is determined
.that a final loss has been incurred as a result of an erroneous, payment due
to the fault or negligence of such paying agent.
IV.

REPLACEMENT OF LOSSES OUT OF THE FUND-

1, When it is established to the satisfaction of the Secretary of the
Treasury that a loss has resulted from a payment made in connection with
the redemption of a United States Savings Bond, the loss shall be subject
to immediate replacement out of the-fund established by the Government Losses
in Shipment Act, as amended. Any recovery or repayment on account of any
such loss as to which replacement shall have been made out of the fund, shall
be credited to the fund.
V,

INVESTIGATION OF LOSSES

1. The Treasury Department, and, in appropriate cases, Federal Reserve
Banks, as fiscal agents of the United States, may request the Secret Service
to investigate losses and assist in the recovery of improper payments. The
Treasurer of the United States, the Federal Reserve Banks, and qualified
banking institutions should cooperate with the Secret Service to the fullest
extent in'facilitating investigations and making recoveries.
VI.

SUPPLEMENTS, AMENDMENTS, ETC.

1. The Secretary of the Treasury may at any time or from time to time
supplement, amend, or withdraw, in whole or in part, the provisions of this
circular, or of any amendments or supplements thereto, information as to
which will be furnished' promptly to the Federal Reserve Banks and to banking
institutions qualified to make payments of savings bonds under the provisions
of Treasury Department Circular No. 750.

HENRY MORGENTHAU, Jr,,
■Secretary of the Treasury.

TREASURY DEPARTMENT
WASHINGTON
September 5, 1944
To the Incorporated Bank or Trust Company addressed:
Most banking institutions of this country have already rendered in
valuable assistance in making the Treasury’s savings bond program an
unparalleled success. Through your efforts, and those of many other issuing
agents, about 30 billions of dollars have been paid in to the Treasury,
representing the sale of nearly 600 million bonds of Series A, B, C, D and E
to more than 80 million people.
The owners of savings bonds, for the most part, are redeeming their
bonds only as sickness or other emergencies necessitate. Slightly under 90
percent of all savings bonds of these series issued since they were placed
on sale in 1935 are still outstanding. However, it is natural and under
standable that as the volume of outstanding savings bonds increases redemp
tions will also increase. In order that more prompt service might be
rendered in the payment of these bonds legislation was passed last year
authorizing the Secretary of the Treasury to utilize the services of incor
porated banks and trust companies in making such payments.
You will receive this letter from the Federal Reserve Bank of your Dis
trict, together with the official circular governing payments by incorporated
banks and trust companies, an explanatory memorandum prepared by the Treasury,
and other documents incident to the procedure. I hope you will examine these
carefully and will conclude to qualify as a paying agent, thus rendering a
further service to bond owners in your community as well as to your country.
I know that I need not stress the importance of seeing that in every case
the owner, and no one else, receives the correct value of his bond, and that
all improper practices, such as use of the bonds for collateral and discount
ing bonds not eligible for payment, are discouraged.
We hope these bonds will not be presented unless the owners really need
the money, because huge sums are still to be required before we return to a
normal period. Those who do, however, are entitled to courteous and efficient
service, and this I am sure you are equipped and willing to render.

If you have any questions about the payment procedure, or the scope of
authority or responsibility of paying agents, after reading this material,
the Federal Reserve Bank of your District will be glad to assist you.
Sincerely yours,
EFRNSE

BUY
U N IT E D
STATES
S A V IN G S
BONDS
ANDSUMPS

REGULATIONS GOVERNING PAYMENTS BY INCORPORATED
BANKS AND.TRUST COMPANIES IN CONNECTION WITH
THE REDEMPTION OF UNITED STATES SAVINGS BONDS

1944
Department Circular No. 75®

TREASURY DEPARTMENT,
Office of the Secretary,
Washington, September 5, 1944.

Fiscal Service
Bureau of the Public Debt

Pursuant to the authority of the Second Liberty Bond Act, as amended, the
following regulations are hereby prescribed to govern payments by incorporated banks
and trust companies in connection with the redemption of United States Savings Bonds
on and after October 2,. 1944?
Subpart A - AUTHORITY TO ACT
,
Sec. 321.1* Banks and trust companies authorized to act. - All banks and trust
companies, incorporated under general or special laws of the United States, the
District of Columbia, any State, territory or insular possession of the United
States,, or the Canal Zone, are eligible and are hereby authorized, on and after
October 2, 1944, to make payments in connection with the redemption of'United States
Savings Bonds, subject to the provisions of this circular and any instructions
issued hereunder: Provided, however, That each bank or trust company must be duly
qualified by the Federal Reserve Bank of the districti^befere it may make any such
payment. Federal Reserve Banks, as fiscal agents of the United States, are author
ized to qualify eligible banks and trust companies hereunder, and to terminate any
such qxialification as hereinafter provided.
Sec. 321.2. Application and qualification. - Any eligible bank or trust com
pany which desires to qualify to make payments in connection y/ith the redemption
of United States Savings Bonds should make application to the Federal Reserve Bank
of the Federal Reserve District in which it is located on Application-Agreement
Form PD 1958 (see appended exhibit’A), copies of which may be obtained from the
appropriate Federal Reserve Bank. If the application is approved, the Federal Re
serve Bank will forward to the bank or trust company a Notice of Qualification
Form PD 1959 (see appended exhibit B), establishing that it is qualified t<~> make
payments in connection with the redemption of the United States Savings Bonds here
inafter specified. If the application is not approved, the bank or trust company
will be so advised in writing by the Federal Reserve Bank of the District.
Sec. 321.3
Termination of a bankTs qualification to pay bonds. - The Secretary
of the Treasury or under authority of the Secretary the appropriate Federal Reserve
Bank, as fiscal agent of the United States, may, by written notice, at any time and
-without previous demand or notice, terminate the qualification of'any bank or trust

1/ For the purpose of this circular, banks and trust companies in Puerto Rico, the
Virgin Islands and the Canal Zone shall be considered as being within the Second
Federal Reserve District and shall make application to the Federal Reserve Bank of
New York, and banks and trust companies in Alaska and HawTaii shall be considered as
being within the Twelfth Federal Reserve District and shall make application to the
Federal Reserve Bank of San Francisc«.

-2

-

company to pay United States Savings Bonds. A duly qualified bank or trust company
may discontinue making payments at any time upon written notice to the Federal Re
serve Bank, and its qualification shall thereupon cease.
Subpart B - GENERAL
Sec. 321,4. -Meaning of terms in this circular. - Hereinafter, for the purposes
of this circular, unless otherwise, indicated specifically, or by context, the terms:
(a) "Bank(s)" shall mean any eligible incorporated bank or trust company duly
qualified pursuant to the provisions of this circular to make payments in connection
with the redemption of the United States Savings Bonds hereinafter specified, in
cluding such branches and facilities thereof located within the United States (in
cluding the territories and insular Possessions of the United States and the Canal
Zone) as it may desire to utilize for this purpose. The term- "facilities,” as used
herein, is defined as those bank facilities at army and navy installations and at
defense plants which have been established for the duration of the war with the
specific approval of the Treasury Department.
(b) "Bond(s)" shall include only United States Savings Bonds of Series A, B, C,
P or E , including bonds of Series E designated "Defense Savings Bonds" or "War Sav
ings Bonds." (SAVINGS BONDS 0 =" SERIES F AND G ARE NOT INCLUDED.)
(c) "Owner(s)" shall mean.an individual (natural person) whose name is in
scribed as an Owner (or coowner) in his o1 n right on a bond which is registered in
any of the following forms:
(1) in the name of a single individual in his own right, e.g.
"John A. Jones;"

(2) in the names of two individuals as coowners, e.g. "John A.
Jones or Mrs. .Ella S. Jones" (each is considered as an "owner,"
and payment may be made to either without the consent of the'
other); or
(3) in the name of one individual,.payable on death to another,
e.g. "John A. Jones, payable on death to Mrs. Ella S, Jones,"
or "John A. Jones, p.o.d. Mrs. Ella S. Jones." (in this
example, John A. Jones is the "owner" and Mrs. Ella S. Jones
is the beneficiary. Payment under this circular to a bene
ficiary is not authorized.)
(d) "Federal Reserve Bank" includes each Federal Reserve\Bank and each Branch
of a Federal Reserve Bank which has been or may hereafter be utilized by such
Federal Reserve Bank to conduct any of the transactions in connection with which
the term is used in this circular.
Sec. 321,5. Reimbursement of banks1 costs. - A bank shall not make any charge
against the owners of bonds for payments made hereunder. However, each bank shall
be entitled to receive, for its service in paying bonds hereunder, reimbursement f#r
bonds paid and forwarded to the Federal Reserve Bank each calendar quarter according
to the following scale, which shall be applicable' separately, to each bank and each
of its branches and facilities, if utilized, and if the bonds paid by each are
separately scheduled and accounted for:

15

cents each for the first 1,000 bonds
12 cents each for the second 1,000 bonds
10 cents each for all over 2,000 bonds

-

_ I,
1

.: _

~ 3 - '

•

i • ;

The date such bonds are forwarded to tbe Federal Reserve Bank will govern the rate
of reimbursement, and the payment of such amount as the bank is entitled to receive
shall be made by the Federal Reserve Bank on behalf of the Treasury Department.
Sec. 321.6. Announcements etc. -o£ authority to pay bonds. - Any announcement
of or any reference to a-bank's authority to pay savings bonds may be made only in
a form or manner or contain such statements or substance as may be approved by the
Secretary of the Treasury or, under authority of the Secretary, by the Federal Re
serve Bank of the District, as fiscal agent of the. United States. A bank shall not
make such announcements or references unless and until it is officially qualified
to pay bonds.
Subpart C - SCOPE OF AUTHORITY OF BANKS
Sec. 321.7. General. - In order to protect the interests of the owners and to
insure- receipt by the proper persons of the proceeds thereof, savings bonds are
registered, are n<ot transferable^ and are payable only to the owner named on the
bond (ex.cept as otherwise specifically provided in the regulations governing the
,
bonds)'. This policy must be understood-and effectuated by each bank, notwithstand
ing the authority granted herein to make payments of bonds, since it is of the ut
most importance that payment of the appropriate redemption value of the bonds be
made to and received by only the persons entitled under the terms and conditions of
the bonds and applicable regulations.
Sec. 321.8, Payments authorized. - Subject to the terms of the' bonds and to
the-provisions of the regulations governing them (Treasury Department Circular y
No. 530, as currently in effect on the date of payment) and the provisions of this
circular, a bank may make payment of any United States Sayings Bond of Series A, B ,
C, D or E , to the individual (natural person) whose name is inscribed as 'the owner
tor cooi/vner) in his own right on the bond? Provided, That such individual presents
the bond to the bank for payment and that the individual is known to the bank or
establishes his identity to/the complete satisfaction of the bank. This authority
to make payments to the owner named on the bond will be held to include the follow
ing exceptional cases:
»
(a) Where the name of the owner as inscribed on the bond'has been changed
by marriage and the bank knows- or can establish to its complete, satis
faction the identity of the bwner whose name has been so changed. The
signature to the request for payment should show both names, f»r •
example - "Miss Mary T. Jones, now by marriage Mrs. Mary J. Smith."
A BANK IS NOT AUTHORIZED TO PAY A BOND FOR AN OY/NER WHOSE NAME AS
INSCRIBED ON THE BONHHAS BEEN CHANGED IN ANY OTHER MANNER.
(b) Where the' name of the owner inscribed on the bond is that of a minor
child who is not of sufficient competency and understanding to execute
the reouest for payment and comprehend the nature of such act. but upon
whose behalf request for payment is made by_a parent with whom the
child resides: Provided, however, That the form-of registration does
not indicate a-guardian or similar representative of the estate of the
minor owner has been appointed or is otherwise legally qualified. The
parent requesting payment on behalf of the minor child must be known
er his or her identity established to the complete satisfaction of the
bank, and'the parent must, sign the request for payment in the form -

mm
’’John A. Jones,, on behalf of John C..Jones” and affix an endorsement in
substantially the following form, which may be typed on the back of the
bondi ”1 certify that I am the
(father or mother) of
John C. Jones and the person with whom he resides. He is
years of
age and is not of sufficient competency and understanding to sign the
request.” Such a pa.yment may not be made to any person other than a
father or mother.
Sec. 321.9. Specific limitations -of payment .authority. - A bank is not
authorized hereunder to pay a bond!
(a) If the bond is presented for payment prior to the expiration of 60 days
from the issue date (the issue date should not be confused with the date
appearing in the issuing agent’s dating stamp).
(b) If the bank does not know or can not establish to its complete satis
faction the identity of the person requesting payment as the owner of
the bond (including the establishment of the identity of parents re
questing payment on behalf of minor children, as set forth in Sec.
321.8 (b)).
(c) If the owner requesting nayment (form for which appears on the back of
each bond) does not sign his name in ink as it is inscribed on the face
of the bond and show his home or business address. (See also Secs.
321.8(a) and (b) and 321.10(d)),
(d) If the bond appears to bear a material irregularity, .for example, an
altered, illegible, incomplete or unauthorized inscription, issue date
or issuing agent’s validating stamp impression; or if a bond appears
to be; altered, or is mutilated or defaced in such a manner as to create
doubt or arouse suspicion with respect to the bond or any essential
part thereof.
(e) If the bond is marked ’’DUPLICATE,”
(f) If Treasury Department regulations require the submission of docu
mentary evidence to support the redemption of the bond, as in the case
of deceased owners, incompetents or minors under legal guardianship
or the change of an owner’s name as inscribed on a bond if for any
reason other than marriage.
(g) If the owner named on the bond and nonnesting payment is a!minor
who, in the opinion of the bank, is not of sufficient competency
and understanding to execute the request for payment and comprehend
the nature of such act. (Note the authority granted to banks to
make payments of bonds to either parent on behalf of a minor child
under the provisions of Sec. 321.8(b)).
(h) If it is known to the bank that the- owner has been declared, in
accordance with law, incompetent to manage his estate,.
(i) If partial redemption is requested.
Attention is directed to Sec. 321.17 hereof for handling bonds of the ‘
foregoing
classes of cases which1may not be paid by banks f

'fyg'-k
" ; 'Subpart P - PAYMENT AND ACCOUNTING

'

''

Sec. 321.10, Examination of bonds presented for payment. - Before making pay
ment' of bonds presented hereunder the bank:
(a) Shall determine, that the person requesting payment as the "owner” (as
defined in this circular) is known or. his identity is established to
the satisfaction of the bank.
(b) Shall examine the bond and determine that it is a bond which the bank
is authorized to pay under the provisions of this circular.'
(c) If the ’reouest for payment on the back of the bond is already executed,
shall determine that-the request is properly-signed by the registered
owner presenting the bond and that his home, or business address is shown.
(d) If the request for payment on the back of the bond has not been executed
or has been improperly*executed by the owner presenting the bond, shall
require such owner to Properly sign the request and show his home or
business' address.
Sec. 321.11. Certification of requests for oayment.
In view of the provi
sions of this circular governing payment of bonds and the requirements as'to the
data to be endorsed on each bond, under Sec. 321.12, a bank will not be required •in the case of any bond said, by it to complete the certification form at the“'’end
of the request for payment, nor determine the authenticity of any. certification
which'may appear on the bond at the time it is presented for payment: Provided,
however, That each bank submitting paid bonds shall be understood by such submis
sion to have represented and certified that the identity of the owner:requesting
payment has been duly established to the satisfaction of the-bank by one of its
officers or by an employee duly authorized-by the bank.
y '
Sec. 321,12. Determination of redemption values and payment of bonds, - The
redemption value of a bond is determined from the period of time (years and full
half-year) that it has been outstanding, and the table of redemption Value’s on
each bond. The Federal Reserve Bank of the district will furnish each bank with
a table of redemption values from which it will be possible, after determining the
month and year of issue of any bond,, to immediately establish its current Value'.
After establishing such value, payment thereof to the owner requesting payment shall
be made in cash. No objection will be made to an arrangement between the owner and
the bank under which the owner accepts in lieu of cash, a credit to his checking
savings account with the bank, or a check or similar instrument payable to his
order. Each bank shall place on the face of each bond paid by it the word "PAID",
the amount and, date of payment and the name, location and transit (or code), number
of the bank. Other data pertinent to the payment procedure of a bank may be in
cluded if approved by the Federal Reserve Bank Of the District, The Federal Re
serve Bank will furnish rubber stamps for this purpose -or, in lieu thereof, will
approve suitable .stamps prepared by a bank. ’.The affixation of such data shall be
construed by and between the bank and,the Treasury Department to be a certification
by the paying bank- that the bond has been paid in accordance with the terms and
requirements of this circular and that payment of the proceeds of the bond.has
been made to the owner,
- - . ’
;

-

-

-

*

-

Sec. 321.13 . Forwarding paid-bonds-"to the Federal Reserve Bank. - After pay
ment, the bonds shall be forwarded to the Federal Reserve Bank of the district in
accordance with instructions issued by such Federal Reserve Bank.
Sec. 321.14. Redemption of raid bonds by Federal Reserve Banks. - Uoon re
ceipt of the paid bonds the Federal Reserve Bank will make immediate settlement
with the forwarding bank for the total amount of payments made on such bonds; how
ever, such settlement shall be subject to adjustment if any discrepancies are dis
covered at a later date.
Sec. 32I.I5. Losses resulting from payments. - Section 22 of the Second
Liberty Bond Act, as amended, provides:

"(i) Any losses resulting from payments made in connection with the re
demption of savings bonds shall be replaced out of the fund estab
lished by.the Government Losses in Shipment Act* as amended, under
such regulations^/as may be prescribed by the Secretary of the
.
Treasury. The Treasurer of the United States, any Federal Reserve
Bank, or any incorporated bank or trust company authorized or per
mitted to make payments in connection with the redemption of such
bonds, shall be relieved from liability to the United States for
such losses, upon a determination by the Seeretar}?" of the Treasury
that such losses resulted from no fault or negligence on the part
of the Treasurer, the Federal Reserve Bank, or the incorporated
bank or trust company * *
The provisions of Section 3^/of the
Government Losses in Shipment Act, as amended, with respect to
the finality of decisions by the Secretary of the Treasury shall
apply to the determinations made pursuant to this subsection,*•* *".
(a) Consideration of facts concerning loss. - In any case in which a loss
occurs, the paying bank shall be afforded -ample opportunity to present all of the
facts pertaining to the circumstances of the payment for consideration by the
Secretary.

Sec. 32I.I6. Preservation of rights. - Nothing contained in these regulations
shall be construed to limit or restrict' any existing rights which holders of sav-‘
ings bonds may have acquired under the circulars offering such bonds for sale and
the regulations Prescribed thereunder.
Sec. 321.17. Redemption of bonds not-payable by banks. - Any bonds which a
bank is not authorized to pay pursuant to the Provisions, of this circular should
be forwarded by the owner, or his agent, after certification of the requests for
payment, to the Federal Reserve Bank or Branch of the District for redemption.
2/ Regulations governing replacement of losses resulting from payments made in con
nection with the redemption of United States Savings Bonds are set forth in Treasury
Department Circular No, 751.
3/ The provisions of Section 3 of the Government Losses in Shipment Act, as amended,
with■respect to the finality of decisions by the Secretary of the Treasury are. "Notwithstanding any provision of law to the contrary, the decision of the Secretary
of the Treasury that such loss, destruction, or damage has occurred or that such ship
ment was made substantially in accordance with such regulations shall be final and
conclusive and shall not be subject to review by any other officer of the United
States."

7
If a bank should undertake"to forward such unpaid bonds at the request and in be
half of the person entitled to payment, such bonds must be.sent separate and apafrt
from bonds which the bank has paid. Any documentary evidence required to support
the redemption should accompany the bond or bonds when forwarded to the Federal
Reserve Bank. .
■
- , •
Sec. 321.18. Functions of Federal Reserve Banks. - The Federal Reserve Banks,
as fiscal agents of the United States, abe, authorized to perform such duties, and
prepare and issue such forms and instructions, as may be necessary to the fulfill
ment of the purpose and requirements of this circular. The Federal Reserve Banks,
in their discretion, may utilize any or all of their Branches in the performance
of these duties.
Sec.. 321.19. Supplements, Amendments, etc. - The Secretary of the Treasury
may at any time 6r from time to time supplement, amend, or withdraw, in whole or
in part, the provisions of this circular, or of any amendments $r supplements
thereto, information as to which will be furnished promptly to the Federal Reserve
Banks'and to the banks qualified hereunder.

HENRY MORGENTHAU, JR.,
Secretary of the Treasury.

- 8 Form PD 1958
TREASURY DEPARTMENT
' Fiscal Service
■
Bureau of 'the- PubTic“Deb't

EXHIBIT üAn

APPLICATION-AGREEMENT •
Payments by Incorporated Banks and Trust. Companies
in connection with the redemotion [of United States
Savings Bonds
Dated _________
TO THE FEDERAL RESERVE BANK OF
As fiscal- Agent of the United States

*

, 194__ .

T

The undersigned, eligible under the provisions of Sec. 321.1 of United States
Treasury Department-Circular No. 750, hereby applies for qualification to make pay
ments in connection with the redemption of United States Savings Bonds, as provided
m the said Circular No. 750, and, upon being so nualified, hereby agrees:
1.

T# be bound by and to comply with the Provisions of Treasury Depart
ment^ Circular No. 750, including all supplements and amendments thereof
and instructions as may be issued thereunder.

2.

That the Secretary of the Treasury, or the Federal Reserve Bank of
— ------ r..... ...... > by written notice, may, at any time, and-with
out previous demand or notice, terminate the Qualification of the .
undersigned, if such authority is granted pursuant to this application;
and that in the event of such termination the undersigned, after re
ceipt of such notice or after the date of termination specified therein,
will not thereafter pay any United States Savings Bonds.

It is understood that the undersigned may withdraw from this Agreement at any
time upon written notice of such intention to the Federal Reserve Bank of
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed
under seal^by the officer below named, thereunto duly authorized by a resolution of
its governing board or committee adopted on the ___ f day of
f 1%
"(Ñame)
(Address)
By
(Signature of Officer)
(ïitlè of Officer)
State of
County of

ACKNOWLEDGMENT

SS.
)
On this
day of
194
before me appeared
to me personally known, who, being by me duly sworn, did say that he is the
"•pyg-xi »"---A a o'a .— — r—
—
_______ ____,_____ ___ . âîid that the seal affixed to
(Title of Officer)
(Name of Institution)
the above instrument is the corporate seal of said institution, and that the ab^ve
instrument was signed and sealed in behalf of said institution by authority of its
governing board or committee, and said officer acknowledged said instrument to be
the free act and deed of said institution.
Notary Public

~ 9 ~
EXHIBIT "B”
Form PD 1959
TREASURY DEPARTMENT
Fiscal Service
Bureau of .the Public Debt
NOTICE OF QUALIFICATION OF AN INCORPORATED
BANK OR TRUST COMPANY TO MAKE PAYMENTS IN
CONNECTION WITH THE REDEMPTION OF UNITED
STATES SAVINGS BONDS.

, 194__ ..

Yòur Application-Agreement Form ED 1958, dated ______ .' ' -,,,.
approved as of this date,

. has been

You are hereby notified that you are qualified to

make payments in connection with the redemption of United States Savings Bonds
pursuant to the provisions of Treasury Department Circular No. 750, and apy
supplements or amendments thereof and instructions issued pursuant thereto.

FEDERAL RESERVE BANK OF
Fiscal Agent of the United States

REGULATIONS GOVERNING REPLACEMENT OUT OF THE FUND
ESTABLISHED BY- THE GOVERNMENT' LOSSES IN SHIPMENT
ACT, AS AMENDED, OF ANY'LOSSES.. RESULTING FROM PAY
MENTS MADE IN CONNECTION I.’ITH <THE •REDEMPTION OF
UNITED STATES SAVINGS BONDS
.
■ 1944
Department Circular No. 751
Fiscal Service
Bureau of the Public Debt
I.

TREASURY DEPARTMENT,*
OFFICE OF THE SECRETARY,
Washington, September 5, 1944*

REGULATIONS PRESCRIBED

1. Pursuant to the authority of the Second Liberty Bond Act, as amended
the following regulations are hereby prescribed for the replacement out of
the fund established by the Government Losses in Shipment Act, as amended, of
any losses to the United States resulting from payments made in connection
with the redemption ef United States Savings Bonds, and shall apply to losses
resulting from payments made (l) by the Treasurer of the United States,
(2) by the Federal Reserve Banks and Branches, as fiscal agents of the United
States, and (3) by .incorporated banks and trust companies qualified pursuant
to Treasury Department Circular No. 750 > to pay savings bonds.
II.

REPORTS ■*'OF LOSSES

1. A loss to the United States may result from an erroneous (or unau
thorized) payment in connection with the redemption of savings bonds.
2. If an incorporated bank or trust company, qualified to pay savings
bonds, after' returns have been made to the Federal Reserve Bank finds an
erroneous payment to have been made, immediate report should'be'made to the
Federal Reserve Bank* Any such erroneous payments so reported, and any
other erroneous payments found by a Federal Reserve Bank in returns from an
incorporated bank or trust company shall, so far as possible, be adjusted be
tween the Federal Reserve Bank and the incorporated bank or trust company
concerned.
3. Any such erroneous payments which are not adjusted and any other
erroneous payments otherwise found after the account of the Treasurer of the
United States has been charged shall immediately be reported to -the Treasury
Department, Division of Loans and Currency, Merchandise Mart, Chicago 54,
Illinois.
Ill,

FINAL DETERMINATION OF LOSSES

1, Following receipt of the report of an erroneous payment the Treas
ury Department will appropriately advise the paying agent concerned, unless
such action is unnecessary. The Department shall determine whether or not
appropriate adjustment may be effected with the persons concerned in the
erroneous payment, and in this connection will expect the cooperation of the
paying agent, if necessary.
(a) If it is determined that no loss to the United States will occur
the paying agent will be so advised.

- 2 (b) If it is determined that a final loss to the United States has oc
curred., the paying agent will be given every opportunity to present the full
facts relating to the payment for consideration of the Secretary of the
Treasury. If the Secretary shall determine that the final loss resulted
from no fault or negligence on the part of the paying agent, the paying
agent shall be relieved from liability
the United States* If, however,
the Secretary of the Treasury finds fault or negligence on the part of the
paying agent, notice to that effect will be given such paying agent who will
make prompt restitution.
2. In no case will the Treasurer of the United States, a Federal Re
serve Bank or Branch, or the banking institution which made the erroneous
payment be called upon to make restitution unless and until it is determined
that a final loss has been •incurred as a result of an erroneous payment due
to the fault or negligence of such paying agent.

'¿¿tri*'

IV.

REPLACEMENT OF LOSSES OUT OF THE FUND

1. When it is established to the satisfaction of the Secretary of the
Treasury that a loss has resulted from a payment made in connection with
the redemption of a United States Savings Bond, the Joss shall be subject
to immediate replacement out of the-fund established by the Government Losses
in Shipment Act, as amended. Any recovery or repayment on account of any
such loss as to which replacement shall have been made out of the fund, shall
be credited to the fund,
V.

INVESTIGATION OF LOSSES

1, The Treasury Department, and, in appropriate cases, Federal Reserve
Banks, as fiscal agents of the United States, may request the Secret Service
to investigate losses and assist in the recovery of improper payments. The
Treasurer of the United States, the Federal Reserve Banks, and qualified
banking institutions should cooperate with the Secret Service to the fullest
extent in facilitating investigations and making recoveries.
VI.

SUPPLEMENTS, AMENDMENTS, ETC. '

1. The Secretary of the Treasury may at any time or from time to time
supplement, amend, or withdraw, in whole or in part, the provisions of this
circular, or of any amendments or supplements thereto, information as to
which will be furnished promptly to the Federal Reserve Banks and to banking
institutions qualified to make payments of savings bonds under the provisions
of Treasury Department Circular No. 750.,

HENRY MORGENTHAU, Jr,,
Secretary of the Treasury.

REGULATIONS GOVERNING REPLACEMENT OUT OF THE FUND
ESTABLISHED BY,THE GOVERNMENT LOSSES IN SHIPMENT
■ ' ACT/ AS AMENDED, OF ANY- LOSSES RESULTING FROM PAY■ • : M e!n TS MADE IN CONNECTION WITH THEvREDEMPTION OF
•
UNITED'STATES SAVINGS,-BONDS

1944'
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,
Washington, September 5* 1944.

Department Circular No, 751

Fiscal Service
Bureau of the Public Debt
I.

REGULATIONS PRESCRIBED

1, Pursuant to the authority of the Second. Liberty Bond Act, as amended
the following regulations are hereby prescribed for the replacement out of
the fund established by the Government Losses in Shipment Act, as amended, of
any losses to the United States resulting from payments made in connection
with the redemption of United States Savings Bonds, and shall apply to losses
resulting from payments made (l) by the Treasurer of the United States,
(2) by the Federal. Reserve Banks and Branches, as fiscal agents of the United
States, and (3) by incorporated banks and trust companies qualified pursuant
to Treasury Department Circular No, 750> to pay savings bonds,
II.

REPORTS OF LOSSES

1. A loss to the United States may result from an erroneous (or unau
thorized) payment in connection with the redemption of savings bonds.
2. If an incorporated bank or trust company, qualified to pay savings
bonds, after returns have been made to the Federal Reserve Bank finds an
erroneous; payment to have been made, immediate report should be made to the
Federal Reserve Bank. Any such erroneous payments so reported, and any
other erroneous payments found by a Federal Reserve Bank in returns from an
incorporated bank or trust company shall, so far as possible, be adjusted be
tween the Federal Reserve Bank and the incorporated bank or trust company
concerned.
3. Any such erroneous payments which are not adjusted and any other
erroneous payments otherwise found after the account of the Treasurer of the
United States has been charged shall immediately be reported to the Treasury
Department,, Division of Loans and Currency, Merchandise Mart, Chicago 54 j
Illinois.
III.

FINAL DETERMINATION OF LOSSES'

1, Following receipt of the report of an erroneous payment the Treas
ury Department will appropriately advise the paying agent concerned, unless
such action is unnecessary. The Department shall determine whether or not
appropriate.adjustment may be effected with the persons concerned in the
erroneous payment and in this connection will expect the cooperation of the
paying agent, if necessary,
(a) If it is determined that no loss to the United States will occur
the paying agent will be so advised.

- 2 (b) If it is determined that a final loss to the United States has oc
curred, the paying agent will be given every opportunity to present the full
facts relating to the payment for consideration of the Secretary of the
Treasury. If the Secretary shall determine that the final loss resulted
from no fault or negligence on the part of the paying agent, the paying
agent shall be relieved from liability.t® the United States. If, hov^ever,
the Secretary of the Treasury finds fault or negligence on the part of the
paying agent, notice to that effect will- be given such paying agent who will
make prompt restitution.
2. In no case will the Treasurer of the United States, a Federal Re
serve Bank or Branch, or the banking institution which made the erroneous
payment be called upon to make restitution unless and until it is determined
that a final loss has been incurred as a result of an erroneous payment due
to the fault or negligence of such paying agent.
IV.

REPLACEMENT OF LOSSES OUT OF THE FUND

1. ?ihen it is established to the satisfaction of the Secretary of the
Treasury that a loss has resulted from a payment made in cqnnection with
the redemption of a United States Savings Bond, the loss shall be subject
to immediate replacement out of the fund established by the Government. Losses
in Shipment Act, as amended. Any recovery or repayment on account of any
such loss as to which replacement shall have been made out of the fund, shall
be credited to the fund.
V,

INVESTIGATION OF LOSSES

1, The Treasury Department, and, in appropriate cases, Federal Reserve
Banks, as fiscal agents of the United States, may request the Secret Service
to investigate losses and assist in the recovery of improper payments. The
Treasurer of the United States, the Federal Reserve Banks, and qualified
banking institutions should cooperate with the Secret Service to the fullest
extent in facilitating investigations and making recoveries.
VI.

SUPPLEMENTS, AMENDMENTS, ETC.

1. The Secretary of the Treasury may at any time or from time to time
supplement, amend, or withdraw, -in whole or in part, the provisions of this
circular, or of any amendments, or supplements thereto, information as to
which will be furnished promptly to the Federal Reserve Banks.and to banking
institutions qualified to make payments of savings bonds under the provisions
of Treasury Department Circular No. 7^0.

HENRI MORGENTHAU, Jr.,
Secretary of the Treasury..

E m p l o y e e s of the T r e a s u r y D e p a r t m e n t p u r c h a s e d $ 1 1 , 5 2 9 , 5 0 7
w o r t h o f W a r B o n d s d u r i n g the F i f t h W a r Loan, a c c o r d i n g to
E# F# B a r t e l t , D e p a r t m e n t a l C h a i r m a n «

This amount represented

157 p e r c e n t of t h eir $ 7 * 3 1 7 , 0 0 0 quota, w h i c h w a s b a s e d u p o n 4 0
p e r c e n t of a m o n t h * s g r o s s pay«
I h e m a n n e r in w h i c h e m p l o y e e s of t he T r e a s u r y r e s p o n d e d to
the F i f t h W a r L o a n d r ive is m o s t n o t e w o r t h y , a n d is a n a c h i e v e m e n t
o f w h i c h e v e r y o n e i d e n t i f i e d w i t h the D e p a r t m e n t m a y b e j u s t l y
p r o u d f ” Mr« B a r t e l t said«

" In s u r p a s s i n g their F o u r t h W a r L o a n

b o n d p u r c h a s e s o f $ 9 , 6 2 8 , 3 7 3 b y n e a r l y two m i l l i o n dollars,

t hey

i n d i c a t e d their d e t e r m i n a t i o n to s h are w i t h a l l o t h e r A m e r i c a n s
the r e s p o n s i b i l i t y of s e e i n g this w a r t h r o u g h to c o m p l e t e v i c t o r y « M
The a v e r a g e i n v e s t m e n t of T r e a s u r y e m p l o y e e s in S e ries E bonds
d u r i n g the d r i v e was a p p r o x i m a t e l y f 1

inith n n u ti nn al

trneaiitin Afi« ft7 ft-

Treasury

•

e m p l o y e e s a r e p u t t i n g m o r e t h a n $ 2 , 0 0 0 , 0 0 0 o r 1 1.1 p e r c e n t o f
t h e i r p a y r e g u l a r l y e v e r y m o n t h int o w a r b o n d s u n d e r the p a y r o l l
sa v i n g s plan«

T h e n u m b e r p a r t i c i p a t i n g in the p l a n is 8 3 * 4 8 6 o r

95 out o f e v e r y 10 0 e m p l o y e e s o f the d e p a r t m e n t «
E m p l o y e e s of the W a r F i n a n c e D i v i s i o n ^ w h o a r e c h a r g e d w i t h
the r e s p o n s i b i l i t y o f p l a n n i n g a n d c o o r d i n a t i n g the n a t i o n a l W a r
L o a n Dr i v e s * l e d the t w e n t y - o n e b u r e a u s a n d o f f i c e s o f the T r e a s u r y
w i t h b o n d p u r c h a s e s o f $ 6 8 4 , 6 2 3 fo r 347 p e r c e n t of t h e i r a s s i g n e d
quota.
more

F o u r of the b u r e a u s a n d o f f i c e s e x c e e d t h e i r q u o t a s b y

than 5 0 p e r c e n t a n d a l l of t h e m exce p t one s u r p a s s e d their

quotas«

Mr. Shaeffer

TREASURY- D E P A R T M E N T
WASHINGTON

FOR R E L EASE M O R N I N G N E W S P A P E R S
Tuesday, A u g u s t 29, 1944

Press Service
Do. 4 3 -10

E m p l o y e e s of the Treasury D e p a r t m e n t p u r c h a s e d $ 1 1 , 5 2 9 , 5 0 7
w o r t h of W a r Bonds' d u r i n g the F i fth W a r Loan, a c c o r d i n g to
E. F. Bartelt, D e p a r t m e n t a l Chairman.
This amou n t r e p r e s e n t e d
157 percent of their $ 7 , 3 1 7 , 0 0 0 quota, w h i c h was b a s e d u p o n 40
percent of a m o n t h 1s gross pay.
’’The m a n n e r in w h i c h em p l o y e e s of the T r e a s u r y r e s p o n d e d
to the Fifth W a r Loan d r ive is m o s t n oteworthy, and is a n
a c h i e v e m e n t of w h i c h everyone i d e n t i f i e d w i t h the D e p a r t m e n t
m a y be justly p r o u d , ” Mr. Bartelt said,
”In s u r p a s s i n g t h e i r
Fourth W a r L o a n bon d p u r c h a s e s of $ 9 , 6 2 8 , 3 7 3 b y n e a r l y two
m i l l i o n dollars, the y i n d i c a t e d their d e t e r m i n a t i o n to share
w i t h all o t h e r ¿Americans the r e s p o n s i b i l i t y of seeing, this w a r
t h rough to complete v i c t o r y . ’1

„

The av e r a g e i n v e s t m e n t of T r e a s u r y e m p loyees in Series E
Bonds d u r i n g the d r ive was a p p r o x i m a t e l y $123.
Treasury
employees a r e p u t t i n g mor e than $ 2 , 0 0 0 , 0 0 0 or 11.1 p e r c e n t of
their p a y r e g u l a r l y every m o n t h into w a r bonds u n d e r the p a y roll
savings plan.
The n u m b e r p a r t i c i p a t i n g in the p l a n is 8 3 , 4 8 6
or 95 out of e v e r y 100 e m p l oyees of the depa r t m e n t .
E m p l o y e e s of the W a r Finance Division, who are ch a r g e d w i t h
the r e s p o n s i b i l i t y of p l a n n i n g and c o o r d i n a t i n g the n a t i o n a l
W a r L o a n Drives, l e d the t w e n t y - o n e b u r e a u s a nd offices of the
T r e a s u r y w i t h b o n d pur c h a s e s of $ 6 8 4 , 6 2 3 for 347 p e rcent of their
a s s i g n e d quota.
F b u r o f the bu r e a u s and of f i c e s exceeded t h e i r
quotas b y m o r e than 50 pe r c e n t and all of t h e m except one s ur
p a s s e d t h e i r quotas.

oOo

WITHHOLDING RECEIPT—1944

F o rm W -2a

triplicate!

For Income Tax Withheld on Wages
EMPLOYER BY WHOM PAID (Nam e and address)

|) I
B

oti

Hite

I

lo u r.

INSTRUCTIONS TO EMPLOYER

(Mlamt

Total Wages paid during the
calendar year 1944

Federal Income Tax withheld

Prepare Withholding Receipt in triplicate for all employees from
whom tax has been withheld.

__________ _______

$ ----- ------------------------

----

EMPLOYEE TO WHOM PAID (Print full name, address, Social Security N o.)

ployee.

—
S(jVome

Give original and duplicate to em

Forward the triplicates (W—2a) and Reconciliation (Form

(name

W—3) with Return of Income Tax Withheld on Wages (Form W—1),

\ (flame

when filed with Collector for the fourth quarter of the year (or with

(Name

the employer’s final return).

(See Circular WT— Revised 1944.)

(Name]

Iftyou

layout

IffYe
■une
ftllecl
1 6 -4 0 8 9 9 -1

U. S. GOVERNMENT PRINTING OFFICE

Y O U R 1944 EXEMPTIONS
R||) List your own name on first line below.
Bj) If married and your wife (or husband) had no income, or if this is a combined return
of husband and wife, list name of your wife (or husband),
ft) List names of other close relatives with 1944 incomes of less than $500 who received
more than one-half of their support from you.
B )T E : If this is a combined return of husband and wife, list dependent relatives of both and
H jte letter “ W” after names of dependents supported by wife.
Warn Name_________________________ _______ ,______________________ £_______

jw am f)

(Relationship)

BV’ame)

(Relationship)

H lame)

(Relationship)

Ulame)

(Relationship)

H lame)

(Relationship)

mame)
Ijf you need more space, attach list.

(.Relationship)

W a s y o u r in c o m e $500 o r m o r e ? If so, you must file an income tax return
either on a Withholding Receipt or on Form 1040.
W a s y o u r in c o m e u n d e r $500? If so, file a return to get a refund,of tax with
held. A married couple should file a combined return to get full benefit of exemptions.
D e d u c tio n s : If you file your return on a Withholding Receipt, the Government will
figure your tax from a tax table provided by law, which allows about 10% of your total
income for charitable contributions, interest, taxes, casualty losses, medical expenses, and
miscellaneous items. In order to claim deductions of more than l0 % , you must file your
return on Form 1040.
T o file a W ith h o ld in g R e c e ip t a s y o u r r e tu r n , fill out both sides of the
ORIGINAL, sign, and mail to Collector of Internal Revenue, your district, between Jan. 1
and Mar. 15, 1945. Keep the duplicate.
If y o u g o t m o r e t h a n o n e r e c e ip t for income tax withheld during 1944 (Form
W-2 or Form W-2, Rev.), fill out and sign the last one received and attach the others to it.
If filing a combined return, attach receipts of both husband and wife. If any receipt is
missing and you cannot obtain a copy from your employer, make your return
on Form 1040. Write here the total number of receipts you file, including the
one used as your return___________ ________________________________ ____
M a k e n o p a y m e n t n o w , but wait for bill or refund from Collector.
E M P L O Y E E S H O U L D K E E P T H IS C O P Y
F O R H IS R E C O R D .

liyour wife (or husband) making a separate return for 1944? _________________
IfrYes,” write below:
( “Yes” or “ No”)

D O N O T F IL E W IT H C O L L E C T O R .

Name of wife (or h u sb a n d )______________________________ ______________
■Elector’s office to which s e n t _________________________________________

G PO

1 6 -4 0 8 9 9 -1

(over)

Form W-2 (Rev.)
XJ. S . T re a su ry D ep artm en t
In tern al R e ve n u e Service

DUPLICATE

WITHHOLDING RECEIPT—1944
For Income Tax Withheld on Wages

EMPLOYER BY WHOM PAID (Name and address)

To EMPLOYEE: T h is W ith h o ld in g R e c e ip t may be used as your income

return if your 1944 income meets the TEST below.
^
A married couple m ay make a combined return on tJjrSjWlhholding Receipt, if their
income meets the test. Their incomes s h o u l d o n Lines 1,2, and 3, and s„.„.
separately on Line 4. The Collector o f ^ S n ^ L ^ e n u ^ H figure the tax on either tht Your A
combined or the separate incomesp^i^iKverN:nt\ the taxpayers advantage.
LIN E 1 W rite total of wafers sh<Wn oA /tW f and all your
o th e r 1944 W ithhflm ng Jpscfcdjpxs (Form W-2)----J $------- - - ------Urne)
LIN E 2 If you (j o i a n y wagauFrgjn which no tax wa* w ith mm

dividendsor interest, write to tal—. . X

_____ and 2.

■ame)

W rite to tal here— $-----——--

J n e 2 is not over $100 AND Line 3 is less than $5,000, you may use tli
Withholding Receipt as your return provided you had no income other than wm
dividends, and interest. If your income does not meet this test, use Form IOf
LINE 4 If Line 3 includes income of both husband and wife, show husband'
income here $—______________ 5wife’s income here $_
LINE S If you filed a 1944 Declaration of Estim ated Tax
(Form 1040-ES), w rite total of estim ated tax paid. $-

warne)
Ernie)
■ame)
Ernie)

If you n<

'Our ’

EMPLO Y E E S H O U L D KEEP THIS C O P Y
F O R HIS RECORD.
D O N O T FILE W I T H COLLECTOR.
T o EMPLOYEE: C hange n am e and a d d ressif n o t correctly show n

OPO

46—40899-1

(Yes,’

Name o
Hlectc

(over) H

W a s y o u r in c o m e $500 o r m o r e ?

If so, you must file an income tax return

either on a Withholding Receipt or on Form 1040.

W a s y o u r in c o m e u n d e r $500?

If so, file a return to get a refund of tax with
A married couple should file a combined return to get full benefit of exemptions.
D e d u c tio n s : If you file your return on a Withholding Receipt, the Government will
figure your tax from a tax table provided by law, which allows about 10% of your total
income for charitable contributions, interest, taxes, casualty losses, medical expenses, and
miscellaneous items. In order to claim deductions of more than 10% , you must file your
returnon Form 1040.
held.

(JSamt)

( Relationship)
(Relationship)

(tame)
y use tlû
inj M Borne)

(Relationship)

(fame)

(Relationship)

(lame)
Hyou need more space, attach list.

(Relationship)

orm 101

isband'

(.Relationship)

T o file a W ith h o ld in g R e c e ip t a s y o u r r e t u r n , fill out both sides of the
ORIGINAL, sign, and mail to Collector of Internal Revenue, your district, between Ian. I
and Mar. 15, 1945. Keep the duplicate.
If y o u g o t m o r e t h a n o n e r e c e ip t for income tax withheld during 1944 (Form
W-2 or Form W-2, Rev.), fill out and sign the last one received and attach the others to it.
If filing a combined return, attach receipts of both husband and wife. If any receipt is
missing and you cannot obtain a copy from your employer, make your return
on Form 1040. Write here the total number of receipts you file, including the
one used as your return____ _____________________ ______________________ _____
M a k e n o p a y m e n t n o w , but wait for bill or refund from Collector.

Iwour wife (or husband) making a separate return for 1944? __
If “Yes,” write below:

( “Yes” or “ N o")

I declare under the penalties of perjury that the foregoing statements are true to the
best of my knowledge and belief, and that ALL M Y 1944 INCOME IS REPOR T E D
HEREON.
Signature_________________________

fame of wife (or husband)
(Hector’s office to which sent

(D ate)

Signature___________________ _________ __________________
(If this is a combined return of husband and wife, it must be signed by both)

F o rm W -2

(Rev.)

Uinte™aiRe7enDueP8^:ent
E M P L O Y E R B Y W H O M P A ID

WITHHOLDING RECEIPT— 1944

ORIGINAL

For Income Tax Withheld on Wages
(Name and address)

To EMPLOYEE: T h is W ith h o ld in g R e c e ip t may be used as your income t a x i
return if your 1944 income meets the TEST below.
A married couple m ay make a combined return on this Withholding Receipt, if their total |
income meets the test. Their incomes should be combined on Lines 1, 2, and 3, and shown |
separately on Line 4. The Collector of Internal Revenue will figure the tax on either the |
combined or the separate incomes, whichever is to the taxpayers’ advantage.

Total Wages paid during the
calendar year 1944

Federal Income Tax withheld

LINE 1 W rite to tal of wages shown on th is and all your
other 1944 W ithholding Receipts (Form W-2)------$_________________ I
LINE 2 If you got any wages from which no tax was w ith
held, or any dividends or interest, write to tal------$
I
LINE 3 Add Lines 1 and 2.

Write to tal here— $----

I

$----------------------------------- -

TEST: If Line 2 is not over $100 AND Line 3 is less than $5,000, you may use this I
Withholding Receipt as your return provided you had no income other than wages, I
dividends, and interest. If your income does not meet this test, use Form 1040, I

E M P L O Y E E TO WHOM PAID (Print full name, address, Social Security No.)

L IN E 4 I f L in e 3 i n c l u d e s i n c o m e o f b o t h h u s b a n d a n d w if e , s h o w husb an d ’s I

$—_______________________

income here $_________________; wife’s income here $----------------------- I
LINE 5 If you filed a 1944 Declaration of Estim ated Tax
(Form 1040-ES), w rite to tal of estim ated tax paid_ $--------------------- I

T o E M P L O Y E E : C h a n g e n a m e a n d a d d r e ss i f n o t c o r r e c tly s h o w n

DO NOT
WRITE
IN THIS

I

SPACE

I

GPO

16--- 4 0 8 9 9 “ !

(o v er)

return»
new

ob

Worn 1040, which i» «leo being simplified 1b accordance with the

lew*
A taxpayer using his Withholding Receipt for hie return will fill It la

end mall it to his local collector of Internal revenue by March 15, 1945* the
oollector will figure his tax, give him credit for the tax already paid, end
sendee!ther a bill or a refund for the difference*
A special feature of the new fona eolvea the problem of many husbands end wit
as to ehether to file separate or joint returns* If the combined income of e
husband and wife permits use of the new feme, they may combine their returns on
one receipt, end the collector will figure their tax on either their combined
or separate incomes, whichever Is to their advantage*
It the taxpayer has more than one Withholding Receipt for 1944, he wiH be
required to fill out only one reeelpt mad attach the othare to It* for this
reason, Commissioner Hunan advised employees to be careful not to lose any of

Printing of the new forp of Withholding Receipts has begun but It may
take a few months before

*
'

' __

.

.

employers 4C8fc receive their supplies*

-

\

TMASUHT BRFASBfiW
Bureau of Internal Revenue
Washington 25, 0. 0»
for Release:
Wednesday, August 30
Joseph D. Hunan, Jr*, Commissioner of Internal Revenue, announced today
that approximately 30,000,000 employees will he relieved of computing their
1944 income tax by using their Withholding Receipts for their returns*
Whs Commissioner authorised the use of Withholding Receipts for this
purpose under provisions of tho Individual Income fax Act of 1944* this will
simplify the annual task of filing income tax returns for tho 30,000,000
merely
.■
employees by enabling them to etate/their income and exemptions on their
Withholding Receipts instead of filling out the regular incase tax blank,
Form 1040.
Wo deductions are listed for charitable contributions, interest, tares,
medical expenses, etc., since the tsx on this form of return will bo figured
from a table which automatically allows shout 10 per cent for such expenses.
Persons whose expenses exceeded 10 per cent, however, may claim them by

A Withholding Receipt, showing total wages paid and total income tax
withheld during the year, is required by law to be furnished by eesh employer
to each of his employees on or before January 31. the form of the Withholding
Receipt has been revised to include the necessary questions and instructions
which will permit most employees to use it as a return, fhe revised form is
designated form W-2 (Rev.)•
fhle form of return is permitted by the new law for anyone whose total
income in 1944 was less than #5,000, consisting wholly of wages shown on
Withholding Receipts or of such wages and not more than #100 of other wages,
|_■

, dividends, and interest. All other taxpayers will be required to make their

"

W L,

< a rV

- 2 -

A special feature of the new form solves the problem of many husbands and
wires as to whether to file separate or joint retime* If the combined
of a husband and wife permits use of the new form, they may combine their
returns on one receipt, and the collector will figure their tax on either their
combined or separate incomes, whichever Is to their advantage*
the tax on this form will be figured by the collector from a table which
automatically allows about 10 par cent of the esployee** total income for
charitable contributions, interest, taxes, medical expenses, etc* therefore,
employees should not list deductions for such expenses on their Withholding
Eeceipt. However, an employee whose expenses for these purposes exceeded
1° per cent of his total income, may claim his deductions in detail on Tom 1040.
If the taxpayer has more then one Withholding Hecelpt for 1944, he will be
required to fill out only one receipt end attach the others to it* for this
reason, Commissioner Hunan advised employees to be careful not to lose any of
their receipts.
Printing of the new form of Withholding Beoeipte has begun but it may
take a few months before all employers receive their supplies*. The new fox® is
being printed in triplicate. The employer gives the employee the first two
copies and sends the third to the office of the collector in that district.
The first copy, marked «Original", may be filled out by the employee and mailed
in as his return. The second copy, marked "Employees Copy," or "Duplicate",
is to be retained by the employee for his own personal records.

mSASUBY DEPARTMERT

Bureau of Internai Revenue
Washington WW» D* 0«

Joseph 0» Hunan, Jr.» Commissionar of Internai Revenue» announced todey
that approxiraately 00»000»000 employées «III be reiterad of computing their
1944 incese tax by using their Withholding Receipts for their return*.
Tbe Commiseioner, in accordance with provisions of tbe Individuel
Incesse fax dot of 1944» bas authorlzed tbe use of Witbholding Receipts for
ibis purpose. Thi* «ili simplify tbe annuel ta«k of filisg incoase tax retume
for tbe 00»000»000 employées by enabling them to state marely their income
and exemptions on their Witbholding Receipts Instsed of filling out tbe
regular income tax blank» form 1040»
Â Withholdisg Receipt » showing total «ages pdd and total incarne tax
withheld during tbe year» le required by la« to be furaished by each employer
to easb of bis employées en or before January SI* The fox» of tbe Witbholding
Reeeipt bas been revisad to include tbe neceesary questions and instructions
iftiieh «111 permit stoet employées to use it as a retura.
deslgnateâ Wom.

w-8

Th©

revised form le

(Rev.}*

ffcia form of return may be usad by anyone idioso total Income im 1944 «as
lese thea #5»000, conslsting «holly of «ages ahorna on Witbholding Receipts or
of such «ages and not more than #100 of other «âges» dividende» end interest«
Ail other taxpayer* «ili be required to aake their returne on form 1040 »
Whioh 1s also being elmplified in accordance «Itb tbe ne« la«*
A taxpayer using bis Witbholding Reeeipt for his retuisi «ili fili it in
and mali it to his loeal collector of internai revenue by March 15» 1945* The
eollector «îll figure his tax» g lv e him credit for

th é

send him either a bill or a refund for the différence*

tax already paid» and

TREASURY DEPARTMENT
B u r e a u o f Internal Revenue
W a s h i n g t o n 25, D, C«

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 ,
W e d n esday, A u g u s t 50, 1944______

P r ess Se r v i c e
No« 43-11

J o s e p h D« Nunan, Jr«, C o m m i s s i o n e r o f Internal Revenue,
a n n o u n c e d today that a p p r o x i m a t e l y 5 0 , 0 0 0 , 0 0 0 e m p l o y e e s will
he r e l i e v e d of c o m p u t i n g t h e i r 1 9 4 4 income tax b y u s i n g their
W i t h h o l d i n g Receipts f o r their returns«
The Commissioner,, in a c c o r d a n c e w i t h p r o v i s i o n s of the
I n d i vidual I n c o m e T a x A ct of 1944, has a u t h o r i z e d the use of
W i t h h o l d i n g R e c e i p t s for this purpose.
This w ill s i m p l i f y
the annual task of filing income tax returns for the 3 0 , 0 0 0 , 0 0 0
e m p l oyees b y enabling t h e m to state m e r e l y t h e i r income a n d
e x e m p t i o n s on t h e i r W i t h h o l d i n g Receipts i n s t e a d of f i l ling out
the r e g u l a r Income tax blank, Form 1040«
A W i t h h o l d i n g Receipt, showing total w a g e s p a i d a n d total
income tax w i t h h e l d d u r i n g the year, is r e q u i r e d by law to b e
f u r n i s h e d b y each e m p l o y e r to e a c h of his emp l o y e e s on or
b e f o r e J a n uary 31.
The f o r m of the W i t h h o l d i n g Receipt has
b e e n r e v i s e d to include the n e c e s s a r y q u e s t i o n s a n d inst r u c t i o n s
w h i c h w i l l p e r m i t most e m p l o y e e s to u se it as a return.
The
r e v i s e d f o r m is d e s i g n a t e d F orm W - 2 (Rev«)«
T h i s f o r m of r e t u r n m a y be u s e d b y a n yone w h o s e total i n 
come in 1 9 4 4 was less than $5,000, c o n s i s t i n g w h o l l y of w a ges
shown on W i t h h o l d i n g Receipts o r of s u c h wages a n d not m o r e
than $ 1 0 0 of o t h e r wages, dividends, a n d interest.
Al l o t h e r
taxpayers w i l l be r e q u i r e d to make t h e i r returns o n F o r m 1040,
w h i c h is a l s o b e i n g s i m p l i f i e d in a c c o r d a n c e w i t h the n e w law«
A t a x p a y e r u s i n g his W i t h h o l d i n g R e c e i p t for his r e t u r n
will fill It in and mail it to his l o cal c o l l e c t o r of internal
r e v e n u e by M a r c h 15, 1945«
The c o l l e c t o r will figure his tax,
give h i m credit for the tax a l r e a d y paid, a nd send h i m e i t h e r
a bill or a r e f u n d for the d i f f erence.
A special
fe a t u r e of the n e w f o r m solves the p r o b l e m
of m a n y h u s b a n d s a n d w i v e s as to w h e t h e r to file separate or
joint returns.
If the c o m b i n e d income of a h u s b a n d and wif e
pe r m i t s u s e of the n e w form, t h e y m a y combine their returns
on one receipt, a n d t h e c o l l e c t o r w ill figure their tax on
e i t h e r their com b i n e d or s e p arate incomes, w h i c h e v e r is to
their a d v a n t a g e .

2
The tax on this f o r m will be figured b y the c o l l e c t o r
fro m a table w h i c h a u t o m a t i c a l l y a l l o w s a b o u t 10 p e r cent of
the employee* s total income for c h a r i t a b l e contributions,
interest, taxes, m e d i c a l expenses, etc»
Therefore, employees
should n o t list d e d u c t i o n s for such expenses on their W i t h h o l d i n g
Receipt.
However, an employee whose expenses f o r these purpo s e s
e x c e e d e d 10 per cent o f his total income, m a y c l a i m his d e d u c 
tions in d e t a i l on Form 1040.
If the t a x p a y e r
for 1944, he will be
a t t a c h the others to
a d v i s e d emp l o y e e s to
re celpt s •

has m o r e than one W i t h h o l d i n g Receipt
r e q u i r e d to fill out o n l y one receipt a nd
it.
F o r this reason, C o m m i s s i o n e r N u n a n
be careful n o t to lose a n y of t h e i r

Pr i n t i n g of the n e w for m of W i t h h o l d i n g Rec e i p t s has b e 
gun b ut It m a y take a few m o nths b e f o r e all employers receive,
their supplies#
T h e n e w f o r m is b e i n g p r i n t e d in t r i p licate.
The e m p l o y e r gives the em p l o y e e the first two copies a n d sends
the third to the o f f i c e o f the c o l l e c t o r in that district.
T he f i rst copy, m a r k e d " O r i g i n a l ” , m a y be fill e d out b y the
employee a n d m a i l e d in as hi s return.
The s e cond copy, m a r k e d
" E m p l o y e e 1s C o p y , " or "Duplicate", is to be r e t a i n e d b y the
em p l o y e e f o r his o w n p e r s o n a l records»

oOo

Tmstrar

department

Washington
Press Service

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, August 29. 1944.

c f 3 ' ( H

The Secretary of the Treasury announced last evening that the tenders for
$1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated August 31 and to
mature November 30, 1944, which were offered on August 25, were opened at the Federal
Reserve Banks on August 28*
The details of this Issue are as follows:
Total applied for - $1,831,554,000
Total accepted
- 1,210,125,000
Average price

(includes $56,965,000 entered on a fixedprice basis at 99*905 and accepted in full)
- 99.905^ Equivalent rate of discount approx. 0*3755$ per annum

Range of accepted competitive bids:
High
Low

- 99*910 Equivalent rate of discount approx. 0.356$ per annum
- 99*905
•
*
■
»
"
0.376$ »
«

(62 percent of the amount bid for at the low price was accepted)
Federal Reserve
District

Total
Applied for

Total
Accepted

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

$
19,430,000
1,258,179,000
27,880,000
39,405,000
20,245,000
14,810,000
307,068,000
7,705,000
5,152,000
19,722,000
8,705,000
103,253,000

1

*1,831,554,000

*1,210,125,000

TOTAL

15,136,000
788,107,000
19,558,000
33,591,000
16,138,000
14,610,000
211,821,000
6,755,000
5,147,000
17,570,000
7,835,000
73.857.000

TREASURY DEPARTMENT
Washington .
Press Service

FOR RELEASE, MORNING- .NEWSPAPERS,
Tuesday, August 29, 1944»

No. 43-12

8-28-44
The Secretary of the Treasury announced last evening that

,

the tenders for $1, 200 000,000, or thereabouts, of 91-day Treasury
bills to be dated August 31 and to mature November 30 , 1944, which
were offered on August 25, were opened at the Federal Reserve
Banks on August 28.
The details of this issue are as follows:
Total applied for - $1,831,554,000
Total accepted
>- 1,210,125,000
(includes $56,965,000
entered on a fixed-price basis at 99.905 and accepted in •.•
full)
Average price

- 99.905/Epuivalent rate of discount approx,
0 .375 % par annum

Range, of accepted competitive bids:

- 99*910
0 .356$)
- 99*905
0 .376 %

High
Low

Equivalent rate of discount approx.
per annum
Equivalent rate of discount approx.
per annum

(62 percent of the amount bid for at the low price was accepted)
Federal Reserve
Listrict

■ | . 1 9 ,4 3 0 ,0 0 0
1,258,179,000
27r880,000
39,405,00.0
20,245,000
.14,810,000
3 0 7 ,06 8,0 00
7 ,7 0 5 ,0 0 0
5 ,1 5 2 , 0 0 0
19,722,000
8,705,000
103,253,000

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

Total
Applied for

TOTAL

$l-?831,554,000

-oOo«^

Total
Accepted
•f

/
.

1 5 ,1 3 6 ,0 0 0
788,107,000
1 9 r558,000
33,591,000
16,138,000
14,610,000
211,821,000
6 ,7 5 5 ,0 0 0
5X,147,000
17,570,000
7,835,000
73,857,000

$ 1 ,2 1 0 , 1 2 5 ,0 0 0

- 3 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. 41S, as amended, and this notice, pre
scribe 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.

- 2 Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of the amount and brice 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, apd his action in any such respect shall be final,
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

September 7, 1944

The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under 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 42 and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of,, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereuhder
need include in his income tax return only the difference between the price paid

TREASURY DEPARTMENT/'
Washingtdtl
FOR RELEASE, MORNING N E W S P A P E R S , ' ^
Wednesday, August 30 > 1944

The Secretary of the Treasury, by this public notice, invites tenders
$ 1 «200.000»000 ■> or thereabouts, of

:;|Sp3tk p " / 1

|

91 -day Treasury bills,, to be issued

. 1fj||\;

on a discount basis under competitive and fixed-price bidding as hereinafter pro
vided,

The bills of this series will be dated

mature

December 7« 1944

interest.

September

7« 1944

, and will

, when the face amount will be payable without

They will be issued in bearer form only, and in denominations of $1,000,

$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock p. m., Eastern War time,

Friday, September 1, 1944

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,
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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 securi
ties.

Tenders from others must be accompanied by payment of 2 percent ef 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

TREASURY DEPARTMENT
Washington

F O R RELEASE, M O R N I N G N E W S P A P E R S
W e d n e s d a y , A u g u s t 30, 1944*
8-29-44

The S e c r e t a r y of the Tre a s u r y , by this publ i c notice,
invites tenders fo r $ 1 , 2 0 0 , 0 0 0 , 0 0 0 , or thereabouts, of 9 1 - d a y
T r e a s u r y bills', to be issued on a d i s c o u n t b a sis u n d e r c o m p e t 
itive and f i x e d - p r i c e b i d d i n g as h e r e i n a f t e r provided.
The
bills of this series will be d a t e d S e p t e m b e r 7, 1944, a n d will
matu r e D e c e m b e r 7, 1944, w h e n the face a m o u n t will be payable
without interest.
T h e y will be issued in b e a r e r f o r m only, a nd
in d e n o m i n a t i o n s o f $1,000, $5,000, $10,000, $100,00.0, $ 5 0 0 , 0 0 0
an d $ 1 , 0 0 0 , 0 0 0 (maturity value)*
Tend ers wil l be r e c e i v e d at Federal Reserve Banks and
Br a n c h e s up to the c l o sing hour, two o ’c l ock p,m., E a s t e r n
W a r Time, Friday, S e p t e m b e r 1, 1944,
T e n ders wil l n ot be r e 
ceived at the T r e a s u r y Department, W a s h i n g t o n ,
Each tender
m u s t be for a n even m u l t i p l e o f $1,000, a n d the p r ice o f f e r e d
m ust be e x p r e s s e d on the b a s i s of 100, w i t h not m ore than
three decimals, e. g,, 99,925.
Fr a c t i o n s m a y not be used. It
is u r g e d that t e nders be m a d e on the p r i n t e d forms a nd f o r 
w a r d e d in the special e n v e l o p e s w h i c h will be su p p l i e d by
Federal Reserve Banks or B r a n c h e s on a p p l i c a t i o n therefor*
Te n d e r s will be r e c e i v e d w i t h o u t d e p o s i t f r o m i n c o r p o r a t e d
banks a n d trust companies a n d from r e s p o n s i b l e a n d r e c o g n i z e d
dealers in i n v e stment securities,
T e n d e r s f r o m others m u s t be
.accompanied b y pa y m e n t of 2 p e r c e n t of the face a m o u n t of
T r e a s u r y bills a p p l i e d for, u n l e s s the tenders are a c c o m p a n i e d
b y an express g u a r a n t y o f p a y m e n t -by an i n c o r p o r a t e d b a n k or
trust company,
jj
I
I m m e d i a t e l y a f t e r the c l o sing hour, tenders will be o p e n e d
at the Federal Reserve Banks a n d Branches, f o l l o w i n g w h i c h
public a n n o u n c e m e n t wil l be m ade b y the S e c r etary of the
T r e a s u r y of the a m o u n t and p r i c e range of a c c e p t e d bids.
T h ose
submitting te n d e r s will be a d v i s e d of the a c c e p t a n c e o r r e 
jection thereof.
T he S e c r e t a r y of the T r e a s u r y e x p r e s s l y
r e s erves the right to accept o r reject a n y or all tenders, in
whole or in part, and his a c t i o n in a n y s u c h respect shall be
final.
S u b j e c t to these reservations, tenders for $ 1 0 0 , 0 0 0
or less f r o m a n y one b i d d e r at 9 9 , 9 0 5 e n t e r e d on a f i x e d - p r i c e
basis will be a c c e p t e d in full.
Payment of a c c e p t e d tenders
at the pric e s o f f e r e d mus t be m ade or c o m p l e t e d at the Federal
Reserve B a n k in cash o r o t h e r i m m e d i a t e l y a v a i l a b l e funds on
S e p t e m b e r 7, 1944,
43-13

(0 ve r )

-

2

-

The income d e r i v e d f r o m T r e a s u r y hills, w h e t h e r interest
o r g a i n f r o m the sale or o t h e r d i s p o s i t i o n of the hills, shall
not have a n y exemption, as such, a n d loss f r o m the sale or
o t her d i s p o s i t i o n o f T r e a s u r y .hills shall not h a v e a ny special
treatment, as such, u n d e r Federal tax A cts n o w or h e r e a f t e r
enacted*
The h i l l s shall he subject to estate, inheritance,
gift, • or o t h e r excise taxes, w h e t h e r Federal o r State, h u t
shall be exempt f r o m all t a x a t i o n n o w or h e r e a f t e r i m posed .
on the principal or interest t h e r 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 o f the U n i t e d States, or b y a n y local taxi n g
.authority*
For p u r p o s e s of t a x a t i o n the 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 hills are 'originally sold by the U n i t e d
States shall be c o n s i d e r e d to he interest*
U n d e r S e c t i o n s 42
a nd 117 (a) (1) of the Internal Revenue Code, as a m e n d e d b y
S e c t i o n 115 of t h e Revenue A c t of 1941, the a m o u n t of d i s c o u n t
at w h i c h hills issued he’r e u n d e r are sold shall n o t he considered
to a c c r u e u n t i l such h i l l s shall he sold, r e d e e m e d or otherwise
d i s p o s e d of, a n d s u c h h i lls are 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
capital assets*
A c c o r d i n g l y , the o w n e r o f T r e a s u r y bills
(other than life in s u r a n c e companies) i s s u e d h e r e u n d e r n e e d
include in his income tax r e t u r n o n l y the d i f f e r e n c e b e t w e e n
the p r i c e p a i d f o r s u c h hills, w h e t h e r on origi n a l issue or on
s u b s e q u e n t purchase, a n d 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 sale or r e d e m p t i o n at m a t u r i t y during the taxable y e a r
for 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* 418, as amended, and
this notice, p r e s c r i b e the terms of the T r e a s u r y h i lls a n d
g o v e r n the c o n d i t i o n s of t h e i r issue.
C o pies of the c i r c u l a r
m a y he o b t a i n e d f r o m A n y Federal R e s erve B a n k or Branch.

oOo

FOB IMMEDIATE RELEASE

x

tu August 3e*. 19*1**_____

A'

~

U?

30

The Bureau of Customs announced today preliminary figures showing
the quantities of coffee authorized for entry for consumption under the
quotas for the

12

months commencing October

1 , 19**3 , provided

for in the

Inter-American Coffee Agreement, proclaimed by the President on April

19^1 ,

15,

as follows:

Authorized for entry
for consumption
As of (Date) : (Pounds)

Country of Production

Signatory Countries:
Brazil
Colombia
Costa Bica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1,621,630,1*79
5**9,26l ,936
3**»273 ,77!*
13,9^.562
20,881,883
26,155$330
10**,621,321
93,287,3***
**7,951,373
3 ,**86,928
82,825,279
3**,001,9**3
**,359,288
73,23**,872

Non-Signatory Countries:

61,900,935

August 19 , 19****
1,131,575,21**
(Import quota filled)
August 19 , 1944
29,983.4*0
H
8.192,397
August 26 , 1944 2/
18,946,805
August 19, 1944
21.471,389
It
98,607,917
n
82,471,295
R
39,279,409
(Import quota filled)
(Import quota filled)
August 19, 19****
28,868,484
R
3,029,059
N
40,339,362
H

4 ,193,312

ly

Quotas as established by act ion of the lot er**American Coffee Board on
April 21, 19U4.

2/

Per telegraphic reports.

TREASUE? DEPARTMENT
Washington
POE IMMEDIATE EE1EASE,
Wednesday. August 30. 1944.

Press Service
No. 43-14

The Bureau of Customs- announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas for
the 12 months commencing October 1, 1943, provided for in the Inter-American
Coffee Agreement,, proclaimed by the President on April 15, 1941, as follows:

Country of Production

:

Quota Quantity
(Pounds) 1/

:
:
:

Authorized for entry
for consumât ion
As of (Date)
:
(Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
G-uat emala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1,621,630,479
August 19, 1944
1,131,575,214
549,261,936
(Import quota filled)
34,873,774
August 19, 1944
29,983,480
t
i
8,192,397
13,949,562
18,946,805
20,881,883 , August 26, 1944 2/
21,471,389
26,155,330
August 19, 1944
ti
98,607,917
104,621,321
n
93,287,384
82,471,295
it
39j279,409
47,951,373
3,486,928
(Import quota filled)
82,825,279
(Import quota filled)
August 19, 1944
28,868,484
34,001,943
ii
4,359,288
3,029,059
it
73,234,872
40,339,362

Non-Signatory Countries:

61,900,935

it

4,193,312

1/

Quotas as established by action of the Inter-American Coffee Board on
April 21, 1944.

2/

Per telegraphic reports.
-oOo-

VICTORY

TR EA SJ

BUY
UNIT«©
STATKB
WAR
fBONDS

fR T M E N T

¿PfÎOCURÎ

IENT

[ AND

\ STAMPS

^sHiN^rorrtr

O F F IC E O F T H E D IR E C T O *

¿1 A - / (

€ 4 4 ^ 1
IM

te^LEASE

!SS

riti

J. M. J(

'ice

lent

in

J. M. Johnson of the J. C. Penney Company
has /been granted temporary leave of absence to join Treasury
Procurement with the idea of readjusting its Division of Tex
tiles» Clothing and Pootwear to meet the needs of the increased
demands of PEA and expected needs of UFEEA.
The requirements of these agencies, also Army lend—
lease for civilians in liberated A^eas, are -m Whim: il through
Treasury Procurement.
/
The progress made by the Allied Armies in Europe,
which is ahead of schedule, has created an emergency for re
quirements which has placed a greater immediate burden on
Treasury Procurement.
Close and cooperative action between PEA, U1
T O and industry^ is of utmost importance at this time^nd Mr.
Johnson will aseist Treasury Procurement in this respect. Con
tact will be kept with the Army and Havy with the view of applying
any excess of needs against Treasury Procurement requirements.
It is expected that because of the emergency of these needs WP3
will assist Treasury Procurement with the necessary ratings.

(P

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE
September 1, 194-4-

Press Service
No. 4-3-15

Secretary Morgenthau announced today that J. M. Johnson of the
J. C. Penney Company has been granted temporary leave of absence to join
Treasury Procurement with the idea of readjusting its Division of Tex
tiles, Clothing and Footwear to meet the needs of the increased demands of
FEA and expected needs of UNRRA.
The requirements of these agencies, also Arragr lend-lease for civilians
in liberated areas, are fulfilled through Treasury Procurement.
The progress made by the Allied Armies in Europe, which is ahead of
schedule, has created an emergency for requirements which has placed a
greater immediate burden on Treasury Procurement.
Close and cooperative action between FEA, UNRRA, WPB and industry,
is of utmost importance at this time officials said, and Mr. Johnson will
assist Treasury Procurement in this respect. Contact will be kept with
the Army and Navy with the view of applying any excess of needs against
Treasury Procurement requirements. It is expected that because of the
emergency of these needs WPB will assist Treasury.Procurement with the
necessary ratings.

0O0

contracts (over 02,000 having been executed) calling
for the purchases of Four Billion Dollars worth of
supplies for the Allies» Except for rare cases
there has been no criticism of these vast purchases,
le cut red tape, streamlined the official purchase
contracts, and gave your office 24—hour legal service.
Tihile I regret leaving this important war work,
I know the opportunity as candidate for the Ifcdted
States Senate to Present the cause of liberal govern**
meat, as exemplified in the principles enunciated
by our great President, is a groat one*
I want you to know that I appreciate the courtos
you have extended me in the past and to wish you
continued success and good health in 'the future.
Sincerely yours,
(signad) Thurman Hill

Ihurman Hill

Honorable Henry Morgenthau, Jr.
Secretary of the treasury

August 21, 1944

%

dear Mr, Secretary?

The Democratic State Committee of Kansas has
selected me to make the race for the United States
Senate against the present incumbent. Senator
Clyde M* Seed.
Naturally, I feel highly honored and, since it
is a great privilege to seek election to the Senate
and to he on the same ticket as the President, I
deemed it ay duty, as well as pleasure, to accept
tae official action of the State Committee. There
fore, I tender you ay resignation as Chief Counsel
of Treasury Procurement, effective at the close of
business on August 28, 1944.
For more than nine years 1 have had the pleasure
of serving your office, first, as special assistant
to tae General Counsel and the past two years in
this position.
Shortly after Pearl Harbor, and as an added duty,
you did ae the honor of having me head up the investi
gation of the American Bosch Company which resulted
la th® control of that important war plant being
taken away from Oenaan hands and turned over to the
Alien Property Custodian.
I am very proud, too, of the work done by ay
legal staff is the Procurement Division. We have
passed on the legality of thousands of Lend-Lease

AUG 2 2 1944

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w M % tff tefoateaoot
i i O b l a f i © © # 2# €«

Proposed press release

Thurman Hill has resigned as Chief Counsel for the
Procurement Division in order to make the race for United States
Senator from Kansas, the treasury announced today.
Mr* Hill has been with the Treasury for nine years, first
as special assistant to the General Counsel, and for the last two
years in the Procurement position where he handled leg&l problems
arising from the huge purchasing program for lend lease and other
wartime needs of the Government.

As a special assignment he

headed an investigation of the American Bosch Company which
resulted in control of that important war plant being taken from
German hands and turned over to the Alien Property Custodian.
In accepting Mr. H i l l ’s resignation, Secretary korgenthau
said!
nDuring the time you have been with the Department, your
work has been of the highest order.

The problems with which you

have been faced and with which you have dealt so successfully have
been extremely important ones from the standpoint of the w a r effort
and your contribution in that respect has been most valuable. For
those reasons I am reluctant to see you leave the Treasury*

On

the other hand, I thoroughly appreciate your desire to resign in
order to make the race for the Senate, and I feel that X must
accept your resignation so that you may do so.11
Mr. Hill said he had been asked by the Democratic State
Committee of Kansas to make the race against Clyde M. Reed, the
incumbent Senator.

«»oGo

KAj

aJ

Thurman

H ill has r e s i g n e d as C h i e f C o u n s e l for thé

P r o c u r e m e n t D i v i s i o n in o r d e r to make the race for U n i t e d
Stat e s S e n a t o r f r o m « p M i M H H H H ^

the T r e a s u r y

a n n o u n c e d today.
M r . H i l l has

been with

the T r e a s u r y for nine years,

first

as special a s s i s t a n t to the G e n e r a l C o u n s e l , a n d for the l ast two
y e ars in the P r o c u r e m e n t p o s i t i o n ^ w h e r e he h a n d l e d legal problems
a r i s i n g f r o m the huge I

W

r

p u r c h a s i n g p r o g r a m for lend lease

and other w a r t i m e needs of the G o v e r n m e n t , A s a special assignment
he h e a d e d a n i n v e s t i g a t i o n of the A m e r i c a n B o s c h C o m p a n y w h i c h
re s u l t e d in co n t r o l of that i m p o r t a n t w a r

plant

f r o m G e r m a n hands a nd t u r n e d over to the â i

being t a k e n

Alien Property

Custodian.
In a c c e p t i n g Mr.

H i l l ' s r esignation,

Secretary Morgenthau

said z
\

x

" D u r i n g the time you h a v e b e e n w i t h the D e p a r t m e n t

^^j^pi^i^fljirt9E6p336Hi^fiBn!SB8SêSwi®l^8fla6B8BB3uSSfl3EXSMflFÿX!!BBC
-******■'
V . you r w o r k has b e e n of the h i g h e s t ord e r . T h e gjjSfe problems w i t h
w h i c h you h a v e b e e n f a c e d a n d w i t h w h i c h y o u have d e alt so successfij
have b e e n e x t r e m e l y i m p o r t a n t ones f r o m the s t a n d p o i n t of the
w a r effort a n d your c o n t r i b u t i o n in that r e s p e c t has b e e n most
valuable.

F o r those r e a s o n s

the Treasury,

I a m reluctant

On the o t h e d h a n d ,

so see you l e ave

I t h o r o u g h t l y a p p r e c i a t e yourpesire

to r e s i g n in o r der to m a k e the race for the Senite,

a n d I feel that

I m u s t a c c e p t your r e s i g n a t i o n so that yo u ma y do so."
Mr. Hil l said he had b e e n a s k e d by the D e m o c r a t i c State
of Kajsas to m a k e the raxe a g a i n s t 'Clyde M . R e e d , t h e

Committe

incumbent

(

X

PTOposed

Thurman Hill has resigned as Chief Counsel for the
Procurement Division in order to make the race for United States
Senator from Kansas, the Treasury announced today.
Mr. Hill has been with the Treasury for nine years, first
as special assistant to the General Counsel, and for the last two
years in the Procurement position where he handled legal problems
arising from the huge purchasing program for lend lease and other
wartime needs of the Government.

As a special assignment he

headed an investigation of the American Bosch Company which
resulted in control of that important war plant being taken from
German hands and turned over to the Alien Property Custodian.
In accepting Mr. Hill's resignation, Secretary Morgenthau
said:
‘‘During the time you have been with the Department, your
work has been of the highest order.

The problems with which you

have been faced and with which you have dealt so successfully have
been extremely important ones from the standpoint of the war effort
and your contribution in that respect has been most valuable. For
those reasons I am reluctant to see you leave the Treasury.

On

the other hand, I thoroughly appreciate your desire to resign in
order to make thevrace for the Senate, and I feel that I must
accept your resignation so that you may do so.”
Mr. Hill said he had been asked by the Democratic State
Committee of Kansas to ra*ir*. 4

nnt ^lydo F

-0 O 0 -

p rrd, thn

FROM! MR. Q*O0MRHi

For approval, please.

Chas. P. Shaeffer

Mr. Shaeffer

TO:

fOr.
..i

s

g

'fhaejrfe.rs

S

-

For approval, X L ease.

Copy to

TREASURY DEPARTMENT
Washington

F O R I M M E D I A T E RELEASE,
Friday, S e p t e m b e r 1* 1944.

Press Service
No. 43-16

T h u r m a n H i l l has r e s i g n e d as C h i e f C o u n s e l f or the
P r o c u r e m e n t D i v i s i o n in o r der to fflakje t h e r a c e f o r
U n i t e d S t a t e s S e n a t o r f r o m Kansas, t h e t r e a s u r y a n n o u n c e d
today*
Mr. H i l l has b e e n w i t h t h e T r e a s u r y fo r n i n e years,
first as s p e c i a l a s s i s t a n t to t he G e n e r a l Counsel, a n d
f o r t h e last t wo years in “ the. P r o c u r e m e n t p o s i t i o n w h e r e
he h a n d l e d l e gal p r o b l e m s a r i s i n g f r o m t h e h uge p u r c h a s i n g
p r o g r a m f o r len d l e ase a n d o t h e r w a r t i m e needs of the.
G overnment.
As a s p e c i a l a s s i g n m e n t he h e a d e d an i n 
v e s t i g a t i o n of t he A m e r i c a n B o s c h C o m p a n y w h i c h r e s u l t e d
in control of that i m p ortant w a r p l a n t b e i n g t a k e n f r o m
G e r m a n h a n d s a n d t u r n e d over to t h e A l i e n P r o p e r t y C u s t o 
dian .
In a c c e p t i n g Mr. H i l l ' s resig n a t i o n ,
M o r g e n t h a u said:

Secretary

" D u r i n g t h e t i m e y o u h a v e b een w i t h the D e p a rtment,
y o u r w o r k has been of t h e h i g h e s t order.
T he p r o b l e m s
w i t h w h i c h y o u h ave b e e n f a c e d a n d w i t h w h i c h y o u h a v e
dealt so s u c c e s s f u l l y h a v e been e x t r e m e l y important ones
f r o m t he s t a n d p o i n t of t h e w a r effort a n d y o u r c o n t r i 
b u t i o n in t h a t r e s p e p t has b e e n most valuable.
For
t h o s e r e a sons I. a m r e l u c t a n t to se e y o u l e ave the
Tre a s u r y .
On the o t her hand, I t h o r o u g h l y a p p r e c i a t e
y o u r desi r e to r e s i g n in o r d e r t o m ake t h e r a c e for
the Senate, a n d I feel tha t I m u s t a c c e p t y o u r r e s i g 
n a t i o n so tha t y o u m a y do so."
Mr, H i l l sai d he h a d been a s k e d b y t h e D e m o c r a t i c
S t a t e C o m m i t t e e of K a n s a s to r un f o r a seat in t h e
U n i t e d States Senate.

-oOo-

)

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Saturday, September 2. 1944«

Press Service

^ 3 - ' 7

I

the Secretary of the treasury announced last evening that the tenders for
#1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated September 7 and
to mature December 7, 1944, which were offered on August 50, were opened at the
Federal Reserve Banks on September 1.
The details of this issue are as follows:
Total applied for - #1,759,890,000
Total accepted
- 1,204,692,000
Average price

(includes #44,877,000 entered on a fixedprice basis at 99*905 and accepted in full)!
- 99*905/ Equivalent rate of discount approx. 0*375# per annul

Range of accepted competitive bids:
High
Low

- 99*908 Equivalent rate of discount approx. 0*364# per annura|
- 99*905
*
*
*
*
»
0*376# »
"

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

Federal Reserve
District

Tbtal
Applied for

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

#
13,695,000
1,254,949,000
56,500,000
44,407,000
17,088,000
10 ,315,000
267,923,000
17,325,000
8,446,000
9,787,000
8,265,000
51.190.000
TOTAL

ss~v

11,759,890,000

Tbtal
Accepted
11 , 140,000

823.494.000
48.940.000
38 020.000
15.494.000
9.965.000
180.161.000

.

.

13 2 30 .00 0

6.686.000
9.367.000
8.230.000
39,965,000
#1,204,692,000

TREASURY DEPARTMENT
Washington
FOR RELEASE, M O R N I N G NEWSPAPERS,Saturday, S e p t e m b e r 2, 1944,
9-1-44

Press S e r vice
No. 4 5 -17

The S e c r e t a r y o f the T r e a s u r y a n n o u n c e d l ast e v e n i n g that
the tenders

for $1,200,000,000,

Tr e a s u r y b i l l s
1944,

or thereabouts,

of 9 1 - d a y

to be d a t e d S e p t e m b e r 7 a n d to m a t u r e D e c e m b e r 7,

w h i c h wer e

o f f e r e d on A u g u s t 30, w e r e o p e n e d at

the Federal

Reserve B a nks on S e p t e m b e r 1*
The details

of this

issue ar e as follows:

Total a p p l i e d f or - $ 1 , 7 5 9 , 8 9 0 , 0 0 0
Total accepted
1 , 2 0 4 , 6 9 2 , 0 0 0 (includes $ 4 4 , 8 7 7 , 0 0 0
e n t e r e d on a fixe d - p r i c e b a sis at 9 9 * 9 0 5 a n d a c c e p t e d in
full)
Average price

- 9 9 , 9 0 5 / E q u i v a l e n t rate of d i s c o u n t
approx* 0 * 3 7 5 % p er a n n u m

Range of a c c e p t e d c o m p e t i t i v e bids:
Righ

- 9 9 * 9 0 8 E q u i v a l e n t rate of d i s c o u n t
approx, 0 * 3 6 4 % p e r a n n u m
- 9 9 ,905 E q u i v a l e n t rate of di s c o u n t
approx. 0 * 3 7 6 % p e r a n n u m

k°w

(65 p e r c e n t of the a m o u n t b i d for at
Federal Re s e r v e
D i s trict________

Total
Applied

Boston
New Y o r k
P h i l a delphia
Cle v e l a n d
Richmond
Atlanta
Chicago
St. Louis
Minn e a p o l i s
Kansas C i t y
Da11a s
San Francisco

$

Total

the l o w p r i c e was accepted)

for

13,695,000
1,254,949,000
56.500.000
44.407.000
17.088.000
10.315.000
267,923,000
17.325.000
8.446.000
9.787.000
8.265.000
51.190.000

$1,759,890,000

oOo

Total
Accepted
$

11,140,000
823.494.000
48.940.000
38.020.000
15.494.000
9.965.000
180.161.000
13.230.000
6.686.000
9.367.000
8.230.000
59.965.000

$1,204,692,000

THEASUKI DEPARTMEHT
Washington
FOR M E D I A T E RELEASE,
Saturday. September 2. 19AA.

Press Service

¥ 3 The Secretary of the Treasury today announced the final subscription and allotment
figures with respect to the current offering of

7/8 percent Treasury Certificates of

Indebtedness of Series F-1945 and of the additional issue of

1 percent Treasury Motes

of Series A-1946.
Subscriptions and allotments were divided among the several Federal Reserve Districts and the Treasury as follows j
Federal Reserve
District

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

4 L

Series F-1945
Certificates
Total E-1944 Certificates Exchanged
$ 130,548,000
2,254,846,000
104 ,683,000
154 ,922,000
47.937.000
60.060.000
399.453.000
63.A03.000
71.553.000
92.976.000
51.624.000
259.291.000
2.716.000
$3 ,694 ,012,000

Series A-1946
Motes
Total C-1944
Total D-1944
Motes Exchanged
Motes Exchanged

Total
Bxchancri

$ 7,547,600

$ 13,172,700

$ 20,720,j

139,093,600

352,742,800
14.598.400
57.632.400
7.865.000
3.855.000
74.488.200
13, 110,100

491,836,
25,864,
63,087,
7,945,
4,228,
89,217,
15,014,
9,392,
23,052,
14,176,j
22,161,\
916,(

11 ,2 66 ,30 0

5,455,500
80,000
373.000
14,729,200
1.904.700
976,600
2.602.700
210.000
862,200

300.000
$185,401,400

8 , 4 1 6 ,3 0 0

20.450.200
13 ,9 66,500

21 ,299,000
616.000

.
1602,212,¿00

m

n m

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Saturday. September 2. 1944.

Press Service
No. 43-18

The Secretary of the Treasury today announced the final subscription
and allotment figures with respect to the current offering of 7/8 percent
Treasury Certificates of Indebtedness of Series F-1945 and of the additional
issue of 1 percent Treasury Notes of Series A -1946.
Subscriptions and allotments were divided among the several Federal
Reserve Districts and the Treasury as follows:

Federal Reserve
District

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

Series F-1945
Certificates
Total E-1944 Certificates Exchanged
$

Total e-1944
Notes Exchanged

Series A-1946
Notes
Total D-1944
Notes Exchanged

Tbtal Nbtes
Exchanged

130,543,000
2*254,346,000
104,683,000
154,922,000
47,937,000
60,060,000
399,453,000
63,403,000
71,553,000
92,976,000
51,624,000
259,291,000
2.716.000

1 7,547,600
139,093,600
11,266,300
5,455,500
80,000
373,000
14,729,200
1,904,700
976,600
2,602,700
210,000
862,200
300.000

$ 13,172,700
352,742,800
14,598^400
57,632^400
7,865^,000
3,855,000
74,488,200
13,110,100
8,416,300
20,450,200
13,966,500
21,299^000
616.000

$ 20,720,30(
491,836,40c
25,864,7a
63)087)90*
7,945,000
4,228,00C
89,217,4a
15Ì014^8a
9,392,90(
23,052,90c
14^176'5a
22,l6l,2a
916.00C

$3,694,012,000

$185,401,400

$602,212,600

$787,614,OCX

oOo

September^,
STATUTORY DEBT LIMITATION
AS OF AUGUST 51. 3.944

19W
✓S

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 $260,000,000,000 outstanding at 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
Outstanding as of August 31, 1944:
Interest-bearing;
Bonds Treasury
$81,231*.674,350
Savings (Maturity
value)*
45.650,173.350
Depositary
484,242,750
Adjusted Service
____716,279.307
Treasury notes
36,691,707,600
Certificates of
Indebtedness
36,367.4 a , 000
Treasury Bills
(Maturity value)
15,714,953.000
Matured obligations on
which interest has ceased
Bearing no interest
U*S. Savings stamps
167,425,035
Excess profits tax refund
*onds
262,469,194
Face amount of obligations
issuable under above authority

$260,000,000*000

$128,085,369,757

88.774.081.600
$216,859,45i |357
159.380,875

429,894.229

a

7 ,448,756,461

Reconcilement with Daily Statement of the United States Treasury
August 31. 194%
~
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act,
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 (Postal Savings, etc.,)
$195,917,5^
Matured obligations On which
interest has ceased
7,516,065
Bearing no interest
91b,900,534
Total gross debt outstanding as of August

31, 1944

♦Approximate maturity value, Principal amount (current
redemption value) according to preliminary public debt
statement $36,883,**53,969.

RHM/mc

$217,44S,726,461
8,766,719,381
208,b82,007,080

1,120,334.132
l$209.802.341.219
irriiiiiFr1irT Tt"1,,,|iiasz&sgZz

September 5, 1944STATUTORY DEBT LIMITATION
AS OP AUGUST 31. 1944
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 $260,000,000,000 outstanding at 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

$ 260, 000, 000,000

Outstanding as of August 31, 1944:
Inte re st-bearing;
Bonds Treasury
$81,234,674,350
Savings (Maturity
value)*
45,650,173,350
Depositary
484,242,750
Adjusted Service
716.279.307
Treasury notes
Certificates of
Indebtedness
Treasury Bills
(Maturity value)

$128,085,369,757

36,691,707,600
36.367.421.000
15.714.953.000

Matured obligations on
which interest has ceased
Bearing no interest
U.S. Savings stamps
167,425,035
Excess profits tax refund
bonds
~
262.469.194
Face amount of obligations
issuable under above authority
>

88.774.081.600
$216,859,451,357
159,380,875

429.894.229

217,448,726,461
i 42.551.273.539

Reconcilement with Daily Statement of the United States Treasury
August 31, 1944
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act.
$217,448,726,461
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 (Postal Savings, etc.,)
$195,917,540
Matured obligations on which
interest has ceased
7,516,065
Bearing no interest
916,900.534
Total gross debt outstanding as of August 31, 1944
^Approximate maturity value, Principal amount (current
redemption value) according to preliminary public debt
statement $ 36,883,453,969.
43-19

0O0

8 ,766,719.381
208,682,007,080

1,120,334,139
$209,802,341.219

COTTON CARD STRIPS, /. COMBER WASTE, DAP WASTE, tSLIVER WASTE, .AND ROVING V/ASTB *
WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUE. Annual 'quotas
commencing September SO, 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 *L-r3/l6 inches-or more in staple length in the
case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany and Italy: 7
(In Pounds)
:TOTAL,....IMPORTS :ESTABLISHED:Imports Sept« 20,
Country of Origin .^Established- :Sept* 20,:1943 i 33-1/3$ of :1943, to..
, •
m h
i
: TOTAL QUOTA : August 26.
Total; Quota August 26. 19kk 1
•• '

'

'

’f:

Unit ed ‘Kingdom.. . . . .
OdHS>dd>t • < • • • • » 9 1 » « » «
France*. . . . . . . . . . . . .
British India......
Netherlands.. . . . . . . .
Swit zerland.. . . . . . . .
Belgium.
J Sp3*n * » » a m ♦ # * * • • # . * « «

China....... ..
Effypt.. . . . . . . . . . . . . .
Cuba.. . . . . . . . . . . . . . .
Germany*. . . . . . . . . . . .
Italy.... ..
TOTALS

1

/

Z/

i ",

1,441,152
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
a , 263

29,398

5,482,509

29,398

- -...
■
-

75,807

—
—

■r*
—

..

'

■
''

22,747 '
14,796’
12 * 853

mm

;

—
—

—
a.

m,

mm' ‘

mm

' —
mm
■, -;r

Included in total imports, column 2*

'*

.. _

25,443 '
7,088
1,599,8-86

'

,

*

•

—

. . .

■

The Presidents 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, ''
-- ^
vi'..»

~o0o—

,

FOR BiMEDIATE RELEASE
*September

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, 1943* to
August ‘26, 1RI4*.
‘
ffl
t
‘
COTTON HAVING- A STAPLE OF LESS THAN 1-11/l6 INCHES (OTHER THAN HARSH OR* ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS AND BLANKETING, AND OTHER THAT LINTERS)* Annual quotas
commencing September 20, by Countries of Origin:
"
(In Pounds)

- ~

-

•
:

Staple length less : Staple length 1-1/8" or more
than 1—1/811
:
but less than 1—11/16”
Country of
•
•
:Imports S e p t E s t a b l i s h e d : Imports Sept.
Origin
«Established:20, 1943* to
: Quota
: 20, 1943, to
— .—
-------- 1— .-..te.t.a.__ ?August-26,, .Igltlj 15i.656*,.420.August 26^.. I ShkEgypt and the AngloEgvn tian 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. . . . . . . i * ....
Other British West
Indies 1/......... ..
Nigeria........... ..
Other British West
Africa 2/* . . . . . . . . . . .
Other French Africa 3/.
Algeria and Tunisia**...

783,1316
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,1533
752
871
124
,195
2,240
71,388
~

21,321
5,377
16,004
689

2/
.3/

*>

8,883,259
1(17,580 '
/-mm ■t - *

33,00^,072
■• ' 1,836,01(8
'1 ‘
w
....

-- •

A- — ■
*

•

-

—
• *•
■—
-

-

. —

: ** * ■
•

£ '> ■*

'

•

-

«

•

■a.

—

'mm

—

mm

—

mm

—

mm

—

mm

—

-

14,516,882

l/

— '•
73,576
- ;*
m -V .

9 93 7 k ? k l $

45,656,420

Other than Barbados,. Bermuda, Jamaica,. Trinidad, and Tobago.
Other than Gold Coast and Nigeria*
Other than Algeria, Tunisia, and Madagascar.

3l(,860,120

TREASURY DEPARTMENT
Washington
PQR IMMEDIATE RELEASE,
Tuesday. September 5, 1944.

Press Service
No. 43-20

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? 1943, to
August 26, 1944.
COTTON HAVING A STAPLE OP LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origin:

.
Country of
Origin

(In Pounds)
Staple length less
than 1-1/8”

• Staple length 1-1/8” or more
:
but less than 1-11/16”
:
:Imports Sept, * Established : Imports Sept.
Quota
: 20, 1943, to
:Established:2Q, 1943, to ;
:
Quota
‘
.August 26, 1944: 45,656,420 : August 26, 1944

Egypt and the Anglo783,816
EgyptIan Sudan......
247,952
Peru........... ......
British India........
2,003,483
1,370,791
China.,..... .
8,883,259
Mexico...............,
618,723
Brazil................
Union of Soviet
475,124
Socialist Republics.
5,203
Argentina..........,.,
237
H a i t i . .. ......
9,333
Ecuador...............
752
Honduras,...... ......
871
Paraguay...... .
124
Colombia...... .
195
Iraq..................
2,240
British East Africa...
71,388
Netherlands East Indies
IT
Barbados....... .
Other British West
21,321
Indies 1/...........
5,377
Nigeria.....y ........
Other British West
16,004
Africa 2/ ..........
689
Other French Africa £5/
—
Algeria and Tunisia...
14,516,882
1/
2/
3/

73,576
8,883,259
417,580

33,004,072
1,856,048
-

- ,
-

. .—
—
—
-

-■
-

—
—
-

-

. 9,374,415

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Coast and Nigeria.
Other than Algeria, Tunisia, and Madagascar,

34,860,120

-

2-

CCTTON CARD STRIPS. 2/ COMBER' TASTE, LAP WASTE, SLIVER WASTE, AND ROVING WASTE,
WHETHER OR NOT MANWAC TUBED OR OTHERWISE ADVANCED IN VALUE. Annual quotas
commencing September 20, by Countries of Origin:
Jotal quota, provided, however, that not more than 33-1/3 percent of 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:
________________________ __ _______ (In Pounds)
:
:T0TAL IMPORTS :ESTABLISHED: Imports Sept. 20,
Country of Origin? Established :Sept. 20, 1943 :33-1/3$ of :1943, to
__________: TOTAL QUOTA :August 26, 1944:Total Quota?August 26, 1944 1/
United Kingdom..... .,
Canada...............
France.... .
British India.,.....
Netherlands..........
Switzerland..........
Belgium.... .
Japan................
China...... .
Egypt......... ......
Cuba.................
Germany..............
Italy...... .........
TOTALS

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

1,441,152
29,398
-

—

75,807
22,747
14,796
12,853
25,443
7,088

29,398

1,599,886

-t*

#■*

5,482,509

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—

-_
%
—
—
-

J-/-3 FOR IMMEDIATE RELEASE
September 5. 19**4

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1,

19^*3 , provided for in the Inter-

American Coffee Agreement, proclaimed by the President on April

15 , 19^1 ,

as follows:

Country of Production

Quota Quantity
(Pounds) 1/

Authorized for entry
for consumption
As of (Date) : (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 ,621,630,^79
5^9,261,936
34,873,774
13,9^9,562

2 0 ,881,883

26 ,155,330
104,621,321

Non-Signatory Countries:

93,287,384
**■7,951,373
3,486,928

8 2 ,825,279

34 .001.9U3
4,359,288

73 ,234,872
61,900,935

August 26 , 1944
1 ,162,793,584
(Import quota filled)
August 26 , 1944
31,380,696
S,^77,820
September 2 , 1944 2/
18,947,854
August 26 , 1944
21,901,597
September 2 , 1944 2 /
98,820,529
August 26 , 1944
82.862.096
n
39.279.096
(lnq>ort quota filled)
(Import quota filled)
August ¿6, I 9I&
28,867,^3**
it
3,381,510
N
**1,920 ,179
s

4 ,193.368

Xj

Quotas as established by action of the Inter—American Coffee Board on
April 21, 19****,

2/

Per telegraphic reports.

TREASURY DEPARTMENT
Washington

POR IMMEDIATS RELEASE,
Wednesday, September 6y 1944«

Press Service
No. 43-21

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1, 1943, provided for in the InterAmerican Coffee Agreement, proclaimed by the President on April 15, 1941, as
follows?

Country of Production

•* Quota Quantity
(Pounds) 1/

ï
:
î

Authorized for entry
for consumntion
As of (Date)
?
(Pounds)

Signatory Countries?
Braz il
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
11 Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1,621,630,479
549,261,936
34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47,951,373
3,486,928
82,825,279
34,001,943
4,359,288
73,234,872

Non-Signatory Countries?

61,900,935

August 26, 1944
1,162,793,584
(import quota filled)
31,380,696
August 26, 1944
«
8,477,820
18,947,854
September 2, 1944 2/
21,901,597
August 26, 1944
98,820,529
September 2, 1944 2]
82,862,096
August 26, 1944
it
39,279,096
(import quota filled)
(Import quota filled)
28,867,434
August 26, 1944
ti
3,381,510
it
41,920,179
»

4,193,368

1/

Quotas as established-by action of the Inter-rAmerican Coffee Board on
April 21, 1944.

2/

Per telegraphic reports.

oQo-

- 49 One

o p

two would introduce averaging for some or all types

of income, notably for capital gains*

This interest in the averaging problem is significant,

because in the many tax revisions and great amount of tax study

that have been carried on in the United States over the years,

relatively little time and thought have been devoted to methods

of overcoming the disadvantages for tax purposes of the annual

fiscal year.

let the potential importance of such methods in

terms of equity and sound economic effects is so great that

much more attention to them is justified for the future than

has been given to them in the past.

It may well he that a good

averaging device applying over an adequate period of years

would be worth quite a few percentage points in the tax rate

scale in furthering the realization of our tax and economic

objectives in the postwar world

is you no doubt have learned, the Congressional Joint

Committee on Internal Revenue Taxation instructed its

staff and requested the Treasury staff to work together

as a unit on the problem of tax adjustments for the

transition and postwar periods.

The studies being carried

on have not yet reached the point of a report to the Joint

Committee.

So it would be inappropriate for me to go into

the part which averaging devices might play in a postwar

tax program*

The matter is being given careful study along

with other aspects of the postwar tax problem, and any

suggestions which any of you may care to make on this

question or any other involved in the study will be most

welcome and carefully considered*

Suggestions have already been made by a number of groups.

Several plans provide long periods of carry-over of losses.

If an averaging device such, as the carry-over is to

serve its functions of increasing tax equity and

encouraging business investment and expansion, it must be

adopted as firm policy to be retained in good times and

bad*

It would be worse to adopt a long carry-over, or other

longer-term averaging device, and thereafter to abandon it

when loss periods were experienced than to delay

lengthening the period until there was a general understanding

and resolution to retain the device as a continuing element

in the tax system.

I

am sure you would like for me to tell you what is

going to happen to the wartime carry-backs and to averaging

devices for the postwar tax revisions*

you.

I wish I knew*

Congressional action.

I would like to tell

But tax revision is a matter for

48

Fluctuations of business incomes are sometimes
classified roughly into the seasonal and the cyclical#
To these are added the life cycle of the business unit*
The annual income period averages out the seasonal
fluctuations* Few who favor averaging devices

would

cover the whole life period of the business firm
although, unhappily, for'many businesses no long period
would be involved* Cyclical movements are of various
lengths* The two year carryover of the prewar Federal
law would be sufficient for the shorter cycles, but is
too short for the.longer and more important cycles and,
accordingly, too short to at#t a substantial part of
the problem*

The new business cannot benefit from the carry-back, but

would be benefitted by a longer carry-over especially in

view of the tendency of businesses to suffer losses in the

early years*

The dying or liquidating business cannot use

the carry-over but would be benefitted by the carry-back.

For other businesses it is hard to forecast whether the carry-

or the carry-back confers the greater benefit*.

However, the

carry-over has the merit of permitting the closing of tax

years without delay and of minimizing manipulation to

secure the maximum benefit and avoid taxes*

Under carry-overs

carry-backs, and actual averaging, the problems of predecessor

and successor corporations and corporate acquisitions to

reduce tax are present and must be met, even though

arbitrarily*

- 44 The period for spreading losses in Great Britain is seven

years including in addition to the year of loss, a one-year

carry-back and a five-year carry-over*

In the Commonwealth

of Australia losses are spread over five years by means

of a four-year carry-over*
%i

The recently proposed spread

in the Dominion of Canada would be temporarily five years

including a one-year carry-back and a three-year carry-over*

Under the two-year carry-back and two-year carry-over in the

United States the spread is likewise five years; it may be

even longer under certain circumstances*

In peacetime, countries other than our own have

limited the carry-back to one year, if they allowed it at

all, and the misgivings about our own carry-backs are such

as to raise a question as to their desirability for

peacetime use

• 48
These experiences present a practical obstacle to tho
friends of averaging but have not dismayed them. New
methods of averaging have been developed that meet some of
the objeetions to the moving average, and other improvements
ean no doubt be made. Nevertheless, the administration and
compliance problems of even the most promising methods of
averaging remain a major impediment, especially with respect
to the individual income tax, which is unfortunate since
under the individual income tax the progressive rate scale
and relative unimportance of losses make such partial
devises as the loss oarry-over largely ineffective.
For business income the spreading of losses through
carrying of losses from years of loss to years of gain is
ths averaging device that has been preferred in these
countries.

- 42 Conclusion

This survey of the use of averaging and averaging

devices is too limited to justify definitive conclusions,

but a few observations may not be out of order*

Although

of all averaging devices, out right averaging provides the

most complete equalisation of tax load between fluctuating

and stable incomes, it has lost rather than gained ground

in the English-speaking countries whose tax systems have

.been examined.

After very long use and several

reappraisals it was abandoned in Great Britain*

After

a shorter trial its use was minimised in Australia*

has not been adopted In Canada*

It

The Wisconsin experiment

could hardly have been more ill-timed, as matters turned

out, and may not indicate what would have been the result

of a longer trial under more auspicious circumstances*

- 41 -

These earry-backs and carry-forwards do not extend beyond

the period during which the excess-profits tax law is in

operation*

However, it was stated by Sir Kingsley Wood

in the Parliamentary Debate of 1943 that reconversion

costs will be allowed as a deduction in computingsexcess

profits tax if the tax is repealed before these costs

are incurred. J /

37

Sir Kingsley Wood, Parliamentary l>ebate, April 13, 1943,
pp* 960-982, The British have no specific inventory
reserve adjustment. Apparently they have made some
provision, in the administration of their law, for
deferred maintenance.

Ifodep the proposal any unused balance in the reserve when the

excess-profits tax act becomes inoperative may be applied

against any inventory price decline in the following year, and

if not used then is to be added to the income in the last

year that the excess-profits tax act applied to the
taxpayer*

In the British law losses and unused excess-profits

credits arising in the period the excess-profits tax is

in operation may be completely offset against taxable

excess^profits*

fhese deficiencies are first carried

backward until excess-profits are exhausted and then

forward, with an appropriate allowance for the increase

in the rate of excess-profits tax in 1940 from 60 to
100 percent*

S9 ^

*^o observed th&t Canada hu fiftitlnr & carry

forward nor carry-back of unused excess-profits credits.
Another adjustment was suggested in the 1944 Budget
Speech regarding warties income. This was a suggested
provision that half of the expenditures on maintenance
and repairs incurred in a period to be fixed by order
in council may be charged against income of a preceding
taxable period, but to no year earlier than one ending in
1943.
The Canadian law also provides for a reasonable in
ventory reserve against future depreciation in inventory
II

\

Tain®* This reserve is allowed solely for purposes of
determining excess-profits taxes* This reserve cannot pro
vide for price decline below inventory prices at the end of
taxable years ending in 1939, or August 1939, whichever date
is earlier*

In this connection, the Minister of Finance stated;
"We cannot shut our eyes to the fact that with the
change from war to peace many firms may encounter temporary
losses and under our present practice taxes paid over
the whole period of war and readjustment may bear con
siderably higher rates to the fell realised income than
those prescribed in the law. I am particularly concerned
lest for this reason, when the time comes to replace war
industries with peace industries, business enterprises
should be handicapped in making the necessary changes
or should be hesitant rather than prompt in action..."
It is worthy of note that the emphasis in this new
proposal is upon the correction of wartime Income
:

|| j

pjp§ 11

-

’

|

i | NsU'-h.I; ,

insofar as the one-year oarry-baok is concerned, while the
three-year carry-forward is for the purpose of looking ahead
and giving relief to peacetime industry.

37

Although tho objectives of those refunds are proper*

there may be a feeling after the war that such refunds

constitute a special benefit to corporations which earned
excessive profits during the war.

World War II Averaging Devices in Canada and Great Britain.

Since Canada and Great Britain have faced ¡such the

same wartime tax problems as we have, it

may

be helpful

to examine their wartime methods of averaging.

In Canada

a carry-forward of one-year’s loss has been allowed

against income earned in taxable years ending in 1942

and 1943.

In the Budget Speech of June 26, 1944 «

somewhat different plan was suggested.

For losses sustained

in taxable years ending in 1944 and subsequently, a one

year carry-back of loss is allowed under this plan and any

unused balance of loss may be carried forward for three years.

- 36 -

Row serious this problem is will depend on the working

capital position of corporations*

Recent data of the

Securities and Exchange Commission indicate that, in the

aggregate, working capital is the largest in corporate

financial history*

In addition, the Government has

provided generous aid for reconversion financing in various

cases.

Nevertheless, where working capital is frozen in

inventories or receivables, there may be specific instances

of cash shortages which would be alleviated if the benefits

of the carry-backs could fee made available more promptly.

i general disadvantage of carry-backs is that they

involve payments of refunds from the Treasury to taxpayers.

file carry-backs bave been urged as a substantial

measure for easing the readjustment and reconversion

problem; there seems to be little or no evidence that they

\

W6re

g

pur^os6*

Problem of readjustment

from wartime to peacetime business is, to a considerable

extent, a cash problem.

Eefunds payable by virtue of the

carry-backs cannot be made under present law until the

claim has been filed after the year in which the loss or

unused credit arises.

let the need for cash will be felt

during the year of loss, not sometime later, and even while

the loss is being suffered the corporation may have to

borrow to pay its tax liabilities of the preceding year.

- 34 -

The carry-backs present another problem In that
refunds nay be made in circumstances where there can be
no justification. Consider, for example, a corporation
established solely to produce wartime goods and not
reconverting to postwar peacetime business. Instead of
being liquidated immediately after its arar business Is
completed, the corporation can be kept alive and under
present law would be entitled to a carry-back of its
excess-profits credit against wartime incoimi of the two
previous years.
There may also be possibilities of manipulation in
which losses Or reduced incomes are made to appear in
a year when a carry-back could be used to advantage.

- 33 A carry-back of excess-profits credit in such

a case diminishes the amount of excess-profits tax,

incresjeiea the amount of normal tax and surtax, and

decreases the 10-percent postwar refund.

The corporation

would have its net tax increased by the amount of the

cancellation of its 10-percent refund.

However, if the

carry-back is sufficiently large to bring the corporation

out of the 80-percent limit, this anomalous effect

rapidly disappears.

The failure of a corporation subject to the 80-

percent limit to receive benefits from the carry-back

of unused credit should be considered in the light of

the benefit the 80-percent limit has already conferred.

Such a corporation has received a reduction, often very

substantial, in its wartime taxes by virtue of the limit.

The small«? the excess-profits tax
postwar refund, the larger the net

- 31 -

It has been urged that corporations subject to the

80-percent rate limitation do not fare well under the unused

credit carry-back*

Under this carry-back a corporation

subject to the 80-percent limit might have to pay more tax

instead of receiving a refund, if, after applying the carry

back, it was still subject to the limit.

This peculiar

result arises because the 80-percent limit applies to total

taxes prior to the deduction of the postwar refund of 10

percent of excess-profits taxes.

In determining what portion

of the 80-percent tax is the excess-profits tax, the normal

tax and surtax are subtracted from the total gross tax and

the balance is excess profits tax.

The larger the excess-

profits credit, the larger the normal tax and surtax, and

the smaller the excess-profits tax.

Still another corporation with base period income of three

and one-half million dollars would, if it had sero income

in a year subject to the carry-backs, receive $18 million

dollars, while another company with average prewar earnings

of two and one-half million dollars would receive $5§

million*

These cases, not necessarily the worst, indicate

that the carry-backs under some circumstances may provide

tax refunds from the Government of amounts far exceeding

prewar average earnings, or even, in some cases, the best

year of earnings in the base period«

The criticism of the carry-back of unused excess

profits credit is less valid in the case of a credit

corrected through Section 722 or even through the growth

formula or the 75-percent rule, although these latter are

mechanical methods which almost certainly overstate the

really normal credit in numerous cases*

• 29 •

The objection is most valid in the case of the

invested capital credit*

Many concerns using this

credit not only receive free from excess-profits tax

much larger profits than they earned before the war,

and perhaps ever received, but in effect will have their

profit level artificially maintained by the carry-backs

in the postwar years.

For example, one firm with average

base period earnings slightly over $50,000 before taxes

would, if it had sero income, receive nearly a half million

dollars of tax refunds.

Two other corporations that have

come under observation had no base period earnings and
V &£

/

would receive between $800 and $900 thousand each in tax

refunds if they earn no income in one year.

-

28

-

These adjustments of the credits may he entirely

appropriate in arriving at income to be subjected to

the excess-profits tax in time of war, especially in

the light of the very high rates whieh apply to income

designated as excess profits.

Furthermore, if the income

is brought below the level of the excess-profits credit

because of deferred expenses or other war-caused reductions

in income, it is no doubt proper to correct the wartime

income through the carry-backs.

But to the extent that

earnings simply fall off in amount while remaining above

their peacetime level there is room to question whether the

corporation should receive a tax refund out of its wartime

profits.

Yet the development of a high credit far above

the prewar experience of a company results in a carry-back

against excess profits and a refund in such a case.

- 27 -

Only if the loss were unusually severe because of the

war could a case be made for reducing wartime taxes on

'■■■-

'■ ;

account of the loss.

MM :

This generosity allowed by the

carry-backs with respect to postwar losses extends also

to postwar reductions of income below the excess-profits

credit.

The carry-back of excess-profits credits is generous

also in another respect.

This generosity arises from the

fact that an excess-profits credit may be substantially

larger than the earnings of the corporation in the prewar

period.

This larger credit may result from the application

of the growth formula, the 75-percent rule, the invested-

eapital credit, or relief under Section 722.

• 26 -

Any losses or reductions in income below the excess-

profits credit bring the carry-backs into operation,

yet the averaging of income earned during the war with

normal or usual losses or declines in income sustained

after the war violates the objective of taxing war-

induced excess-profits heavily.

The mere fact that a loss is incurred after the war

is no evidence that it is necessarily a war-caused loss#

Corporations in the aggregate have earned high net profits

after taxes for five consecutive years, probably an

unprecedented experience in corporate history#

Interruptions of this high profit experience by a postwar

loss would not necessarily indicate an unusual or war-caused

event, but might merely reflect the regular course of

economic developments#

on
¿0 **

The carry-backs may not carry out these purposes

completely.

To be effective, deferred costs or expenses

must occur within two years after the receipt of wartime

profits.

There are, of course, some circumstances where
A■

■, . :

taxes four years prior to or subsequent to the loss in

question could be affected by the carry-backs*

It is too

soon to tell whether the period allowed will be too short

or too long.

Morever, to be completely effective, the

carry-backs must remain in operation until the bulk of

reconversion and readjustment has been completed, whether or

not the excess-profits tax is repealed*

The carry-backs are crude in another respect*

They

are not a precision instrument which can separate out

war-caused expenses and war-caused losses from usual and

ordinary expenses

- 24 In the absence of any provision these expenses and losses
/*

would he chargeable at a time when there might be no

income and when tax rates, considering both the income

tax and the excess-profits tax, might he much lower, although

such costs and losses would he equitably a proper charge

against the income of the war years *

More generally, the carry-backs achieve another

aPPi*opriate purpose in that they provide an offset against

wartime income of war—caused postwar losses or of war—caused

postwar reductions in income below the excess-profits credit

level*

In those cases in which wartime production may be used

to supply postwar needs or in which competing facilities may

have been developed, losses or lower profits after the war may

result directly from irartime production*

It may be argued that

such losses or reductions of income are proper charges
against wartime profits.

- 23 This circumstance was taken care of in the Revenue

Act of 1942 which provided a two-year carry-back of losses

and of unused excess-profits credits to years beginning

after December 31, 1940,

y

This carry-back, however, was

not 1 imited specifically to war years and its effect in

averaging wartime income over the period of the war was

probably an incidental result rather than a basic purpose

of the legislation.

The carry-backs were placed in the law, in lieu of

specific reserves, at a time when efforts were being made

to provide a satisfactory means of charging against

wartime income such postponed wartime expenses as deferred

maintenance, reconversion costs, and the like.

Similarly,

the carry-backs provide a means for charging inventory losses

against the income of the war years.

World War II Experience In the United State»
Our most reoent and, for that reason, most interesting
experiment with averaging devioes is in the form of carry
overs end carry-backs of losses and unused excess-profits
credits for determining the taxes of World War II* The
carry-forward of losses, as I have just indicated, had
been restored in 1939, In 1940 a two-year carry-over of
unuaed excess-profits credits was provided* The effect
of this carry-over was to assure that the corporation
would derive full benefit from all of its excess-profits
credits, if profits were low in an early year of the war ■
and high thereafter* The corporation would, of course,
lose a part of its credit if the early year were the high
year and a later year of the war were the low year*

21-A
As this brief resume would indicate, there has been no

experience in the Federal income tax with averaging of

positive incomes of corporations as distinguished from the

carryover and carryback of losses.

When there are no

exemptions and the tax is imposed at a flat rate in operation

the effects of carryovers and carrybacks are nearly the

equivalent of averaging*

This is not the case when rates are progressive.

At the

present time the effective rates of our corporation taxes are

progressive up to corporate income levels of $50,000*

Small

corporations, accordingly, do not derive as much benefit from

carryovers and carrybacks as they would from averaging positive

as well as negative incomes, for an equivalent number of years.

However, since small corporations in general show more

fluctuation between years of loss and years of income they deriv

relatively more benefit from loss carryovers and carrybacks than

do large corporations.

With respect to that year a elaim could he filed for loss

in the value of inventory whether or not the lo ss had been

realized by disposal of the inventoried goods#

However, in

application, this adjustment probably did not provide very

substantial relief since in general the price collapse which

led to large losses did not occur until 1920 and 1921#

/

The Revenue Act of 1921 provided that a net business

loss could be deducted from the net income of the

succeeding two years#

Similar provisions remained a part

of the Federal income tax law until 1932, at which time

the carry-over was limited to one year#

It was eliminated

entirely by the Rational Industrial Recovery Act in 1933

and not reintroduced until the Revenue Act of 1939#

20 -

The Federal income tax law has sought to lessen

the higher tax on fluctuating income through the

allowance of net loss carry-overs for most of the years

since 1918.

Such earry-ovprs were provided only for

losses from a trade or business.

The first adjustment of

this kind was in the Revenue Act of 1918, which provided

that if a net loss were suffered during taxable years

beginning after October 31# 1918 and ending before

January 1, 1920, it could be carried back against income

in the preceding year, and any unused portion could then

be carried forward against income of the following year.

This adjustment probably was not of substantial importance

because the year 1919 was generally a very good year.

Another significant type of adjustment was provided

for the taxable year 1918*

The purpose of the provision was to relieve the hardships

believed to exist when the compensation of writers,

inventors, lawyers, and others is received in full upon

completion of a long period of work#

with the taxpayer*

Averaging is optional

Under the Revenue Act of 1942 the

five-year period was reduced to 36 months and the 95-percent

requirement was reduced to SO percent#

This application of averaging is of interest because of

its experimental character but is hardly of great significance

for the field of income as a whole because of the narrow

scope of the cases included#

The situation was further complicated by legal difficulties

in imposing taxes under the averaging system after death

or removal from the State,

The 1981 legislature enacted

legislation for gradual transition from averaging which was

completed by 1934#

Federal Government Experience

•

A narrowly restricted averaging provision was introduced inti

the Federal income tax law in the Revenue Act of 1939*

This

averaging device was restricted to use where 95 percent of the

compensation for personal services rendered over a period of

five or sore calendar years m s postponed until the completion

of the services*

It was provided that in such cases the tax

attributable to such compensation should not be greater than the

total that would have been paid if the compensation had been

received in equal portions over the years of service#

aisooaaia Experience
Averaging received a brief teat in the United States

when the Wisconsin State Legislature in 192? changed the

base of the income tax to a three-year moving average*

The plan got off to a bad start because the effects of

averaging were confused in the public mind with an increase

in taxes attributable to the transformstian -of the personal

exemptim

into a tax credit*

The early onset of the

depression resulted in & large proportion of taxpayers'

being subject, in a p rlod of little or no income, to
•%
relatively high tax liabilities based on average income*

To the attendant hostility of the public was added the

administrative difficulty, of collecting large amounts of

delinquent taxes*

Following the Royal Commission recommendation,

averaging was abolished effective June 30, 1938 except for
primary producers.

• 15-b -

Moreover, it questioned the equity of the provision on the

grounds that the average rate benefitted the taxpayer who was

in better position to pay and penalised the taxpayer whose

income had declined.

It reported that all witnesses

representing the Commonwealth and State Tax Departments "were

emphatic and unanimous in advocating its total abolition, and

none of them viewed with favor the proposal to retain it for

the benefit of any class or classes of taxpayers.”

The State

Tax Commissioners also made it clear that they were not

prepared to recommend averaging for State purposes.

The only

witnesses who strongly favored continuance of averaging were

those representing the primary producers.

A decisive majority

of witnesses representing other classes of taxpayers was of

the opinion that averaging should be abolished.

On the basis

of this evidence the Commission recommended retention of

averaging only for primary producers.

The Australian law sought to meet some of the problems of

imposing a higher tax in a year when income is low by-

providing that where taxable lucerne has been permanently

reduced to an amount which is less than two-thirds of average

income the tax shall be applied on the basis of this reduced

income. 1/
r

After averaging was adopted provision was made in the

Commonwealth law for carrying forward business losses against

the profits of the four succeeding years. Some of the income

taxes of the Australian States also had carryover provisions.

In the Third Report of the Royal Commission on Taxation,

issued in 1934, the Comission called attention to the

complications, special records, and errors which are involved
..
in the averaging of income.

1/

;

/

.

Section 155, The Income Tax Assessment Act of 1936, p. 162.
With minor differences the provision was contained in all
acts from 1922 through 1934.

The British experience thus has been one of a long use

of a three-year moving average, 1/ finally abandoned after

a number of careful studies, and replaced by a loss carry

over together with a one year carry-back.

Australia

The Commonwealth of Australia, after revisions of the

inititial legislation, in 1923 applied an averaging procedure

♦ to all taxpayers excluding companies*

The income of five

years, including the most recent year, was averaged and

this average amount used to determine the rate of tax, which

was then applied to the actual income of the current year*

1/

In some instances under Schedule A, five-year and sevenyear and even discretionary averages have been used. Bee
Income Tax in Great Britain and the United

- 14 In 1920 the Royal Comission on the Income Tax found that

public opinion

was

opposed to averaging and this fact, together

with the anticipated simplification of administration which would

result if averaging were eliminated, convinced the Commission that

the income tax should he assessed on the preceding year’s profits

only.

The effect of variation in incomes on taxpaying ability

was, however, not overlooked, for it was recommended that for

purposes of equity a five-year net loss carry-forward should be

permitted.

This change was made in the law in 1926 and is the

basis upon which the British Income Tax is now imposed.

Under the

operation of this system a loss may be offset against the income

of the prior year and any balance of loss not thus offset m y be

carried forward for & period of five years, thus spreading the

loss over a possible seven years in all.

To the extent that the

loss is not completely offset against income in this period the

portion of loss representing depreciation may be carried forward

still further.

- 13 «
Various m thods of avoiding this difficulty war« tried

from time to time.

Some discriminated in favor of
,t

fluctuating incoae as against stable income.

■

SR . -1

Hone seemed

to be successful, and In 1870 the Commissioners of Inland

Revenue stated that flw© doubt whether any rule of change could

be devised for such cases which would do justice both to

the taxpayer and the revenue so long as the system of

averaging is preserved.”

356

action was taken at that time,

however, to eliminate averaging.

When the problem was reconsidered is 1905 by the

Departmental Committee on Income fax, the inequity resulting

in some years from an assessment's being larger than current

income was again recognised.

In view of the long existence

of the averaging provision, however, it was recommended

that unless public opinion disapproved, the averaging system
should be retained.

Great Britain

Great Britain has had the longest experience with

averaging.

The first income tax, enacted in 1799,

permitted the computation of the tax on the average

business profits of the three years preceding the year

of assessment and similar provisions were contained in all

subsequent acts until 1926»

In part at least, however,

this averaging was not allowed for the purpose of avoiding

excessive taxes on fluctuating income, but appears also to

have been a device to assist in the estimation of current

income and the prevention of tax evasion,

A major

difficulty encountered In averaging in Great Britain was

that taxpayers were often subject to burdensome tax liability

in years when they had relatively little income or no income

On the other side, however, It is often urged that

many of

the most difficult technical problems in allocating income

and expanse items among /ears would be eliminated or made

of minor importance if income were averaged*

Historical Experience with Averaging

in the light of the advantages of averaging one might

well ask

why we

lack a full-fledged averaging system.

If

the test of the cooking is the eating, it may be useful to*

examine the use which has been, and is being, made of various

averaging devices in the United States and abroad, to see how

they have worked out in practice and thereby to throw light

on the desirability of their more extensive use here in the

future*

-

10

-

Fo p example* it would take the edge off high rates which
’

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were especially designed to apply in periods of war or

inflationary danger, and it likewise might partially

neutralise the effects of low rates in periods of depression*

There are a number of serious compliance and aeministrativ«

problems raised by averaging proposals, especially for the

individual income tax*

la the individual tax field the
H

■•

pay-as-you-go or current payment method and the simplification

program rely heavily on the retention of a simple, definitive

income period such as the annual income period*

In the

field of business income averaging involves additional

checking and auditing, the holding open of statutes of

limitation, and the problems of transition into and out of
an averaging plan.

Consolidated returns offer a similar advantage of internal

compensator/ offsets.

Averaging would also tend to remove

the tax incentive to the timing of investment or income*

producing activity in ways which do not necessarily represent

desirable economic or business decisions.

The objections to averaging are largely fiscal and

administrative.

On the fiscal side it is urged that

averaging would introduce greater uncertainty into

budgetary planning and would raise policy problems in

the timing of refunds or rebates and In making other

adjustments of tax burdens*

Revenue effects would be

particularly i .¡portent when there were wide swings In the

national income.

Moreover, averaging would have the effect

of blunting fiscal weapons which were directed toward
specific income years.

-

8

-

The averaging of income for tax purposes would have

advantageous economic effects*

It would remove tax

pressures in favor of investing in stable lines of business

and against investing in businesses with fluctuating incomes.

In the absence of averaging, some misapplication of economic

resources undoubtedly results between these types of

businesses.

Moreover, averaging would presumably tend to

make risk investment relatively more attractive by reducing

the risk of paying taxes out of capital and by permitting

a greater offset of losses against income.

This advantage

of averaging over a period of time is somewhat similar to

the advantages which large businesses enjoy over small

businesses because they are in a position to average the

losses of some lines against the losses of other lines.

- 7 On the other hand, it may be urged that annual income is
in harmony with the general thinking of individual taxpayers

who often gear current standards of consumption to the

current year’s income and who are not disposed to project

their income computations over a long period of time.

There is, moreover, some value in closing each year’s income

and taxing it as a complete episode, thus removing uncertainty

about the effect of some future year’s income on the current

tax.

These arguments against averaging are more pertinent

in the case of individual taxpayers and nonbusiness income

than they are in the case of business income; they are

least pertinent in the case of the business corporation.

The present discussion is primarily directed to the averaging

of business income, although it must be remembered that some

of the most serious injustices of strict adherence to the

annual accounting period lie in the personal income field.

However, averaging should not be looked upon as a Beans

of reducing taxes*

If the same number of dollars is to

be raised, the effect of averaging is to redistribute the

burden among years and among taxpayers*

The advantages claimed for averaging are primarily in
the fields of equity and economic effects*

The basic

argument in favor of averaging is that the assessment of

substantially different amounts of tax against two taxpayers

receiving the same aggregate income over a period of years

is inequitable*

Indeed, it is sometimes argued that

a taxpayer with fluctuating income may have less ability

to pay than a taxpayer with stable income, since irregularity

of income may require greater liquidity and other unfavorable

pa?sonai or business adjustments*

The higher tax imposed on fluctuating income, when the

annual accounting year is followed strictly, may result from

any one or a combination of factors, the most universal of

which are the following:

(1) Negative Incomes, that is,

losses, may not be offset against positive income; (2) exemptions

may be wasted in years of loss or of low income; (3) progressive

rates may throw fluctuating incomes into higher brackets.

While it is

possible

to devise averaging methods which would

eliminate completely the higher tax on fluctuating incomes,

most of the commonly suggested plans would not go that far.

The general run of proposals would reduce rather than remove

entirely the tax differential between variable and stable

incomes.

For a given schedule of rates and a given definition of

income, the effect of averaging is in part to change the

timing of tax payment and in part to reduce the tax liability.

**

«•>

Averaging devices* as thus defined, embrace various forms,

including a fixed period average of, for example, five years,

a moving average, and the determination of the rate of tax

by tbs average amount of income* ,Averaging devices also

include methods other than actual averaging*

Among these are

flexible depreciation and inventory accounting devices*

most important, however, undoubtedly are the carryforward

and carryback of losses and, with respect to the excess

profits tax, of unused excess profits credits*

Pros and Cons of Averaging

One reason for averaging is that it compensates for,

or reduces, the importance of errors in allocating income

or expense items among different years*

More important,

however, averaging plays a useful part in equalising

the tax burdens on fluctuating and stable incomes of the

same average or aggregate size.

The

Taxes must be computed on the basis of formal and uniform

accounting, procedures; otherwise the determination of income

would involve a larger element of personal and adminis trative

judgment than either the Government or the American taxpayer

would be willing to accept.

Averaging; Methods

There have been two approaches to the problem of the

annual income period.

One has been the development of

accounting procedures to take into consideration events of

past or future years, in computing the income for a specific

year.

Depreciation reserves, deferred expenses, and the

last-*in first-out method of computing inventory are examples.

The second approach to the problem has been to cut across

the boundary line between years in such a way that the tax

imposed on the income of one year is affected by the Income

or loss of other years.

The length of our year is an astronomical accident.

Yearly

income represents an aggregation of 385 daily incomes,

52 weekly incomes, and so forth.

but not a sacred, period.

The year is a convenient,

Tax accounting periods as short

as one week and as long as two or three generations are

conceivable and, in fact, have been suggested.

Although taxation is only one of several areas where

the defects of the annual income period are patent, it is

perhaps the most important.

In preparing income statements

for moat purposes, relevant facts and expectations outside

or beyond the formal accounting figures can be recognised

when action is to be taken or decisions are to be made.

Moreover, reserves cah be set up in the accounts to give

a degree of formality to these facts and expectations.

the case of taxation, however, such adjustments are not

feasible

In

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Averaging and the Annual Accounting Period

The fact that the earth's axis is not perpendicular to the

plane of its orbit around the sun is responsible for many things

in this world*

Among these, perhaps one of the least, is the

problem of averaging annual incomes for tax purposes*
H. i

v\

In addressing the leaders of the accounting profession,

I need not dwell on the implications, peculiarities, and

limitations of the one-year accounting period which taxation

inherited from the established practice of business and

accounting*

The purpose of averaging devices is to get away from

the segmentation of income into pieces one year in length or,

in other words, to lengthen the accounting period for tax

purposes*

There is nothing very radical about this idea*
y-

One

op

two would introduce averaging for some or all types

of income, notably for capital gains*

This interest in the averaging problem is significant,

because in the many tax revisions and great amount of tax study

that have been carried on in the United States over the years,

relatively little time and thought have been devoted to methods

of overcoming the disadvantages for tax purposes of the annual

fiscal year*

let the potential importance of such methods in

terms of equity and sound economic effects is so great that

much more attention to them is justified for the future than

has been given to them in the past«

It may well be that a good

averaging device applying over an adequate period of years

would be worth quite a few percentage points in the tax rate

scale in furthering the realisation of our tax and economic

objectives in the postwar world*

* 48 As you no doubt have learned, the Congressional Joint
Comities on Internal Revenue Taxation instructed its
staff and requested the Treasury staff to work together
as a unit on the problem of tax adjustments for the
transition and postwar periods« The studies being carried
on have not yet reached the point of a report to the Joint
Committee« So it would be inappropriate for me to go into
the part which averaging devices might play in a postwar
tax program« The matter is being given careful study along
with other aspects of the postwar tax problem, and any
suggestions which any of you m y care to make on this
question or any other involved in the study will b# most
welcome and carefully considered«
Suggestions have already been made by a number of groups#
Several plans provide long periods of carry-over of losses«

— 47 —
If an averaging device such as the carry-over Is to
serve its functions of increasing tax equity and
encouraging business investment and expansion, it must be
adopted as firm policy to be retained in good times and
bad# It would be worse to adopt a long carry-over* or other
longer-term averaging device, and thereafter to abandon it
when loss periods were experienced than to delay
lengthening the period until there was a general understanding
and resolution to retain the device as a continuing element
in the tax system*
I am sure you would like for me to tell you what is
going to happen to the wartime carry-backs and to averaging
devices for the postwar tax revisions# I would like to tell
you# I wish I knew# But tax revision is a matter
for
'1 f "
Congressional action#

fluctuations of business incomes art sometime
classified rougiiij into the seasonal tut the cyclical*
To those are added the life cycle of the business unit*
the

¿usual

income period

eteregea

out the seasonal

fluctuations* Few who favor averaging devisee would
cover the whole life period of the business firm
although* unhappily* for many businesses no long period,
would be Involved* Cyclical movements are of various
lengths* The

two

year carryover of the prewar federal

law would be sufficient for the shorter cycles* but is
too short for the longer md more important cycles and*
accordingly* too short to meet a substantial part of

The new business cannot b en efit from the carry-back, but
would be ben efitted by a longer carry-over especially In
view of tbs tendency of businesses to su ffer losses in the
early years*

The dying or liq u id atin g business cannot use

the carry-over but would be b en efitted by the carry-back*
fo r other businesses i t is hard to fo recast whether the e&rry*<r
or the carry-back confers the g reater benefit*

However, the

carry-over has the m erit of perm itting the closing of tax
years without delay and of minimizing manipulation to
secure the maximum b en efit and avoid taxes*

Under carry-overs,

carry-backs, and actual averaging, the problems of predecessor
and successor corporations and corporate acquisitions to
reduce tax are present and must be met, even though
a rb itra rily *

•

<4«4 —

The period for spreading losses in Great B ritain is seven
years including in addition to the year of 1 oss, a one-year
carry-back and a five-year carry-over*

In the Commonwealth

of A ustralia losses are spread over fiv e years by means
of a four-year carry-over#

The recently proposed spread

in the Dominion of Canada would be tem porarily fiv e years
including a one-year carry-back and a three-year carry-over*
Under the two-year carry-back and two-year carry-over in the
United S tates the spread is likew ise fiv e years; i t may be
even longer under certain circumstances*
la peacetime, countries other than our own have
lim ited the carry-back to one y ear, i f they allowed i t a t
a l l , and the misgivings about our own carry-backs are such
as to ra is e a question as to th e ir d e s ira b ility fo r
peacetime use*

These experiences present a practical obstacle to the
friends of averaging but have not dismayed them* New
methods of averaging have been developed that meet some of
the objections to the moving average, and other improvements
can no doubt be made* Nevertheless, the administration and
compliance problems of even the most promising methods of
averaging remain a major impediment, especially with respect
to the Individual income tax, which is unfortunate since
under the individual income tax the progressive rate scale
and relative unimportance of losses make such partial
devices as the loss carry-over largely ineffective.
For business income the spreading of losses through
carrying of losses from years of loss to years of gain is
the averaging device that has been preferred in these
countries.

- 42 -

Conclusion
This survey of the use of averaging and averaging
devices is too limited to justify definitive conclusions,
hut a few observations may not be out of order* Although
of all averaging devices, out right averaging provides the
aost complete equalisation of tax load between fluctuating
and stable incomes, it has lost rather than gained ground
in the English-speaking countries whose tax systems have
‘been examined* After very long use and several
reappraisals it was abandoned in Great Britain# After
a shorter trial its use was minimised in Australia* I t

has not been adapted in Canada* The Wisconsin, experiment
could hardly have been more ill-timed, as matters turned
out, and may not indicate what would have been the result
of a longer trial under more.auspicious circumstances*

«

• 41 fhtae carry-backs and carryforw ards do not extend beyond
the period during which the ex cess-p ro fits tax law is in
operation.

However, i t was stated by S ir Kingsley Wood

in the Parliamentary Debate of 1943 th a t reconversion
costs w ill be allowed as a deduction in computing excess
p ro fits tax i f the tax is repealed before these costs
are incurred# 1/

v

—

- —

—

maintenance*

40 -

Under the proposal any unused balance in the reserve when the
excess-profits tax act becomes inoperative may be applied
against any inventory price decline in the following year, end
i f not used then is to be added to the incorni in the l a s t
year th a t the ex cess-p ro fits tax act applied to the
taxpayer#
In the B ritish law losses and unused excess-profits
c re d its a risin g in the period the ex cess-p ro fits tax is
in operation may be completely o ffs e t against taxable
excess-profits#

These d eficiencies arc f i r s t carried

backward u n til ex cess-p ro fits are exhausted and then
forwardt with an appropriate allowance fo r the increase
in the ra te of ex cess-p ro fits tax in 1940 from 60 to
100 percent#

- 39 It will be observed that Canada has neither a carry
forward nor carry-back of unused excess-profits credits*
Another adjustment was suggested, in the 1944 Budget
Speech regarding wartime income* This was a suggested
provision that half of the expenditures on maintenance
and repairs incurred in a period to be fixed by order
in council may be charged against income of a preceding
taxable period» but to no year earlier than one ending in
1943.
The Canadian law also provides for a reasonable in
ventory reserve against future depreciation in inventory
value* This reserve is allowed solely for purposes of
determining excess-profits taxes* This reserve cannot pro
vide for price decline below inventory prices at the end of
taxable years ending in 1939, or August 1939, whichever date
is earlier.

- 38 -

In this connection, the Minister of Finance stated;
**We cannot shut our eyes to the fact that with the
change from war to peace many firms may encounter temporary
losses and under our present practice taxes paid over
the whole period of war and readjustment may bear con
siderably higher rates to the full realised income than
those prescribed in the law. I am particularly concerned
lest for this reason, when the time comes to replace war
industries with peace industries, business enterprises
should be handicapped in making the necessary changes
or should be hesitant rather than prompt in action...n
It is worthy of note that the emphasis in this new
proposal is upon the correction of wartime income
insofar as the one-year carry-back is concerned, while the
three-year carry-forward is for the purpose of looking ahead
and giving relief to peacetime industry.

- 37 Although the objectives of these refunds are proper,
there may be a feeling after the war that such refunds
constitute a special benefit to corporations which earned
excessive profits during the war.
World War II Averaging: Devices in Canada and Great Britain.
Since Canada and Great Britain have faced much the
same wartime tax problems as we have, it my fee helpful
to examine their wartime methods of averaging. In Canada
a carry-forward of one-year’s loss has been allowed
against income earned in taxable years ending in 1942
and 1943. In the Budget Speech of June 26, 1944 a
somewhat different plan was suggested. For losses sustained
in taxable years ending in 1344 and subsequently, a one
year carry-back of loss is allowed under this plan and any
unused balance of loss may be carried forward for three years.

Bow serious this problem is will depend on the working
capital position of corporations. Recent data of the
Securities and Exchange Commission indicate that, in the
aggregate, working capital is the largest In corporate
financial history. In addition, the Government has
provided generous aid for reconversion financing in various
cases* nevertheless, where working capital is frozen in
inventories or receivables, there may be specific instances
of cash shortages which would be alleviated if the benefits
of the carry-backs could be made available more promptly.
A general disadvantage of carry-backs Is that they
involve payments of refunds from the Treasury to taxpayers

• 35 The carry-backs have been urged as & substantial
measure for easing the readjustment and reconversion
problem; there seems to be little or no evidence that they
were designed for this purpose. The problem of readjustment
from wartime to peacetime business is, to a considerable
extent, a cash problem. Refunds payable by virtue of the
carry-backs cannot be made under present law until the
claim has been filed after the year in which the loss or
unused credit arises. let the need for cash will be felt
during the year of loss, not sometime later, and even while
the loss is being suffered the corporation may have to
borrow to pay its tax liabilities of the preceding year.

~ 34 -

The carry-backs present another problem in that
refunds may be made in circumstances where there can be
no justification. Consider* for example, a corporation
established solely to produce wartime goods and not
reconverting to postwar peacetime business. Instead of
being liquidated immediately after its war business is
completed, the corporation can be kept alive and under
present law would be entitled to a carry-back of its
excess-profits credit against wartime income of the -two
previous years.
There may also be possibilities of manipulation in
which losses or reduced incomes are made to appear in
a year when a carry-back could be used to advantage.

- 33 Â carry-back of excess-profits credit in such

a case diminishes the amount of excess-profits tax,

increases the amount of normal tax and surtax, and

decreases the 10-percent postwar refund,

the corporation

would have its net tax increased by the amount of the

cancellation of its 10-percent refund*

However, if the

carry-back is sufficiently large to bring the corporation

out of the 80-percent limit, this anomalous effect

rapidly disappears*

The failure of a corporation subject to the 80-

percent limit to receive benefits from the carry-back

of unused credit should be considered in the light of

the benefit the 80-percent limit has already conferred#

Such a corporation has received a reduction, often very

substantial, in its wartime taxes by virtue of the limit.

The similar the excess-profits tax and hence the 10-percent
.if i | ■
.’_ ■
r UnitM l 11BB Ml
postwar refund, the larger the net tax after deducting the

postwar refund*

* 81 *

It has been urged that corporations subject to the

80-percent rate limitation do not fare well under the unused

credit carry-back.

Under this carry-back a corporation

subject to the 80-percent limit might have to pay more tax

instead of receiving a refund, if, after applying the carry

back, it was still subject to the limit.

This peculiar

result arises because the 80-percent limit applies to total

taxes prior to the deduction of the postwar refund of 10

percent of excess-profits taxes.

In determining what portion

of the 80-percent tax is the excess-profits tax, the normal

>

tax and surtax are subtracted from the total gross tax and

the balance is excess profits tax.

The larger the excess-

profits credit, the larger the normal tax and surtax, and

the smaller the excess-profits tax.

• 30 -

Still another corporation with base period income of three

and one-half million dollar« would, if it had aero income

in a year subject to the carry-backs, receive $18 million

dollars, while another company with average prewar earnings

of two and one-half million dollars would receive $Si

million,

these cases, not necessarily the worst, indicate

that the carry-backs under some circumstances may provide

tax refunds from the Government of amounts far exceeding

prewar average earnings, or evei^ in some cases, the best

year of earnings in the base period.

the criticism of the carry-back of unused excess

profits credit is less valid in the ease of & credit

corrected through Section 722 or even through the growth

formula or the 75-percent rule, although these latter are

mechanical methods which almost certainly overstate the

really normal credit in numerous cases

- 29 -

The objection is most valid in the case of the

invested capital credit.

Many

concerns using this

credit not only receive free from excess-profits tax

much larger profits than they earned before the war,

and perhaps ever received, but in effect will have their

profit level artificially maintained by the carry-backs

in the postwar years,

for example, one firm with average

base period earnings slightly over $60,000 before taxes

would, if it had sere income, receive nearly a half million

dollars of tax refunds.

Two other corporations that have

come under observation had no base period earnings and

would receive between $800 and $900 thousand each in tax

refunds if they earn no income in one year.

-

28

—

These adjustments of the credits may be entirely

appropriate in arriving at income to be subjected to

the excess-profits tax in time of war, especially in

the light of the very high rates which apply to income

designated as excess profits.

Furthermore, if the income

is brought below the level of the excess-profits credit

because of deferred expenses or other war-caused reductions

in income, it is no doubt proper to correct the wartime

income through the carry-backs.

But to the extent that

earnings simply fall off in amount while remaining above

their peacetime level there is room to question whether the

corporation should receive a tax refund out of its wartime

profits.

Yet the development of a high credit far above

the prewar experience of a company results in a carry-back
^

. %■

'' *

;jjf '

against excess profits and a refund in such a case.
1

- 27 -

Only if the loss were unusually severe because of the

war could a case be made for reducing wartime taxes on
|g

|

account of the loss.

|p

This generosity allowed by the

carry-backs with respect to postwar losses extends also

to postwar reductions of income below the excess-profits

credit*

The carry-back of excess-profits credits is generous

also in another respect.
.

This generosity arises from the
-

,

'

J■

|

•

fact that an excess-profits credit may be substantially

larger than the earnings of the corporation in the prewar

period.

This larger credit may result from the application

of the growth formula, the 75-percent rule, the invested-

capital credit, or relief under Section 722.

*

26

—

Any losses or reductions in income below the excess*

profits credit bring the carry-backs into operation,

yet the averaging of income earned during the war with

normal or usual losses or declines in income sustained

after the war violates the objective of taxing war-

induced excess-profits heavily*

The mere fact that a loss is incurred after the war

is no evidence that it is necessarily a war-caused loss*

Corporations in the aggregate have earned high net profits

after taxes for five consecutive years, probably an

unprecedented experience in corporate history.

Interruptions of this high profit experience by a postwar

loss would not necessarily indicate an unusual or war-caused

event, but might merely reflect the regular course of

economic developments.

The carrybacks may not carry out these purposes

completely#

To be effective, deferred costs or expenses

must occur within two years after the receipt of wartime

profits#

There are, of course, some circumstances where

taxes four years prior to or subsequent to the loss in

question could be affected by the carry-backs*

It is too

soon to tell whether the period allowed will be too short

or too long*#

Morever, to be completely effective, the

carry-backs must remain in operation until the bulk of

reconversion and readjustment has been completed, whether

not the excess-profits tax is repealed#

The carry-backs are crude in another respect*

They

are not a precision instrument which can separate out

war-caused expenses and war-caused losses from usual and

ordinary expenses#

la the absence of any provision these expenses and losses
wcmld be chargeable a t a time when there might be no
income and when tax ra te s , considering both the income
tax and the ex cess-p ro fits tax, might be much lower, although
such costa and losses would be equitably a proper charge
against the income o f the war y ears,
Mope generally, the carry-backs achieve another
appropriate purpose ia th a t they provide an o ffs e t against
wartime income of war-caused postwar losses or

of

war-caused

postwar reductions in income below the excess-profits c re d it
le v e l.

In those cases in which wartime production may he used

to supply postwar needs or in which competing f a c i l i t i e s may
have been developed, losses or lower p ro fits a fte r the war my
r e s u lt d ire c tly from wartime production.

I t may be argued that

such losses or reductions of income are proper charges
against wartime p r o f its .

23 This circumstance was taken care of in the Revenue
Act of 1342 which provided a two-year carry-back of losses
and of unused excess-profits c re d its to years beginning
a fte r December 31, 1340*

This carry-back, however, was

not 1 ia ite d sp e c ific a lly to war years and i t s e ffe c t in
averaging wartime income over the period of the war ms
probably an in cid en tal r e s u lt rath e r than a basic purpose
of the le g islatio n #
The carry-backs were placed in the law, in lie u of
specific reserv es, a t a time when e ffo rts were being made
to provide a sa tisfa c to ry means of charging against
wartime Income such postponed wartime expenses as deferred
maintenance, reconversion co sts, and the like*

S im ilarly,

the carry-backs provide a moans for charging inventory losses
against the income of the war years*

- 2Z

World War II Experience in the United States

Our most recent and, for that reason, most interesting

experiment with averaging devices is in the form of carry

overs and carry-backs of losses and unused excess-profits

credits for determining the taxes of World War II*

The

carry-forward of losses, as I have just indicated, had

been restored in 1939*

In 1940 a two-year carry-over of

unused excess-profits credits was provided*

The effect

of this carry-over was to assure that the corporation

would derive full benefit from all of its excess-profits

credits, if profits were low in an early year of the war

and high thereafter.

The corporation would, of course,

lose a part of its credit if the early year were the high

year and a later year of the war were the low year*

2 1 **A

th is b rie f resume would indicate* there has been no
experience in the Federal income tax with averaging of
p o sitiv e incomes of corporations as distinguished fro® the
‘carryover and carryback of losses,*

When there are no

exemptions aim the tax is imposed a t a f l a t ra te in operation

the effects of carryovers and carrybacks arc nearly the
equivalent of averaging#

This is not the case when rates are progressive* At the
present time the effectiv e ra te s of cur corporation taxes are
progressive up to corporate income lev els of $6 0 ,0 0 0 # Small

corporations, accordingly, do not derive as much b en efit from
carryovers and carrybacks as they would from averaging positive
as w all as negative incomes, fo r an equivalent number of years.

However, since small corporations in general show more
flu c tu a tio n between years of loss and years of Income they derive
re la tiv e ly more b en efit from loss carryovers and carrybacks than
do large corporations.

— ex —

With respect to th a t year a claim could he f ile d fo r lo ss
in the value of inventory whether or not the lo s s had been
re a lise d by disposal of the inventoried goods*

However, in

ap p licatio n , th is adjustment probably did not provide very
su b stan tial r e l i e f since in general the price collapse which
led to large lo sses did not occur u n til 1920 and 1921*
ïh© Revenue Act of 1921 provided th a t a net business
lo ss could be deducted from the n e t income of the
succeeding two years*

Sim ilar provisions rem ined a p a rt

of the Federal income taz law u n til 1932, a t which time
the carry-over was lim ited to on# year*

I t was eliminated

e n tire ly by the national In d u strial Recovery Act in 1933
and not reintroduced u n til the Revenue Act of 1939#

-

20 -

The Federal income tax law ha» sought to lessen
the higher tax on flu c tu a tin g income through the
allowance of n e t lo ss carry-overs fo r most of the years
since 1918, Such carry-overs were provided only fo r
losses from a trade or business.

The f i r s t adjustment of

th is kind was in the Revenue Act of 1918, which provided
th a t i f a n e t lo s s were suffered during taxable years
beginning a f te r October 81, 1918 and ending before
January 1, 1920, i t could be carried back against income
in the preceding y ear, and any mused portion could then
be carried forward against income of the following y ear.
This adjustment probably was not of su b stan tial importance
because the year 1919 was generally a very good year*
Another sig n ific a n t type of adjustment was provided
fo r the taxable year 1918,

•* 19 •*

The purpose of the provision was to relieve the hardships

belieYed to exist when the compensation of writers,

inventors,

lawyers,

and others is received in full upon
..

completion of a long period of work.

with the taxpayer.

Averaging is optional

Under the Revenue Act of 1942 the

five-year period was reduced to 38 months and the 95-percent

requirement was reduced to 80 percent.

This application of averaging is of interest because of

its experimental character but is hardly of great significance

for the field of income as a whole because of the narrow

scope of the cases included.

The situation was further complicated by legal difficulties

in imposing taxes under the averaging system after death

or removal from the State*

The 1931 legislature enacted

legislation for gradual transition from averaging which was

completed by 1934*

Federal Government Experience

A narrowly restricted averaging provision was introduced into

the Federal income tax law in the Revenue Act of 1939*

This

averaging device was restricted to use where 95 percent of the

compensation for personal services rendered over a period of

five or more calendar years was postponed until the completion

of the services*

It was provided that in such gases the tax

attributable to such compensation should not be greater than the

total that would have been paid if the compensation had been
//

y
received in equal portions over the years of service.

Wisconsin Experience

Averaging received a brief test in the United States

when the Wisconsin State Legislature in 1927 changed the

base of the income tax to a three-year moving average.

The plan got off to a bad start because the effects of

averaging were confused in the public mind with an increase

in taxes attributable to the transformation of the personal

exemption into a tax credit.

The early onset of the

depression resulted in a large proportion of taxpayers'

being subject| in a pe riod of little or no income, to

relatively high lap liabilities based on average income.

To the attendant hostility of the public was added the

administrative difficulty of collecting large amounts of

delinquent taxes*

Following the Royal Commission recommendation,

averaging was abolished effective June §0, 1938 except for

primary producers*

Moreover, it questioned the equity of the provision on the

grounds that the average rate benefitted the taxpayer who was

in better position to pay and penalized the taxpayer whose

income had declined»

It reported that all witnesses

representing the Commonwealth and State Tax Departments *were

emphatic and unanimous in advocating its total abolition, and

none of them viewed with favor the proposal to retain it for

the benefit of any class or classes of taxpayers**

The State

Tax Commissioners also made it clear that they were not

prepared to recommend averaging for State purposes.

The only

witnesses who strongly favored continuance of averaging were

those representing the primary producers*

A decisive majority

of witnesses representing other classes of taxpayers was of

the opinion that averaging should be abolished.

On the basis

of this evidence the Commission recommended retention of

averaging only for primary producers.

* 15-a •

The Australian lav sought to meet some of the problems of

imposing a higher tax in a year when income is low by

providing that «here taxable income has been permanently

reduced to an amount which is less than two-thirds of average

income the tax shall be applied on the basis of this reduced

income. 1/

After averaging was adopted provision was made in the

Commonwealth law for carrying forward business losses against

the profits of the four succeeding years. Seme of the income

taxes of the Australian States also had carryover provisions.

In the Third Report of the Royal Commission on Taxation,

issued in 1934, the Commission called attention to the

complications, special records, and errors which are involved

in the averaging of income.

1/

Section 155, The Income Tax Assessment Act of 1936, p. 162.
With minor differences the provision was contained in all
acts from 1922 through 1934.

The British experience thus has been one of a long use

of & three-year moving average, 2/ finally abandoned after

a number of careful studies, and replaced by a loss carry

over together with a one year carry-back*
Australia

The Commonwealth of Australia, after revisions of the

initital legislation, in 1923 applied an averaging procedure

to all taxpayers excluding companies.

The income of five

years, including the most recent year, was averaged and

this average amount used to determine the rate of tax, which

was then applied to the actual income of the current year.
|

2/

'

/

|

$ |§

H igj llg

some ins nances under Schedule A, five-year and sevenyear and even discretionary averages have been used. See
Spaulding, The Income Tax in Great Britain and the United
States, p. 215.
"
— — — ------------

14 In 1920 the Royal Commission on the Income Tax found that

public opinion was opposed to averaging and this fact, together

with the anticipated simplification of administration which would

result if averaging were eliminated, convinced the Commission that

the income tax should be assessed on the preceding year*s profits

only*

The effect of variation in incomes on taxpaying ability

was, however, not overlooked, for it was recommended that for

purposes ©f equity a five-year net loss carry-forward should be

permitted.

This change was made in the law in 1926 and is the

basis upon which the British Income Tax is now imposed.

Under the

operation of this system a loss may be offset against the income

of the prior year and any balance of loss not thus offset may be

carried forward for a period of five years, thus spreading the

loss over a possible seven years in all*

To the extent that the

loss is not completely offset against income in this period the

portion of loss representing depreciation may be carried forward

still further.

- 13 -

Various methods of avoiding this difficulty were tried

from time to time.

Some discriminated in favor of

fluctuating incooe as against stable income.

Hone seemed

to be successful, and in 1870 the Commissioners of Inland

Revenue stated that "we doubt whether any rule of change could

be devised for such cases which would do justice both to

the taxpayer and the revenue so long as the system of

averaging is preserved."

Ho action was taken at that time,

however, to eliminate averaging.

When the problem was reconsidered in 1905 by the

Departmental Committee on Income Tax, the inequity resulting

in some years f£om an assessment's being larger than current
\

\

income was again recognized.

1;
In view of the long existence

of the* averaging provision, however, it was recomended

that unless public opinion disapproved, the averaging system

should be retained.

-

12

-

Great Britain

Great Britain has had the longest experience with

averaging*

The first income tax, enacted in 1799,

permitted the computation of the tax on the average

business profits of the three years preceding the year

of assessment and similar provisions were contained inwall

subsequent acts until 1928*

In part at least, however,

this averaging was not allowed for the purpose of avoiding

excessive taxes on fluctuating income, but appears also to

have been a device to assist in the estimation of current

income and the prevention of tax evasion*

A major

§||§f§H H H §fig

difficulty encountered in averaging in Great Britain was

that taxpayers were often subject to burdensome tax liability

in years when they had relatively little income or no income

at all*

On the other side, however, it is often urged that man/ of

the most difficult technical problems in allocating income

and expense items among /ears would he eliminated or made

of minor importance if income were averaged.

Historical Experience with Averaging

In the light of the advantages of averaging one might

well ask why we lack a full-fledged averaging system.

If

the test of the cooking is the eating, it may he useful to

examine the use which has been, and is being, made of various

averaging devices in the United States and abroad, to see how

they have worked out in practice and thereby to throw light

on the desirability of their more extensive use here in the

future

- 10 -

For example, it would take the edge off high rates which

were especially designed to apply in periods of war or

inflationary danger, and it likewise might partially

neutralise the effects of low rates in periods of depression#

There are a number of serious compliance and administrative

problems raised by averaging proposals, especially for the

individual income tax#

In the individual tax field the

pay-as-you-go or current payment method and the simplification

program rely heavily on the retention of a simple, definitive

income period such as the annual income period*

In the

field of business income averaging involves additional

checking and auditing, the holding open of statutes of

limitation, and the problems of transition into and out of

an averaging plan*

Consolidated returns offer a similar advantage of internal

compensatory offsets«

Averaging would also tend to remove

the tax Incentive to the timing of investment or income-

producing activity in ways which do not necessarily represent

desirable economic or business decisions.

The objections to averaging are largely fiscal and

administrative.

On the fiscal side it is urged that

averaging would introduce greater uncertainty into

budgetary planning and would raise policy problems in

the timing of refunds or rebates and in making other

adjustments of tax burdens.

Revenue effects would be

particularly i mportant when there were wide swings in the

national income.

Moreover, averaging would have the effect

of blunting fiscal weapons which were directed toward
specific income years.

The averaging of income for tax purposes would have

advantageous economic effects*

It would remove tax

pressures in favor of investing in stable lines of business

and against investing in businesses with fluctuating incomes*

In the absence of averaging* some misapplication of economic

resources undoubtedly results between these types of

businesses.

Moreover* averaging would presumably tend to

make risk investment relatively more attractive by reducing

the risk of paying taxes out of capital and by permitting
|

a greater offset of losses against income.

This advantage
ip

of averaging over & period of time is somewhat similar to

the advantages which large businesses enjoy over small

businesses because they are in a position to average thè

losses of some lines against the losses of other lines.

On the other hand, it may be urged that annual income is

in harmony with the general thinking of individual taxpayers

who often gear current standards of consumption to the
*
current year *& income and who are not disposed to project

their income computations over a long period of time*

There is, moreover, some value in closing each year1s income

and taxing it as a complete episode, thus removing uncertainty

about the effect of some future year's income on the current

tax*

These arguments against averaging are more pertinent

in the case of individual taxpayers and nonbusiness income

than they are in the ease of business income; they are

least pertinent in the case of the business corporation*

The present discussion is primarily directed to the averaging

of business income, although it must be remembered that some

of the most serious injustices of striet adherence to the

annual accounting period lie in the personal income field.

'

-

6

-

However, averaging should not be looked upon as a means

of reducing taxes*

If the same number of dollars is to

be raised, the effect of averaging is to redistribute the

burden among years and among taxpayers*

The advantages claimed for averaging are primarily in

the fields of equity and economic effects.

The basic

argument in favor of averaging is that the assessment of

substantially different amounts of tax against two taxpayers

receiving the same aggregate income over a period of years

is inequitable*

Indeed, it is sometimes argued that

a taxpayer with fluctuating income may have less ability

to pay than a taxpayer with stable income, since irregularity

of income may require greater liquidity and other unfavorable
/

personal or business adjustments.

The higher tax imposed on fluctuating income, when the

annual accounting year is followed strictly, may result from

any one or a combination of factors, the most universal of

which are the following:

(1) Negative incomes, that is,

losses, may not be offset against positive income; (2) exemptions

may be wasted in years of loss or of low income; (3) progressive

rates may throw fluctuating incomes into higher brackets.

While it is possible to devise averaging methods which would
|§J|Bill!

y

I I ’■ '

f ...

,

\

✓

|| ! .

.•

eliminate completely the higher tax on fluctuating incomes,

most of the commonly suggested plans would not go that far.

The general run of proposals would reduce rather than remove

entirely the tax differential between variable and stable

incomes.

For a given schedule of rates and a given definition of

income, the effect of averaging is in part to change the

timing of tax payment and in part to reduce the tax liability

Averaging devices, as thus defined, embrace various forms,

including a fixed period average of, for example, five years,

a moving average, and the determination of the rate of tax

by the average amount of income*

Averaging devices also

include methods other than actual averaging*

Among these are

flexible depreciation and inventory accounting devices*

The

most important, however, undoubtedly are the carryforward

and carryback of losses and, with respect to the excess

profits tax, of unused excess profits credits*

Pros and Cons of Averaging

(hie reason for averaging is that it compensates for,

or reduces, the importance of errors in allocating income

or expense items among different years*

More important,

however, averaging plays a useful part in equalising

the tax burdens on fluctuating and stable incomes of the

same average or aggregate sise*

•3*

Taxes must be computed on the basis of formal and uniform

accounting procedures;

otherwise

the determination of income

would involve a larger element of personal and administrative

judgment than either the Government or the American taxpayer

would be willing to accept.

Averaging Methods

There have been two approaches to the problem of the

annual income period.

One has been the development of

accounting procedures to take into consideration events of

past or future years, in computing the income for a specific

year*

Depreciation reserves, deferred expenses, and the

last-in first-out method of computing inventory are examples.

The second approach to the problem has been to cut across

t|ie boundary line between years in such a way that the tax

imposed on the income of one year is affected by the income

or loss of other years.

-

2

-

The length of our year is an astronomical accident.

Yearly

income represents an aggregation of 365 daily incomes,

52 weekly incomes, and so forth.

hat not a sacred, period.

The year is a convenient,

Tax accounting periods as short

as one week and as long as two or three generations are

conceivable and, in fact, have been suggested.

Although taxation is only one of several areas where

the defects of the annual income period are patent, it is

perhaps the most important.

In preparing income statements

for most purposes, relevant facts and expectations outside

or beyond the formal accounting figures can be recognised

when action is to be taken or decisions are to be made.

Moreover, reserves can be set up in the accounts to give

a degree of formality to these facts and expectations.

the case of taxation, however, such adjustments are not

feasible

In

THE AVERAGING OF INCOME FOR TAX PURPOSES

Averaging and the Annual Accounting Period

The fact that the earth’s axis is not perpendicular to the

plane of its orbit around the sun is responsible for many things

in this world.

Among these, perhaps one of the least, is the

problem of averaging annual incomes for tax purposes.

In addressing the leaders of the accounting profession,

I need not dwell on the implications, peculiarities, and

limitations of the one-year accounting period which taxation

inherited from the established practice of business and

accounting.

The purpose of averaging devices is to get away from

the segmentation of income into pieces one year in length or,
i,

in other words, to lengthen the accounting period for tax

purposes.

There is nothing very radical about this idea.

— 49 **

One op two would introduce averaging for some or all types

of income, notably for capital gains.

This^is significant, because in the many tax revisions

and great amount of tax study that have been carried on

in the United States over the years, relatively little

time and thought have been devoted to methods of overcoming

the disadvantages for tax purposes of the annual fiscal

fwig|Cttl»aetnof such

of equity and sound economic effects is so great that
Y*AAa M j Ttortls

/»a*

/; *

attention's justified for the future than^er^the

It ©ay well be that a good averaging device

applying over an adequate period of years would fee worth

quite a few percentage points in the tax rate scale in
v

>

furthering the realisation of our tax and economic

objectives in the postwar world

Æ

past.

40 *

One

op

two would introduce averaging fop
/
■

sou#

or all types

of income, notably for capital gains*

This interest in the averaging problem is significant,

because in the many tax revisions and great amount of tax study

that have been carried on in the United States over the years,

relatively little time and thought have been devoted to methods

of overcoming the disadvantages for tax purposes of the annual
/

fiscal year*

” I

■ %;■ ;

let the potential importance of such methods in

t e r m of equity and sound economic effects is so great that

much more attention to them is justified for the future than

has been given to them in the past*

It may well be that a good

averaging device applying' over an adequate period of years

would be worth quite a few percentage points in the tax rate

scale in furthering the realisation of our tax and economic,

objectives in the postwar world*

I

As you no doubt have learned, the Congressional Joint

Committee on Internal Revenue Taxation instructed its

staff and requested the Treasury staff to work together

as a unit on the problem of tax adjustments for the

transition and postwar periods.

The studies being carried

on have not yet reached the point of a report to the Joint

Committee*

So it would be inappropriate for me to go into

the part which averaging devices might play in a postwar

tax program*

The matter is being given careful study along

with other aspects of the postwar tax problem, and any

suggestions which any of you may care to make on this

question or any other involved in the study will be most

welcome and carefully considered.

Suggestions have already been made byA omteMwAgroups.

of losses.

• 48 ■

As you no doubt have learned, the Congressional Jo in t
Committee on In tern al Revenue Taxation in stru cted i t s
s ta f f aim requested the Treasury s ta ff to work together
as a u n it on the problem of tax adjustments fo r the
tra n s itio n and postwar periods#

The studies being carried

on have not y et reached the point of a report to the Jo in t
Com ities*

$0 i t would be inappropriate fo r me to go into

the p art which averaging devices might play in a postwar
tax program#

The matter if being given carefu l study along

w ith other aspects of the postwar tax problem, and any
suggestions which any of you may care to stake on th is
question or any other involved in the study w ill b# most
welcome and carefu lly considered#
Suggestions have already been mads by a number of groups*
Several plans provide long periods of carry-over of losses#

* 47 *
If an averaging device such ae the carryover is to

serve its functions of increasing tax equity and

encouraging business investment and expansion it must be

A
bad.

as firm policy to be retained in good times and
>

It would be worse to adopt a long carryover, or otiler

longer-term averaging device, and thereafter to abandon it

when loss periods were experienced than to delay

lengthening the period until there was & general

understanding and resolution to retain the device as

a continuing element in the tax system,

I am sure you would like for me to tell you what is

going to happen to the wartime carrybacks and to averaging

devices for the postwar tax revisions.

you.

I wish 1 knew.

I would like to tell

But tax revision^ w e
A

Congressional action.

a matter for

- 47
If

an averaging device sack as the c a rry o v e r is to

serve i t s ftm ctions of increasing tax equity end
encouraging business investment m i expansion, i t must be
adopted as firm policy to be retained in good times and
bad#

I t would be worse to adopt a long carry-over, or other

longer-term averaging device, and th e re a fte r to abandon i t
when lo ss periods were experienced than to delay
lengthening the period u n til there was a general understanding
and reso lu tio n to re ta in the device as a continuing clement
in' the tax system#
1 am sure you would lik e fo r

m

to t e l l you what is
lflll'8 !|lS ft ;fff|

going to happen to the wartime carry-backs and to averaging
devices fo r the postwar tax revisions#
you#

I would lik e to t e l l

I wish I knew* nut tax revision is a m atter lo r

Congressional action*

- 46 Fluctuations of business incomes are sometimes

classified roughly into the seasonal and the cyclical.

To these are added the life cycle of the business unit.

The annual income period averages out the seasonal

fluctuations.

Fee who favor averaging devices would

cover the whole life period of the business

alth

for many businesses no long period

would bo involved.

lengths.

Cyclical movements are of Tarious

The two year carryover of the prewar Federal

law would be sufficient for the shorter cycles* but is

\ \ioo short for the longer and more important cycles and,

the problem

m #|! «*
• .

1

■

.' •

t

'K;,

Floctuatioas of h m i m m i m m m ufi soiaetima

classifieà rmigtily lato ih# se&soa&l «ad th* eyolic&l#

Io thè sa or* a M a i thè lift ojclt of th« business «alt*

Th# armoni Inmrn parlai avcipagtc oat tfe stasanti

fluetoatioas«

Few «ho favor f&wagSag devi««« « o o U

eovtr th# whole lift perlài of th# business firn

althoogh» imh&pfiÌyf. for « . f baila###«# ao long period

wculi b# Satolliti#

leagths*

Cyolieal m r m m u t# art of tariout

Ih© two | »

o a r r j * o w of th# f m m r federai

law «rotili 11 soffi«imt for th# sàorter «folte* bai 1#
too short for ths ioagtr m i aere ii&portaot cycles m à $

aecordiagljf too short to » e t s sabetaatial pari of

th# rroblsa»

45 -

The new business cannot benefit from the carryback, but

would be benefit ted by a longer c&rrjjpver especially in

&$ ftru4t*v<L4-4t*i^
T ie w of t h e tendihcy^to suffer losses la the early years*

The dying or liquidating business cannot use the carryover

but would b e benefit ted by the carryback*

For other

businesses it is hard to forecast whether the carryover

or the carryback confers the greater benefit.

However,

the carryover has the merit of permitting the closing of

tax years without delay and of minimising manipulation to
UaJ maJ

secure the maximum benefit and avoid taxes.

^

Ik carryovers,

carry^cks^ and^veraging^teelrfithe problems of predecessor

and successor corporations and corporate acquisitions to

reduce tax are present and must be met, even though
arbitrarily.

«* 4 b —

j

/

The new business cannot b en efit from the carry-back, but
, U||

would be benefltted by a longer carry-over especially in
.view of the tendency of businesses to su ffer losses in the
early years#

The dying or liq u id atin g business cannot use

the carry-over but would be b enefittcd by the carry-back*
fa r other businesses i t is hard to forecast Mietbar the carryover
or the carry-back confers the g reater benefit*

However, the

carry-over has the m erit of perm itting the closing of tax
years without delay and of minimising manipulation to
secure the maximum b en efit and avoid taxes*

Under carry-overs,

carry-backs, and actual averaging, the problems of predecessor
and successor corporations and corporate acquisitions to
reduce tax are present and
a rb itra rily *

be met, even though

«o

m

s e v e n ■year^pe r

ritain ii

The^spread ^

i ed-j

including in addition to the year of loss, a one-year

carryback and a five-year carryover.

In the Commonwealth

of Australia losses are spread over five years by means

of a four-year carryover*

The recently proposed spread

N

in the Dominion of Canada would be temporarily five years

including a one-year carryback and a three-year carryover.

in the United States, is^likewise five years,' Ct
A

ami m m

longer under certain circumstances/

two-year carryback and p two-year carry-over.
A

In peacetime^ countries other than our own have

limited the

carryback

to one year, if they allowed it at

A
all, and the misgivings about our own carrybacks are such

as to raise a question as to their desirability for

peacetime use

** d d ■
—

The period for spreading losses in Great Britain is seven

years including in addition to the year of loss, a one-year

carry-back and a five-year carry-over«

In the Coimaoawe&lth

of Australia losses are spread over five years by means

of a four-year carry-over«

The recently proposed spread

$

in the Dominion of Canada would be temporarily five years
1 '
/

Ill

■ ••

'

!/

.

including a one-year carry-back and a three-year carry-over#

Under the two-year carry-back and two-year carry-over in the

United States the spread is likewise five years; it m y be

even longer under certain circumstances#

In peacetime, countries other than our own have

limited the carry-back to one year, if they allowed it at

all, and the misgivings about our own carry-backs are such

as to raise a question as to their desirability for

peacetime use«

These experiences prsssnt a practical obstacle to tho
friends of averaging but have not dismayed them. New
/

methods of averaging have been developed that meet some of
the objections to the moving average, and other improvements
can no doubt be made. Nevertheless, the administration end
oompllance problems of even the most promising methods of
averaging remain a major impediment, especially with respect
to the individual income tax, which ie unfortunate since
under the individual incoas tax the progressive rate ecale
end relative unimportance of losses make such partial
devices as the loss carry-over largely ineffective.
For businese income the spreading of losses through
carrying of losses from years of loos to years of gain is
the averaging device that has been preferred in these
countries.

42 -

Conclusion
Sbls survey of ths use of averaging and averaging
devices is too limited to justify definitive conclusions*
but a few observations may not be out of order* Although
(ruJ-i^Lr *~**J«m& .

J

of all averaging devices¿averaging itsetf.provides the
"*

%

most complete equalisation of tax load batmen fluctuating
and stable incomes, it has lost rather than gained ground
in the English-speaking countries whose tax systems have
been examined* After very long use and several
reappraisals it was abandoned in Great Britain* After
a shorter trial its pss was minimised in Australia. It
has not been adopted in Canada* The Wisconsin experiment
could hardly have been more ill-timed, as matters turned
out, and may not indicate what would have been the result
of a longer trial under more auspicious circumstances.

- 42
Conclusion

this survey of the use of averaging and averaging

devices is too limited to justify definitive conclusions,

tut a few. observations nay not be out of order»

Although

of all averaging devices, outjpight averaging provides the

most complete equalisation of tax load between fluctuating

and stable incomes, it has lost rather than gained ground

in the English-speaking countries whose Itax systems have
‘

been examined*

'hr

A fter

very

long

\

use and several

reappraisals it was abandoned in Great Britain»

After

a shorter trial its use m s minimised in Australia#

has not been adopted in

Canada*

could hardly have been more

out, and may not indicate

The Wisconsin experiment

ill-tim e d , as

what

It

matters turned

would have been the r suit

of a longer trial under more auspicious circumstances#

These carry-backs and carry-forwards do not extend beyond

the period during which the excess-profits tax law is in

operation.

However, it was stated by Sir Kingsley Wood

in the Parliamentary Debate of 1943 that reconversion

costs will be allowed as a deduction in computing excess

are incurred.

1/

British have no specific inventory

e made some
provision, in the administration of their fygg law, for

J
deferred maintenance.

\
/
1/ Sir Kingsley l^dd, Parliamentary^^
~

p p .

9 6 0 - 9 8 2 .

115, 1943,

These carry-backs and carry-forwards do not extend beyond
the period during which the ex cess-p ro fits tax law i s in
operation.

However, i t was stated by S ir Kingsley Wood

in the Parliamentary Debate of 1943 th a t reconversion
costs w ill be allowed as a deduction in comonting excess
p ro fits tax i f the tax is repealed before these costs
are incurred. 2 /

mm

w

¡pa.

ilp jP ’JlX JL&* JU

960-382* The B ritish heir© no sp ecific inventory
res err© adjustment# Apparently they hair© made, some
rroT lsiou, in the adm inistration of th e ir law, fo r
deferred maintenance*

- 40 ^Aèy unused balance in the reserve when the excess-profits

tax act becomes inoperative may be applied against any

inventory price decline in the following year, and if

not used then Is to be added to the income in the last

year that the excess-profits tax act applied to the

taxpayer*

In the British law losses and unused excess-profits

credits arising in the period the excess-profits tax is

in operation may be completely offset against taxable

excess-profits*

These deficiencies are first carried

backward until excess-profits are exhausted and then

forward, with an appropriate allowance for the Increase

in the rate of excess-profits tax in 1940 from 60 to

100 percent*

40 -

Under the proposal any unused balance 1n the reserve when the

excess-profits tax act becomes inoperative nay be applied

against any inventory price decline in the following year, and

if not used then is to be added to the Income in the last

year that the excess-profits tax act applied to the

taxpayer#

In the British law losses and m u s e d excess-profits

credits arising in the period the excess-profits tax is

in operation may be completely offset against taxable

excess-profits*

These deficiencies are first carried

backward until excess-profits are exhausted and then

forward, with an appropriate allowance for the increase

in the rate of excess-profits tax in 1940 fro® 60 to

100 percent*

- 39 It will lie observed that Canada has neither a carry

forward nor carry-back of unused excess-profits credits.

Another adjustment was suggested in the 1944 Budget
t >-

Speech regarding wartime income.

'

This was a suggested

provision that half of the expenditures on maintenance

and repairs incurred in a period to he fixed by order

in council may be charged against income of a preceding

taxable period, but to no year earlier than one ending in

1943.

The Canadian law also provides for a reasonable in

ventory reserve against future depreciation in inventory
J|P | .¿I'?..;

value.

This reserve is allowed solely for purposes of

determining excess-profits taxes.

This reserve cannot pro

vide for price decline below inventory prices at the end of

taxable years ending in 1939, or August 1939, whichever date

is earlier

In this connection, the Minister of Finance stated:

"We cannot shut our eyes to the fact that with the

change from war to peace many firms may encounter temporary

losses and under our present practice taxes paid over

the whole period of war and readjustment may bear con

siderably higher rates to the full realised income than

those prescribed in the law,

I am particularly concerned

lest for this reason, when the time comes to replace war

industries with peace industries, business enterprises

should be handicapped in making the necessary changes

or should be hesitant rather than prompt in action,

It is worthy of note that the emphasis in this new

proposal is upon

the correction of wartime income

insofar as the one-year carry-baok is concerned, while the
three-year carry-forward is for the purpose of looking ahead
and giving relief to peacetime industry.

here may be a feeling after the war that such refunds

constitute a special benefit to corporations which earned

excess/^ofits during the war.

World War II Averaging Devices In Canada and Great Britain.

Since Canada and Great Britain have faced much the
\

same wartime tax problems as we have, it may he helpful

to examine their wartime methods of averaging*

In Canada

a carry-forward of one-year’s loss has been allowed

against income earned in taxable years ending in 1942

and 1943*

In the Budget Speech of June 26, 1944 a some

what different plan was suggested*

For losses sustained

in taxable years ending in 1944 and subsequently, & one
be • ■ -

kk*..£>*e.

year carry-back of loss is allowed and any unused balance

A

of loss may be carried forward for three years*

- 37 -

Although the objectives of these refunds are proper,

there m y be a feeling after the war that sueh refunds

constitute a special benefit to corporations which earned

excessive profits during the war*

World War II Averaging Devices in Canada and Great Britain»

Since Canada and Great Britain have faced such the

same wartime tax problems as we have, it m y be helpful

to examine their wartime methods of averaging.

In Canada

a carry-forward of one-year’s loss has been allowed
4

against incoaa earned In taxable years ending in 1942

and 1943.

In the Budget Speech of June 26, 1944 a

saaawhat different plan vat suggested.

For losses sustained

in taxable years ending in 1J44 and subsequently, a one

year carry-back of loss is allowed under this plan and any

unused balance of loss aay be carried forward for three years.

■

How

serious

- 36 -

| ,• . .

„/¿J•»

this problem is will depend on the working

capital position of corporations.

Recent data of the

Securities and Exchange Commission indicate that -in the
J

aggregate working capital is the largest in corporate
A

financial history.

In addition, the Government has

provided generous aid for reconversion financing in various

cases.

Nevertheless,.there may be specific instances

of cash shortages/where working capital is frozen in

/Inventories or receivables/which would be alleviated
_
___________
if the benefits of the carry-backs could be made available

more promptly.

A general disadvantage of carry-backs is that they

involve payments of refunds from the Treasury to taxpayers

Although the objectives of these refunds are proper^

- 36

Hoir serious this problem is mill depend on the working

capital position of corporations.

Recent data of the

Securities and Exchange Comission indicate that, in the

aggregate, working capital is the largest In corporate

financial history.

In addition, the Government has

provided generous aid for reconversion financing in various

oases,

nevertheless, where working capital Is frozen in

inventories or receivables, there may be specific Instances

of cash shortages which would be alleviated if the benefits

of the carry-beaks could be made available more promptly.

A general disadvantage of carry-backs is that they

involve payments of refunds from the Treasury to taxpayers.

The carry-backs hare baaa urged as a substantial

measure for easing the readjustment and reconversion

problem'*MfeMgh there seems to be little or no evidence

that they m m

designed for this purpose*

The problem

of readjustment from wartime to peacetime business is to

a considerable extent a cash problem*

Refunds payable by

virtue of the carry-backs cannot be made under present

law until the claim has been filed after the year in

which tbe loss or unused credit arises*

let the need for

cash will be felt during the year of lossf not sometime

later, and even while the loss is being suffered the

corporation -might have to borrow to pay its tax liabilities
of the nr seed inn near

The carry-backs have been urged as a substantial

measure for easing the readjustment and reconversion
,

/

problem; there seems to be little or no evidence that they

were designed for this purpose.

The problem of readjustment

fro© wartime to peacetime business isf to a considerable

extent, a cash problem.

Refunds payable by virtue of the

carry-backs cannot be made under present law until the

claim has been filed after the year in which the loss or

unused credit arises.

Yet the need for cash will be felt

during the year of loss, not sometime later, and even while

the loss is being suffered the corporation m y have to

borrow to pay its tax liabilities of the preceding year#

/

The carry-backs present another problem in that

refunds m y be made in circumstances where there can be

no justification*

Consider, for example, a corporation

established solely to produce wartime goods and not

reconverting to postwar peacetime business*

Instead of

being liquidated immediately after its war business is

completed, the corporation can be kept alive^and under

present law would be entitled to a carry-back of its

excess-profits credit against wartime income of the two

previous years*

There may also he possibilities of manipulation in

which losses

a year

reduced incomes are made to appear in

when a carry-back could be used to advantage*

- 33 A carry-back of excess-profits credit in such

a case diminishes the amount of excess-profits tax,

increases the amount of normal tax and sur tax, and

decreases the 10-percent postwar refund.

The corporation

would have its net tax increased by the amount of the

cancellation of its 10-percent refund.

However, if the

carryback is sufficiently large to bring the corporation

out of the 80-percent limit, this anomalous effect

rapidly disappears.

The failure of a corporation subject to the 80-

percent limit to receive benefits from the carry-back

of unused credit should be considered in the light of

the benefit the 80-percent limit has already conferred.

Such a corporation has received a reduction, often very

substantial, in its wartime taxes by virtue of the limit.

.
\

Expressing the proposal in these terms may be criticized by
in terms of the British method
students of British taxation, since the proposal is ordinarily
of tax assessment the proposal is ordinarily referred to as a si* year
r referred to as a six year carryover* I but the
carryover* I have endeavored to state the situation in &us terms
mo

Expressing the proposal in these terms

setoff
s&xfe&A
loss
provisions are
tximoix«xdhra«x*tixkExjaijkBX3radi The British/xxxxjanrxr jsxBKsáxxBxxfcs/here
restated
as nearly comparable as possible
provisions*
/in a form thatxxküxhsxKaarçsarxshix/to the American jsxmauttxs; the
result unfortunately is tm not in entire accordance with British
method of assessment, under which the carryover is referred to
as a six-year carryover*
Under the British method of assessment the aouexgraxxxxi»

J jft h e British loss setoff provisions are here restated in a form as
nearly comparable as possible to the

American provisions*

Under the

British method of assessment fehxxaqraeyigagianrdxki jssxs&xfcxxx&sxxBBOSt
commonily
tjnMKPcxgigrxwrixfcBxauDcaxEkxxyBxrxgxrxy the taxpayer is/xoDHSddoBix/sai d
to fexxx be allowed x to carry forward his losses for six years*

The smaller the excess-profits tax and hence the 10-pereest
postwar refund, the larger the net tax after deducting the
postwar refund*

- 31 -

It has been urged that corporations subject to the

80-percent rate limitation do not fare well under the

unused credit carry-back*

Under this carry-back

& corporation subject to the 80-percent limit might have

to pay more tax instead of receiving a refund, if, after

applying the carry-back, it wmm >-still subject to the

limit.

^

This peculiar result arises because the 80-percent

limit applies to total taxes prior to the deduction of

the postwar refund of 10 percent of excess-profits taxes.

In determining what portion of the 80-percent tax is :te

hcaatiasasl the excess-profits tax, the normal tax and

surtax are subtracted from the total gross tax and the

balance is excess profits tax.

The larger the excess-profits

credit, the larger the normal tax and surtax, and the

smaller the excess-profits tax.

It has been urged that corporations subject to the

80-percent rate limitation do not fare well under the unused

credit carry-back.

Under this carry-back a corporation

subject to the 80-percent limit might have to pay more tax

instead of receiving a refund, if, after applying the carry

back, it was still subject to the limit«

This peculiar

result arises because the 80-percent limit applies to total

taxes prior to the deduction of the postwar refund of 10

percent of excess-profits taxes«

In determining what portion

of the 80-percent tax is the excess-profits tax, the normal

tax and surtax are subtracted from the total gross tax and

the balance is excess profits tax«

The larger the excess-

profits credit, the larger the normal tax and surtax, and

the smaller the excess-profits tax«

30
3tin Mother corporation with base period income of three
and one-half million dollars would, if It had aero Income
H

in a year subject to the carry-backs, receive W&million
dollars, while another company with average prewar
earnings of two and one-half million dollars would receive
li^million. These cases, not necessarily the worst,
indicate that the carry-backs vdbtik under some circumstances
provide tax refunds from the Government of amounts far
prewar average earnings, or evei ^

The criticism of the carry-back of unused excess
profits credit is less valid in the case of a credit
corrected through Section 722 or even through the growth

\

A

numerous cases*

A

Still another corporation with base period income of three

and one-half million dollars would, if it had aero incase

in a year subject to the carry-backs, receive $18 million

dollfpr, while another company with average prewar earnings

of two and one-half million dollars would receive $££

million.

These cases, not necessarily the worst, indicate

that the carry-backs under some circumstances may provide

tax refunds from the Government of amounts far exceeding

prewar average earnings, or even, in some cases, the best

year of earnings in the base period.

The criticism of the carry-back of unused excess

profits credit is less valid in the case of a credit

corrected through Section 722 or even through the growth

formula or the 75-percent rule, although these latter are

mechanical methods which almost certainly overstate the

really normal credit in numerous casts

29

The objection la most valid in the ease of the

invested capital credit#

Hany concerns using this

credit not only receive free from exces«»profits tax

much larger profits than they earned before the war, and

perhaps ever received* but in effect will have their

profit level artificially maintained by the oarry»b&cks

in the postwar years#

For example* one firm with IflightJy

over $50*000 average base period earning^before taxes

would* if it had aero income* receive srhalf million
A

dollars of tax refunds*

Two other corporations that have

come under observation had no base period earnings and

would receive^ nsarly a million dollars each in tax

refunds if they earn no income in one year#

The objection le mast valid in the case of the

invested capital credit.

Many concerns using this

credit not only receive free from excess-profits tax

much larger profits than they earned before the war,

and perhaps ever received, but in effect will have their

profit level artificially maintained by the carry-backs

in the postwar years.

For example, one firm with average

base period earnings slightly over $50,000 before taxes

would, if it had aero income, receive nearly a half million

dollars of tax refunds.

Two other corporations that have

come under observation had no base period earnings and

would receive between $800 and $900 thousand each in tax

refunds if they earn no income in one year.

-

28

-

These adjustments of the eredita may be entirely
appropriate in arriving at income to be subjeoted to
the excess-profits tax in tine of war, especially in
the light of the very high rates which apply to Income
designated as excess profits, furthermore, if the income
is brought below the level of the excess-profits credit,
.

because of deferred expenses or other war-caused reductions
in income, it is no doubt proper to correct the wartime
income through the carry-backs. But to the extent that
earnings simply j.'4fcìl off in amount while remaining above
ifsfkjJiA» 4^,/%&&****

the5^ peacetime level- it .maybe yiaetioned' uUetlwa-ttoweCru-t

pj*ofits^
the prewar experience of a company results in a carrybask against excess profits^!»

umh a case

—

28

»

These ad jus tarn ts of the credits may be entirely

appropriate in arriving at income to be subjected to

the excess-profits tax in time of war, especially in

the light of the very high rates which apply to income

designated as excess profits*

Furthermore, if the income

is brought below the level of the excess-profits credit

because of deferred expenses or other war-caused reductions

in income, it is no doubt proper to correct the wartime

income through the carry-backs.

But to the extent that

earnings simply fall off in amount while remaining above

their peacetime level there is room to question whether the

corporation should receive a tax refund out of its wartime

profits.

let the development of a high credit far above

the prewar experience of a company results in a carry-back

against excess profits and a refund in such & case.

- 27 Only if the loss were unusually severe because of the
war eould a ease be made for reducing wartime taxes on
aeeount of the loss. This generosity allowed by the
carry-backs with respect to postwar losses extends also
,1,1. ■ " ," .

to postwar reductions of income below the excess-profits
credit.
The carry-back of excess-profits credits is generous
also in another respeet. This generosity arises from
the^isbeb&aitty that an excess-profits credit may be
substantially larger than the earnings of the corporation
in the prewar period. This larger credit say result from
ths application of the growth formula, the 75-percent
rule, the invested-capital credit, or Ifeomlrelief under
Section 782.

-

Only

if

2 7

-

the loss were unusually severe because of the

war could a case be made for reducing wartime taxes on

account of the loss.

This generosity allowed by the

carry-backs with respect to postwar losses extends also

to postwar reductions of income below the excess-profits
credit.

The c&rry-back of excess-profits credits is generous

also in another respect.

This generosity arises fro® the

fact that an excess-profits credit may be substantially

larger than the earnings of the corporation in the prewar
*

period.

This larger credit may result from the application

of the growth formula, the 75-percent rule, the invested-

capital credit, or relief under Section 722.

Asy l o t n t

op

reductions in incoa

below the excess*

profits credit bring the carry-backs into operation«

yet the averaging of income earned during the war with

normal

after the

or
m § # # losses or declines in income sustained

war violates

the objective of taxing war-

induced exoess-profits heavily*

The mere fact that a loss is incurred after the war

is no evidence that it is necessarily a war-caused loss*

Corporations in the aggregate have earned high net profits

after taxes for five consecutive years« probably an

unprecedented experience in corporate history.

Interruptions of this high profit experience by a postwar

loss would not necessarily indicate an unusual^war-caused

wwfc, but might merely reflect the regular course of
economic

Any losses

op

reductions in income below the excess-

profits credit bring the carry-backs into operation,

yet the averaging of income earned during the war with

normal or usual losses or declines in income sustained

after the war violates the objective of taxing war-

induced excess-profits heavily*

The mere fact that a loss is incurred after the war
♦

is no evidence that it is necessarily a war-caused loss.

Corporations in the aggregate have earned high net profits

after taxes for five consecutive years, probably an

unprecedented experience in corporate history.

Interruptions of this high profit experience by a p o s t e a r ^

loss would not necessarily indicate an unusual or war-caused

event, but might merely reflect the regular course of

economic developments.

- 25 -

The carry-backs may not carry out these

purpose® completely*,

To be effective, deferred costs

or expenses must occur within two years after the receipt

of wartime profits*

There are* of course* some

clrctanstances where taxes

four years prior to

m

the loss in question could be affected by the carry-backs.
K

It is t o o ^ w B ^ L i o tell whether the period allowed will

be too short or too long*

Moreover# to be completely

fiffactive, the carry-backs must remain in operation until

the bulk of reconversion and readjustment has been

completed, whether or not the excess-profits tax is

repealed,

The carry-backs are crude in another respect*

They

are not a précision instrument which can separaie out

war-caused expenses and war-caused losses from usual and

ordinary expenses.

m

The carry-backs
may
y
^
completely#

not

2S •

’

_

carry. cut these
purposes. ''
V

^ .

To he effective* deferred costs or wpaaie«

must occur w ithin two years a fte r the re c e ip t of wartime
p ro fits#

There are* o f course* some circumstances where

taxes four pears p rio r to or subsequent to the lo s s la
question could be affected by the carry-backs*

I t is too

soon to t e l l whether the period allowed w ill be too short
or too lou£#

Mopever* to bo completely effective* the

c a rry -lacks must remain in operation u n til the bulk of
reconversion and. readjustment has bean completed* whether or
not the excess-profits tax is repealed*
The carry-backs arc crude in another respect*

They

are n o t a precision instrument which can separate out
war-caused expenses and war-caused lo sses from usual and
ordinary expenses*

In the absence of any provision these expenses and losses

would be chargeable at a time when there might be no

income and when tax rates, considering both the income

tax and the excess-profits tax, might be much lower, although
SA*, C.$V.Arf

such costs and losses would be

re against
A
*

the income of the war years»

More generally, the carry-backs achieve another

appropriate purpose in that they provide an offset against

wartime income of war-caused postwar losses or of war-caused

postwar reductions in income below the excess-profits credit

level.

In those cases in which wartime production may be used

to supply postwar needs or in which competing facilities may

have been developed,flower profits after the war may result

directly from wartime production.

It may be argued that

such losses or reductions of income are proper charges

against wartime profits.

24 —
la the absence of any provision these expenses and losses

would be chargeable at a time whoa there might be no

income and when tax rates, considering both the income

tax and tbs excess-profits tax, might be much lower, although

such costs and losses would be equitably a proper charge

against the income of the war years*

Mare generally, the carry-backs achieve another

appropriate purpose in that they provide an offset against

wartime income of war-caused postwar losses or of war-caused

postwar reductions in income below the excess-profits credit

level*

In those cases in which wartime production may be used

to supply postwar needs or in which competing facilities m y

have been developed, losses or lower profits after the war m y

result directly from wartime production*

It m y be argued that

such losses or reductions of income are proper charges

against\wartime profits*

\

- 2

\/0j>

.Brovf slon-was m ade f w this circumstance Ain the Revenue

let of 1942 which provided a two-year carry-back of losses

and of unused excess-profits credits to years beginning

after December SI, 1940.

This carry-back, however, was

not limited specifically to war years and its effect In

averaging wartime income over the period of the war was

probably an incidental result rather than a basic purpose

of the legislation,

The cany-backs were placed in the law, in lieu of

specific reserves, at a time when efforts were being Bade

to provide a satisfactory means of charging against

wartime income such postponed wartime expenses as deferred

maintenance, reconversion costs, and the like.

Similarly,

t
..
I
the carry-backs provide a means for chargingYdga^st the
:?§■-

n

This circumstance m s

taken care of la the Revenue

Act of 1942 which provided a two-year carry-back of losses

end of unused excess-profits credits to years beginning

after December 31* 1*340#

This carry-backf however, was

not 1 imited specifically to war years and its effect in

averaging wartime income over the period of the war was

probably an incidental result rather than a basic purpose

of the legislation»

The carry-backs were placed in the law* in lieu of

specific reserves, at a time when efforts were being made

to provide a satisfactory means of charging against

wartime income such postponed wartime expense® as deferred

maintenance, reconversion costs, and the like#

Similarly,

the carry-backs provide a moans for charging inventory losses

against the income of the war years#

-

22

-

World War II Experience In the United States

Our most recent and* for that reason* most interesting

experiment with averaging devices is in the form of carry

overs and carry-backs of losses and unused excess-profits

credits for determining the taxes of World War II*

The

carry-forward of losses* as I have just indicated* had

been restored in 1939«

In 1940 a two-year carry-over of

unused excess-profits credits was provided#

The effect

of this carry-over was to assure that the corporation

would derive full benefit from all of its excess-profits

credits, if profits were low in an early year of the war

and high thereafter.

The corporation would* of course*

lose a part of its credit if the early year were the high

year and a later year of the war were the low year#

As this brief résumé •would indicate, there has been no

L*S/
experience with averaging¿positive incomes of corporations as
A
- ^ S
i
^ I
distinguished from the carryover of losses* Itejgs Mien there

4M»

are no exemptions and the tax is imposed at a flat ratek^he
carryovers and carrybacks^ a re nearly the equivalent of averaging.

%p±* is not the case when rates are jaqsoaad progressive^
fid
M
¿¿A %
¿k*jù&
'copporatidn taxes hawàiad progressive rates ■outonAag
J A;
.

Small corporations

accordinglv do not derive as much benefit from carryovers and
carrybacks as they would from averaging*

However, since defeat

A-~Ari

higiim i x g f £kxfe small co
years of loss and years of in
U

benefit seam from ¡ m loss carry
large corporations .

re fluctuation between
relatively more
and carrybacks than do

1$£Vj me j

21-4.

is this brief resume would indicate, there has been no

experience in the federal income tax with averaging of

positive incomes of corporations as distinguished from the

carryover and carryback of losses.

Shen there are no

exemptions and the tax is imposed at a flat rateyin operation

the effects of carryovers and carrybacks arc nearly the
equivalent of averaging*

This

is

present tiro

progressive

not the

case

when

are progressive#

the effective ra te s of our corporation

carryovers and

do not

Small

derive as much b en efit

from

carrybacks as they would front averaging positive

w ell as negative

incomes* for an

equivalent number

However* since small corporations in general show
fluctuation

At the

taxes are

up to corporate income le v els of $50t QGO*

corporations* accordingly*

as

rates

between

years

of

of years#

sore

loss and years of income they derive

relatively sore benefit from loss carryovers and carrybacks than
do large corporations*

With respect to t & 3 year a claim coaid be filed for loss

in the value of inventory whether or not the loss had been

realised by disposal of the inventoried goods*

However, in

application, this adjustment probably did not provide very

substantial relief sinee* the price collapse which led to

large losses did not occur p a general]until 1926 and 1921.

The Revalue Act of 1921 provided that a net business

loss could be deducted from the net income of the

succeeding two years*

Similar provisions remained a part

of the Federal .Income tax law until 19S2, at which time

the carry-over was limited to one year*

It m s eliminated

entirely by the National Industrial Recovery Act in 1983

and not reintroduced until the Revenue Act of 1939,

21

m

With respect to th a t year a claim could ho f ile d fo r lo ss
in the value of inventory whether or not the lo se had been
re a lise d by disposal of' the inventoried goods*

However, in

ap p licatio n , th is adjustment probably did not provide very
su b stan tial r e l i e f since in general the price collapse which
led to large lo sses did not occur u n til 1820 and 1921*
The Revenue Act of 1921 provided th a t a net business
lo ss could be deducted from the n e t income of the
succeeding two years*

Sim ilar provisions remained a p art

of the Federal income tax law u n til 1932, a t which time
the carry-over was lim ited to one year*

I t was eliminated

e n tire ly by the national In d u strial Recovery Act in 1933
and not reintroduced u n til the Revenue Act of 1939*

The Federal income tax law has sought to lessen

the higher tax on fluctuating income through the

allowance of net

years sines 1913*

carry-overs for most of the

Sueh carry-overs were provided only

for losses from a trade or business.

The first

adjustment of this kind was in the Revenue Aet of 1918 j

which provided t

h

12 ' . v

a

t

lif a net loss were suffered durin
S’

taxable years beginning after October 31, 191# and ending

before January 1, 1920, it could be carried back against

income in the preceding year, and any unused portion could

then be carried forward against income of the following

year.

This adjustment probably was not of substantial

importance because the year 1919 was generally a very good

year*

Another significant type of adjustment was provided for

the taxable year 1918* -

«*» ¡20 **t

The federal income tax law has sought to lessen

the higher tax on fluctuating income through the

allowance of net loss carry-overs for most of the years

since 1918#

Such carry-overs were provided only for

losses from a trade or business*

the first adjustment of

this kind was in the Revenue Act of 1913» which provided

that if a net loss were suffered during taxable years

beginning after October 31» 1918 and ending before

January 1» 1920* it could be carried back against income

in the preceding year» end any m u s e d portion could then

be carried forward against income of the following year*

This adjustment probably was not of substantial importance

because the year 1919 m s generally a very good year*

Another significant type of adjustment m s provided

for the taxable year 1918*

- 19 «

The purpose of the provision was to relieve the hardships

believed to exist «hen the compensation of writers,

inventors, lawyers, and others is received in full upon

completion of a long period of work.

with the taxpayer.

Averaging is optional

Under the Revenue Act of 1942 the

five-year period was reduced to 36 months and the 95-percent

requirement

was

reduced to 80 percent.

a whole because of the narrow scope of the cases includ*^

of interest because of its experimentaxy
(

/

19

The purpose of the provision was to relieve the hardships

believed to exist when the condensation of writers,

inventors, lawyers, and others is received in full upon

completion of a long period of work.

with the taxpayer,

Averaging is optional

Under the ¡¿avenue Act of 1942 the

five-year period was reduced to 36 months and the 95-percent
requirement was reduced to 30 percent.

This application of averaging is of interest because of

its experimental character hut Is hardly of great significance

for the field of ineons as a whole because of the narrow

scope of the oases included.

The situation was farther complicated by legal difficulties

in imposing taxes under the averaging system after death

or removal from the State,

The 1931 legislature enacted

legislation for gradual transition from averaging which

was completed by 1934*

Federal Government Experience

A restrictSi averaging provision was introduced into
A
the Federal income tax law in the Revenue Act of 1939. This

torntpcuA+f***4¡jf&
averaging device was restricted to use where^person&l
hjla/MajlJ .
s e r v i c e s o v e r

years

a period of five or more calendar

coiupGMa

;axi
t|g^gfei^-t^e8esdr

(M iZ ^
ie completion of the services*

|J '
It

m s provided that in such cases the tax attributable to such

compensation should not be greater than the total that would

have been paid if the compensation had been received in
equal portions over the years of^ service.
y VAffirifrtT f* «/

CAtm^pr^r:^

The situation was further complicated by legal difficulties

in loosing taxes under the averaging system after death

or removal from the State.

The 1931 legislature enacted

legislation for gradual transition from averaging which was

completed by 1934.

Federal Government Experience

A narrowly restricted averaging provision m s introduced into

the Federal income tax law in the Eevenue Act of 1939.

This

averaging device m s restricted to use where 95 percent of the

compensation for personal services rendered over a period of

ftvf or more calendar years was postponed until the completion

of the services*

It m s provided that in such oases the tax

attributable to such compensation should not be greater than the

total that would have been paid if the compensation had been

received in equal portions over the years of service*

Wisconsin Experience
Averaging received a brief test in the United States
when the Wisconsin State Legislature in 192? changed the
base of the Income tax to a three-year moving average.
The plan got off to a bad start because the effects of
averaging were confused in the public mind with an increase
in taxes attributable to the transformation of the personal
exempt! n into a tax credit. The early onset of the
depression resulted in a large proportion of taxpayers'
being subject, in a period of little or no incase, to
relatively high tax liabilities based on average income.
v<

To the attendant hostility of .the public was added the
administrative difficulty of collecting large mounts of
delinquent taxes.

- 16 -

Following the Royal Comission recommendation.

averaging

was

abolished effective Jane 30, 1938 except for

primary producers.

16 *

The only witnesses who strongly favored continuance of

averaging were those representing the primary producers

A decisive majority of witnesses representing other

classes of taxpayers was of the opinion that averaging

should be abolished*

the basis of this evidence the

Commission recommended retention of averaging only for

primary producers.

Following the Royal Commission recommendation averaging
P
—

was abolished effective June 30, 1938 except for primary

producers,

the Australian law sought to meet some of the

problems of imposing a higher tax in a year when income i§
v ■ Hi v

lg$ >v’ 1%}h^

*

t •2 ;SR'1'wV.1

SHiEtfj

11

low by providing that where taxable income has been
\ * W

permanently reduced

of average

income

to

the

an amount which is less than two-thirds

tax

shall be applied on the basis of
n
.

this reduced income. 1/
J/ Section Io£, The income Tax Assessment ^ct of 1 9 . ^

\

A4n<tA****d

cl£&

OL+U

{f ^

/f 3 4/
V

i

• J,5*b *

Moreover, it questioned the equity of the provision on the

grounds that the average rate benefitted the taxpayer who «as

in better position to pay and penalised the taxpayer* «hose

income had declined.

It reported that all witnesses

representing the Commonwealth and State fax Departments "were

emphatic end unanimous in advocating its total abolition, and

none of them viewed with favor the proposal to retain it for

the benefit of any class or classes of taxpayers."

The State

Tax Commissioners also made it clear that they were not

prepared to recommend averaging for State purposes.

The only

witnesses who strongly favored continuance of averaging were

those representing the primary producers.

1 decisive majority

of witnesses representing other classes of taxpayers was of

the opinion that averaging should be abolished.

On the basis

of this evidence the Commission recommended retention of

averaging only for primary producers.

The Australian law sought to meet some of the problems of

imposing a higher tax in a year when income is low by

providing that where taxable income has been permanently

reduced to an amount which is less than two-thirds of average

income the tax shall be applied on the basis of this reduced

income. 1/
After averaging mas adopted provision was made in the

Commonwealth law for carrying forward business losses against

the profits of the four succeeding years. Some of the income

taxes of the Australian States also had carryover provisions.

In the Third Report of the Royal Commission on Taxation,

Issued in 1934, the Commission called attention to the

complications, special records, and errors which are involved

in the averaging of income.

Jp

Section 156, The Income Tax Assessment Act of 1936, p. 162.
With minor differences the provision was contained in all
acts from 1922 through 1934.

In the Third Report of the Royal Commission on Taxation,

issued in 1934, the Commission called attention to the

complications, special records, and errors which are

involved in the averaging of income.

Moreover, it questioned

the equity of the provision on the grounds that the average

rate benefitted the taxpayer who was in better position to

pay and penalised the taxpayer whose income had declined,

it reported that all witnesses representing the Commonwealth

and ^tate^iax Bepartments "were emphatic and unanimous in

advocating its total abolition, and none of them viewed with

favor the proposal to retain it for the benefit of any class

or classes of taxpayers."

The State Tax Commissioners also

made it clear that they were not prepared to recomend

averaging for State purposes.

- IS -

The British experience thus has been on# of a long use

of a three-year noting average, 1/ finally abandoned after

a u m b e r of careful studies, and replaced by a loss carry

over together with a one year carry-back*

Australia

The Commonwealth of Australia, after revisions of the

initital legislation, in 1923 applied an averaging procedure

to all taxpayers excluding companies.

The income of five

years, including the most recent year, was averaged and

this average amount used to determine the rate of tax, which

was then applied to the actual income of the current year.

1/

In some instances under Schedule A, five-year and sevenyear and even discretionary averages have been used. See
Income Tax in Great Britain and the United

15

The British experience hr thus^one of a long use of

a three-year moving average, V

finally abandoned after

a number of careful studies, and replaced

by

a loss||carry-

over together with

a one

year carry-back*

Australia

The Commonwealth of Australia after revisions of the

initial legislafcion^in 1923 applied an averaging procedure

to all taxpayers excluding companies*

The income of five

years, including the most recent year, was averaged and

this average amount used to determine the rate

of

tax, which
JnUH

A Ai

business losses against the profits of the four succeediïi

- 14 -

In 1920 the Royal Comission on the Income tax found

that public opinion was opposed to averaging and this fact,

together with the anticipated simplification of administration

which would result if averaging were eliminated, convinced

the Commission that the income tax should be assessed on

the preceding year's profits only,

The effect of variation

in incomes on taxpaying, ability was, however, not overlooked,

for It was recommended that for purposes of equity a

»

M

*
-year net loss carry-forward should be permitted.

|change was made in the law in 1926 and is the basis upon

ifl 1 !
J
O T

This

o

/ ■'

: S S l l lllfi

which the British Income Tax is now imposed.

Under the

Sà

operation of this system a loss
H

v

may be offset against the income sas*ee-dji and any balance

of loss not thus offset may be carried forward for a period

y

e
i A

a
A

r

s

“frRfe
%

f"

/¥

■ 1

I

-

R

In 1920 the Royal Commission on the Income fax found that

public opinion m e opposed to averaging and this fact, together

with the anticipated simplification of administration which mould

result if averaging were eliminated, convinced the Commission that

the income tax should be assessed on the preceding year’s profits

only*

Tke effect of variation in incomes on taxpaying ability

was, however, not overlooked, for it was recommended that for

purposes of equity a five-year net loss carry-forward should bs

permitted.

This change was made in the is* in 1926 and is the

basis upon which the British Income Tax is now imposed.

Under the

operation of this system a loss may be offset against the income

of the prior year and any balance of loss not thus offset may be

carried forward for a period of five years, thus spreading the

loss over a possible seven years in all.

To the extent that the

loss is not completely offset against income in this period the

portion of loss representlag depreciation may be carried forward
still further.

A

V ¿hX fc-Ô rt^

J?

VjjjfeA

r i t e d HfS

limerais* methods of
A.. "

iiÆéÿy)
nteiîU«^..r/r*^1
J*
*

Were 'trie

Some

I

discriminated in favor of fluctuating income as against

stable income.

Eon# seemed to be successful, and in 1870

the Commie sioners of Inland Revenue stated that f,«re doubt

whether any rule of change could be devised for such cases

which would do justice both to the taxpayer and the revenue

so long as the system of averaging is preserved/1 ho action

Sr
was taken, however, to eliminate averaging.

When the problem was reconsidered in 1905 by the

Departmental Committee on Income fax, the inequity resulting

from an assessment's being larger than^ income/ in some

was again recognized.

In view of the long existence of

averaging provision, however, it was recommended that

uni... public opini» 4 U . p p ™ . d j t h, „ . „ g l b „ . , . t ~

should be retained.

Various methods of avoiding this diff icult/ wars tried
\

from time to time.

V :

Some discriminated in favor of

fluctuating incuse as against stable income.

Hone seemed

:

to be successful, and in 1870 the Commissioners of Inland

Revenue stated that Wwe doubt whether an/ rule of change could

be devised for such cases which would do justice both to

the taxpayer and the revenue so long as the system of

averaging is preserved,*

So action was taken at that time,

however, to eliminate averaging,

fhen the problem was reconsidered in 1905 by the

Departmental Committee on Income fax, the inequity resulting

in some years from an assessment's being larger than current

income was again recognised.

In view of the long existence

of the averaging provision, however, it was recommended

that unless public opinion disapproved, the averaging system

should be retained.

Great Britain

Great Britain has had the longest experience with

averaging.

The first income tax, enacted in 1799,

permitted the computation of the tax on the average

business profits of the three years preceding the year

of assessment and similar provisions were contained in all

subsequent acts until 1926,

In part at least, however,

this averaging was not allowed for the purpose of avoiding

excessive taxes on fluctuating income, but appears also to

#

have been a device to assist in the estimation of

current income and the prevention of tax evasion,

4 major

difficulty encountered in averaging in Great

Britain was that taxpayers were often subject to

burdensome tax liability in years when they had relatively

little income or no income at ail.

-

12 -

Great Britain
m

Great Britain has bad the longest experience with

averaging*

The first Income tax, enacted in 1799,

permitted the computation of the tax on the average

business profits of the three years preceding the year

of assessment and similar provisions were contained in? all

subsequent acts until 1926*

In part at least, however,

this averaging was not allowed for the purpose of avoiding

excessive taxes on fluctuating income, but appears also to

have been a device to assist In the estimation of current

income and the prevention of tax evasion.

A major

difficulty encountered in averaging in Great Britain was

that taxpayers were often subject to burdensonas tax liability

In years when they had relatively little income or no income

at all*

-

11

»

On the other side, however, It is often urged that many of
the most difficult technical problems in allocating income

|

and expense items among years would be eliminated or made
of minor importance if income were averaged.
Historical Experience with Averaging
In the light of the advantages of averaging one might
well

the

ask why we
test

lack

a full-fledged averaging system. If

of the cooking is the eating, it may be useful to

examine tbe uae which has been, and Is being, made of various
averaging devices in tbe United States and abroad, to see how
they have worked out in praotloe and thereby to throw light
on the desirability of their more extensive use here in the
future.

On the other side, however, it is often urged that many of

the most difficult technical problems in allocating income

and expense items among years ?*ould be eliminated or made '

of minor importance if incase were averaged*

Historical Experience with Averaging

In the light of the advantages of averaging one might

well ask why we lack a full-fledged averaging system*

If

the test of the cooking is the eating, it m y be useful to

examine the use which .has been, and is being, made of various

averaging devices in the united States and abroad, to see how

they have worked out in practice and thereby to

throw

light

on the desirability of more extensive use here in the future*

For example, it would take the edge off high rates which

were especially designed to apply in periods of war or

inflationary danger, and it likewise might partially

neutralise the effects of low rates in periods of depression*

There are a number of serious compliance and administrative

problems raised by averaging proposals, especially for the

individual income tax«

In the individual tax field the

pay-as-you-go or current payment method and the simplification

program rely heavily on the retention of a simple, definitive

income period such as the annual income period«

In the

field of business income averaging involves additional

checking and auditing, the holding open of statutes of

limitation, and the problems of transition into and out of

an averaging plan.

9
Consolidated returns offer a similar advantage of internal

compensatory offsets*

Averaging would also tend to remove

the tax incentive to the timing of investment or income-

producing activity in mays which any gpsateaEpT»^S¥-'

do not necessarily represent desirable

economic or business decisions*

the objections to averaging are largely fiscal and

administrative.

On the fiscal side it is urged that

averaging would introduce greater uncertainty into

budgetary planning and would raise policy problems in

the timing of refunds or rebates and in making other

adjustments of tax burdens*

Revenue effects would be

particularly important when there were wide swings in the

national income.

Moreover, averaging would have the effect

of blunting fiscal weapons which were directed toward

specific income years

Consolidated returns offer a similar advantage of internal

compensatory offsets«

Averaging would also tend to remove

the tax incentive to the timing of investment or Income-

producing activity in ways which do not necessarily represent

desirable economic or business decisions.

The objections to averaging are largely fiscal and
I p

administrative.

On the fiscal side it is urged that

averaging would introduce greater uncertainty into

budgetary planning and would raise policy problems in

the timing of refunds or rebates and in making other

adjustments of tax burdens.

Revenue effects would be

particularly important when there were wide swings in the

national income,

liareover, averaging would have the effect

of blunting fiscal weapons which were directed toward
specific income years.

The averaging of incase for tax purposes would, have

advantageous economic effects*

It would ramove tax

pressures in favor of investing in stablelines of business

and against investing in businesses with fluctuating incomes

In the absence of averaging, seme misapplication of economic

resources undoubtedly results between these types of

businesses*

Moreover, averaging would presumably tend to

make risk investment relatively more attractive by reducing
' ^1 ^3 " v ' " ‘'.''VO ■ " ||'

" |

.■ |

1

I f t » '■■■

I

.... |

1 5| '■ M

-:

the risk of paying taxes out of capital and by permitting
-

i.;

. '

-

a greater offset of losses against income*

This advantage

of averaging over a period of time is somewhat similar to

the advantages which large businesses enjoy over small

businesses because they are imposition to average the

losses of some lines against the losses of other lines*

The averaging of income for tax purposes would have

advantageous economic effects*

It would remove tax

pressures in favor of investing in stable lines of business

and against investing in businesses with fluctuating incomes.

In the absence of averaging, some misapplication of economic

resources undoubtedly results between these types of

businesses.

Moreover, averaging would presumably tend to

make risk investment relatively more attractive by reducing

the risk of paying taxes out of capital and by permitting

a greater offset of losses against income*

This advantage

of averaging over a period of time is somewhat similar to

the advantages which large businesses enjoy over small

businesses because they are in a position to average the

losses of some lines against the losses of other lines*

-

7

-

On the other hand, it may be urged that annual income is

in harmony with the general thinking of individual taxpayers

who often gear current standards of consumption to the

current year's income and who are not disposed to project

their income computations over a long period of time*

There is, moreover, some value in closing each year's income

and taxing it as a complete episode, thus removing uncertainty

about the effect of some future year's income on the current

tax*

These arguments against averaging are more pertinent

in the ease of individual taxpayers and nonbusiness income

than they are in the case of business income; they are

least pertinent in the case of the business corporation*

The present discussion is primarily directed to the averaging

of business income, although it must be remembered that some

of the most serious injustices of strict adherence to the

annual accounting period lie in the personal income field*

-

6

-

However, averaging should not be looked upon as a m a n s

of reducing taxes.

If the saae number of dollars is to

be raised, the effect of averaging is to redistribute the

burden among pears and among taxpayers.

The advantages claimed for averaging are primarily in

the fielda of equity and economic effects.

The basic

argument in favor of averaging is that the assessment of

substantially different amounts of tax against two taxpayers

receiving the same aggregate income over a period of years

is inequitable.

Indeed, it is sometimes argued that

a taxpayer with fluctuating income may have leas ability

to pay than a taxpayer with stable income, since irregularity

of income may require greater liquidity and other unfavorable

pa'sonal or business adjustments.

- 6

The higher tax imposed on fluctuating income, when the

annual accounting year

is

followed strictly, may result

from any one or a combination of factors, the most

universal of which are the following:

(1) Negative

incomes, that is, losses, may not be offset against

positive income; (2} exemptions may be wasted in years of

loss or of low income; (3) progressive rates may throw
/s

t’b

fluctuating incomes into higher brackets.

f

e

r

i

s

e

l

i

m

i

n

a

t

e

While fife t

completely the
y

drh^

HÌÌ

higher tax on fluctuating incomes,

~

V-

Ê

/

f ^

¿A r Ä V

%

y ^

*

iop a given schedule of rates and a given definition

of income, the effect of averaging is in part to change

the timing of tax payment and in part to reduce the tax

liability.

ei*J

The higher tax imposed on fluctuating income, when the

annual accounting year is followed strictly, may result from

any one or a combination of factors, the most universal of

which are the following:

(1) Negative incomes, that is,

losses, may not be offset against positive income; (2) exemptions

¡my be wasted in years of loss or of low income; (3) progressive

rates may throw fluctuating incomes into higher brackets*

While it is possible to devise averaging methods which would

eliminate completely the higher tax on fluctuating incomes,

most of the commonly suggested plans would not go that far*

The general run of proposals would reduce rather than remove

entirely the tax differential between variable and stable
incomes*

For a given schedule of rates and a given definition of

income, the effect of averaging is in part to change the

timing of tax payment and in part to reduce the tax liability.

Averaging devices* as thus defined* embrace various foras;

including a fixed period^of* for example, five years, a moving

average* and the determination of the rate of tax by the

average amount of income.

Averaging devices also include

methods other than actual averaging.

Among these are

flexible depreciation and inventory accounting devices.

The most important, however, undoubtedly are the carryforward

and carryback of losses and, with respect to the excess

profits tax, of unused excess profits credits.

Pros and Cons of Averaging

One reason for averaging is that it compensates for,

or reduces, the importance of errors in allocating income

or expense items among different years.

More important,

however, averaging plays a useful part in equalising

the tax burdens on fluctuating pfr stable incomes of the

same average or aggregate si*e

m- 4t

Averaging devices, as thus defined, embrace various forms,

including a fixed period average of, for example, five years,

a moving average, and the determination of the rate of tax

by the average amount of income.

Averaging devices also

include methods other than actual averaging.

Among these are

flexible depreciation and inventory accounting devices.

most important, however, undoubtedly are the carryforward

and carryback of losses and, with respect to the excess

profits tax, of unused excess profits credits.
Pros and Cons of Averaging

One reason for averaging is that it compensates for,

or reduces, the importance of errors in allocating income

or expense items among different years.

More important,

however, averaging plays a useful part in equalising

the tax burdens on fluctuating and stable incomes of the

same average or aggregate sixe.

The

-3-

¡pips must be computed on the basis of formal and uniform

accounting procedures; otherwise the determination of income

would involve a larger element of personal and administrative

judgment than either the Government or the American taxpayer
would be willing to accept.

Averaging Methods

There have bean two approaches to the problem of the

annual income period.

One has been the development of

accounting procedures to take into consideration events of

past or future years, in computing the income for a specific

year.

Depreciation reserves, deferred expenses, and the

last-in first-out method of computing inventory are examples.

The second approach to the problem has been to cut across

th# boundary line between years in such a way that the tax

imposed on the income of one year is affected by the income
or loss of other years.

-2-

The length of our jeer is an astronomical accident.

Yearly

income represents an aggregation of 365 daily incomes,

62 weekly incomes, and so forth.

but not a sacred, period.

The year is a convenient,

Tax accounting periods as short

as one week and as long as two or three generations are

conceivable and, in fact, have been suggested.

Although taxation is only one of several areas where

the defects of the annual income period are patent, it is

perhaps the most important.

In preparing income statements

for most purposes, relevant facts and expectations outside

or beyond the formal accounting figures can be recognised

when action is to be taken or decisions are to be made.

Moreover, reserves can be set up in the accounts to give

a degree of formality to these

taxation, however, such adjustments are not feasible.

- 2 -

The length of our year 1» an astronomical accident.

Yearly

income represent» an aggregation of 385 daily incomes,

53 weekly incomes, and so forth*

but not a sacred, period.

The year is a convenient,

Tax accounting periods as short

as one week and as long as two or three generations are

conceivable and, in fact, have been suggested.

Although taxation is only one of several areas where

the defects of the annual income period are patent, it is

perhaps the most important.

In preparing income statements

for most purposes, relevant facts and expectations outside

or beyond the formal accounting figures can be recognised

when action is to be taken or decisions are to be made.

Moreover, reserves can be set up in the accounts to give

a degree of formality to these facts and expectations.

the case of taxation, however, such adjustments are not

feasible.

In

THE AVERAGING OF INCOME FOR TAX PURPOSES

Averaging and the Annual Accounting Period

The fact that the earth's axis is not perpendicular to the

plane of its orbit around the sun is responsible for many things
__ *TAt_ *|

in this world*

Among than'l eastsofr- these is the problem of

averaging annual incomes for tax purposes*

In addressing the leaders of the accounting profession*

I need not dwell on the implications* peculiarities* and

limitations of the one-year accounting period which taxation

inherited from the established practice of business and

accounting.

The purpose of averaging devices is to get away from

the segmentation of income into pieces one year in length or*

in other words* to lengthen the accounting period for tax

purposes*

There is nothing very radical about this idea*

fit kimAQim

OF IBCCMS FOR TAX PHRPOSfiS

Averaging and the Annual Accounting Period

The fact that the earth1a axis Is not perpendicular to the

plane of its orbit around the sun is responsible for many things

in this world.

Among these, perhaps one of the least, is ths

problem of averaging annual incomes for tax purposes.

In addressing the leaders of the accounting profession,

I need not dwell on the implications, peculiarities, and

limitations of the one-year accounting period which taxation

inherited from the established practice of business and

accounting.

The purpose of averaging devices is to get away from

the segmentation of income into pieces one year in length or,

in other words, to lengthen the accounting period for tax

purposes.

There is nothing very radical about this idea.

lÜ IM i
B

.

/

TREASURY DEPARTMENT
Washington

>jSL 3

(Th© following addfcess by Roy Blough, Director
of the Division of Tax Research, before the
American Accounting Association at the Palmer
House, Chicago, is scheduled for delivery at
5:50 p»
Central War Time, Saturday, September
9, 1944, and is for release at tkat t^w*»)

I

TREASURY DEPARTMENT
•Washington

(The following address b y Roy Blough, Director of the
Division of Tax Research, before the American Accounting
Association at the Palmer House, Chicago, is scheduled
for delivery at 3:30 p.m., Central War Time, Saturday,
September 9, 1911. and ib for release at that time»)

THE AVERAGING OF INCCME FOR TAX PURPOSES
Averaging and the Annual Accounting Pebiod
It is an honor and a pleasure to be here this afternoon* As an economist,
I have for many years been keenly interested in accounting because I believe
the accountant is in a strategic position to be the most influential economic
theorist and practicing economist of the present day.
In addressing the leaders of the accounting profession, I need not dwell
on the implications, peculiarities, and limitations of the one-year account
ing period which taxation inherited from the established practice of business
and accounting*
The purpose of averaging devices is to get away from the segmentation of
income into pieces one year in length or, in other words, to lengthen the
accounting period for tax purposes. There is nothing very radical about this
idea. The year is a convenient, but not a sacred, period. Yearly income re
presents an aggregation of 52 weekly incomes, 12 monthly incomes, and so forth.
Tax accounting periods as short as one week and as long as two or three gen
erations are conceivable and, in fact, have been suggested.
Although taxation is only one of several areas where the defects of the
annual income period are patent, it is perhaps the most important. In pre
paring income statements for most purposes, relevant facts and expectations
outside or beyond the formal accounting figures can be recognized when action
is to be taken or decisions are to be made. Moreover, reserves can be set up
in the accounts to give a degree of formality to these facts and expectations.
In the case of taxation, however, such adjustments are not feasible. Taxes
must be computed on the basis of formal and uniform accounting procedures;
otherwise.the determination of income would involve a large element of per
sonal and administrative judgment than either the Government or the American
taxpayer would be willing to accept.
Averaging Methods
There have been two approaches to the problem of the annual income period.
One has been the development of accounting procedures to take into consideration
events of past or future years, in computing the income for a specific year.

43-22

depreciation and deferred expense reserves-,, and the
of computing inventory are examples. The second approach to the problem
has been 'to cut across the boundary line between years in such a way that the
tax imposed on the income of one year is affected by the income or loss of
other years, .averaging devices, as thus defined, embrace various forms, in
cluding a fixed period average of, for example, five years, a moving average,
and the determination of the rate of tax by the average amount of income.
Averaging devices also include methods other thah actual averaging. Among
these are flexible depreciation and inventory accounting devices. .The most
important, however, undoubtedly are the carryforward and carryback of losses
and, with respect to the excess profits tax, of unused excess profits credits.
Pros and Cons of Averaging
One reason for averaging is that it compensates for, or reduces, the
importance of errors in allocating income or expense items among different
years. More important, however, averaging plays a. useful part in equalizing
the tax burdens on fluctuating and stable incomes of the same average or
aggregate size. The higher tax imposed on fluctuating income, when the annual
accounting period is followed strictly, may result from any one or a combine tion
of factors, the most universal of which are the following:
(1) Negative
incomes, that is, losses, may not be offset against positive income; (2) ex
emptions may be wasted in years of loss or of low income; (3) progressive ratesmay throw fluctuating incomes into higher brackets. While it is possible to
devise averaging methods which would eliminate completely the higher tax on
fluctuating incomes, most of the commonly suggested plans would not go that
far. The general fun of proposals would reduce rather than remove entirely the
tax differential between variable and stable incomes.
For a given schedule of rates ana a given definition of income, the effect
of averaging is in part to change the timing of tax payment and in part to
reduce the tax liability. However, averaging should not be looked upon as
a means of reducing taxes. If the same number of dollars is to be raised, the
effect of averaging is to redistribute the burden among years and among tax
payers.
The advantages claimed for averaging are primarily in the field of equity
end economic effects.
The basic argument in favor of averaging is that the
assessment of substantially different amounts of tax against two taxpayers
receiving the same aggregate income over a period of years is inequitable.
Indeed, it is sometimes argued that a taxpayer with fluctuating income may have
less ability to pay than a taxpayer with stable income, since irregularity of
income may require greater liquidity and other unfavorable personal or business
Adjustments.., Un the other hand, it may be urged that annual income is in
harmony with the general thinking of individual taxpayers who often gear current
standards of consumption to the current year’s income and who are not disposed
to project their income computations over a long period of time. There is,
moreover, some value in closing each year’s income and taxing it as a complete

- 3 episode, thus removing uncertainty about the effect of some future year’s
income on the current tax. These arguments against averaging are more
pertinent in the case of individual taxpayers and nonbusiness income than
they are in the case of business income; they are least pertinent in the case
of the business corporation. The present discussion is primarily directed to
the averaging of business income, although it must be remembered that some of
the most serious injustices of strict adherence to the annual accounting
period lie in the personal income field.
The averaging of income for tax purposes would have advantageous economic
effects* It would remove tax pressures in favor of investing in stable lines
of business and against investing in businesses with fluctuating incomes. In
the absence of averaging, some misapplication of economic resources undoubtedly
results between these types of businesses. Moreover, averaging would pre
sumably tend to make risk investment relatively more attractive by reducing
the risk of paying taxes out of capital and by permitting a greater offset of
losses against income.
This advantage of averaging over a period of time is
somewhat similar to the advantages which large businesses enjoy over small
businesses because they are in a position to average the losses of some lines
against the gains of other lines.
Consolidated returns offer a similar
advantage of internal compensatory offsets. Averaging would also tend to
remove the tax incentive to the timing of investment or income-producing
activity in ways which do not necessarily represent desirable economic or
business decisions.
The objections to averaging are largely fiscal and administrative. On
the fiscal side it is urged that averaging would introduce greater un
certainty into budgetary planning and would raise policy problems in the
timing of refunds or rebates and in making other adjustments of tax burdens.
Revenue effects would be particularly important when there were wide swings
in the national income. Moreover, averaging"would have the effect of blunt
ing fiscal weapons which were directed toward specific income years. For
example, it would take the edge off high rates which were especially
designed to apply in periods of war or inflationary danger, and it likewise
might partially neutralize the effects of low rates in periods of depression.
There are a number of serious compliance and administrative problems
raised by averaging proposals, especially for the individual income tax. In
the individual income tax field the pay-as-you-go or current payment method
and the simplification program rely heavily on the retention of a simple,
definitive income period such as the annual income period. In the field of
business as well as for individuals, income averaging involves additional
checking and auditing, the holding open of statutes of limitation, and the
problems of transition into and out of an averaging plan. On the other side,
however, it is often urged that many of the most difficult technical
problems in allocating income and expense items among years would be
eliminated or made of minor importance if income were averaged*

- 4
Historical Experience with Averaging
In the light of the advantages of averaging one might well ask why we
lack a full-fledged averaging system. If the test of the cooking is the eat
ing, it may be useful to examine the use which has been, end is being, made
of various averaging devices in the United States and abroad, to see how they
have worked out in practice and thereby to throw light on the desirability of
their more extensive use here in the future*.
Great Britain
Great Britain has had the longest experience with averaging. The first
income tax, enacted in 1799, permitted the computation of the tax on the
average business profits of the three years preceding the year of assessment
and similar provisions'were contained in all subsequent acts until 1926. - In
part at least, however, this averaging was not allowed for the purpose of
avoiding excessive taxes on fluctuating income, but appears also to have been
a device to assist in the estimation of current income and the prevention of
tax evasion. A major difficulty encountered in averaging in Great Britain
was that taxpayers were often subject to burdensome tax liability in years
when they had relatively little income or no income at all, . Various methods
of avoiding this difficulty were tried from time to time. Some discriminated
in favor of fluctuating income as against stable income. None seemed to be
successful, and in 1870 the Commissioners of Inland Revenue stated that ”we
doubt whether any rule of change could be devised for such cases which would
do justice both to the taxpayer and the revenue so long as'the system of
averaging is preserved.” No -action..was taken at that time, however, to elim
inate averaging.
"When the problem was reconsidered in 1905 by the Departmental Committee
on Income Tax, the inequity resulting in some years from an assessment’s being
larger than current income wad again recognized. In view of the long existence
of the averaging provision, however, it was recommended that unless public
opinion disapproved, the averaging system should be retained.
In 1920 the Royal Commission on the Income Tax found that public opinion
was opposed to averaging and this fact, together with the anticipated simpli
fication of administration which would result if averaging were eliminated,
convinced the Commission that the income tax should be assessed on the pre
ceding year’s profits only. The effect of variation in incomes on taxpaying
ability was, however, not overlooked, for it was recommended that for pur
poses of equity a five-year net loss carry-forward should bo permitted. This
change was made in the law in 1926 and is the basis upon which the British
Incme Tax is now imposed. Under the operation of this system a loss may be
offset against the income of the prior year and any balance of loss not thus
offset may be carried forward for a period of five years,l/ihus-spreadlhg'the
If The British loss setoff provisions are here restated in a form as nearly
comparable as possible to the American provisions. Under the British
method c£f assessment the taxpayer is commonly said to be allowed to carry
forward his losses for six years.

- 5 loss over a possible seven years in all* To the extent that the loss is not
completely offset against income in this period the portion of loss repre
senting depreciation may be carried forward still further.
The British experience thus has been one of a long use of a three-year
moving average, 1/ finally abandoned after a number of careful studies, and
replaced by a loss carry-over together with a one year carry-back*
Australia
$

The Commonwealth of Australia, after revisions of the initial legislation,
in 1923 applied an averaging procedure to all taxpayers excluding companies *
The income of five years, including the most recent year, was averaged and this
average amount used to determine the rate of tax, which was then applied to
the actual income of the current year. The Australian law sought to meet some
of the problems of imposing a higher tax in a year when income is low by pro
viding that where taxable income has been permanently reduced to an amount
which is less than two-thirds of average income the tax shall be applied on the
basis of this reduced income. 2]
After averaging was adopted provision was made in the Commonwealth law
for carrying.forward business losses against the profits of the four succeeding
years. Some of the income taxes of the Australian States also had carryover
provisions.
In the Third Report of the Royal Comm:ssion on Taxation, issued in'1934,
the Commission called attention to the complications, special records, and
errors which are involved in the averaging of income. Moreover, it questioned
the equity of the provision on the grounds that the average rate benefitted
the taxpayer who was in better position to pay and penalized the taxpayer whose
income had declined. It reported that all witnesses representing the Common
wealth and State Tax Departments ”were emphatic and unanimous in advocating
its total abolition, and none of them viewed with favor the proposal to retain
it for the benefit of any'class or classes of taxpayers.” The State Tax Com
missioners also made it clear that they were not prepared to recommend
averaging for State purposes, The only witnesses who strongly favored con
tinuance of averaging were those representing the primary producers. A de
cisive majority of witnesses representing other classes of taxpayers was of
the opinion that averaging should be abolished. On the basis of this evidence
the Commission recommended retention of averaging only for primary producers.
Following the Royal Commission recommendation, averaging was abolished
effective June 30, 1938 except for primary producers.
Wisconsin Experience
Averaging received a brief test in the United States when the Wisconsin
State Legislature in 192? changed the base of the income tax to a three—year
moving average. The plan got off to a bad start because the effects of
1/ In some instances under Schedule A, five-year and seven-year and even
discretionary averages have been used. ,See Spaulding, The Income Tax in
Great Britain and the United States, p., 213.
2/ Section 155, The Income Tax Assessment Act of 1936, p. 162. With minor
differences, the provision was contained in all acts from 1922 through 1934.

- 6 -

averaging were confused in tire public mind with an increase in taxes attribu
table to the transformation of thè personal exemption into a tax credit. The
early onset of the depression resulted in a large proportion of taxpayers
being subject in a period of little or no income, to relatively high tax
liabilities based on average income. To the attendant hostility of the public
was added the administrative difficulty of collecting large amounts of delin
quent taxes• The situation was further complicated by legal difficulties in
imposing taxes under the averaging system after death or removal from the
State» The 1931 legislature enacted legislation for gradual transition from
averaging which was completed by 1934-•
l'édera! government Experience
A narrowly restricted averaging provision was introduced into the Federal
income tax law in the Revenue Act of 1939• This averaging device was restric
ted to use where 95 percent of the compensation for personal services rendered
over a period of five or more calendar years was postponed until the comple
tion of the services. It was provided that in such cases the tax attributable
to such compensation should not be greater than the total that would have
been paid if the compensation had been received in equal portions over the
years of service* The purpose of the provision was to relieve the hardships^
believed to exist when the compensation of writers, inventors, lawyers, and
others is received in full upon completion of a long period of work. Averag
ing is optional with the taxpayer. Under the Revenue Act of 1942 the fiveyear period was reduced to 36 months and the 95-percent requirement was
reduced to 80 percent.
This application of averaging is of interest because of its experimental
character but is hardly of great significance for the field of income as
a whole because of the narrow scope of the cases included.
The Federal income tax law has sought to lessen the higher tax on fluc
tuating income through the allowance of net loss carry-overs for most of the
years since 1918. Such carry-overs were provided only for losses from a trade
or business. The first adjustment of this kind was in the Revenue Act of 1918,
which provided that if a net loss were suffered during taxable years begin
ning after October 31, 1918 and ending before January 1, 1920, it could be
carried back against income in the preceding year, and any unused portion
could then be carried forward against income of the following year. This
adjustment probably was not of substantial importance because the year 1919
was generally a very good year.
Another significant type of adjustment was provided for the taxable year
1918. With respect to that year a claim could be filed for loss in the value
of inventory whether or not the loss had been realized by disposal of the
inventoried goods» However, in application, this ..adjustment probably did
not provide very substantial relief since in general the price collapse which
led to large losses did not occur until 1920 and 1921.
The Revenue Act of 1921 provided that a net business loss could be
deducted from the net income of the succeeding two years. Similar provisions
remained a part of the Federal income tax law until 1932, at which time the

carry-over was limited to one year* It was eliminated entirely by the
National Industrial Recovery Act in 1933 and riot reintroduced until the
Revenue Act of 1939*
As this brief resume would indicate, there has been no experience in the
Federal income tax with averaging of positive incomes of corporations as
distinguished'from the carryover and carryback of losses. When there are no
exemptions and the tax is imposed at a flat rate,"in operation the effects of
Carryovers and carrybacks are nearly the equivalent of averaging*
This is not the case when rates are progressive* At the present time
the effective rates of our corporation taxes are progressive up to corporate
income levels of $50,000* Small corporations, accordingly, do not derive as
much benefit from carryovers and carrybacks as they would from averaging p
positive as well as negative incomes, for an equivalent number of years.
However, since small corporations in general show more fluctuation between
years of loss and years of income they derive relatively more benefit from
loss carryovers and. carrybacks thani do large corporations*
World War II Experience in the United States
Our most recent and, for that reason, most interesting experiment
with averaging devices is in the form of carry-overs and carry-backs of losses
and unused excess-profits credits for determining the taxes of World War II*
The carry-forward of losses, as I have just indicated, had been restored in
1939» In 1940 a two-year carry-over of unused excess-profits credits was
provided.* The effect of this carry-over was to assure that the corporation
would derive full benefit from all of its excess-profits credits, if profits
were low in an early year of the war and high thereafter* The corporation
would, of course, lose a part of its credit if the early year were the high
year and a later year of the war were the low year*
This circumstance was taken care of in the Revenue Act of 1942 which
provided a two-year carry-back of losses and of unused excess-profits
credits to years beginning after December 31* 1940. This carry-back, however,
was not limited specifically to war years and its effect in averaging wartime
income over the period of the war was probably an incidental result rather
than a basic purpose of the legislation*
The carry-backs were placed in the law, in lieu of specific reserves, at
a time when efforts were being made to provide a satisfactory means of charg
ing against wartime income such postponed wartime expenses as deferred
maintenance, reconversion costs, and the like. Similarly, the carry-backs
provide a means for charging inventory losses against the income of the war
years. In the absence of any provision these expenses and losses would be
chargeable at a time when there might be no income and when tax rates,
considering both the income tax and the excess-profits tax, might be much
lower, although such costs and losses would be equitably a proper charge
against the income of the war years.

-

8

-

More generally, the carry-backs achieve another appropriate purpose
in that they provide an offset against wartime income of war-caused postwar
losses or of war-caused postwar reductions in income below the excess-profits
credit level# In those cases in which wartime production may be used to supply
postwar needs or in which competing facilities may have been developed, losses
or lower profits after the war may result directly from wartime production.
It may be argued that such losses or reductions of income are proper charges
against wartime profits•
The carry-backs may not carry out these purposes completely. To be effec
tive, deferred costs or expenses must occur within two years after the receipt
of wartime profits# There are, of course, some circumstances where taxes
four years prior to or subsequent to the loss in question could be affected
by the carry-backs# It is too soon to tell whether the period allowed will be
too short or too long# Moreover, to be completely effective, the carry-backs
must remain in operation until the bulk of reconversion and readjustment has
been completed, whether or not the excess-profits tax is repealed#
The carry-backs are crude in another respect# They are not a precision
instrument which can separate out war-caused expenses and war-caused losses
from usual and ordinary expenses# Any losses or reductions in income below
the excess-profits credit bring the carry-backs into operation, yet the
averaging of income earned during the war with normal or usual losses or de
clines in income sustained after the war violates the objective of taxing
war-induced excess-profits heavily#
The mere fact that a loss is incurred after the war is no evidence that
it is necessarily a war-caused loss* Corporations in the aggregate have
earned high net profits after taxes for five consecutive years, probably an
unprecedented experience in corporate history#
Interruptions of this high profit experience by a postwar loss would
not necessarily indicate an unusual or war-caused event, but might merely
reflect the regular course of economic developments#. Only if the loss were
unusually severe because of the war could a case be made for reducing ■wartime
taxes on account of the loss* This generosity allowed by the carry-backs with
respect to postwar losses extends also to postwar reductions of income below
the excess-profits credit #The carry-back of excess-profits credits is generous also in another
respect. This generosity arises from the fact that an excess-profits credit
may be substantially larger than the earnings of the corporation in the prewar
period. This larger credit may result from the application of the growth
formula, the 75-percent rule, the invested-capital credit, or relief tinder
Section 722.
These adjustments of the credits may be entirely appropriate in arriving
at income to be subjected to the excess-profits tax in time of war, especially
in the light of the very high rates which apply to income designated as
excess profits* Furthermore, if the income is brought below the level of the
excess-profits credit because of deferred expenses or other war-caused reduc
tions in income, it is no doubt proper to correct the wartime income through

the carry-backs* But to the extent that earnings simply fall off in amount
while remaining above their peacetime level there is room to question whether
the corporation should receive a tax refund out of its wartime profits. Yet
the development of a high credit far above the prewar experience of a company
results in a carry-back against excess profits and a refund in such a case.
The objection is most valid in the case of the invested Capital.'.credit.
Many concerns using this, credit not only receive free from excess-profits tax
much larger profits than they earned before the war, and perhaps ever received,
but in effect will have their profit level artifically maintained by the
carry-backs in the postwar years. For example, one firm with average base
period earnings slightly over $>50,000 before taxes would, if it had zero
income in one year, receive nearly a half million dollars of tax refunds. Two
other corporations that have come under observation had no base period
earnings and. would receive between $800 and $900 thousand each in tax refunds
if they earn no income in one year. Still another corporation with base
period income of three and one-half million dollars would, if it had zero
income in a year subject to the carry-backs, receive $18 million, while ancthep
company with average prewar earnings of two and one-half million dollars
would receive $5j million. These cases, not necessarily the worst, indicate
that the carry-backs under seme circumstances may provide tax refunds from
the Government of amounts far exceeding prewar average earnings, or even, in
seme cases, the best year of earnings in the base period.
. The criticism of the carry-back of unused excess profits credit is less
valid in the case of a credit corrected through Section 722 or even through
the growth formula or the 75-percent rule, although these latter are
mechanical methods which almost certainly overstate the really normal credit
in numerous cases.
It has been urged that corporations subject to the 80-percent rate limi
tation do not fare well under the unused credit carry-back. Under this carry
back a corporation subject to the 80-percent limit might have to pay more tax
instead of receiving a refund, if, after applying the carry-back, it was still
subject to the limit. This peculiar result arises because the 80-percent
limit applies to total taxes prior to the deduction of the postwar refund of
10 percent of excess-profits taxes. In determining what portion of the
80—percent tax is the excess-profits tax, the normal tax and surtax are
subtracted from the total gross tax and the balance is excess profits tax* The
larger the excess-profits credit, the larger the normal tax and surtax, and
the smaller the excess-profits tax. The smaller the excess-profits tax and
hence the 10-percent postwar refund, the larger the net tax after deducting
the postwar refund.
A carry-back of excess-profits credit in such a case diminishes the
amount of excess-profits tax, increases the amount of normal tax and surtax,
and decreases the 10-percent postwar refund. The corporation would have its
net tax increased by the amount of the cancellation of its 10-perccnt refund.
However, if the carry-back is sufficiently large to bring the corporation
out of the 80-percent limit, this anomalous effect rapidly disappears.

-

10

-

The failure of a corporation subject to the 80-percent limit to receive
benefits from the carry-back of unused credit should be considered in the light
of the benefit the 80-percent limit has already conferred* Such a corporation
has received a reduction, often very substantial, in its wartime taxes by
virtue of the limit*
The carry-backs present another problem in that refunds may be made in
circumstances where there can be no justification* Consider, for example,
a corporation established solely to produce wartime goods and not reconverting
to postwar peacetime business* Instead of being liquidated immediately after
its war business is completed, the corporation can be kept alive, and under
present law would be entitled to a carry-back of its excess-profits credit
against wartime income of the two previous years*
there may also be possibilities of manipulation in which losses or reduced
incomes are made'to appear in a year when a carry-back could be used to
advantage•
The carry-backs have been urged as a substantial measure for easing the
readjustment and reconversion problem| there seems to be little or no evidence
that they were designed for this purpose* The problem of readjustment from
wartime to peacetime business is, to a considerable extent, a cash problem*
Refunds payable by virtue of the carry-backs cannot be made under present law
until the claim has been filed after the year in which the loss or unused credit
arises* Yet the need for cash will be felt during the year of loss, not some
time later, and even while the loss is being suffered the corporation may have
to borrow to pay its tax liabilities of the preceding year* How serious this
problem is will depend on the working capital position of corporations* Recent
data of the Securities and Exchange-Commission indicate that, in the aggregate,
working capital is the largest in corporate financial history* In addition,
the Government has provided generous aid for reconversion financing in various
cases. Nevertheless, where working capital is frozen in inventories or re
ceivables, there may be specific instances of cash shortages which would be
alleviated if the benefits of the carry-backs could be made available more
promptly*
A general disadvantage of carry-backs is thatthey involve payments of
refunds from the Treasury t o 1taxpayers. Although the objectives of these
refunds are proper, there m a y b e a feeling after the war that such refunds
constitute a special benefit ,to corporations which earned excessive profits
during the war*
World War II Averaging Devices in Canada and Great Britain*
Since Canada and Great Britain have faced much the same wartime tax
problems as we have, it may be helpful to examine their wartime methods of
averaging* In Canada a carry-forward of one-year’s loss has been allowed
against income earned in taxable years ending in 194-2 and 1943* In the Budget
Speech of June 26, 1944 a somewhat different plan was suggested. For losses
sustained in taxable years ending in 1944 and subsequently, a one year carry
back of loss is allowed under this plan and any unused balance of loss may be

-

11

-

carried forward for three years. In this connection, the Minister of Finance
stated: nWe cannot shut our eyes to the fact that with the change from war
to peace many firms may encounter temporary losses and under our present
practice taxes paid over the whole period of war and readjustment may bear
considerably higher rates to the full realized income than those prescribed in
the law, I am particularly concerned lest for this reason, when the time comes
to replace war industries with peace industries, business enterprises should
be handicapped in making the necessary changes or should be hesitant rather
than prompt in action.♦•n
It is' worthy of note that the emphasis in this new proposal is upon the
correction of wartime income insofar as the one-year carry-back is concerned,
while the three-year carry-forward is for the purpose of looking ahead and
giving relief to peacetime industry. It will be observed that Canada has
neither a carry-forward nor carry-back of unused excess-profits credits.
Another adjustment was suggested in the 1944 Budget Speech regarding
wartime income. This was a suggested provision that half of the expenditures
on maintenance and repairs incurred in a period to be fixed by order in council
may be charged against income of a preceding taxable period, but to no year
earlier than one ending in 194-3*
The Canadian law also provides for a reasonable inventory reserve against
future depreciation in inventory value. This reserve is allowed solely for
purposes of determining excess-profits taxes. This reserve cannot provide
for price decline below inventory prices at the end of taxable years ending
in 1939, or August 1939, whichever date is earlier. Under the proposal any
unused balance in the reserve when the excess-profits tax act becomes inopera
tive may be applied against any inventory price decline in the following year,
and if not used then is to be added to the income in the last year that the
excess-profits tax act applied to the taxpayer.
In the British law losses and unused excess-profits credits arising in
the period the excess-profits tax is in operation may be completely offset
against taxable excess-profits. These deficiencies are first carried back
ward until excess-profits are exhausted and then forward, with an appropriate
allowance for the increase in the rate of excess-profits tax in 194-0 from 60
to 100 percent. These carry-backs and carry-forwards do not. extend beyond
the period during which the excess-profits tax law is in operation. However,
it was stated by Sir Kingsley Wood in the Parliamentary Debate of 1943 that
reconversion costs will be allowed as a deduction in computing excess profits
tax if the tax is repealed before these costs are incurred. 1/
Conclusion
This survey of the use of averaging and averaging devices is too limited
to justify definitive conclusions, but a few observations may not be out of
order. Although of all averaging devices, outright averaging provides the
most complete equalization of tax load between fluctuating and stable incomes,
it has lost rather than gained ground in the English-speaking countries whose
|7 Sir Kingsley Food, Parliamentary Debate, April 12, 1943, PP* 960-932
The British have no specific inventory reserve adjustment. Apparently they have
made some provision, in the administration of their law, for deferred
maintenance.

-V 12 -

tax systems have been examined. After very long use and several reappraisals
it was abanddned in Great Britain. After a shorter trial its use was mini
mized in Australia* It has not been adopted in Canada. The Wisconsin experi
ment could hardly have been more ill-timed, as matters turned out, and may not
indicate what would have been the result of a longer trial under more auspicious
circumstances. These experiences present a practical obstacle to the friends
of averaging, but have not dismayed them. New methods of averaging have been
developed that meet some of the objections to the moving average, and other
improvements can no doubt be made. Nevertheless, the administration and
compliance problems of even the most .promising methods of averaging remain a
major impediment, especially with respect to the individual income tax, which
is unfortunate since under"the individual income tax the progressive rate
scale and relative unimportance of losses make such partial devices as the
loss carry-over largely ineffective.
For business income the spreading of losses through carrying of losses
from years of loss to years of gain is the averaging device that has been
preferred in these countries. The period for spreading losses in Great
Britain is seven years including in addition to the year of loss, a one-year
carry-back and a five-year carry-over. In the Commonwealth of Australia losses
are spread over five years by means of a four-year carry-over. The recently
proposed spread in the Dominion of Canada would be temporarily five years
including a one-year carry-back and a three-year carry-over, Under the
two-year carry-back and the two-year carry-over in the United States the spread
is likewise five years ; it may be even longer under certain circumstances.
In peacetime, countries other than our own have limited the carry-back
to one year, if they allowed it at all, and the misgivings about our own
carry-backs are such as to raise a question as to their desirability for
peacetime use. The new business cannot benefit from the carry-back, but
would be benefitted by a longer carry-over especially in view of the tendency
of businesses to suffer losses in the early years. The dying or liquidating
business cannot use the carry-over but would be benefitted by the carry-back.
For other businesses it is hard to forecast whether the carry-over or the
carry-back confers the greater benefit. However, the carry-over has the merit
of permitting the closing of tax years without delay and of minimizing manipu
lation to secure the maximum benefit and avoid taxes. Under carry-overs,
carry-backs, and actual averaging, the problems of predecessor and successor
corporations and corporate acquisitions to reduce tax are present and must be
met,, even though arbitrarily.
Fluctuations of business incomes are sometimes classified roughly into
the seasonal and the cyclical. To these are added the life cycle of the
business unit. The annual income period averages out the seasonal fluctuations.
Few who favor averaging devices vrould cover the whole life period of the
business firm although, unhappily, for many businesses no long period would
be involved. Cyclical movements are of various lengths. The two year carry
over of the prewrar Federal law would be sufficient for the shorter cycles,
but is too short for the longer and more important cycles and, accordingly,
too short to meet a substantial part of the problem.

- 13 If an averaging device such as the carry-over is to serve its functions
of increasing tax equity and encouraging business investment and expansion,
it must be adopted as firm policy to be retained in good times and bad.
It would be worse to adopt a long carry-over, or other longer-term averaging
device, and thereafter to abandon it when loss periods were experienced than
to delay lengthening the period until there was a general understanding and
resolution to retain the device as a continuing element in the tax system.
I am sure you would like for me to tell you what is going to happen to
the wartime carry-backs and to averaging devices for the postwar tax
revisions. I would like to tell you. I wish I knew. But tax revision is
a matter for Congressional action. As you no doubt have learned, the
Congressional Joint Committee on Internal Revenue Taxation instructed its
staff arid requested the Treasury staff to work together as a unit on the
problem of tax adjustments for the transition and postwar periods. The
studies being carried on have not yet reached the point of a report to the
Joint Committee. So it would be inappropriate for me to go into the part
which averaging devices might play in a postwar tax program. The matter is
being given careful study along with other aspects of the postwar tax
problem, and any suggestions which any of you may care to make on this
question or any other involved in the study will be most welcome and care
fully considered.
Suggestions have already been made by a number of groups. Several
plans provide long periods of carry-over of losses. One or two would
introduce averaging for some of all types of income, notably for capital gains.
This evidence of interest in the averaging problem is significant, because
in the many tax revisions and great amount of tax study that have been
carried on in the United States over the years, relatively little time and
thought have been .devoted to methods of overcoming the disadvantages for tax
purposes of the annual accounting year. Yet the potential importance of
such methods in terms of equity and sound economic effects is so great that
much more attention to them is justified for the future than has been given
to them in the past. It may well be that a good averaging device applying
over an adequate period of years would be worth quite a few percentage
points in the tax rate scale in furthering the realization of our tax and
economic objectives in the postwar world.

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. 41$, as amended, and this notice, pre
scribe 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.

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
tenders, in whole or in part, and his action in any such respect shall be final.
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

Payment of accepted

tenders at the prices offered must be made or completed at the Federal Reserve Bank
m

cash or other immediately available funds on

l^i« 1 9 M ____ *

The income derived from Treasury bills, whether interest or gain from
jdie sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any

A
special treatment, as such, under Federal tax Acts now op 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 42 and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941* the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,

i^JL 24k__-

The Secretary of the Treasury, by this public notice, invites tenders
for $ l f2Q0. (XX).000 , or thereabouts, of

*sr

9 1 -day Treasury bills, to be issued

is*

on a discount basis under competitive and fixed-price bidding as hereinafter pro
BBS

vided.

The bills of this series will be dated

September 14* 1944

* and will

mature

December 14. 1944
, when the face amount will be payable without
ft*
interest. They will be issued in bearer form only, and in denominations of $1,000,
$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock p. m., Eastern War time,

Monday, September 11, 1944

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.
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded in the special envelopes which Yfill be supplied by Federal Reserve Banks
I g i '...
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 securi
ties.

Tenders from others must be accompanied by payment of 2 percent cf 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

T REA SU HT D E P A R T M E N T
Washington
*

FOR RELEASE, M O R N I N G N E W S P A P E R S
Friday, S e p t e m b e r 8, 1944*
9-7- 4 4
=

The S e c r e t a r y of the Trea-sury, b y this p u b l i c notice,
invites tenders for $ 1 , 2 0 0 , 0 0 0 , 0 0 0 , or thereabouts,- of 9 1 - d a y
T r e a s u r y bills, to be issued on a discount b a s i s u n d e r
c ompetitive a nd f i x e d - p r i c e b i d d i n g as h e r e i n a f t e r provided.
The b i l l s of this series w i l l be d a t e d S e p t e m b e r 14, 1944, a n d
will m a t u r e D e c e m b e r 14, 1944, w h e n the face a m o u n t will be
-payable wi t h o u t interest.
They will be i s sued in bearer' f o r m
only, a n d in d e n o m i n a t i o n s of $1,000, f>5,000, f 10,000, .$>100,000,
$>500,000, a n d $>1,000,000 (maturity value)*
T e n d e r s w i l l be r e c e i v e d a t Federal Reserve Banks a nd
Br a n c h e s up to the c l o s i n g hour, two o* clock p,m., E a s t e r n
W a r time, Monday, S e p t e m b e r 11, 1944,
T e n d e r s will n o t be
r e c e i v e d at the T r e a s u r y Department, 'W a s h i n g t o n .
Eac h tender
m u s t be for an e v e n - m u l t i p l e of $>1,000, a n d ' t h e price o f f e r e d
m u s t be e x p r e s s e d on the b a s i s of 100, w i t h n ot m o r e than three
decimals, e, g., 9 9 . 925*
Fractions m a y n o t be used.
It is
u r g e d that t e n d e r s be mad e on the p r i n t e d forms a n d f o r w a r d e d
in the special e n v e l o p e s w h i c h w i l l be s u p p l i e d by Federal
R e serve Banks or Br a n c h e s on a p p l i c a t i o n therefor.
T e n d e r s wil l be r e c e i v e d w i t h o u t deposit f r o m i n c o r p o r a t e d
b a nks a n d trust companies a n d f r o m r e s p o n s i b l e a n d r e c o g n i z e d
dealers in i n v e s t m e n t securities.
Te n d e r s f r o m others m u s t be
a c c o m p a n i e d b y p a y m e n t of 2 pe'rcent of the face a m o u n t of
T r e a s u r y b i l l s a p p l i e d for, u n l e s s the tenders are a c c o m p a n i e d
by an express g u a r a n t y of p a y m e n t b y an i n c o r p o r a t e d b a n k or
t rus t compa n y .
I m m e d i a t e l y a f t e r the c l o s i n g hour, tenders will be o p e n e d
at the F e d e r a l R e s erve Banks a n d Branches, .following w h i c h
p u b l i c a n n o u n c e m e n t will b e m a d e b y the S e c r e t a r y of the T r e a s u r y
of the a m o u n t and price range of a c c e p t e d bids.
T h ose s u b m i t t i n g
tenders w ill be a d v i s e d of the a c c e p t a n c e or r e j e c t i o n thereof.
The S e c r e t a r y of the T r e a s u r y e x p r e s s l y reserves the right to
a c c e p t or reject a n y or a ll tenders, in whole or in part, a n d
his a c t i o n in a n y s u c h respect' shall be final.
S u b j e c t to
these
reservations, tenders for $100,000. or less from a n y one
b i d d e r at 9 9 . 9 0 5 e n t e r e d on a f i x e d - p r i c e b a s i s will be a c c e p t e d
in full;.
Pa y m e n t of a c c e p t e d tenders a t the prices o f f e r e d
m u s t be m a d e or completed at the Federal Reserve B a n k in c a s h or
o t h e r i m m e d i a t e l y a v a i l a b l e funds on S e p t e m b e r 14, 1944.
4 3 -23
(Over)

2
’*... The- 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 hills, w h e t h e r interest
o r g a i n f r o m the sale or o t h e r d i s p o s i t i o n •of the hills, shall
n ot have a n y exemption, as such, a n d loss fro m the sale 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 h i l l s shall not have a n y special
treatment, as such, u n d e r Federal tax A c t s n o w or h e r e a f t e r
enacted,
The h i l l s shall h e s u b ject to estate, inheritance,
gift, or other e x c i s e taxes, w h e t h e r Federal or State, h u t shall
.he^ e x e m p t f r o m all t a x a t i o n now or h e r e a f t e r i m p osed on the
p r i n c i p a l or interest t h e r e o f by a n y State, or a n y o f the
p o s s e s s i o n s of the U n i t e d States, or b y a n y local taxi n g
auth o r i t y .
For purpose's of t a x a t i o n the a m ount of d i s count at
w h i c h T r e a s u r y h i l l s are o r i g i n a l l y sold b y the United' States
shall he c o n s i d e r e d to b e interest,: U n d e r S e c tions 42 a nd 117
(a) (1) of the Internal R e v e n u e Code, as a m e n d e d by S e c t i o n 115
of the ^Revenue Act of. 1941, the a m o u n t of di s c o u n t at w h i c h
hills i s s u e d h e r e u n d e r are. sold shall n o t he c o n s i d e r e d to
a c c r u e u n til s uch bill's shall he sold, r e d e e m e d or otherwise
d i s p o s e d of, a n d such h 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
capital a s s e t s .
A c c o r d i n g l y , the o w n e r of T r e a s u r y bills
(other than life i n s u rance companies) issued h e r e u n d e r n e e d
include in his income tax r e t u r n only the d i f f e r e n c e b e t w e e n
the p r ice p a i d fo r s u c h bills, w h e t h e r on or i g i n a l issue or on
s u b s e q u e n t purchase, a n d the a m o u n t a c t u a l l y r e c e i v e d either
u p o n sale' or r e d e m p t i o n a t m a t u r i t y d u r i n g the taxable y e a r
for w h i c h the r e t u r n is made, as o r d i n a r y g ain 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* 418, as amended, a n d
this notice, p r e s c r i b e
the terms o f the T r e a s u r y bills and
g o v e r n the c o n d i t i o n s of their issue.
Copies of the circular
m a y - b e o b t a i n e d f r o m a n y Federal Reserve B a n k or Branch.

oOo

%•

FOR IMMEDIATE RELEASE
September 7, 19lili

The Bureau of Customs announced today that the
tariff rate quota of Fish, fresh or frozen (whether or
not packed in ice), filleted, skinned, boned, sliced,
or divided into portions, not specially provided for:
Cod, haddock, hake, pollock,.cusk, and rosefish was
approximately 9k% filled as of August 26, i 9lj.I1.

Pre

liminary data before the Bureau shows that 17,Oli9,l?2
pounds of such fish were imported for consumption during
the period January 1 to August 26, 19lj.li, inclusive.
Importers are required to deposit estimated duties at the
full tariff rate on all importations for consumption
during the period September 6 to December 31, I9I1U, pending
determination of the quota status of such importations.

TREASURY- DEPARTMENT
Wa shlngton

F O R I M M E D I A T E R E L E A S E ,*
T h u r s d a y , )S e p t e m b e r 7, 104 4

Press Service
No. 4 3 -24

The B u r e a u o f C u s t o m s a n n o u n c e d t o d a y that the t a r i f f
rate quota of Fish,
in ice),
portions,
pollock,

filleted,
n ot

f r e s h or f r o z e n
skinned,

boned,

( w h e t h e r or n o t p a c k e d
sliced,

s p e c i a l l y p r o v i d e d for: Cod,

or d i v i d e d into
haddock,

hake,

cusk, a n d r o s e f i s h w as a p p r o x i m a t e l y 94$ f i lled as

of A u g u s t 26,

1944.

P r e l i m i n a r y data b e f o r e the B u r e a u

shows that 1 7 , 0 4 9 , 1 7 2 poun d s of s u c h f i s h were

i m p o r t e d for

c o n s u m p t i o n d u r i n g the p e r i o d Ja n u a r y 1 to A u g u s t 26,

1944, .

inclusive•
I m p o r t e r s are r e q u i r e d to d e p o s i t e s t i m a t e d duties at
the full t a r i f f rate on a ll

i m p o r t a t i o n s f o r c o n s u m p t i o n duri n g

the p e r i o d S e p t e m b e r 6 to D e c e m b e r 31, 1944,
n a t i o n o f the q u ota

pending determi

status of s u c h i m p o r t a t i o n s .

oOo

No technicians can compromise these differences.
But we have democratic political machinery designed
for that purpose. Upon the successful functioning of
that machinery we must finally rely for the solution
of our postwar problems.

-

3 3

-

We hope reconversion will Boon be the order of the day.
If

We must prepare now to rebuild our wartime tax system to
meet our postwar needs — our postwar revenue needs
and our postwar economic needs. This is the time when the
economic brains of this country, whether in business,
agriculture, labor, Government, or academic circles,
must be marshalled in the solution of the most difficult
tax problem in American history. It will take all of the
courage and ingenuity and unswerving devotion to the
public interest that we can command«
But in the end our tax problem must finally be solved
by the Congress. Inevitably there will be differences
of opinion, conflicts of interest, divergent plans and
recommendations.

Conclusion

On the whole, I think it is becoming clear that the
postwar tax problem is even more difficult than the wartime
tax problem. That may seem a pessimistic view to those who
look forward to the return of the good old days of low taxes.
Even the good old days of taxation were, of course, not
without their difficulties. But these difficulties will be
greatly magnified in the postwar period by the combination
of high revenue requirements, clouded business prospects,
and the heavier impact of taxes upon the national economy.
Today we have a tax system which is the kind of fiscal
instrument we need in wartime. At its peak it will have
raised nearly $45 billion a year. How much can we reduce
taxes after the war? Probably less than most people think.
Yet our wartime tax system will not serve our peacetime
needs.

- 31 -

in advance decision on a level of rates and a tax
structure which are to remain stable throughout a future
period that may turn out to be not at all stable, requires
a much more accurate forecast and greater skill of tax
adjustment than may be acceptable if experimentation and
change are to be permitted. Although stability is to b*s
desired, it will not necessarily be achieved. A study
of tax history, for example, with respect to the treatment
of capital gains indicates that the virtues of stability
seem much more important to us when the law is as we
like it than when it is not. Since large numbers of
people believe theseelves to be relatively overtaxed,
regardless of how much they are taxed, the stability of
taxes is likely to depend on the stability of the balance
of political power among economic groups.

The problem is to relieve the hardships without opening

up new loopholes at the same time. Wartime rates have
produced many new loopholes and hardships. These are
unfortunate in time of war, but it would be still more
serious for them to continue over the long pull of the
postwar years. The technical work on any postwar tax
bill is likely to be very heavy. To this may be added
the continuing problem of tax simplification. The
desirability of greater simplicity both for the masses
of taxpayers and for taxpayers subject to more intricate
provisions of the law increases the technical problems
of postwar tax revision.
The technical and other difficulties of the postwar
tax problem are also accentuated by the emphasis being
placed on stability of structure and rates.

- 29 -

High taxes make technical problems more important

and more difficult to solve than when faxes are low.

On the one side are loopholes through which taxpayers

find a way to escape the load they were intended to pay.

The loopholes may not be worth using when tax rates are

low, but may seem to justify great effort when the rates

are high.

One of the difficulties in connection with so-

called tax incentives to encourage production is that

such incentives lend themselves to the reduction of taxes

for people whom the devices were not intended to benefit.

On the other side

ships.

is the matter of relieving hard

Again high tax rates greatly increase the importance

of hardships on some individuals and corporations.

28

*

Technical problems

In placing emphasis on the more fundamental policy

problems of postwar tax revision, I do not wish to gloss

over the technical problems that are involved#

the hardest problems can be called technical*

Some of

Thus the

problem of eliminating double taxation of income earned

through corporations may be considered primarily technical,
■

♦

but it is a problem for which a really satisfactory answer

has thus far been sought in vain#

- 27
The arguments by which both of these extreme positions

manage to spell maximum gross national product and

employment are interesting and important, and I very much

regret that time does not permit examining them here.

Lest we feel in a too confused mood after all this

emphasis on economics, we ought not to overlook the

possibility that these economic theories may grow out of

points of view rather than determine points of view.

We are

all inclined to believe that taxes which fall lightly on

ourselves and more heavily on others are the kind of taxes

calculated to promote employment, production, and general

economic well being.

The perennially appealing economic

arguments are those which seem to promote most directly our

own special interests.
\

All economic theories including our

own should be viewed with an amiable skepticism.

26

•

One of the most important points of divergence of economic

opinion is at what level the revenue should be maintained.

Obviously the smaller the total tax load the more easily

solved is the dilemma of restrictive taxation.

lowering the total tax load

produces

the effects desirable or undesirable?

But if.'

a budget deficit« are

Or, more specifically,

in an econoxy operating at less than full employment, what

are the effects of a large budgetary deficit as compared

with a balanced budget, or with a large budgetary surplus?

Bow do these effects differ in the current year and in the

long run?

You are all familiar with tills problem and know

that the answers range all the way from insistence upon

an annually balanced budget with a surplus for debt

retirement to defense of a chronic deficit.

Now one important argument concerning postwar taxation
is t h a t ."investment" is being discouraged by what is
called the double taxation of corporate p ro fits .

The

v a lid ity of the double taxation argument hinges upon
whether corporation taxes are, or are not, sh ifted to
consumers and workers.

I f they are n o t sh ifted , then

the stockholder is doubly taxed in the sense th at his
dividend income is subject to the corporation tax as well
as the individual income tax.

I f , in a very large p a rt,

the corporation tax is sh ifted and therefore not borne by
stockholders, the double taxation of corporate income
largely disappears.

But then the argument can be made th at

the corporate tax represses consumption, as would an excise
or sales tax.
A l i t t l e way back in the argument the point was made that
when one tax is lowered another must be raised i f the revenue
is to be maintained.

I

b*X

This group holds that incentive is best supported by

lowering corporation taxes.

, At this point, as if matters were not already

sufficiently complicated, we are confronted by another point

of divergence in economic thinking, namely, the incidence of

the corporation tax.

The answer to the question, who bears

the corporate tax, largely determines what role that tax

plays in creating or destroying conditions favorable to

a high level of investment and employment.

I believe it is

fair to say that, in general, businessmen have held that

the corporation tax is shifted to consumers much as if it

were an excise tax, while tax students have held that it is

largely borne by stockholders, as if it were a withheld

income tax.

The argument is also made that it is shifted

at least in part to the workers in the form of lower wages.

* 23

They maintain further that the potential supply of

investment funds is largely in the hands of* or eontrolled

by, individual investors*

Therefore, they reason that the

way to increase incentives and stimulate investment is to

reduce taxes on personal incomes, particularly those incomes

which are derived from business investment.

- On the other side are those who hold that what retards

investment is the unwillingness of corporation and other

business managers to decide to build a plant, buy new

machinery, or otherwise invest in new capital goods.

They

contend that once the corporate manager sees an opportunity

to make a good profit for the corporation, the necessary

funds will he forthcoming, either through retained corporate

profits, from banking institutions, or from individual

investors who will not willingly sit forever on idle funds*

-

82

-

The effect of such a tax would be merely to reduce hoarding,

which occur* when income is neither saved nor invested

in new plant, equipment, or other capital goods.

But the

kinds of taxes that would reduce the savings from whioh

hoards are created are likely also to reduce the incentive

for making investment.

This presents a real dilemma.

There is no easy way out.

However, there must be one

solution which is better than the others, one which will

result in the minimum restriction on consumption and

investment.

The effort to find taxes that are least restrictive on

investment gives rise to a further division of opinion,

which relates to the point at which taxes take hold on

incentives.

One group holds that what retards investment is

an insufficient supply of investment funds, that is, of

funds whioh their owners are willing to invest.

-

21

-

Those who hold this theory urge that taxes should fall

lightly, or not at all, at those income levels where
■
they would largely reduce consumption.

Here we have an important issue.

Both views are

plausible, both undoubtedly reflect one facet of the truth.

One side argues that taxes which reduce consumption reduce

the gross national product and employment, because no one

can afford to employ labor and produce goods that he cannot

sell.

The other side argues that taxes which reduce

business investment likewise reduce gross national product

and employment.

But taxes must fall somewhere.

If one

tax is lowered, another must be raised to maintain

revenue.

Conceivably, we could impose a tax that would

reduce neither consumption nor investment.

The very fact of business expansion, it is said, employs

labor and materials to create additional plant, equipment,

and other capital goods; with businesses in other fields

similarly expanding, investment builds up the consumer

demand necessary to move the enlarged volume of consumer

goods from the market.

According to this theory, therefore

the greatest stress should be laid on removing and reducing

taxes which cut into the profit incentive of the investor.

On the other hand are those who argue that since

a businessman is a practical and prudent person he must

have the assurance of & consumer market to induce him to

invest and expand; accordingly the road to high employment

is a high level of consumer purchasing power, for

consumption gives employment directly and also creates

investment, thus giving employment indirectly.

This approach holds that appropriate fiscal policy can

help to achieve such an atmosphere and is, therefore,

a prerequisite of fundamental economic adjustment.

Another divergence of economic thinking which is

important to tax and fiscal policy bears upon the relation

of incentives to the expansion and high-level operation of

business.

On one hand is the view that the factors,

including taxes, which operate directly on the

businessmans profits are the influence determining business

expansion and employment.

According to this view, if tax

and other restrictions on the businessman are minimised,

he will be stimulated by the profit motive to adopt new

processes, invest new capital, and expand operations.

•

18

-

Some people/ for example, blame the ills of the economy on

monopoly.

To their minds, the removal of restrictions on

business competition and on the labor market is the prime

necessity.

Their program calls for readjusting American

institutions along lines which will minimise restrictions

and maximize the freedom of the market mechanism*

Some

persons holding this approach regard reliance on fiscal

policy as a snare and a delusion which, by postponing more

fundamental changes, may lead the Nation to eventual economic

ruin*

Other groups, while agreeing that there is need for more

truly competitive freedom of enterprise, believe it will never

develop in an atmosphere of insecurity and depression*

As

they see it, a vigorous approach to the problem of monopoly

and restrictive practices will be achieved only in an

atmosphere of security for labor and business groups*

I

>

%

- 17 Th«y ar«, first, goods sad servicos purchased by
’ .A

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consumers; second, gross business investment in

physical goods such as plants, equipment and inventory;

and third, goods and services purchased by Government*

Mo one or these three items can be allowed to shrink

without a compensating expansion in one or both of the

others, except by paying the price of increased a

unemployment*

To maintain full employment, in the face

of shrinking Government expenditures for war, the slack

must be taken up by consumer expenditures and business

investment*

Unfortunately for the peace of mind of would-be

architects of the postwar tax structure, there are widely

divergent views regarding the conditions under which the

goals of high consumption and high investment can be
achieved*

-

16

-

However, "minimum interference" is not an entirely
.•

'■ ••••**.

^

mu*

negative concept; it is often urged that carefully

devised tax measures can provide positive incentives to

stimulate investment or consumption.

But the postwar

tax load promises to be so high that, despite the

possibility of successful incentive provisions, any system

of taxes will, on balance, inevitably have restrictive

effects on consumption and investment.

A high level of employment is, of

with a high level of production.

course, associated

It may be worth while,

therefore, to examine briefly the components of our

national production, that is, of our gross national

product.

By gross national product is meant the aggregate

value of all goods and services produced in the country

during a given period of time*

i terns •

It is made up of three

- IS I should like to pause for a moment over the idea of

“minimum interference•*

giff

I j'* ^

Many writers apparently assume

H

that V the
presence
of high
taxes, designed for wartime
■
j
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V
• . •
3 x.
use,is the only obstacle to permanent full employment in

the postwar period.

This point of view seems to proceed

from an over-simplification of the postwar economic

problem*

However great an obstacle taxation may interpose

to maintaining full employment, the removal of this

obstacle may not be enough.

That unemployment can occur

when taxes are low is attested by the tragedy of 1929

and the ensuing years.

Numerous and important forces

besides taxes may stand in the way of high employment.

Consequently, no guarantee of high employment can be found

In tax policy alone.

The most we can hope for is that

taxes will be designed to produce

the

“minimum interference”

with the factors and forces leading to full employment•

- 14 -

But in the postwar period, when high employment and

business activity are goals to be reached rather than

facts to be taken for granted, the problem is entirely

different.

The tax system must be adjusted to the

economy so as to reduce restrictions on employment and

activity in every possible way.

Equitable tax measures

which yield revenue with the least restrictive effect will

be the goal of policymakers.

The Role of Taxes in Maintaining Employment.

ftnphasis on the importance of desirable economic

effects in framing postwar\taxes does not, of course,

mean that other criteria should be neglected.

But few

would contest the assertion that, with due regard to

justice, ease of compliance and administration, and

other considerations, taxes should be designed so as to

provide the minimum of interference with a high level of

production and employment.

- 13 —

Methods of avoiding unemployment ape receiving widespread

attention#

Generally* the expectation is that stimulation

of economic activity rather than restraintof inflationary
forces will be needed# 1/

In this setting* much greater emphasis will have to

be placed upon minimizing the restrictive effects of

taxation than in previous tax programs#

We are currently

in the midst of a wartime econoi^r supercharged b y huge

Government expenditures for war#

Restrictive effects on

the economy outside the field of war production are not

objectionable during a war#

In fact* they are implicit in

the purposes of a wartime tax policy.which* by absorbing

excessive profits and excessive purchasing power, supports

the stabilization program
In any event, of course* employment will
perfectly "fulFbecause of the Inevitable so-called
rictional unemployment of possibly two or three million
ersons moving Jfroa one Job
liilto anoxlher or otherwise
enroorarlly between Jobs# In us in the term "full
employment,” the presence of frictional unemployment
is assumed#
...

PI# IIIM|)I

■

mmminwn■<>■■■• » O y i ■■h

-12

-

What kind of economic weather can we expect after ^

the war?

fill the pattern of the last war be repeated,

this is, will we have postwar inflation followed by

collapse and recovery?

Will the first year or two after

the war be a time of business activity sustained at

a high level, and later years a time of stagnation?

pent-up

demands,

Will

expanding world markets, and the optimism

of peace lead to a decade or so of highly active business?

If one may judge by the premises on which postwar

tax plans are being formulated, it is safe to say that the

most commonly held view of the postwar economic situation

following the transition is that maintenance of full

employment and high gross national product will not be easy

and will require the most constructive governmental policies

-11

A

-

third element of difference in the postwar tax

problem, especially as compared with the war period,

will be the sharply changed economic situation«

As I have

said, a successful tax system must fit the needs of the

times; and the climate of the economy is an important

aspect of the times.

The economic weather will vitally

affect the amount of our postwar expenditures, the yield

of our taxes, and the fiscal policy we should adopt.

One

policy may be called for if industry enters a period of

high employment and sustained expansion after the war*

Quite another may be appropriate if employment declines

and factories are idle.

The kinds of taxes, the rates of

taxes, and the speed of deb$ retirement will necessarily

be tightly interrelated with the economic situation in

the postwar period*

In essence, tax revision consists of changes in the

relative importance of different taxes and in the amounts

which different people pay.

It is scarcely conceivable

that immediately following the war Congress would increase
'

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||

taxes on any substantial group of people while at the same
‘

,' •

time decreasing taxes on all other groups.

' . ■/

| -/■

Accordingly,

the degree of tax revision that can be expected to take

place will depend upon the aggregate reductions that can

be made.

If there is little leeway available for tax

reduction, there is likely to be relatively little basic

revision of the tax structure.

The more leeway in revenue,

the better the prospect for basic revision.

The size of the postwar tax load has extremely

Important Implications.

The quality of the tax structure,
I

|'

its virtues and its defects, are much more Important to

•‘j■
.I .' mm,S B H H H
the efficient operation of jthe ejonony when taxes are

high than idisn taxes are low.

The postwar tax load will

he so large that taxes will have a profound effeot upon

the operation of 13» postwar economy*

Moreover, the

stake involved in the distribution of the tax burden will

be greater than ever beforej this presages a more intense

effort of different economic groups to unload the tax

burden upon eaoh other.

The effectiveness of our political

machinery for attaining the public interest in the tax

field will be tested to the utmost.

The size of postwar tax needs will also determine in

large part the extent to which postwar tax revision is

possible.

To this sum* one must add the amount of intended surplus

for debt retirement or subtract the amount of expected

deficit*

%

any reasonable calculation* the tax load

will have to be much larger after the war than in any

previous peacetime years*

Without getting into detailed

estimates* it is clear that postwar needs will call for

Federal tax collections three or more times as large as

those of the immediate prewar period#

The amounts needed

will not* of course* be as great as wartime tax collections

which will possibly reach their wartime peak of more than

$43 billion during the current fiscal year*

Per dollar of

taxes* however* the postwar load may well be harder to

bear in that it will be a continuing load with no expectation

of early reliefj it will not be paid out of war-swollen

incomesj and it will no longer have the support of wartime

patriotism*

But it is hardly likely that either the budgetary

situation or the economic climate would justify taxes

and rates during the transition period that would be

appropriate for the long pull.

Moreover, it will be

very hard to forecast just what would be proper rates
H

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for the post-transition years.

The postwar tax problem

thus presents a critically delicate problem of timing.

It is the problem of determining by what steps, in what

sequence, and at what time tax adjustments should be

made after final victory is won.
vA" .• •

A second factor which distinguishes the postwar tax

problem from the problems we have faced heretofore is the

size of the tax load.

The amount of taxes to be raised is

determined in the first instance by the amount of current

expenditures.

- 6 -

Similarly, 'tax policies for the 10 or 15 post-transition

years should guard against ingraining the use of

measures which, though temporarily efficacious, might

be injurious in the long-run.

This brings us to the first major feature distinguishing

the postwar tax problem from previous tax problems, namely,

the fact that the economy will pass through a crucial

transition period from war to peace.

The process of

winding down the war economy, of demobilising men and

reconverting industry,will take time.

We cannot shift

overnight from a wartime budget to a peacetime budget.

Conceivably at a given moment our wartime tax system

could be changed by a single legislative stroke to

a postwar tax system.

The advantages thus afforded of

stability of postwar rates and structures would be

substantial, assuming there could beally be stability*

Despite these similarities, however, the postwar

tax problem differs from the tax problems we have faced

at other times.

But before getting down to the minutiae

perhaps we should define the ter®, "postwar.*

Literally

interpreted, "postwar* means all future time after the

war.

Obviously we cannot now plan for all time to come.

Most workers in the field of postwar taxation are not

inclined to look farther ahead than 10 or 16 years. Those

on the political firing line seem inclined to focus

attention on a shorter period of time.

Some of them prefer

to concentrate only on the transition years immediately

ahead.

Yet if future difficulties are to be avoided, the

policies of the transition years must be formed with at
least one eye on probable post*transition conditions, so
that steps taken shortly will not be inconsistent with
steps to be taken later on.

-

4

-

And so on through the myriad details of the individual

incase tax, corporation taxes, estate and gift taxes,

excise taxes, payroll taxes, and other miscellaneous
#
||
taxes*
Likewise, the criteria of desirable taxation in the

postwar period art not essentially different from the

criteria of desirable taxation in the prewar period or

the wartime period*

revenue*

We must still consider adequacy of

le must still seek to minimise tax discrimination

and maximise tax justice*

le must still work for

simplicity and ease of compliance and administration*

We must still seek to achieve the maximum of Federal-State

coordination and the minimum of conflict with State and

local taxes*
harmful and
taxation

And we must still endeavor to reduce the

promote

the desirable economic effects of

lie wartime tax system, however well it serves its present

purposes, will not be suitable for the postwar years

when less revenue will be needed, when high war profits

will be a memory, and when inflationary pressures may be

superseded by the need to maintain a high level of

employment*

Fundamental changes again will be required

to adapt our wartime system to postwar needs#

Special Character of the Postwar Tax Problem

In many respects the problem of postwar tax readjustment

resembles that of any tax legislation.

Although the

setting will be different, the same specific decisions

must be faced.

What exemptions are to be allowed for

the individual income tax?

be?

What is the starting rate to

What about the top rate?

the rate curve?

What about the shape of

People reach different answers because they start with

different premises, because their interests conflict,

and because they do not have the same understanding of

the way taxes act upon the economy in general*

Any postwar tax plan must stand or fall on its

ability to solve the problem toward which it is directed*

So we must first understand wh&t the postwar tax problem

is*

There is one proposition upon which I believe we all

can agrees

of its time*

A successful tax system must serve the needs

War gave rise to the necessity of raising

stupendous sums of revenue, of reducing or recapturing

excessive war profits, and of diminishing and restraining

inflationary pressures*

Fundamental changes were required

to adapt our prewar system to those wartime needs*

PROBLEMS OF POSTWAR FEDERAL TAX POLICY

If the importance of a problem is indicated by the

number of different groups of people studying it, the

postwar tax problem deserves top billing.

If all the

solutions reached through these studies were identical,

or even substantially the same, we could relax and there

would be little need for holding this meeting today.

Unhappily, the solutions differ widely.

Practically all

of them provide substantial rate reductions.

But beyond

that point, unanimity ceases and the plans ride off in all

directions.

This lack of harmony is confusing, for we are

prone to think that for any one given situation there

should be one best plan.

A problem in mathematics has

only one correct answer and every competent mathematician

can arrive at that answer.

But problems of tax policy are

TREASURY DEPARTMENT
Washington
(The following address by Roy Blough, Director
of the Division of Tax Research, before the
National Tax Association at the Jefferson
Hotel, St* Louis, is scheduled for delivery
at 10;30 a« m*, Central War Time, Tuesday,
September 12, 1944, and is for release at
that time»)

PROBLEMS OF POSTWAR FEDERAL TAX POLICY

TREASURY DEPARTMENT
Washington
(The following address by Roy Blough, Director
of the Division of Tax Research, before the
National Tax Association at the Jefferson
Hotel, St. Louis, is scheduled for delivery
at 10 ì30 a. m,, Central War Time, Tuesday,
September 12, 194-Aj and, is for release at
that time.)

PROBLEMS OF POSTWAR FEDERAL TAX P O H Cl

If the importance of a problem is indicated by the number of different
groups of people studying it, the postwar tax problem deserves top billing.
If all the solutions reached through these studies were identical, or even
substantially the same, we could relax and there would be little need for
holding this meeting today. Unhappily, the solutions differ widely.
Practically all of them provide substantial rate reductions. But beyond
that point, unanimity ceases and the plans ride off in all directions,
This
lack of harmony is confusing, for we are prone to think that for any one
given situation there should be one best plan. A problem in mathematics
has only one correct answer and every competent mathematician can arrive at
that answer. But problems of tax policy are not so clear-cut. People
reach different answers because they start with different premises, because
their interests conflict, and because they do not have the same understand
ing of the way taxes act upon the economy in general.
Any postwar tax plan must stand or fall on its ability to solve the
problem toward which it is directed, '$o we must first understand what the
postwar tax problem is, There is one proposition upon which I believe we
all can agrees A successful tax system must serve the needs of its time.
War gave rise to the necessity of raising stupendous sums of revenue, of
reducing or recapturing excessive war profits, and of diminishing and
restraining inflationary pressures. Fundamental changes were required
to adapt our prewar system to those wartime needs. The wartime tax
system, however well it serves its present purposes, will not be suitable
for the postwar years when less revenue will be needed, when high war
profits will be a memory, and when inflationary pressures may be superseded
by the need to maintain a high- level of employment. Fundamental changes
again will be required to adapt our wartime system to postwar needs.
Special Character of the Postwar Tax Problem
In many respects the problem of postwar tax readjustment resembles
that of any tax legislation. Although the setting will b e ■different, the
same specific decisions must be faced. What exemptions are to be allowed
for the individual income tax?. What is the starting rate to be? What

-

2

-

about the top rate? What about the shape of the rate curve? And so on
through the myriad details of the individual income tax, corporation taxes,
estate and gift taxes, excise taxes, payroll taxes, and other miscellaneous
taxes.
Likewise, the criteria of desirable taxation in the postwar period
are not essentially different from the criteria of desirable taxation in
the prewar period or the wartime period. We must still consider adequacy,
of revenue. We must still seek to minimize tax discrimination and
maximize tax justice. We must still work for simplicity and ease of
compliance and administration. We must still seek to achieve the maximum
of Federalr-State coordination and the minimum of conflict with State and
local taxes. And we must still endeavor to reduce the harmful and promote
the desirable economic effects of taxation.
Despite these similarities, however, the postwar tax problem differs
from the tax problems we have faced at other times. But before getting
down to the minutiae perhaps we should define the term, ‘'postwar.11
Literally interpreted, "postwar" means all future time after the war.
Obviously we cannot now plan for all time to come. Most workers in the
field of postwar taxation are not inclined to look farther ahead than 10 or
15 years. Those on the political firing line seem inclined to focus
attention on a shorter period of time. Some of them prefer to concentrate
only on the transition years immediately ahead. Yet if future difficulties
are to be avoided, the policies of the transition years must be formed with
at least one eye on probable post-transition conditions, so that steps
taken shortly will not be inconsistent with steps to be taken later on.
Similarly, tax policies for the 10 or 15 post-transition years should
guard against ingraining the use of measures which, though temporarily
efficacious, might be injurious in the long-run.
This brings us to the first major feature distinguishing the postwar
tax problem.- frcm previous tax problems, namely, the fact that the economy
will pass through a crucial transition period from war to peace. The
process of winding down the war economy, of demobilizing men and recon
verting industry, will take time. We cannot shift overnight from a wartime
budget to a peacetime budget. Conceivably at a given moment our wartime
tax system could be changed by a single legislative stroke to a postwar
tax system. Hie advantages thus afforded of stability of postwar rates
and structures would be substantial, assuming there could really be
stability, But it is hardly likely that either the budgetary situation or
the economic climate would justify taxes and rates daring the transition
period that would be appropriate for the long pull. Moreover, it will be
very hard to forecast!just what would be proper rates for the post
transition years.
The postwar tax problem thus presents a critically
delicate problem of timing. It is the problem of determining by what steps,
in what sequence, and at what time tax adjustments should be made after
final victory is won,

- 3 A second factor which distinguishes the postwar tax problem from the
problems we have faced heretofore is the size of the tax load. The amount
of taxes to be raised is determined in the first instance by the amount of
current expenditures*
To this sum* one must add the amount of intended
surplus for debt retirement or subtract the amount of expected deficit* By
any reasonable calculation* the tax load will have to be much larger after
the war than in any previous peacetime years. Without getting into detailed
estimates* it is clear that postwar needs will call for Federal tax
collections three or more times as large as those of the immediate prewar
period.^ The amounts needed will not* of course* be as great as wartime tax
collections which will possibly reach their wartime peak of more than {$43
billion during the current fiscal year.
Per dollar of taxes* however* the
postwar load may well be harder to bear in that it will be a continuing load
vdth no expectation of early relief; it will not be paid out of war-swollen
incomes; and it will no • longer have the support of wartime patriotism.
The size of the postwar tax load has extremely important implications.
The quality of the tax, structure* its virtues and its defects* are much more
important to the efficient operation of the economy when taxes are high
than when taxes are low. The postwar tax load will be so large that taxes
will have a profound effect upon the operation of the postwar economy.
Moreover, the stake involved in the distribution of the tax burden will be
greater than ever before; this presages a more intense effort of different
economic groups to unload the tax burden upon each other.
The effectiveness
of our political machinery for attaining the public interest in the tax
field will be tested to the utmost.
The size of postwar tax needs will also determine in large part the
extent to which postwar tax revision is possible* In essence* tax revision
consists of changes in the relative importance of different taxes and in
the amounts which different people pay. It is scarcely conceivable that
immediately following the war Congress would increase taxes on any sub
stantial group of people while at the same time decreasing taxes on all
other groups. Accordingly* the degree of tax revision that can be expected
to take placewill depend upon the aggregate reductions that can be made.
If there is little leeway available for tax reduction* there is likely to
be relatively little basic revision of the tax structure.
The more leeway
in revenue* the better the prospect for basic revision.
A third element of difference in the postwar tax problem* especially as
compared with the war period* will be the sharply changed economic situation.
As I have said* a successful tax system must fit the needs of the times; and
the climate of the economy is an important aspect of the times. The economic
weather will vitally affect the amount of our postwar expenditures, the yield
of our taxes*and the fiscal policy we should adopt. One policy may be
called for if industry enters a period of high employment and sustained
expansion after the war, Quite another may be appropriate if employment
declines and factories are idle.
The kinds of taxes* the rates of taxes*
ana the speed of debt retirement will necessarily be tightly interrelated
with the economic situation in the postwar period.

What kind of economic weather can we expect after the war? Will the
pattern of the last war be repeated, that is, will we have postwar
inflation followed by collapse and recovery? 'Will the first year or two
after the war be a time of business activity sustained at a high level,
and later years a time of stagnation? Will pent-up demands, expanding
world markets, and the optimism of peace lead to a decade or so of highly
active business?
If one may judge by the premises on v/hich postwar tax plans are being
formulated, it is safe to feay that the most commonly held view of the
postwar economic situation following the transition is that maintenance of
full employment and high gross national product will not be easy and will
require the most constructive governmental policies. , Methods of avoiding
unemployment are receiving widespread attention. Generally, the expectation
is that stimulation of economic activity rather than restraint of
inflationary forces will be needed, 1/
In this setting, much greater emphasis will have to be placed upon
minimizing the restrictive effects of taxation than in previous tax
programs. We are currently in the midst of a wartime economy supercharged
by huge Government expenditures for war. Restrictive effects on the economy
outside the field of war production are not objectionable during a war. In
fact, they are implicit in the purposes of a wartime tax policy which, by
absorbing excessive profits and excessive purchasing power, supports the'
stabilization program. But in the postwar period, when high employment and
business activity are goals to be reached rather than facts to be taken for
granted, the problem is entirely different. The tax system must be adjusted
to the economy so as to reduce restrictions on employment and activity in
every possible way. Equitable tax measures which yield revenue with the
least restrictive effect will be the goal of policymakers.
The Role of Taxes in Maintaining•Employment.
Emphasis on the importance of desirable economic effect's in framing
postwar taxes does not, of course, mean that.other criteria should be
neglected. But few would contest the assertion that, with due regard to
justice, ease of compliance and administration, and other considerations,
taxes should be designed so as to provide the minimum of interference with
a high level of production and employment. I should like to pause for
a moment over the idea of ‘"minimum interference." Many writers apparently
assume that the presence of high taxes, designed for wartime use, is the
only obstacle to permanent full employment in the postwar period. This
l7

In any event, of course, employment will never be perfectly "full"
because of the inevitable so-*called frictional unemployment of
possibly two or three million persons moving from one job to another
or otherwise temporarily between jobs. In using the term "full
employment," the presence of frictional unemployment is assumed.

-5 point of view seems to proceed from an over-simplification of the postwar
economic problem# However great an obstacle taxation may interpose to
maintaining full employment* the removal of this obstacle may not be
enough. That unemployment can occur when taxes are low is attested by the
tragedy of 1929 and the ensuing years. Numerous and important forces
besides taxes may stand in the way of high employment. Consequently, no
guarantee of high employment can be found in tax policy alone. The most
we can hope for is that taxes will be designed to produce the "minimum
interference1’ with the factors and forces leading to full employment.
However, "minimum interference" is not an entirely negative concept; it is
often urged that carefully devised tax measures can provide positive
incentives to stimulate investment or consumption. But the postwar tax
load promises to be so high that, despite the possibility of successful
incentive provisions, any system of taxes will, on balance, inevitably
have restrictive effects on consumption and investment.
A high level of employment is, of course, associated with a high level
of production. It may be worth while* therefore, to examine briefly the
components of our national production, that is, of our gross national
product* By gross national product is meant the aggregate value of all
goods and services produced in the country during a given period of time. *
It is made up of three items. They are, first, goods and services
purchased by consumers; second, gross business investment in physical
goods such as plants, equipment and inventory; and third, goods and services
purchased by Government. No one of these three items can be allowed to
shrink without a compensating expansion in one or both of the others,
except by paying-the price of increased unemployment. To maintain full
employment, in the face of shrinking Government expenditures for war;, the
slack must be taken up-by consumer expenditures and/business investment.
%

Unfortunately for the peace of mind of would-be architects of the
postwar tax structure, there are widely divergent views regarding the
conditions under which the goals of high consumption and high investment
can be achieved* Some people, for example, blame the ills of the economy
on monopoly. To their minds, the removal of restrictions on business
competition and on the labor market is the prime necessity.
Their program
calls for readjusting American institutions along lines which will minimize
restrictions and maximize the freedom of the market mechanism. Some persons
holding this approach regard reliance on fiscal policy as a snare and
a delusion which, by postponing more fundamental changes, may lead the
Nation to eventual economic ruin.
Other groups, while agreeing that there is need for more truly
competitive freedom of enterprise, believe it will never develop in an
atmosphere of insecurity and depression. As they see it, a vigorous
approach to the problem of monopoly and restrictive practices will be achieved
only in an atmosphere of security for labor and business groups. This
approach holds that appropriate fiscal policy can help to achieve such an
atmosphere and is, therefore, a prerequisite of fundamental economic
adjus tment.

-

.6

-

Another divergence of -economic thinking which is important to tax
and fiscal policy bears upon the relation of incentives to the expansion
and high-level operation of business. On one hand is the view that the
factors, including taxes, which operate directly on the businessman’s
profits are the influence determining business expansion and employment.
According to this view, if tax and other restrictions on the businessman
are minimized, he will be stimulated by the profit motive to adopt new
processes, invest new capital, and expand operations. The very fact of
business expansion, it is said, employs labor and materials to create
additional plant, equipment, and other capital goods; with businesses in
other fields similarly expanding, investment builds up the consumer demand
necessary to move the enlarged volume of consumer goods from the market.
According to this theory, therefore, the greatest stress should be laid on
removing and reducing taxes which cut into the profit incentive of the
investor.
:
■,
On the other hand are those who argue that since a businessman is
a practical and prudent person he must have the assurance of a consumer
market to induce him to invest and expand; accordingly the road to high
employment is a high level of consumer purchasing power, for consumption
gives employment directly and also creates investment, thus giving
employment indirectly, 'Those who hold this theory urge that taxes, should
fall lightly, or not at all, at those income levels where they would
largely reduce consumption.
Here we have an important issue. Both views are plausible, both
undoubtedly reflect one facet of the truth. One side argues that taxes
which reduce consumption reduce the gros-s national product and employment,
because no one can afford to employ labor and produce goods that he cannot
sell. The other side argues that taxes which reduce business investment
likewise reduce gross national product and employment. But taxes must
fall somewhere. If one tax is lowered, another must be raised to maintain
revenue. Conceivably, we could impose a tax that would reduce neither
consumption nor investment.
The eff:ct of such a tax would be merely to
reduce hoarding, which occurs when income is neither saved nor invested
in new plant, equipment, or other capital goods. But the kinds of taxes
that would reduce the savings from which hoards are created are likely
also to reduce the incentive for making investment.
This presents a real
dilemma. There is no easy way.out. However, there must be one solution
which is better than the others, one which will result in the minimum
restriction on consumption and investment.
The effort to find taxes that are least restrictive on investment
gives rise to a further division of opinion, which relates to the point
at which taxes take hold on incentives. One group holds that what
retards investment is an insufficient supply of investment funds, that
is, of funds which their owners are willing to invest. They maintain
further that the potential supply of investment funds is largely in the
hands of, or controlled by, individual investors.
Therefore, they

- 7 reason that the way to increase incentives and stimulate investment is to
reduce taxes on personal incomes, particularly those incomes which are
derived from business investment.
On the other side are those who hold that what retards investment is
the unwillingness of corporation and other business managers to decide
to build a plant, buy new machinery, or otherwise invest in new capital
goods. They contend that once the corporate manager sees an opportunity
to make a good profit for the corporation, the necessary funds will be
forthcoming, either through retained corporate profits, from banking
institutions, or from individual investors who will not willingly sit
forever on idle funds. This group holds that incentive is best supported
by lowering corporation taxes.
At this point, as if matters were not already sufficiently complicated,
we are confronted by another point of divergence in economic thinking,
namely, the incidence of the corporation tax. The answer to the question*
who bears the corporate tax, largely determines what role that tax plays
in creating or destroying conditions favorable to a high level of invest
ment and employment, t believe it is fair to say that, in general,
businessmen have held that the corporation tax is shifted to consumers
much as if it were an excise tax, while tax students have held that it is
largely borne by stockholders, as if it were a withheld income tax. The
argument is also made that it is shifted at least in part to the workers
in the form of lower wages. Now one important argument concerning postwar
taxation is that "investment11 is being discouraged by what is called the
double taxation of .corporate profits.
The validity of the double taxation
argument hinges upon whether corporation taxes are, or are not, shifted to
consumers and workers. If they are not shifted, then the stockholder is
doubly taxed in the sense that his dividend income is subject to the
corporation tax as well as the individual income tax. If, in a very
large part, the corporation tax is shifted and therefore not borne by
stockholders, the double taxation of corporate income largely disappears.
But then the argument can be made that the corporate tax represses con
sumption, as would an excise or sales tax.
A little way back in the argument the point was made that when one
tax is lowered another must be raised if the revenue is to be maintained.
One of the most important points of divergence of economic opinion is at
what level the revenue should be maintained. Obviously, the smaller the
total tax load, the more easily solved is the dilemma of restrictive
taxation. But if lowering the total tax load produces a budget deficit,
are the effects desirable or undesirable? Or, more specifically, in
an economy operating at less than full employment, what are the effects
of a large budgetary deficit as compared with a balanced budget, or with
a large budgetary surplus? How do these effects differ in the current
year and in the long run? Tou are all familiar with this problem and
know that the= answers range all the way from insistence upon an annually
balanced budget with a surplus for debt retirement to defense of
a chronic deficit. The arguments by which both of these extreme positions

- 8 manage to spell maximum gross national product and employment are interest
ing and important, and I very much regret that time does not permit examin
ing them here*
Lest we feel in a too confused mood after all this emphasis on
economics, we ought not to overlook the possibility that these economic
theories may grow out of points of view rather than determine points of
view. We are all inclined to believe that taxes which fall lightly on
ourselves and more heavily on others are the kind of taxes calculated to
promote employment, production, and general economic well-being.
The
perennially appealing economic arguments are those which seem to promote
most directly our own special interests. All economic theories including
our own should be viewed with an amiable skepticism.
Technical problems
In placing
emphasis on the more fundamental policy problems of postwar
tax revision, I
do not wish to gloss over the technical problems that are
involved. Some of the hardest problems can be called technical.
Thus the
problem of eliminating double taxation of income earned through corporations,
may be considered primarily technical, but it is a problem for which
a really satisfactory answer has thus far been sought in vain.
High taxes make technical problems more important and more difficult
to solve than when taxes are low. One the one side are loopholes through
which taxpayers
find a way to escape the load they were intended to pay.
The loopholes may not be worth using when tax rates are low, but may seem
to justify great effort when the rates are high, One of the difficulties
in connection with so-called.tax incentives to encourage production is
that such incentives lend themselves to the reduction of taxes for people
whom the devices were not intended to benefit.
On the other side is the matter of relieving hardships. Again high
tax rates greatly increase the importance of hardships on some individuals
and corporations. The problem is to relieve the hardships without
opening up new loopholes at the same time. Wartime rates have produced
many new loopholes and hardships. These are unfortunate in time of war,
but it would be still more serious for them to continue over the long
pull of the postwar years. The technical work on any postwar tax bill ,
is likely to be very heavy. To this may be added the continuing problem
of tax simplificationl The desirability of greater simplicity both for
the masses of taxpayers and for taxpayers subject to more intricate
provisions of the law increases the technical problems of postwar tax
revision.
The technical and other difficulties of the postwar tax problem are
also accentuated by the emphasis being placed on stability of structure
and rates. An advance decision on-a level of rates and a tax structure,
which are to remain stable throughout a future period that may turn out

- 9 to be not at all stable, requires a much more accurate forecast and greater
skill of tax adjustment than may be acceptable if experimentation and
change are to be permitted. Although stability is to be desired, it will
not necessarily be achieved. A study of tax history, for example, with
respect to the treatment of capital gains indicates that the virtues of
stability seem much more important to us when the law is as we like it
than when it is not. Since large numbers of people believe themselves to
be relatively overtaxed, regardless of how much they are taxed, the
stability of taxes is likely to depend on the stability of the balance
of political power among economic groups.
Conclusion
On the whole, I think it is becoming clear that the postwar tax
problem is even more difficult than the wartime tax problem.
That may
seem a pessimistic view to those who look forward to the return of the good
old days of low taxes. Even the good old days of taxation were, of course,
not without their difficulties. But these difficulties will be greatly
magnified in the postwar period by the combination of high revenue require
ments, clouded business prospects, and the heavier impact of taxes upon
the national economy.
Today we have a tax system which is the kind of fiscal instrument we
need in wartime. At its peak it will have .raised nearly $45 billion
a year. How much can we reduce taxes after the war? Probably less than
most people think. Yet our wartime tax system will not serve our peacetime
needs. We hope reconversion will soon be the order of the day. We must
prepare now to rebuild our wartime tax system to meet our postwar needs —
our postwar revenue needs and our postwar economic needs. This is the
time when the economic brains of this country, whether in business,
agriculture, labor, Government, or academic circles, must be marshalled
in the solution of the most difficult tax problem in American history.
It Y/ill take all of the courage and ingenuity and unswerving devotion to
the public interest that Y/e can command.
But in the end our tax problem must finally be solved by the Congress.
Inevitably there will be differences of opinion, conflicts of interest,
divergent plans and recommendations. No technicians can compromise these
differences. But we have democratic political machinery designed for that
purpose* Upon the successful functioning of that machinery we must finally
rely, for the solution of our postwar problems.

0O0

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, September 12, 1944«

Press Service

'WS:
The Secretary of the Treasury announced last evening that the tenders for
$1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated September 14 and
to mature December 14» 1944, which were offered on September 3, were opened at the
Federal Reserve Banks on September 11.
The details of this issue are as follows:
Total applied for - $2,005*263,000
Total accepted
- 1,214,325,000
Average price

(includes $63,353,000 entered on a fixedprice basis at 99-905 and accepted in full)
- 99.905/ Equivalent rate of discount approx. 0.375# per annum

Rangs of accepted competitive bids:
High
Low

(56

- 99*910 Equivalent rate of discount approx. 0.356# per annum
- 99.905
»
«
«
»
»
0.376# »
»

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

Federal Reserve
District

T0U1
Applied for

Total
Accepted

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

,
28,540,000
1,404,981,000
44,620,000
37,515,000
24,227,000
9,155,000
291,310,000
30,287,000
5,655,000
20,723,000
7,965,000
99,785,000

1

12,005,263,000

61,214,825,000

TOTAL

18,451,000
303,013,000
33,378,000
35,093,000
21,653,000
3,861,000
170,815,000
20,337,000
5,655,000
17,731,000
7,283,000
72,505,000

TREASURY DEPARTMENT
1Washington
P r ess Se r v i c e
No. 43-26

FOR RELEASE, MORNING- -N E W S P A P E R S ,
Tues day, S e p t e m b e r 12,,, 1944«
9-11-44

T h e S e c r e t a r y of the T r e a s u r y a n n o u n c e d last
the t e n d e r s f o r $ 1 , 2 0 0 ,000,000,

or thereabouts,

evening tha t

of 9 1 - d a y T r e a s u r y

bills to be d a ted S e p t e m b e r 14 a n d to m a t u r e D e c e m b e r 14,

1944,

w h i c h w e r e o f f e r e d on S e p t e m b e r 8, w e r e o p e n e d at t h e F e d e r a l
R e s e r v e Banks

on S e p t e m b e r 11.

T h e details

of t h i s

issue a r e as follows:

Total applied for - $2,003,263,000
Total accepted
- 1 , 2 1 4 , 8 2 5 , 0 0 0 (includes $ 6 3 , 3 5 3 , 0 0 0
entered on a f i x e d - p r i c e basis at 99.905 a n d a c c e p t e d in
full)
A v e r a g e p r ice

9 9 . 9 0 5 / E q u i v a l e n t r a t e of d i s c o u n t a p p r o x
0 . 375/0 p e r a n n u m

R a n g e of a c c e p t e d c o m p e t i t i v e bids:
High

- 99.910 Equivalent
0.356^ per
- 99.905 E q u i v a l e n t
0.376% per

Low

(56 p e r c e n t

of the a m o u n t b id f o r at t h e

rat e of d i s count a p p r o x
annum
r â t e of discount a p p r o x
annum

low p r i c e was a c c epted)

F e deral R e s e r v e
D i s trict

Total
Applied for

Total
Accepted

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
C h i cago
S t . Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o

t

#

TOTAL

28,540,000
1,404,981,000
44,620,000
37,515,000
24 ,227,000
9,155,000
291,810,000'
30,287,000
5,655,000
20, 723,000
7,965,000
99,785,000

#2,005,263,000
-cOo-

18,451,000
803,013,000
33,378,000
35,093,000
21,653,000
8,861,000
170,815,000
20,387,000
5,655,000
1 7 , 731,000
7,283,000
72,505,000

$1,214,825,000

FOR IMMEDIATE RELEASE
September 12, 19hh

The Bureau, of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1, 19^3* provided for in the InterAmerican Coffee Agreement, proclaimed by the President on April

15 , 19hl,

as follows:

t
e

Country of Production

:
t

:

Quota Quantity
(Pounds) 1/

:
:

Authorized for entry
for consumption
As of (Date) :
(Pounds)
♦ ■

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 .621,630,1*79

Non-Signatory Countries:

5^9,261.936
3^,873,771413,9^9,562
20,881,883
26 .155,330
10^,621,321
93,287.38»*
»*7.951,373
3 ,1+86.928
82,825,279
3»+,001 ,91+3
1+,359,288
73,23»*,872
61,900,935

September 2 , 1 9 ^ 1,187*829,100
(import quota filled)
September 2 , 191+h
31 ,381,»*20
K
8,^77,821
September 9» 19hh 2 / 19 ,033.356
September 2, I9IA
22,089,097
September 9 * 19kk 2/ 100 ,273 ,ohi
September 2, 1 9 ^
86,825,355
i
39 .279.096
(Import quota filled)
(Import quota filled)
September 2, 19H4
28 ,867,712
n
3,381,510
t!
»*1.952,579
it

»*,»*59,775

1/

Cfrtotas as established by action of the Inter-American Coffee Board on
April 21, I9I&.

2/

Per telegraphic reports.

TREASURY DEPARTMENT
Washington

EOR IMMEDIATE RELEASE
Tuesday. September 12, 1944

Press Service
No* 43-26

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entiy for consumption under the quotas
for the 12 months commencing October 1, 1943, provided for in the InterAmerican Coffee Agreement, proclaimed by the President on April 15, 1941,
as follows:

Country of Production

ï

:

I Quota Quantity

i

3

(Pounds) 1/_____:

Authorized for entry
for consumption
As of (Date) * (Pounds)

Signât oiry Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Hai t i
Honduras
Mexico
Nicaragua
Peru
Venezuela

1,621,630,479
549,261,936
34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47,951,373
3,486,928
82,825,279
34,001,943
4,359,288
73,234,872

Non-Signatoiy Countries:

61,900,935

September 2, 1944 1, 187,829,100
(import quota filled)
31,381,420
September 2, 1944
li
8,477,821
9,* 1944 2/ 19,033,356
22,089,097
2, 1944
9, 1944 2/ 100,273,041
86,825,355
2, 1944
39,279,096
( Import quota filled)
(import quota filled)
28,867,712
September 2, 1944
»
3,381,510
n
41,952,579
September
September
September
September
ii

ti

4,459,775

1/

Quotas as established by action of the Inter-imerican Coffee Board on
April 21, 1944,

2J

per telegraphic reports*

oOo

tmimm wtkmmm
Washington

FOE RELEASE, M E T I S I'^SPAPMS

SOIKT STAfUffilT Bf T B M S W 1

k m M E BmBTKESTS

Kotes of the Bsmque Hatianale do Belgique have been made available by
the Belgian Government to the Supreme Commander, Allied Expeditionary Force«,
for the use of the Allied Liberation Forces in Belgium* These arrangement«
«are completed sene time ago between officials of the United States and the
British Governments and representatives of the Belgian Government in London
in anticipation of the operation* of the Allied Forces now programing within
Belgium* The notes consist in part of currency taken to London from Belgium
in IShQ and in part of currency recently printed in London by the Belgian
Government* Xn addition, the Belgian Government has similarly made available
pre-war Belgian coins, and a now series of two-franc coins minted for it by
the United States hint*
The rates of exchange ifeioh have been established for Belgium are i3*T73
Belgian francs to $1 and l?6«6g£ Belgian francs to tl* These rates were
selected by the Belgian Government in London* Complete records are being kept
mod a detailed accounting procedure has been set up in connection with the use
of the Belgian currency by the ¿ W e d Military forces* these records will be
used in the future in reaching intergovernmental settlements for Allied ex
penditures in Belgium*
Arrangements have been made whereby IT* $• military personnel may r m l t all
or any portion of their pay which they receive in Belgian francs to the United
States against payment here in dollars* ©sited States soldiers leaving Belgium
may exchange franc currency held by them for dollar currency* When United
States forces obtain Belgian francs for military expenditures, the relevant
Army appropriation will be charged for the dollar equivalent thereof* In this
manner the control of Congress over the expenditures of the United States %say
is maintained*

Y l - \ j
TREASURY DEPARTMENT
Washington

FOR RELEASE* MORNING NEWSPAPERS j

JOWT STATEMENT BI TREASURY AND WAR DEPARTMENTS
Notes of the Banque National© de Belgique have been
available by
the Belgian Government to the Supreme Commander; Allied Expeditionary Forces,
for the use of the Allied liberation Forces in Belgium* These arrangements
were completed some time ago between officials of the United States and the
British Governments and representatives of the Belgian Government in London
in anticipation ©f the operations ©f the Allied Forees now progressing within
Belgium* The notes consist in part of currency taken to London from Belgium
in 191*0 and in part of currency recently printed in London b y the Belgian
Government* In addition, the Belgian Government has similarly made available
pre-war Belgian coins, and a new series of two-franc coins minted for it by
the United States Mint*
The rates of exchange which have been established for Belgium are 1*3.773
Belgian francs to $1 and 176*625 Belgian francs to £L* These rates were
selected by the Belgian Government in London* Complete records are being kept
and a detailed accounting procedure has been set up in connection with the use
of the Belgian currency b y the Allied Military forces* These records will be
used in the future in reaching intergovernmental settlements for Allied ex
penditures in Belgium*
Arrangements have been made whereby U* S# military personnel may remit all
or any portion of their pay which they receive in Belgian francs to the United
States against payment here in dollars* united States soldiers leaving Belgium
may exchange franc currency held by them for dollar currency* When United
States forces obtain Belgian francs for military expenditures, the relevant
A m y appropriation will be charged for the dollar equivalent thereof* In this
manner the control of Congress over the expenditures of the United states Arffly
is maintained*

Treasury Department
Division of Monetary Research

m . WHITE
Branch 2058 - Room 214J

TREASURY DEPARTMENT
Washington

F O R RELEASE, M O R N I N G N E W S P A P E R S
W e d n esday, S e p t e m b e r 15, 1944»

Press Service
No. 43*27

JOINT S T A T E M E N T B Y T R E A S U R Y A N D W A R D E P A R T M E N T S

N o t e s o f the B a n q u e N a t i o n a l e de B e l g i q u e have b e e n mad e
a v a i l a b l e b y the B e l g i a n G o v e r n m e n t to the S u p r e m e Commander,
A l l i e d E x p e d i t i o n a r y Forces, f or the u se of the A l l i e d
L i b e r a t i o n Forces in B e l g i u m .
These arrangements were
com p l e t e d some time a go b e t w e e n o f f i c i a l s of the U n i t e d States
and the B r i t i s h G o v e r n m e n t s a n d r e p r e s e n t a t i v e s of the B e l g i a n
G o v e r n m e n t in L o n d o n in a n t i c i p a t i o n of the o p e r a t i o n s of the
A l l i e d F o r c e s n o w p r o g r e s s i n g w i t h i n Be l g i u m .
The n o t e s cons ist
in part of c u r r e n c y t a k e n to L o n d o n f r o m B e l g i u m in 1 9 4 0 a n d in
part of c u r r e n c y r e c e n t l y p r i n t e d in L o n d o n b y the B e l g i a n
Gove r n m e n t .
In a d d i tion, the B e l g i a n G o v e r n m e n t has s i m i l a r l y
made a v a i l a b l e p r e - w a r B e l g i a n coins, a n d a n e w series of twofranc coins m i n t e d for it b y the U n i t e d States Mint.
T h e rates of e x c h a n g e w h i c h have b e e n e s t a b l i s h e d for
B e l g i u m are 4 3 . 7 7 3 B e l g i a n francs to |l a n d 1 7 6 . 6 2 5 B e l g i a n
francs to Bl,
T h ese rates wer e s e l e c t e d b y the B e l g i a n
G o v e r n m e n t in Lo n d o n .
C o m p l e t e records are b e i n g k e p t a n d .
a d e t a i l e d a c c o u n t i n g p r o c e d u r e has b e e n set up in c o n n e c t i o n
w i t h the u s e o f the B e l g i a n c u r r e n c y b y the A l l i e d M i l i t a r y
forces*
T h e s e records will be u s e d in the future in reaching
i n t e r g o v e r n m e n t a l s e t t l e m e n t s for A l l i e d e x p e n d i t u r e s in
Belgium.
A r r a n g e m e n t s have b e e n m a d e w h e r e b y U. S. m i l i t a r y p e r 
sonnel m a y r e m i t all or a n y p o r t i o n of their p a y w h i c h they
receive in B e l g i a n francs to the U n i t e d States a g a i n s t p a y m e n t
here in dollars.
U n i t e d S tat e s soldiers l e a v i n g B e l g i u m m a y
exchange franc c u r r e n c y h e l d b y t h e m for d o llar currency.
W h e n U n i t e d S t a t e s forces o b t a i n B e l g i a n francs for m i l i t a r y
expenditures, the r e l e v a n t A r m y a p p r o p r i a t i o n will be c h a r g e d
for the doll a r e q u i v a l e n t thereof.
In this m a n n e r the control
of Congr e s s ove r the e x p e n d i t u r e s of the U n i t e d States A r m y
is m a i n t a i n e d .

-oOo

’

f j -

W

]

FOR IMMEDIATE RELEASE
September 12, 19U1*.

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, 19ltl, as modified by the President 's proclamations of April 13, <

19h2> and April 29, 19U3, for the 12 months commencing May 29, 1914-U, as follows}

Country
of
Origin

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

WHEAT
•
•
Established t
Quota
:
t
«
•

#
îWheat flour, semolina.
«crushed or cracked wheat,!
sand similar wheat products
•
•
Imports
: Established
Imports
]May 29,1914
May 29, 19hh, to
Quota.
]Sept.2, Ï9I1I1
S
Sept. 2, 19l|l* î
«
•

(Bushels)

(Bushels)

795,000
100
100
100
-

795,000

100
2,000
100
1,000
100
-

—
1,000
100
100

«

m
m
-

.*■*

(Pounds)

(Pounds)
3,81$,000
2l*,000
13,000
13,000
8,000

75,000
1,000
$,000

5,000
1,000
1,000
1,000
lit,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
-

22 ,911*
- .J
—
.mm*m

—
**
—
—
**
—
—

"

m
ioo.-ooo---- —

•a.
79Ç.000-- -- ------ il-.QQQ-QO5---22T9IÎI

J

TREASURY DEPARTMENT
Washington
Press Service
No. 43-28

FOR IMMEDIATE RELEASE
Wednesday. September 13, 1944.

The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour entered, or withdrawn from warehouse, for
consumptioh under the import quotas established in the President’s proclama
tion of May 28, 1941, as modified hy the President’s proclamations of April 13,
1942, and April 29, 1943, for the 12 months commencing May 29, 1944 as follows:
Country
of
Origin

Established
Quota

Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
New 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 Republics
Belgium

:Wheat flour, semolina,
;crushed or c racked wheat,
land similar wheat produds
:Established : Imports
: Imports
:May 29,4944 to
:May 29, 1944, to : Qpota
*Sent.2. 1944
Sept* 2. 1944'

WHEAT

(Bushels)

(Bushels)

795,000
—
—
100

795,000
-

—
■—
—
—
'—
—
**

100
100
100
2,000
100
—
1,000
100
.”
—

■

—
—
—
''—
**

(Pounds)
3,815,000
24.000
13.000
13.000

(Pounds)
22,914

8,000
75.000

1,000
5.000

5.000
1,00 0

1,000
1,00 0

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

—
1,000
100
100

—

100
100
800,000

—
—
795,000

oOo

.4,000,000

2 2 „914

' S '

'

2/

-v'

'4

■ ¿ '.u

OOIIOK CARD SCRIPS,/ COMBER WASIE, -LAP WASTE, SLITER WASIB, A M ROTOR} KAS2B,
WHETHER OR T O MANUFACTURED OR OTHERWISE ADVANCED IN VALUE. Annual quotas
commencing September 20, by Countries of Origin:

■

-

•. • 3

, / V : ’'V- *■:

::

* '• U

' •.

Total"'quota, ‘provided, however, that not1more than 33~«l/3 percent/ of the •
quotas shall he filled by cotton wastes other 'than- card strips/ and comberwastes 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:

;TOTAL-IMFOBTS .jESTABLISHED:Impo r t s Sept* 20,
Country of Origin : Establi shed iSept* 20,' 1943 i33-1/3^ of :1943, to
*
*
% TOTAL QUOTA ifiept* :2j T-Qiiii iTotal Quota:<;tp+., o j..1914+___ u
United Kingdom......

0&n8>d&* •
France
British India......
Netherlands.........
Switzerland.........
Belgium.
oapan ....•***.*»*.»••
China*..............
Egypt.....*....... *
Cuba..............*»
Germany«'............
Italy.... .
TOTALS

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

1,441.152
■- •
75,807..
- ■
'
.... f? ...
. . ■ 'i:
— .' ■:
‘ 22,747 . .
— 11
....
. - 1 i . . 14,796
12,853.
* - ■'
—■
—
—
/'mm :
•- j £
■— , ;
mm ■
... .. *r. , , , .
25*443 ......
—
, ■;-mm
.7,088
. .
- •

29,398

21,263
5,482,509

.

29,398

1,599,886

"

mm

-

1/

Included in total imports, column 2*

'

£/

The »resident*e 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,

3

YJ ~~2

*"f'FOR MEDIATE RELEASE
September 12, l$hk

The Bureau of Customs announced today that preliminary reports’from the
collectors of customs shovr imports of cotton and cotton waste chargeable to the
import quotas established by the Presidents proclamations of September 5» 1939,
and December 19* 1940, as follows, during the period September 20, 1943, to

September 2, 19hk*
COTTON HAYING A STAPLE OP LESS THAN 1-11/l6 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE 01 BLANKETS AND BLANKETING, AND OTHER THAN LINTERS), Annual quotas
commencing September 20, by Countries of Origin*
(In Pounds)

5*
Country of
Origin

Staple length less
Staple length 1-1/8" or more
than 1-1/8"
:
but less than 1-11/16"
*
:Imports Sept,: Established i Imports Sept.
•Established:20, 1943, to ;
Quota
: 20, 1943, to
___ Quota__ :Septft 2. 19iikt
45.656.4$0
o. ToMi

tN- ,

Egypt- and the AngloEgyptian Sudan........
P e r u . ...... ....
British India......... *.
China,..................
Mexi co................ ,
Brazil.............
Union of Soviet
Socialist Republics,..
Argentina...... .
Haiti,.
Ecuador...... .
Honduras*......... ... ..
Paraguay......... ......
Golombia.......... .
Iraq,.................. .
British East Africa..,.,
Netherlands East Indies.
Barbado s..........
Other British West
Indies if............
Nigeria........... .
Other British West
Africa 2/.,..........
Other French Africa 2>/.
Algeria and Tunisia..,.*

783,816
247,962
2,003,483
1,370,791
8,883,259
618,723
475,124
5,205.
237
9,333
752
871
124 •'
195
2,240
71 ,.388
•—

-

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

7 3 ,5 7 6
«. .

mm
8 ,8 8 3 ,2 5 9
1*17,580
m

mm
mm
mm
mm
mm
mm
mm
mm

<
.. ^

\

•(

mm

mm

21,321
5,377
16,004
689
-

14,516,882

mm
mm

mm

z

»

?,37l*,105

45,656,420

if Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
2/
ü/

w

Other than Gold Coast and Nigeria,
Other than Algeria, Tunisia, and Madagascar.

35,136,786

TREASURY DEPARTMENT
Washington
Press Service
No. 43-29

FOR IMMEDIATE RELEASE
Wednesday. September 13, 1944.

The Bureau of Customs announced today that preliminaiy reports from the
collectors of customs show imports of cotton and cotton waste chargeable to the
import quotas established by the Presidents proclamations of September 5, 1939,
and December 19, 1940, as follows, during the period September 20, 1943, to
September 2, 1944.
COTTON HAVING A STAPLE OF LESS THAN 1-11/16 .INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origin:
(In Pounds)

Country of
Origin

: Staple length 1-1/8« or more
Staple length less
than 1-1/8«
:
but less than 1-11/16«
:
:Imports Sept,: Established : Imports Sept.
: Established:20, 1943, to :
: 20, 1943 to
Quota
Quota
:Sept.2, 1944 : 45,656,420 : Sent. 2, 1944

Egypt and the AngloEgyptian Sudan...... .
Peru........ ...........
British India....... .
China.
Mexico....-. *...... .....
Brazil...........
Union of Soviet
Socialist Republics...
Argent ina......... .
Haiti.................
Ecuador.... ............
Honduras............. ..
Paraguay................
Colombia............
Iraq....................
British East Africa....*
Netherlands East Indies.
Barbados....... .
Other British West
Indies 1/...,,.......
Nigeria...... .
Other British West
Africa 2/.............
Other French Africa .3/•
Algeria and Tunisia....

1/
2/
3/

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

73,576
—
—
8,883,259
417,580

33,280,253
1,856,533
—
w
»

475,124
5,203
237
9,333
752
871
124
195
2,240
71,388
-

«
—
;—
-

—
—
—
—

21,321
5,377

-

-

16,004
689

-

14,516,882

9,374,415

—
35,136,786

—
-

-

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Coast and Nigeria,
Other than Algeria, Tunisia, and Madagascar,

-

2

-

2/

COTTON CARD STRIPS, / 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/ of the
auotas 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, Prance, Netherlands,
Switzerland, Belgium, Germany and Italy:
(In Pounds)
•
.• TOTAL IMPORTS ;ESTABLISHED :Imports Sept. 20,
•
1943, to
Country of Origin : Established : Sept. 20, 1943 :33-1/3# of :
•
•
TOTAL QUOTA : Sept. 2, 1944 :Total Quota : Sept. 2 , 1944 1/
United Kingdom, ,♦, ••
Canada,
Prance. *... *.... *• *
British India.......
Netherlands.........
Switzerland.
Belgium.... *..... ..
Japan........ .
China.........*.i...
Egypt............. .
Cuba........ .......
Germany. ..... .
Italy.......... ....

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

TOTALS

5,482,509

29,398
—
—
—
—

29,398

1,441,152
—
75,807
■
—
22,747
14,796
12,853
—
—
—

■—
—
—

•m
***

25,443
7,088

—

1,599,886

-

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

— •
—
—
—

f
i

Commodity

Silver or black
foxes, furs
and articles!
Foxes valued
under $25>0 each
and whole furs
and skins
Tails

Established Quota
:
•
Period and Country s Quantity
9

:
•
•

i

Unit
of
Quantity

! Imports as of
• September 2,
i
1P14*

May - Nov. 19UU
All countries

59,171*

12 months from
Dec. 1, 1 9h3

5,000

Piece

198

Number

13,683

Paws, heads, or
other separated
parts

n

500

Pound

1*87

Piece plates

n

55o

Pound

-

Articles, other
than piece
plates

n

5oo

Unit

61

10R IMMEDIATE RELEASE,
-v ^ ,

J

3

'

3

<i

i^
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 September 2, 19Ui, inclusive, as follows:

Commodity

•

•
•

s

:
s

Established Quota
•
i Period and Country s Quantity

Unit
of
Quantity

î
î
i

Imports as of
September 2,
191*1*

Ihole milk, fresh
or sour

Calendar year

3,000,000

Gallon

3,786

Cream, fresh or
sour

Calendar year

1,$00,000

Gallon

667

Pish, fresh or
frozen, filleted,
etc., cod, had
dock, hake, pol
lock, cusk, and
: rosefish

Calendar year

18,210,658

Pound

17,553,857

90,000,000
60,000,000

Pound
Pound

61*,36!*,837
58,91*2,311

TShite or Irish
potatoes;
certified seed
other

12 months from
Sept. 1$, 19^3

Red cedar shingles

Calendar year

Cuban filler tobacco,
unstemmed or
stemmed(other than
cigarette leaf
tobacco), and scrap
tobacco
Calendar year
Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
' mord than 6% of
total soluble
solids

Calendar year

2,153,981*

Square

22 000,000

Pound
(unstemmed
equivalent)

1,$00,000

Gallon

,

(Over)

979,669

Quota
filled

190,3$0

j

TREASURY DEPARTMENT
Washington

FOR M E D I A T E RELEASE,
Wednesday, September 13. 1944.

Press Service
No. 43-30

T,he Bureau of Customs announced today preliminary figures for imports
of commodities within quota limitations provided for under trade agreement
from the beginning of the quota periods to September 2, 1944, inclusive,
as follows:

Commoditv
w

.
*

Unit
Established Quota
;
of
Period and Country î Quantity :
Quantity

: Imports' as
: September
,*
1944

Whole milk, fresh
or sour

Calendar year

3,000,000

Gallon

3,786

Cream, fresh or
sour

Calendar year

1,500,000

Gallon

667

Fish, fresh or
frozen, filleted,
etc., cod, had
dock, hake, pol
lock, cusk, and
■rosefish
Calendar year

18,210,658'

White or Irish
potatoes;
certified seed
other

12 months from
Sept. 15, 1943
90.000.
60.000.

Red cedar shingles

Calendar year

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

2,153,984

Pound

17,553,857

000
Pound
000
Pound

64,364,837
58,942,311

Square

Pound
(unstemmed
22,000,000 equivalent)

(Over)

979,669

Quota
filled

Unit
:
X
of
: Quantity ; Quantity

Established Quota

Commodity

5 Period and Country
Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
more than 6% of
total soluble
solids
Silver or black
foxes, furs
and articles:
Foxes valued
under $250 each
and uhole furs
•and skins
Tails ■

Calendar year

May - Nov. 1944'
All countries

12 months from
Dec« 1, 1943

Imports as of
September 2,

1,500,000

Gallon

190,350

59,174

Number

13,683

5,000

Piece

198

Paws, heads, or
other separated
. parts

h

500

Pound

487

Piece plates

!!

550

Pound

—

Articles, other
than piece
plates

"

500

Unit

61

Form 1G4GA, which in past years was called the "short form"» bee m e
unnecessary when the tan table was incorporated in Warn 1040 and when most
employed persons became eligible to use their Withholding Receipts for
their returns«
The worksheets for persons filing Declarations of Estimated Tax,
originally intended os singjlified versions of the regular income tax form»
became unnecessary for the reason that in its new style Form 1040 will be
usable both as a return form and as a gulds for estimating tax*
ready for general distribution
Printing of the new Form 1040 has begun» but it will not be/gaocKxskhy
until late this year

Joseph D* Hue mi, Jr*, Commissioner of Internal Revenue, announced today
income tax return,
prepared for use next March,
that a revised and simplified/Fom 1040, is now being px±ntntxMxth»*ra&ttiar

Most employed persons are expected to use their Withholding Receipts for
their returna, but an estimated 20,000,000 taxpayers will need or prefer to
use Form 1040«
Simplification of P o m 1040, Caaslssloner Hunan also stated, has made
possible the elimination of two previous f o m s — «Poma 1040A, which was a
special income tax for» for incomes under #3,000, and tbs estimating worksheets
for a Declaration of Estimated Tax*
The new P o m 1040 is in four pages, as in former years*

However, it now

contains both a tax table for ready determination of the tax of persons with
incomes of less than #0,000, and a confutation method for other taxpayers*
Those who use the tax table will be able to convert the form into a »short form
return» by tearing off half of the form*
The tax table automatically allows its users about 10 per cent of their
income in lieu of deductions for charitable contributions, Interest, taxes,
medical expenses, etc*

This is the same table which will be used by collectors

of internal revenue to figure the tax of persons who use their Withholding
Receipts Instead of Form 1040 for their 1944 returns*
Persons whose Income was less than #3,000 hut who are entitled to
deductions of more than 10 per cent will disregard the table, itemise their
deductions and confute their tax*

Persons whose income was #5,000 or more will

hare a choice of taking a standard deduction of #500 or Itemising their
deductions in detail, but will hare to confute their tax in either case*

r

TREASURY DEPARTMENT
. Bureau of Internal Revenue
Washington 25, D. C.
FOR RELEASE, MORNING- NEWSPAPERS
Friday« September 15. 1044.

Press Service
Uo, 43-31

Joseph D. Nunan, Jr., Commissioner of Internal Revenue, announced today
that a revised and simplified income tax return, Porm 1040, is now Being pre
pared for use next March.
Most employed persons are expected to use their Withholding Receipts for
their returns, hut an estimated 20,000,000 taxpayers will need or prefer to
use Form 1040.
Simplification of Form 1040, Commissioner Nubian also stated, has made
possible the elimination of two previous foims— Form 1040A, which was a special
income tax form for incomes under $3,000, and the estimating worksheets for a
Declaration.of Estimated Tax.
The new Form 1040 is in four pages, as in former years. However, it now
contains both a tax table for ready determination of the tax of persons with
incomes of less than $5,000» and a computation method for other taxpayers. Those
who use the tgx table will be able to convert the form into a “short form return”
by tearing off half of the form.
The tax table automatically allows its users about 10 per cent of their in
come in lieu of deductions for charitable contributions, interest, taxes,
medical expenses, etc. This is the same table which will be used by collectors
of internal revenue to figure the tax of persons who use their Withholding
Receipts instead of Form 1040 for their 1944 returns.
Persons whose income was less than $5,000 but who are entitled to deductions
of more than 10 per cent will disregard the table, itemize their deductions and
compute their tax. Persons whose Income was $5,000 or more will have a choice
of taking a standard deduction of $500 or itemizing their deductions in detail,
but will have to compute their tax in either case.
Form 1040A, which in past years was called the “short form”, became
unnecessary when the tax table was incorporated in Form 1040 and when most
employed persons became eligible to use their Withholding Receipts for their
returns.
The worksheets for persons filing Declarations of Estimated Tax, originally
intended as simplified versions of the regular income tax form, became unneces-sary for the reason that in its new style Form 1040 will be usable both as a
return form and as a guide for estimating tax.
Printing of the new Form 1040 has begun, but it will not be ready for
general distribution until late this year.

0O 0

F ile t h i s r e tu r n w it h C o lle c to r o f I n te r n a l R e v e n u e o n or b e fo r e M a r c h 15, 1945. A n y b a la n c e o f ta x d u e
( ite m 8 , b e lo w ) m u s t b e p a id in f u ll w it h r e tu r n . S e e s e p a r a te I n s t r u c t io n s fo r f illin g o u t r e tu r n .

U. S. INDIVIDUAL INCOME TAX RETURN

F O R M 1040
Treasury Department
Internal Revenue Service

1944

FOR CALENDAR YEAR 1944

or fiscal year beginning_____ _____________________ , 1944, and ending_________ ___________

., 1945

EMPLOYEES.— Instead of this form, you may use your Withholding Receipt, Form W -2 (Rev.), as
your return, if your total income was less than $5,000, consisting wholly of wages shown on With
holding Receipts or of such wages and not more than $100 of other wages, dividends, and interest.

Do not write in these spaces
File
Code
Serial
No.
D istrict

(Cashier’s Stam p)

N A M E .......
(PLEASE P R IN T .

If this return is for a husband and wife, use both first names)

A D D R ESS
(PLEASE PR IN T .

Street and number or rural route)

_____ __________________________ ____________
(City or town, postal zone number)

Social Security
No. (if an y )_ „,

(State)

I .List your own name. If married and your wife (or husband) had no income, or if this is a joint return of husband and wife, list name of your
wife (or husband). List names of other close relatives with 1944 incomes of less than $500 who received more than one-half of their support from you.
If this is a joint return of husband and wife, list dependent relatives of both.

Exemptions

NAM E (Please print)

Relationship

NAM E (Please print)

Your

Relationship

Y our
X

p arn c

X

X

X

X

X

X

X X

—

2. Enter your total wages, salaries, bonuses, commissions, and other compensation received in 1944, BEFORE PAY-ROLL DEDUCTIONS for taxes, dues,
insurance, bonds, etc.

Members of armed forces and persons claiming traveling or reimbursed expenses, see Instruction 2.___________

P R IN T EM PLOYER’S NAM E

W H ERE EM PLOYED (CITY AND STATE)

AMOUNT
$ ___________________

Your
Income

E nter total here
$
(including interest from G overnm ent |
obligations unless wholly exempt from ta x a tio n )_______________________________________________

3.

Enter here the total amount of your dividends and interest

4. If you received any other income, give details on page 3 and enter the total here
5.
Add amounts in items 2, 3, and 4, and enter the total here______ _____
If item 5 includes income of both husband
and wife, show husband’s income here, $___________________; wife’s income here, $_______

How to
Figure
Your Tax

IF YOUR INCOME WAS LESS THAN $5,000.— You may find your tax in the tax table on page 2. This table, which is provided by law, is based on
the same tax rates as are used in the Tax Computation on page 4. The table automatically allows about 10 percent of your total income for charitable
contributions, interest, taxes, casualty losses, medical expenses, and miscellaneous expenses. If your expenditures and losses of these classes amount
to more than 10 percent, it will usually be to your advantage to itemize them and compute your tax on page 4.
IF YOUR INCOME WAS $5,000 OR MORE.— Disregard the tax table and compute your tax on page 4. You may either take a standard deduction
of $500 or itemize your deductions, whichever is to your advantage.
HUSBAND AND WIFE.— If husband and wife file separate returns, and one itemizes deductions, the other must also itemize deductions.

6.
7.
Tax D ue
or
Refund

$

Enter your tax from table on page 2, or from line 15, page 4_
How much have you paid on your 1944 income tax?
(A) By withholding from your w a g es (Attach Withholding Receipts, Form W -2) . $..__ __________
(B) By payments on 1944 Declaration of Estimated Tax. 1---------E nter total here

8. If your tax (item 6) is larger than payments (item 7), enter BALANCE OF TAX DUE here_____
9.If your payments (item 7) are larger than your tax (item 6), enter the OVERPAYMENT here...
Check ( ( /) whether you want this overpayment: Refunded to you Q]> or Credited on your 1945 estimated tax Q

[If you filed a return for a prior year, what was the latest year?

Is your wife (or husband) making a separate return for 1944?___________ _
If “ Yes,” write below:
( “Yes” or “ No” )
N am e of wife (or h u sb a n d )_________ _____________ __ _____ ___________

ITo which Collector’s office was it » en t?_____________________
[lo which Collector’s office did you pay
amount claimed in item 7 (B ), above?_________________

Collector’s office to which s e n t _________________________________________

I declare under th e penalties of perjury th a t this return (including any accompanying schedules and statem ents) has been examined by me and to the best of
imy knowledge and belief is a true-, correct, and complete return.
(Signature of person

than taxpayer o. agent) preparing return)
(N am e of firm or employer, if any)

(Date)

(Signature of taxpayer)

(D ate)

(If this is a joint return of husband and wife, it m ust be signed by both)
(S E E T A X T A B L E B E L O W )
1 8 -4 1 0 0 2 -1

Page 3

D o n o t u s e t h i s p a g e if y o u r in c o m e is w h o lly fr o m s a la r ie s , w a g e s , d iv id e n d s , a n d in t e r e s t
S c h e d u le A .— IN C O M E F R O M A N N U IT IE S O R P E N S IO N S
1. Cost of annuity (total am ount you paid in) $

4. T otal am ount received this y e a r . ___ $

2. Am ount received tax-free in prior years.

5. Excess, if any, of line 4 over line 3___

3. Rem ainder of your cost (line 1 less line

6. E nter line 5, or 3 percent of line 1, whichever is greater. . . .

2)----------------------------------------------------- $ ____________

S c h e d u le B .— IN C O M E F R O M R E N T S A N D R O Y A L T IE S
2. Amount of
rent or royalty

1. Kind of property

N et profit (or loss) (col. 2 less sum
of cols. 3, 4, and 5)
. .

3. Depreciation or depletion
(explain in Schedule F)

4. Repairs (explain in
Schedule G)

5. Other expenses (itemize
in Schedule G)

$ ______________

$ _______________

$

$ ______________

$ ______________

$ ______________

$ ______________

$ ______________

S c h e d u le C .— P R O F IT (O R L O SS ) F R O M B U S IN E S S O R P R O F E S S IO N .
(S tate (1) natu re of business

(Farmers should obtain Form 1040F)

(2) business name

1. T otal receipts___________________
COST O F GOODS SOLD

O T H E R BUSINESS D ED U CTIO N S

(To be used where inventories are
an income-determining factor)
(E n ter the letters "C ,” or “C or M ," on line
2 and 8 if inventories are valued a t either
cost, or cost or m arket whichever is lower)

11. Salaries and wages not included as “Labor”
12. Interest on business indebtedness..,_____
13. Taxes on business and business property..

2. Inventory a t beginning of year.. $..

14. Losses (explain in Schedule G )_________

3. Merchandise bought for sale_______

15. Bad debts arising from sales or services...

4. Labor________________ __________

16. Depreciation, obsolescence and depletion
(explain in Schedule F )______________

5. M aterial and supplies____________
6. O thercosts(explaininScheduleG )__
7.

T otal of lines 2 to 6_______ $_.

8. Less inventory a t end of year._____
9. N et cost of goods sold (line 7 less
line 8 )_____ __________ ,___ $_

17. R ent, repairs, and other expenses (explain
in Schedule G )_____ 4________________
18. Amortization of emergency facilities
(attach statem ent)_______________ . . . .
19. N et operating loss deduction (attach
statem ent)...:________________________

20.

T otal of lines 11 to 19.

21.

T otal of lines 9 and 20___________ __$

10. Gross profit (line 1 less line 9).__ $..
22. N et profit (or loss) (line 1 less line 21).

S c h e d u le D .— G A IN S A N D L O SS E S F R O M SA L E S O R E X C H A N G E S O F C A P IT A L A S S E T S , E T C .
1.

N et gain (or loss) from sale or exchange of capital assets (from separate Schedule D )_i ______________ ___________________

2.

N et gain (or loss) from sale or exchange of property other th an capital assets (from separate Schedule D )____________________

S c h e d u le E .— IN C O M E F R O M P A R T N E R S H IP S , E ST A T E S A N D T R U S T S , A N D O T H E R SO U R C E S
Nam e and address of partnership, syndicate, etc____________________________ ____________________Amount, $__________________
Nam e and address of estate or t r u s t ______________________________ _____________________________ Amount,
O ther sources (state n a tu re )______________________________________________________ ____________ Am ount,
T o ta l ______ __________ __________________ *_____________________ .____________________ _

T o ta l in c o m e fr o m ab ove so u rce s

(E n te r a s i t e m

4,

p a g e 1) . ___ ________ _______ $

Schedule F.—EXPLANATION OF DEDUCTION FOR DEPRECIATION CLAIMED IN SCHEDULES B AND C
1. K ind of property
(If buildings, state material of which
constructed)

7. Estimated 8. Estimated
3. Cost or other basis
remaining
2. D ate (D o not include land 4. Assets fully depre 5. Depreciation al 6. Remaining cost or life used in
ciated
in
use
a
t
end
lowed
(or
allowable)
othèr
basis
to
be
life from
accumulat
or
other
nondepre
acquired
of year
in prior years
beginning
ing depre
recovered
ciable property)
ciation
of year

9. Depreciation
allowable this
year

Schedule G.—EXPLANATION OF COLUMNS 4 AND 5 OF SCHEDULE B, AND LINES 6, 14, AND 17 OF SCHEDULE C
1. Column or
Line No.

2. Explanation

3. Amount

t. Column or
Line No.

2. Explanation

3. Amount

D o n o t it e m iz e d e d u c t io n s if—(1) Y o u d e te r m in e y o u r ta x fr o m t h e ta x ta b le o n p a £ e 7 or
(2) Y o u r t o t a l in c o m e is $5,000 o r m o r e a n d y o u c la im t h e $500 sta n d a r d dedl?c *:I0 i1,
If h u s b a n d a n d w ife liv in g to g e th e r a t e n d o f y e a r file s e p a r a te r e tu r n s a n d o n e ^ te m iz e s d e d u c tio n s ,
t h e o th e r m u s t file h i s or h e r r e tu r n o n F o r m 1040, a n d m u s t a ls o it e m iz e d e o P * 110118,
___ —

Page 4

DEDUC TIO NS
Describe deductions and state to whom paid.

Amount

If more space is needed, list deductions on separate sheet of paper and attach to this return

$ _____

Allowable Contributions (not in excess of 15 percent of item 5, page 1).

T otal Interest-

T otal T axes.
$ _________

T otal Allowable Losses (not compensated by insurance or otherw ise).

N et Expenses (not compensated by insurance or otherw ise)----- '------------- ~
E nter 5 percent of item 5, page 1, and su b tract from N et Expenses_________
Allowable Medical and D ental Expenses.

See Instruction for lim itation.

T otal Miscellaneous D eductions.
TOTAL D E D U C T IO N S.

T A X CO M PU TA TIO N—FO R PERSO N S NOT U SIN G T A X TABLE ON PAG E 2
$..........................
2. E n ter D ED U CTIO N S (if deductions are itemized above, enter the total of such deductions; if adjusted gross income (line 1,
above) is $5 000 or more and deductions are not itemized enter the standard deduction of $500)
______ _
^ UUULIaLL
SiiKtrarf' Imp
7 1X
from
is
Income « .--.— — _— - —
__________ $ ____________
UllC m
Ulll imp
1IUC 1I* •P'nt’pr
Lj UICI thp
UIC difference bere.
v« This
*
10 vour
J v/w* *N et siiwimv
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pvIoUll
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lino At frnm linA ^ F n f ai* flio /1iiFAl*APrA liAfA TKlS 1ft VAlir SlirtflT ^^Pt TtICOIYIP

$

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_______

$
$

11. Add the figures on lines 6 and 10, and enter the total here. (If alternative tax com putation is made on separate Schedule D,
enter here tax from line 15 of Schedule D ) ------------------------------ -------------------------------------------------------------------------------------- $ -----------------If vou used the $500 standard deduction in line 2, disregard lines 12,13, & 14, and copy on line 15 the same figure you entered on line 11
17 Tonfar
karoc only
amr ineunte
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TTnfar ho«*«» antr inrAma fav nsnrl af «nnrr*p nn taY-frPP rnVPTiant hoTin UltPrPSt

15. S ubtract line 14 from line 11.

E nter the difference here and in item 6, page 1.

$

• . .. .

This is your tax ----------------------- — —.................... $

U. s . GOVERNMENT PRINTING OFFICE

16— 41002—1

Page 2

If y o u u s e t h i s table* te a r off t h i s p a g e a n d file o n ly p a g e s 1 a n d 3

T A X TABLE—FO R INCOM ES U ND ER $5,000
Read down .ft?-shaded columns be>iw until you find the line covering the total income you entered in item 5, page 1. Then read across
a
to the column headed
by the number corresponding
ftl®. ‘umber of persons listed in item 1, page 1. Enter the tax you find there in item 6, page 1
Husband and wife see Special Rule at end of table.

If total income in item
5, pag<s i , « ” B at less
than

At least

And the number of persons listed ia If total income in item
M j g & i i i ; page 1. « S —
5, page !, is—I
g
g
p
!
2
3
t
4
B ut less 1
At least
than
¥
0
1
»
tax
is—
'

$550
575
600

$0
1
12
17

O

625
650
675
700

$0
0
1
2
2

27

3
4

3
4

3
4

3
4

TOO
785'
760
775

725
750
775
800

32
38
43
48

4
5

4
5

4
5

4
5

6
6

6
6

$00
8$ 6

825'
850
875

53
58
64
69

7

7

8
8

8
8

$0
550
575

000
w o®

050
• . T

050
875

000

000

025
050
075

025
050
075

1,000

1,000

1 ,0 2 5
1 ,0 5 0
1 ,0 7 5

1 ,0 0 5
1 ,0 5 0
1 ,0 7 5

7

22

74
79
84
89
95

100
Î0 5

6
6
7

8
8

6
6
n 7

8
8

9

9

9

9

10
10
11
12
12

10
10
11
12
12

10
10
11
12
12

10
10
11
12
12

13
14
14

13
14
14

13
14
14

13
14
14

15
16
16
17

15
16
16
17

15
16
16
17

18
18
19

18
18
19

18
18
19

20
20
21
22
22

20
20
21
22
22

i

2

i

4

1
*

5

1 6 1 7 I

8

g |l g

Your tax is—*

2 ,3 5 0
2 ,3 7 5

I« 2 , 3 2 5
2 ,3 5 0
2*375
2 ,4 0 0

$364
369
374
379

$264
269
274
279

$164
169
174
179

$64
69
74
79

$47
48
49
49

$47
48
49
49

$47
48
49
49

$47
48
49
49

$47
48
49
49

2 ,4 0 0
2*425
2 ,4 5 0
2 ,4 7 5

2 ,4 2 5
2*450
2 ,4 7 5
2 ,5 0 0

384
390
395
400

284
290
295
300

184
190
195
200

84
90
95
100

50
51
51
52

50
51
51
52

50
51
51
52

50
51
51
52

50
51
51
52

2*500
2 ,5 2 5
2 ,5 5 0
2 ,5 7 5

2*525
2 ,5 5 0
2 ,5 7 5
2 ,0 0 0

405
410
415
421

305
310
315
321

205
210
2 Ì5
221

105
110
115
121

53
54
54
55

53
54
54
55

53
54
54
55

53
54
54
55

53
54
54
55

2 ,0 0 0
2*625
2 ,6 5 0
2 ,6 7 5

2 ,0 2 5
2 ,6 5 0
2 ,0 7 6
2 ,7 0 0

426
431
436
441

326
331
336
341

226
231
236
241

126
131
136
141

56
56
57
58

56
56
57
58

56
56
57
58

56
56
57
58

56
56
57
58

2*700
2 ,7 2 5
v:-2*750;
2 ,7 7 5

2 ,7 2 5
2 ,7 5 0
2 ,7 7 5
2*800

446
452
457
462

346
352
357
362

246
252
257
262

146
152
157
162

58
59
60
62

58
59
60
60

58
69
60
60

58
59
60
60

58
59
60
60

$ 2 ,3 0 0

$0 $0 $0
0 0 0
1 1 1
2 2 2
2 2 2

And the number of persons listed h item 1, page

2 ,8 0 0
2 ,8 2 5
2 ,8 5 0
2*875
2 ,9 0 0
i 2 ,9 2 5
2 ,9 5 0
2 ,9 7 5

2 ,8 2 5
2 ,8 5 0
2 ,8 7 5
2 ,9 0 0

468
473
479
485

367
372
378
383

267
272
278
283

167
172
178
183

67
72
78
83

61
62
62
63

61
62
62
63

61
62
62
63

61
62
62
63

2 ,9 2 5
2 ,9 5 0
2 ,9 7 5
3 ,0 0 0

490
496
502
507

388
393
398
403

288
293
298
303

188
193
198
203

88
93
98
103

64
64
65
66

64
64
65
66

64
64
65
66

64
64
65
66

20
20
21
22
22

3 ,0 0 0
3 ,0 5 0
3 ,1 0 0
: 3 ,1 5 0

3 ,0 5 0
3 ,1 0 0
3 ,1 5 0
3 ,2 0 0

516
527
538
549

411
422
432
442

311
322
332
342

211
222
232
242

111
122
132
142

67
68
69
71

67
68
69
71

67
68
69
71

67
68
69
71

i
!
:
;

3 ,2 0 0
3 ,2 5 0
3 ,3 0 0
3 ,3 5 0

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

561
572
583
594

453
463
473
484

253
263
273
284

153
163
173
184

72
73
75
84

72
73
75
76

72
73
75
76

72
73
75
76

23
24
24
25

23
24
24
25

;
5
1
|

3 ,4 0 0
3 ,4 5 0
3 ,5 0 0
: 3 ,5 5 0

. 3 ,4 5 0
3 ,5 0 0
3 ,5 5 0
3 ,6 0 0

606
617
628
630

496
507
518
529

353
363
373
384
394
404
415
425

294
304
315
325

194
204
215
225

94
104
115
125

77
79
80
82

77
79
80
82

77
79
80
82

1,100

110

1 ,1 2 5
1 ,1 5 0
1 ,1 7 5

115

15

120

20

1,200

126
131

26
31

1 ,2 2 5
1 ,2 5 0
1 ,2 7 5

1 ,2 2 5
1 ,2 5 0
1 ,2 7 5
1 ,3 0 0

136
141
146
152

36
41
46
52

1 ,3 0 0
1 ,3 2 5
1 ,3 5 0
1*375

1 ,3 2 5
1 ,3 5 0
1 ,3 7 5

1,100

157
162
167
172

57
62
67
72

1,100
1 ,4 2 5
1 ,1 5 0
1 ,1 7 5

1 ,4 2 5
1 ,1 5 0
1*175
1 ,5 0 0

177
183
188
193

77
83
93

23
24
24
25

1 ,5 0 0
L 6 2 5 :?
1 ,5 5 0
1 ,5 7 6

1 ,5 2 5 *
1 ,6 5 0
1 ,5 7 5
1 ,6 0 0

198
203
208
214

98
103
108
114

26
27
27
28

26
27
27
28

26
27
27
28

\

3*000
i 3 ,6 5 0
i 3 ,7 0 0
! 3 ,7 5 0

3 ,6 5 0
3 .7 0 0
3 ,7 5 0
3 ,8 0 0

651
662
673
684

541
552
563
574

435
446
456
466

335
346
356
366

235
246
256
266

135
146
156
166

83
84
86
87

83
84
86
87

83
84
86
87

1 ,6 0 0
1 ,6 2 5
1 ,6 5 0
1 ,6 7 5

1 ,6 2 5
1 ,6 5 0
1 ,6 7 5
1 ,7 0 0

219
224
229
234

119
124
129
134

29
29
30
34

29
29
30
31

29
29
30
31

3 ,8 5 0
3,ïMM>
3 ,9 5 0
4 ,0 0 0

696
707
718
729

586
597
608
619

477
487
498
509

377
387
397
408

277
287
297
308

177
187
197
208

88
90
97
108

88
90
91
92

88
90
91
92

1 ,7 0 0
1 ,7 2 6
1 ,7 5 0
1 ,7 7 6

1 ,7 2 5
1 ,7 5 0
1 ,7 7 5
1 ,8 0 0

239
245
250
255

139
145
150
155

39
45
50
55

31
32
33
33

31
32
33
33

3 ,8 0 0
? 3 .8 5 0
f 3 ,9 0 0
i 0,000 :
Î 4,000
! 4 ,0 5 0
1 4*100
1 4 ,1 5 0

741
4 ,0 5 0
752
4 ,1 0 0
4 , 1 5 0 1 763
774
4 ,2 0 0

631
642
653
664

521
532
543
554

418
429
439
449

318
329
339
349

218
229
239
249

118
129
139
149

94
95
96
98

94
95
96
98

1*825
1 ,8 5 0
1 ,8 5 0
1 ,8 7 6
1 ,8 7 5 : 1 , 9 0 0

260
265
271
276

160
165
171
176

60
65
71
76

34
35
35
36

34
35
35
36

1
Ü
i:
1

676
687
698
709

566
577
588
599

460
470
480
491

360
370
380
391

260
270
280
291

160
170
180
191

99
100
102
103

99
100
102
103

181
186
191
196

81

37
37
38
39

37
37
38
39

I 4 ,4 0 0
| 4 ,4 5 0
1 4 ,5 0 0
| 4 ,5 5 0

721
732
743
754

611
622
633
644

501
512
523
534

401
411
422
432

301
311
322
332

201
211
222
232

104
111
122
132

104
106
107
109

2 ,6 2 5
2*060
2 ,0 7 5

281
286
291
2,000 i 296
2 , 0 2 5 1 302
307
2*050
312
2 ,0 7 5
2,100 : 317

4 * 2 6 0 ! 786
797
4 ,3 0 0
808
4 ,« S 0
819
4 ,4 0 0
1 4 , 4 5 0 ! 831
4 , 5 0 0 i 842
853
¿ 4 ,5 5 0
4 , 0 0 0 1 864

39
40
41
41

39
40
41
41

1
ï
1
1

4 , 0 0 0 i s 4 * 6 6 0 .1
I , OSO . .. 4 , 7 0 0 ?
4 , 7 0 0 4& ,75© É
4*750
4 ,8 0 0 ,

876
887
898
909

766
777
788
799

656
667
678
689

546
557
568
579

442
453
463
473

342
353
363
373

242
253
263
273

142
153
163
173

110
111
113
114

2,100

2 ,1 2 5

1
g
j
1

4 ,8 0 0
4 ,8 5 0
4 ,9 0 0
4 ,9 5 0

921
932
943
954

811
822
833
844

701
712
723
734

591
602
613
624

484
494
504
515

384
394
404
415

284
294
304
315

184
194
204
215

115
117
118
119

1,100
1 ,1 2 5
1 ,1 5 0
1*17%

1,200

1 ,8 0 0
1 ,8 2 5

1,000
1 ,0 2 5
1 ,0 6 0
1 ,0 7 6

2*000

:

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

322
2 , 1 2 5 S f g ü I 327
2 ,1 5 0
333
■ 2 ,1 7 $
2 ,1 7 5 i 2,200 1 338

2,200

2 ,2 2 5
2 ,2 2 6 : 2 , 2 5 0
2 ,2 5 0
2*273
2 ,2 7 5
2 ,3 0 9

343
348
353
359

88

8 6

91
96

202

102

207

107

212

112

217

117

222

122

227
233
238

127
133
138

42
43
43
44

42
43
43
44

243
248
253
259

143
148
153
159

45
48
53
59

45
45
46
47

1

1
ï

i
1

4 ,2 t> 0
4 ,2 5 0
4 ,3 0 0
4 ,3 5 0

•.•.4*850":
:i-4 ,9 0 0 i
•4*950' ,
6,000 :

SPECIAL. RULE FOR HUSBAND AND WIFE
If item 5, page 1, includes the incomes of both husband and wife,
reduce the tax you found in the table by 3 percent of the smaller
of the two incomes but not by more than $15. For an example,
see last paragraph of page 2 of Instructions.

INSTRUCTIONS FOR FORM 1040, U. S. INDIVIDUAL INCOME TAX RETURN 1 » 4 4
GENERAL INSTRUCTIONS
These instructions will help you to understand and (ill o ut Form 1040, the
jU. S. Individual Income Tax R eturn, for 1944. T hey give the information
Enost commonly needed by taxpayers. You m ay obtain additional inf or¡[nation from the collector of internal revenue for your district or from any of
Ms branch offices.

P u r p o se o f R e tu r n
Under the pay-as-you-go system of income tax collection, most individuals
Lay all or a substantial p art of their income tax during the year in which they
deceive their income. The tax is withheld from their wages or paid in quarterly
Installments as estim ated tax, o r both. However, these paym ents do not
Exactly equal th e actual tax liability. I t is necessary fqr each taxpayer to
pie a return a t th e end of th e year showing his actual tax liability, so th a t
to y additional am ount due m ay be collected or any overpaym ent m ay be
Refunded.

F o r m o f R e tu r n
There are three methods of m aking your return:
1 1. Withholding Receipt.—You m ay use your Withholding Receipt, Form
{¡F-2 (Rev.), as your return, if your total income was less than $5,000, consist
ing wholly of wages shown on W ithholding Receipts or of such wages and not
ore than $100 of other wages, dividends, and interest.
I 2. Short-form Return.—You m ay m ake a Short-form R eturn on Form 1040
If your income was less th an $5,000, by using the tax table on the form and
tearing off pages 2 and 4. If your income was wholly from salaries, wages.
Bividends, and interest, you need fill o ut only page I. If you had other
income, you m ust also use page 3.
3. Long-form Return.—You m ust make a Long-form Return on Form 1040
jif your income was $5,000 or more or if you claim deductions am ounting to
inore than 10 percent of your income. In either of these cases you m ust use
page 4 instead of the tax table on page 2.
If you use a W ithholding Receipt as your return, or m ake a Short-form
'eturn on Form 1040, your tax is figured from a ta x table provided by law
fcvhich automatically allows abo u t 10 percent of your total income for charitable
contributions, interest, taxes, casualty losses, medical expenses, and miscella
neous expenses. Therefore, if you use either of those m ethods of making a
return, you should not deduct an y such expenses on your return. If you make
[a Long-form R eturn on Form 1040 and your income is $5,000 or more, you may
Either take a standard deduction of $500 for such expenses or claim them in
etail, whichever is to your advantage.
Other Forms.—Form s 1040B and 1040NB are for use by nonresident aliens
jknd Form 1041 by fiduciaries of estates or trusts.

W h o M u s t F ile
A return must be filed by every citizen or resident of the United States
{(including a minor) who had $500 or more gross income in 1944.
In deciding whether you m ust file a return, you should exclude from your
Income any items which are wholly exempt from tax, The principal wholly
exempt items are listed on this page under the heading “Exclusions from
¡Gross Income.” For instance, th e first $1,500 of active-service pay received
each year by a member of th e arm ed forces is exempt from tax. Consequently,
post members of th e arm ed forces are n ot required to file returns.
Joint Return.—A husband an d wife m ay m ake a joint return even though
¡one has no income. In a jo int return th e aggregate income, deductions, and
pedits are treated as though husband and wife were one person. Exemptions
{are allowed for both. A jo int return m u st be signed by both husband and wife.
Income under $500.— If you h ad income of less th an $500, any p art of which
pas from wages subject to withholding, you should file a return in order to
get a refund of tax withheld. If you are married and either husband or wife
H i income of less th an $500, you should file a joint return in order to gèt the
lull benefit of exemptions.

W h e n t o F ile
I You must file your return on or before M arch 15, 1945, unless you have
| established a fiscal year which is different from the calendar year. If you have
¡such a fiscal year, you m ust file by the fifteenth day of the third m ondi after the
¡close of your year.
I Members o f the Arm ed Forces.— If you are in the armed forces and, on the
¡filing date, are on sea d u ty or outside the continental U nited States, you
¡may postpone filing your return until the fifteenth day of the fourth month
¡after you come back to the United States, b u t not beyond the fifteenth day of
[the third month after th e end of the war.
Civilians Outside the U nited Stales.— If you are a civilian and are outside
the Americas for’more th an 90 days, you m ay postpone filing your return
[until 90 days after you come back to the Americas b u t not beyond the
[fifteenth day of the third m onth after the end of the 'frar. If you are outside
the United States b u t w ithin the Americas, you m ay defer filing your rejtum for 3 months after th e regular filing d a te b ut will have to pay interest
{on your unpaid tax a t the rate of 6 percent per year.

The normal tax is a t a flat rate of 3 percent. The surtax is a t graduated
rates ranging from 20 to 91 percent.
For normal tax, you are allowed a flat exemption of $500 if your return
includes the income of only one person. In a joint return of husband and wife
the combined norm al-tax exemption is ,$1,000 if each had income of $500 or
more; b ut if the income of either was less than $500, the combined norm al-tax
exemption is $500 plus the actual am ount of the smaller of the two incomes.
For surtax, you are allowed (subject to the restrictions stated under the
heading “Your Exem ptions” on page 2 of these instructions) an exemption of
$500 for yourself, $500 for your wife, and $500 for each dependent relative.

E x c lu s io n s F r o m G r o s s I n c o m e
Income from any source whatsoever is subject to income tax unless excluded
by some specific provision of law. The exclusions are described in sections
22 (b) and 116 of the Internal Revenue Code. The principal exclusions are
listed below.
1. A rm ed Forces, etc.—Members and veterans of the armed forces and their
families should exclude from their income:
(a) T he first $1,500 of annual pay for active service.
(¿) M ustering-out pay.
(c) Contributions by the Governm ent to m onthly family allowances. ,
(</) Pensions and disability compensation to war veterans and their
families.
(e) D isability retirem ent pay (b u t other retirem ent pay is taxable).
( / ) Interest on adjusted-service bonds.
2. Social Security Benefits.—Exclude benefit paym ents received from thp
Federal Governm ent or from a S tate under the Federal social security program.
3. Sickness and In ju ry Benefits.—Exclude am ounts received as compensa
tion for bodily injury or sickness, whether in the form of health and accident
insurance, workmen’s compensation, or damages. However, reimbursements
on account of medical and dental expenses which were claimed as a deduction
in a prior year should be reported as income up to the am ount of such deduc
tion.
4. ‘ Tax-exem pt Interest.—Exclude interest on obligations of a S tate or
political subdivision; interest on obligations of the United S tates issued prior
to M arch 1,1941, if made wholly exempt from taxation by the Act authorizing
'their issuance; and interest on not exceeding $5,000 of United S tates savings
bonds (a t cost) and T reasury bonds (at face value) which were issued before
M arch 1,1941.
5. G(/i!s.—All bona fide gifts should be excluded, b u t so-called- “gifts”
received a s compensation for personal services rendered are taxable.
6. Bequests, Inheritances, etc.—Property acquired by bequest, devise, or in
heritance should be excluded, b u t any income earned by the property is
taxable.
7. L ife Insurance.—Proceeds payable on account of death of the insured
should be excluded, b ut if the proceeds are held by the insurer .under an agree
m ent to pay interest, the interest is taxable. Paym ents on a life or endow
m ent policy (other th an annuity paym ents) during the lifetime of th e insured
should be excluded until they equal the am o u n t paid for the policy; the
remaining paym ents are taxable. ‘
8. Recoveries o f B ad Debts, etc.—Recoveries of bad debts, of prior-year taxes,
or of paym ents on account of tax delinquencies, should be excluded if deduc
tions for these items did n ot reduce the income tax liability of the taxpayer for
any prior year.

C a sh or A c c r u a l B a sis o f R e p o r tin g I n c o m e
Your return m ust be on the "cash basis”— which means on the basis of cash
receipts and paym ents— unless you keep accounts on th e “accrual basis.”
However, cash receipts include the full am ount of your wages or salary even
though a p a rt was deducted for taxes, war bonds, union dues, etc. T hey also
include uncashed salary or dividend checks, bank interest credited to your
account, m atured bond coupons, and sim ilar items which you can immediately
turn into cash. If you keep accdlmts on the accrual basis, your retu rn must
be made accordingly.

F arm ers
Farm ing is regarded as a business and the instructions applicable to re
turns of farmers m ay be found on page 3 under “Schedule C.— Business or
Profession.”

P e n a lt ie s
Severe penalties are provided by law for failure to file a required return, for
filing late, and for filing a false or fraudulent return.'

I n fo r m a tio n a t S o u r c e
Every person who m ade paym ents of salary, wages, interest, rents, com
missions, or other fixed or determ inable income of $500 or more during the
calendar year 1944 to an individual, partnership, or fiduciary, m ust m ake a
return on Form s 1096 and 1099. This requirem ent does not apply to salary
or wages reported on a W ithholding Receipt (Form W -2).

W here t o F ile Y o u r R e tu r n a n d P a y Y o u r T ax
You should take or mail your return to th è collector of internal revenue
[for the district in which you live or have your place of business. If you have
no legal residence or place of business in the U nited States, file with the Col[ fe ° r,o O n te m d Revenue, Baltimore 2, Maryland.
I I f your return on Forfti 1040 shows a balance o f tax due, you should pay it in
.full with your return. Checks or money orders should be m ade payable to
[ Collector of Internal Revenue.”

I n c o m e T a x R a te s a n d E x e m p tio n s
The income taxincludes a “normal tax” and a “surtax.” Both are figured
33 percentages of your income, b ut with different rates and exemptions.

HOW TO FILL OUT FORM 1040
In preparing Form 1040, you are required to fill out only those lines and
pages which apply to your particular circumstances. Thus, if your income
is all from Wages or salary, you should disregard item s 3 and 4 on page 1
and the whole of page 3. Likewise, if you use the tax table on page"2, you
should disregard all of page 4.
Specific instructions for filling out particular lines and schedules on the
form are given in the following pages. The specific instructions have been
so arranged th a t they m ay be placed alongside the corresponding item s on
th e form, for easy reference.
1 6 -4 0 9 0 0 -1

4*agei

INSTRUCTIONS FOR PAGE 1 OF FORM 1040
Place alongside page 1 of Form 1040 for easy reference
Your E xem ptions
1.
List th e names called for in item 1, in order to get credit for your exemp
tions.
If you were married a t the end of the year and you and your wife make a
jo int return, you m ay list your wife’s name. In case you make a separate
return, you m ay list your wife’s nam e only if she had no income and did n ot
receive her chief support from another person closely related to her. If your
wife died during th e year, you m ay list her nam e if she had no income arid did
not receive her chief support from another person closely related to her. If
you were divorced a t th e end of the year, do not include your former wife.
List th e names of other close relatives with 1944 incomes of less th an $500
who received more th an one-half of their support from you.

“ Close relative” means: Your son, daughter, or a descendant of either; your
stepson, stepdaughter, son-in-law, daughter-in-law; your father, mother, or
ancestor of either; your stepfather, stepmother, father-in-law, or mother-inlaw; your brother, sister, stepbrother, stepsister, half brother, half sister,
brother-in-law, or sister-in-law; your Uncle, aunt, nephew, or niece. Do hot
include an un d e, aunt, nephew, or niece if related to you only by marriage.
The above relationships apply to a legally adopted child the sam e as though
he or she were a child by blood. Do n ot claim a citizen of a foreign country
as a dependent unless he or she was a resident of die U nited S tates, Canada, or
Mexico. D o n ot claim an exemption for any relative who files a joint return
with another person.

Your Incom e
2.
W a g e s a n d S a l a r i e s . — If this return includes wages of both hus
band and wife, list wages and employers of each. Do not include earnings of
anyone else.
Members of th e arm ed forces should exclude mustering-out paym ehts and
th e first $1,500 of active service pay.
If, in connection with your employment, you claim deductions for travelirig
or reimbursed expenses, itemize actual expenses on a separate sheet of paper,
subtract them from your total compensation and allowances, and enter the

balance in item 2. A ttach the itemized list securely to your return.
You m ust also include any “gift” which is really compensation for services,
If you receive paym ent in any form other th an money, such as merchandise,
room, or board, you m ust include the fair m arket Value in item 2> However,
if it is necessary for you to live o n your employer’s premises in order to fulfill
your duties, do n ot include the value of the board and room furnished you. A
minister of the gospel should not include the rental value of a dwelling fur
nished him as a p art of his compensation.
"s

3.
D i v i d e n d s a n d I n t e r e s t . — E nter the total of any dividends or
interest unless wholly exempt from tax. See General Instructions under
“ Exclusions from Gross Income.” Allowance for any partial exemption or
amortizable bond prem ium is m ade in the tax table and in the standard deduc
tion of $500. If you do n o t use th e tax table or the standard deduction, these
items m ay be deducted in the tax com putation on page 4 (line 7). The

increase in value of a W ar Bond (Series E or F ) or United States saving!
bond (Series A, B, C, or D ) need not be reported until the bond is cashed.
However, you m ay a t any tim e adopt th e practice of reporting each year the
annual increase in value; b ut if you do so, you m ust report in the first year thè
entire increase to date and m ust continue to report th e annual increase each
year thereafter.

4.
O t h e r I n c o m e . — If you had any income from annuities, rents, royalties, a business or profession, farming, transactions in securities or other property
partnerships, estates and trusts, or other sources, explain on page 3 and enter the total in item 4, page 1.
*

Tax D ue or R efund
6.

Y o u r T a x . — This is your total tax liability before taking credit for tax withheld from your wages and paym ents on your 1944 Declaration of Estimated Tax.

7.
P a y m e n t s . — (A) E nter the am ount of income tax withheld from
your wages by your employer. A ttach to your return originals of receipts for
tax withheld (Form W -2 or Form W -2, Rev.). If you have lost any receipt,
obtain a copy from your employer. If you cannot furnish a receipt or Copy,
attach a statem ent to your return showing am ount withheld by your employer.
(B) If you filed a 1944 Declaration of E stim ated Tax (Form 1040-ES),
- enter the to tal am ount of estim ated tax paid, including any prior year’s credit

which you applied against your estim ated tax. You Can determine the
am ount paid or credited from the retained copy of your declaration, your
canceled checks, or other personal records.
If husband and wife filed a joint declaration b ut are now filing separate
returns, they m ay divide the paym ents of estim ated tax between them in any
proportion they desire.

8.
B a l a n c e o f T a x D u e . —-Any tax owed in excess of payments must be shown in item 8.This amount m ust he paid in fu ll at the time your return isfilei.
If paym ents exceed tax, leave item 8 blank.
9.
R e f u n d o r C r e d i t . — If you have overpaid your tax and ask for a
refund in item 9, any refund found duerwill be m ade as prom ptly as possible
without any further action on your part. Refunds will bear interest a t 6
percent from .March 15, 1945.

Do n ot ask th a t any overpaym ent on this return be credited on your 1945
estim ated tax unless you expect to file a Declaration of Estim kted Tax (Form
1040-ES) showing an estim ated tax against which the overpayment can be
applied.

Signature
You m ust sign your return. If husband and wife are filing a joint return, both m ust sign. If you cannot sign because you are ill or out of the United States,
an authorized agent m ay sign for you, b ut the agent must attach a power of attorney on Form 935 to show th a t he is empowered to sign for you.

INSTRUCTIONS FOR TAX TABLE ON PAGE 2 OF FORM 1040
P u r p o s e o f T a b l e . — The table is a short-cut method of finding your
income tax. I t is provided by law and saves you the trouble of itemizing
deductions an d computing your tax on page 4 of the return. The table
allows for: (a) Your norm al-tax exemption of $500; (b) your surtax exemp
tions—$500 for each person listed in item 1, page 1; and (c) charitable con
tributions, interest, taxes, etc., approxim ating 10 percent of your income.
A r r a n g e m e n t o f T a b l e . — The table contains income columns and
exemption columns. T he income columns are headed by the words “A t least—
B u t less th an .” The exemption columns are headed by the num bers 1, 2, 3,
4, etc.
H o w t o F i n d Y o u r . T a x .— Read down the income columns until you
find the line th a t fits th e income you reported in item 5 on page 1. T hen read
across th a t line until you come to the exemption column which is headed by a
num ber corresponding to the num ber of persons you listed in item 1 on page 1.
T h e figure you find there is your tax. EX A M PL E.— If your income was

$2,245 and you were entitled to three exemptions, you would find your tax op
posite the income line “A t least $2,225 B ut less than $2,250.” You would read
over to the column headed by the figure “3” and thus find your tax was $148.
I f B o t h H u s b a n d a n d W i f e H a v e I n c o m e . — If you are filing1
joint return containing the separate incomes of both husband and wife (see
entries under item 5, page 1), subtract from the tax you find in the table an
am ount equal to 3 percent of the smaller of the two incorries, but do not subtract
more than $15. EX A M PL E.— If your return includes $3,000 income of the
husband and $300 income of the wife, or a total of $3,300, you will find your tax
opposite the income line “A t least $3,300 B ut less th an $3,350,” If you nave
no dependents, you will read over to the column headed by th e figure a
and find a tax figure of $473. B ut since the table allows only one norioaUiXexemption and your return includes the incomes of boffi husband and wife, you
are allowed to subtract an am ount equal to 3 percent of the smaller in c o m e .
Three percent of $300 is $9, reducing die joint tax in this example to $464.
|

16 — 40990-1

¡¡Jig
I
.

Pagei

INSTRUCTIONS FOR PAGE 3 OF FORM 1040

p— 5

Place alongside page 3 of Form 1040 for easy reference
¡gite these «n«tmrtWin* relate to spedai types of incornò, they may be disregarded by persons whose income is all from salaries, wages, dividends, and interest

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Schedule À.—A n n u ities and Pensions

I If you received a pension or annuity which you bought or to which you
Ltribiited, you are entitled to recover yoUr cost tax-free. However, an
taount equal to 3 percent of your total cost m ust be reported as income each
far until you have recovered your total cost tax-free. Thereafter, the entire
mount received each year m ust be reported as income.
¡If you have n ot recovered your total cost tax-free in prior years, fill in all
he lines of Schedule A to determine how much of the am ount you received
1944 is taxable.
On line 1, enter th e total am ount you paid for the annuity or the total
mount of your Contributions to the pension or retirem ent fund. If you
Kaved the annuity by gift, or as the survivor of a deceased annuitant, enter
he cost to the donor or deceased annuitant, However, an employer’s con-

tribution to an employee’s pension is n ot a gift and should n ot be included in
line 1.
.
.
On line 2, enter the total of the am ounts received in aH prior years, less 3 per
cent of line 1 for each year during which the annuity has been received since
1933.
If the paym ents received in 1944 were for less th an 12 m onths, compute
y12of 3 percent of the am ount on line 1 and m ultiply by the num ber of months
for which paym ents were received; then enter on line 6 either the am ount
so com puted or th e am ount on line 5, whichever is greater.
If you have recovered your cost tax-free in prior years, or if the entire cost
of your pension or annuity is borne by a form er employer, you m ay om it lines
1 to 5, inclusive, and enter directly online 6 the to tal am ount received in 1944.

Schedule B .—R ents and R oyalties
. J in all applicable columns of Schedule B whether the transactions
esulted in a profit or a loss. If ren t was received in property ox crops instead
i money, except under a crop-sharing arrangem ent, enter the fair m arket
ralue of the property or crops received. In the case of crops received as rent
mder a crop-sharing arrangem ent by a taxpayer who reports his income on
lie cash basis, th e value of th e crop rent should be reported in th e year in
vhich the commodities received as rent are disposed of. Include in “Other
menses” taxes and interest chargeable against rental or royalty income.

List as repairs, expenditures for the upkeep of rental or royalty property, but
do n ot include expenditures which m aterially prolong the life of the property
and therefore should be added to its cost and recovered by annual depreciation
allowances. Do n ot include taxes levied for paving, sewers, or other local
improvements which tend to increase the value of the property. Deductions
for depreciation, repairs, and other expenses should be entered as totals in
Schedule B and explained in detail in Schedules F and G. If more space is
needed, use separate sheet and attach securely to your return.

Schedule C.—B u siness or Profession
Profit or lossTfrom a business or professiofi m ust be explained in Schedule C,
hcept that farmers who keep no books or who keep books on die cash basis
must obtain Form 1040F'and fill it in instead of Schedule C. Farm ers who
Keep books on the accrual basis m ay also substitute Form 1040F for Schedule
Lif they so desire. If you include in your income loans received from the
pommodity Credit Corporation, attach a statem ent explaining the details.
If you sell merchandise on th e installm ent plan and your return is made
|>nthat basis, attach a schedule showing separately for die years 1941, 1942,
|943, and 1944 th e following: ,(a) Gross sales; (A) cost of goods sold; (c) gross
profit; (d) percentage of gross profit to gross sales; (e) am ount collected;
[/) gross profit on am ount Collected.
If you make your return on th e accrual basis, you m ay deduct either (a) the
[mount of accounts receivable arising from sales or services, which became
wholly worthless within the taxable year or (b) a reasonable addition to a
fuly established reserve for bad debts. On either the cash or the accrual
you may deduct th e am ount of any business loans which became wholly

worthless during the taxable year. A d'ebt which became partially worthless
m ay be deducted to the extent charged off during the year.
List as repairs, expenditures for the upkeep of business property, b ut do not
include expenditures which m aterially prolong the life of die property and
therefore should be added to its cost and recovered by annual depreciation
allowances.
Do not include taxes levied for paving, sewers, or other local improvements
which tend to increase the value of the property.
Do not include in your costs or other business deductions any salary or
other compensation for yourself. Do not deduct any wage or salary deter
mined to be in contravention of the Wage and Salary Stabilization Act of
October 2, 1942, or of the rules, regulations, or orders issued under the Act.
Do not include losses from worthless bonds and similar obligations or non
business bad debts, which should be entered in separate Schedule D.
For com putation of net operating loss deduction, including net operating
loss carry-back and carry-over, see section 122 of the Internal Revenue Code.

Schedule D.—G ains and Losses from Sales or Exchanges of C apital A ssets, etc.
fi filli.

ir 1945
(Form
can be

States,

| If you sold or exchanged any capital assets or other property during the year, fill in the separate sheet entitled Schedule D (Form 1040), in accordance with
tta detailed instructions thereon. The totals from the separate sheet should then be entered on lines 1 and 2 of Schedule D of your return. Be sure to attach
ita separate sheet to your return.

Schedule E.—Incom e from Partnerships, E states and T rusts, and O ther Sources
P a r t n e r s h i p s . — Include in your return your share of the n e t p rofit
[whether received by you or n o t) or loss of a partnership, pool, syndicate or
[he like, whose taxable year ends w ithin th e year covered by your return.
However, you should enter in Schedule E only your share of th e “ordinary”-'
pot income or loss, excluding th e following items:
• Capital gains and losses, which should be entered in separate Schedule D.

E s ta te s a n d T r u s t s . — -Include in y o u r re tu rn y o u r sh are o f th e dispibutable incom e (w h e th e r received b y y o u o r n o t) of a n e s ta te o r t r u s t w hose

tax opId read
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Ruble year ends w ith in th e y e ar covered b y y o u r re tu rn . H ow ever, you
phould enter in Schedule E o n ly y o u r sh are of th e incom e o f th e e s ta te o r
p i t after th e exclusion of th e following item s:
[• Interest on obligations of th e U n ited S ta te s o r its in stru m en talities, w hich

2. Interest on obligations of the U nited States or its instrum entalities,
f which should be included in item 3, page 1.
3. Contributions, income taxes paid to a foreign governm ent, and income
taxes paid a t source on tax-free covenant bond interest— all of which
should be om itted if you use the tax table on page 2 or tak e the
standard deduction, b u t should be entered in the proper spaces on page
4 if you itemize your deductions.

should be included in item 3, page 1.
2. Income taxes paid to a foreign government and incom e-taxes paid a t
source on tax-free covenant bond interest—which taxes should be omitted
if you use the tax table on page 2 or take the standard deduction, b u t
should be entered in the proper spaces on page 4 if you itemize your
deductions.
i

1 O th er S o u r c e s . — List and explain other income, such as am ounts received from, alimony or separate m aintenance, rewards or prizes, recoveries of bad
ÿbts for which a deduction was taken in a prior year, and health and accident insurance benefits received as reim bursem ent for m edical expenses for which a
reduction was taken in a prior year.

Schedule F.—Explanation of D edu ction for D epreciation Claim ed in Schedules B and C
û e p r e c i a t i o ï i .^ - î n determining net rents (Schedulé B) or business
[Profits or losses (Schedule C), you m ay deduct each year as depreciation a rea\ uTr) ' a^ 0wance far exhaustion, wear and tear, and obsolescence of property
it! 11:1a trade or business or held for the production of income. T he dépréciaaf°n
he based <)n th e useful life of th e property and on its cost if purchased
- ter rebruary 28, 1913. For further information regarding depreciation,

see Bulletin “F ” of the Bureau of Internal Revenue and section 114 of the
Internal Revenue Code.
, D e p l e t i o n . —For information about depletion allowances in connection
with oil and gas wells, mines, tim ber, and other natural resources, see sections 23 (m ) and 114 of the Internal Revenue Code.
ia—40090-1

INSTRUCTIONS FOR PAGE 4 OF FORM 1040
P la c e a lo n g s id e p a g e 4 o f F o r m 1040 f o r e a s y r e fe r e n c e
• D E D U C T IO N S .— T h e fo llo w in g i n s t r u c t i o n s d e s c r i b e t h e c la s s e s o f e x p e n d i t u r e s a n d lo s s e s w h i c h y o u m a y ite m iz e and
c la i m a s d e d u c t i o n s i f y o u n e i t h e r u s e t h e t a x t a b l e o n p a g e 2 n o r t a k e t h e s t a n d a r d d e d u c t i o n o f $500 o n l in e 2 o f th e Tax
C o m p u t a t i o n o n p a g e 4 o f F b r m 1040. I f y o u r e x p e n d i t u r e s a n d lo s s e s o f t h e s e c la s s e s a m o u n t e d t o m o r e t h a n 10 p e rc e n t of
y o u r t o t a l in c o m e , o r m o r e t h a n $500 i f y o u r t o t a l i n c o m e w a s o v e r $5,000, i t w ill o r d i n a r i l y b e t o y o u r a d v a n t a g e t o , itemize
t h e m o n p a g e 4 o f F o r m 1040. I f y o u d o so , y o u m u s t c o m p u t e y o u r t a x a s i n d i c a t e d a t t h e b o t t o m o f t h a t p a g e .
C o n trib u tio n s
The deduction for contributions cannot exceed 15 percent of the income
organizations for use exclusively for public purposes,
you reported in item 5, page 1. Deduct only contributions of money or propDo not deduct gifts to relatives or other individuals, or to organizations any
erty (not services) to organizations operated exclusively for religious, charipart of whose earnings is for the use or benefit of private individual^, 0r to
table, scientific, literary, or educational purposes or for the prevention of
organizations which devote a substantial part of their activities to carrying on
¿ruelty to children pr animals; veterans’ organizations; or governmental
propaganda or otherwise attempting to influence legislation.
In te re s t
Itemize interest paid ofi personal debts, such as bank loans or home mortendowment contract. Do not deduct interest paid on behalf of another
gages. Do not deduct in this schedule interest paid on business debts; such
person unless you were legally liable to make the payment. In figuring the
interest should be reported in Schedule B or C. Do not deduct interest on loans
interest paid on a mortgage or installment contract, be careful to distinguish
obtained to buy tax-exempt securities or a single-premium life insurance or
between interest and other charges such as financing fees, taxeis, or insurance,
i '
.T a x e s
Only certain taxes may be deducted. You may deduct State income taxes,
Do not deduct Federal income tax, or any estate, inheritance, legacy, succespersonal property taxes, and real estate taxes except those levied for paving,
sion, or gift taxes, or taxes on your shared in a corporation which are paid for
sewers, or other improvements which tend to increase the value of your propyou by the corporation. Do not deduct in this schedule taxes on business or
erty. You may deduct State or local retail sales taxes (including gasoline
rental property, but report such taxes in Schedule B or C. Do not deduct
taxes) if under the laws of your State or locality they are imposed directly ,
in this schedule Federal import duties or Federal excise or stamp taxes; but
upon the consumer or if they are imposed directly upon the retailer and the
any such taxes attributable to your business activities may be deducted in
amount of the tax is senarately stated by the retailer to the consumer.
Schedule B or| C. Federal social security taxes are not deductible by employee». ■
L o s s e s F r o m F i r e , S t o r m , S h ip w re c k ^ , o r O t h e r C a s u a l t y , o r T h e f t
You may deduct the net amount of actual property losses resulting from
depreciation sustained) and subtracting both (a) salvage value, and (b) any
war, accident, fire, storm, shipwreck, or other casualty, or from theft. Do not
insurance or other reimbursement received. Attach a statement fully explaindeduct here any losses claimed elsewhere in your return. Compute loss by
ing the nature of the loss, describing the property, and showing date acquired,
determining value of the property just , before the loss (ordinarily, cost less
cost, subsequent improvements, depreciation, insurance, and salvage value, i
M e d ic a l a n d D e n ta l E x p e n s e s
You may deduct the net amount of any medical, hospital, or dental expenses
include any amounts paid for health, accident, or hospitalization insurance,
paid by you during the year for yourself, your wife (or husband), or a deList names of those to whom payments were made and state amounts and
pendent, over and above 5 percent of the total income you reported in item 5,
dates of payment. Find your “Net expenses” by subtracting the total of all
page 1. However, this deduction is limited to $1,250 if you claimed only one
insurance and other amounts received as reimbursement for the expenses
exemption in item 1, page 1, or $2,500 if you claimed more them one. Expenses
itemized. From the net expenses subtract 5 percent of the total income you
for eyeglasses, artificial limbs, hearing aids, etc., may be included. Also
reported in item 5, page 1, since only the excess is deductible.
M is c e lla n e o u s
Itemize all allowable deductions not claimed elsewhere on your return,
same year; (d) amortizable bond premium for the taxable year (see section 125
including: (a) Expenses incurred in the production or collection of taxable
of the Internal Revenue Code); (e) your share of the interest and real estate
income or in the management of property held for the production of taxable
taxes paid by a cooperative apartment corporation in which you are a tenant-income; (b) alimony and separate maintenance payments which are taxable to
stockholder; and (J) the $500 special deduction for the blind,
the wife; (c) gambling losses not exceeding gambling gains reported for the
TA X C O M P U T A T IO N IN S T R U C T IO N S F O R TA X PA Y ERS N O T U S IN G T H E TAX TA BLE O N P A G E 2 O F F O R M 1040
S u rta x

(

T a b le

F r o m t h e fo llo w in g ta b le fig u re y o u r s u r ta x o n t h e s u r t a x n e t in c o m e o n lin e 5 , p a g e 4, o f t h e re tu rn :
I f t h e s u r ta x n e t in c o m e is :
T h e s u r ta x is:
N o t o v e r $2,000_________.-..1_____ . . . __ ________. . . . . . . ___ _ 20% o f t h e s u r t a x n e t in c o m e .
O v e r $2,000 b u t n o t o v e r $4,000_____. . . . __. ___ . . . __,__. . . . $400, p l u s 22% o f e x c e ss o v e r $2,000.
O v e r $ 4,000 b u t n o t o v e r $6,000________I ..; .: _________. . . . $840, p l u s 2 6% o f e x c e s s o v e r $4,000.
O v e r $6,000 b u t n o t o v e r $8,000__ . . : ___________________ $1,360, p l u s 30% o f e x c e ss o v e r $6,000.
O v e r $8,000 b u t n o t o v e r $10',000_______________ ______ _ $1,960, p l u s 34 % o f e x c e ss o v e r $8,000.
O v e r $10,000 b u t n o t o v e r $12,000 .
_______ . . . . . . . $2,640, p l u s 38 % o f e x c e s s o v e r $10,000.
O v e r $12,000 b u t n o t o v e r $14,000___ ... ...1__ ______ . . . $3,400, p l u s 43% o f e x c e s s o v e r $12,000.
O v e r $14,000 b u t n o t o v e r $16,000__ ______1______ _____ $4,260, p l u s 47% o f e x c e s s o v e r $14,000.
O v e r $16,000 b u t n o t o v e r $18,000______ ____________ . . . $5,200, p l u s 50% o f e x c e s s o v e r $16,000.
O v e r $18,000 b u t n d t o v e r $20,000—____________ ________ $6,200, p l u s 53% o f e x c e s s o v e r $18,000.
O v e r $20,000 b u t n o t o v e r $22,000—__ ________ _____ $7,260,
p l u s 56% o f e x c e ss o v e r $20,000.
O v e r $22,000 b u t n o t o v e r $26,000____________ ______. . . . $8,380, p l u s 59% o f e x c e ss o v e r $22,000.
O v e r $26,000 b u t n o t o v e r $32,000— __ _______ ________$10,740, p l u s 62% o f e x c e s s o v e r $26,000.
O v e r $32,000 b u t n o t o v e r $38,000_____ _______________ $14,460, p l u s 6 5% o f e x c e s s o v e r $32,000.
O v e r $38,000 b u t n o t o v e r $44,000_____________ _______ _ $18,360, p l u s 69% o f e x c e s s o v e r $38,000.
O v e r $44,000 b u t n o t o v e r$ 5 0 ,0 0 0 ______________§______ $22,500, p l u s 72% o f e x c e s s o v e r $44,000.
O v e r $50,000 b u t ' n o t o v e r $60,000______ ______________$26,820, p l u s 75% o f e x c e s s o v e r $ 50,000.
-O v e r $60,000 b u t n o t o v e r $70,000_. . . . _________________ $34,320, p l u s 78 % o f e x c e s s o v e r $60,000.
O v e r $70,000 b u t n o t o v e r $80,000_____________________ $42,120, p l u s 81 % o f e x c e s s o v e r $70,000.
O v e r $80,000 b u t n o t o v e r $90,000_____ x____%
_________ $50,220, p l u s 8 4 % o f e x c e s s o v e r $80,000.
O v e r $90,000 b u t n o t o v e r $ 1 0 0 ,0 0 0 ...___ 1______________ $58,620, p l u s 87% o f e x c e s s o v e r $90,000.
O v e r $100,000 b u t n o t o v e r $150,000__________ 1.,_____ _ $67,320, p l u s 89 % o f e x c e s s o v e r $100,000.
. O v e r $150,000 b u t n o t o v e r $200,000.._____ . . . . . . . . . . ____ $111,820, p l u s 9 0 % o f e x c e ss o v e r $150,000.
O v e r $200,000—
. . . . _____ __ _____ . . . ______ ____________ $156,820, p l u s 91% o f e x c e ss o v e r $200,000.

St

A d ju s tm e n t o n L in e 7, P a g e 4 , f o r P a r tia lly T a x - e x e m p t I n t e r e s t
If you take the standard deduction, enter on line 7 the same figure as appears
Items that may be subtracted in line 7 are (a) interest on the excess over
on line 3, page 4, since the standard deduction makes allowance for any portion
$5,000 of United States savings bonds (at cost) and Treasury bonds (at fw*
of your net income which is exempt from normal tax. However, if you itemize
value) issued prior to March 1, 1941; (b) interest on obligations of instniyour deductions, you may subtract partially tax-exempt interest, less amormentalities of the United States issued prior to March 1, 1941 (other than
tizable bond premium for the taxable year, from the amount shown on line 3,
Federal land banks, Federal intermediate credit banks, and joint stock land_
page 4, and enter only the balance on line 7. If you subtract any such
banks); and (c) dividends on share accounts in Federal savings and loan assoamounts, attach an explanatory statement.
ciations if the shares were issued prior to March 28, 1942.
N o r m a l- ta x E x e m p tio n o n L in e 8, P a g e 4
If husband and wife combine their incomes in a joint return, the normal-tax exemption (line 8, page 4) is $500 plus the amount of the -smaller of the
incomes shown under item 5, page 1, but not more than $1,000 for both.
1 6 -4 0 9 9 0 -1

u. s.

government prin tin g

OFFICE

- 3 ~

;

for such bills, whether on original issue or on subsequent purchase, and the amount
actually received either upon sale or redemotion at maturity during the taxable
year for which the return is made,-as frdinarjr gain or loss.
Treasury Department Circular No. '418, as amended, and this notice, pre
scribe 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.

s m
-

2

-

Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of thè amount and orice range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final,
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

101,1,_ •

The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under 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 v/hich Treasury bills are originally sold by the United States
shall be considered to be interest.

Under Sections 42 and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or.otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday, September 15* 1944

The Secretary of the Treasury, by this public notice, invites tenders
for $ 1,200.000.000 , or thereabouts, of
91 -day Treasury bills, to be issued
25:
iw
on a discount basis under competitive and fixed*-price bidding as hereinafter pro
vided,

The bills of this series will be dated

i

September 21,
1944............ 0> and will
...............................1

when the face amount will be payable without

mature
interest.

They

j '‘

'I

I

" rm only, and in denominations of $1,00.0,

$5,000, $10,00(f $100,000^4500,000, and $1,000,000 (maturity value).
Tenders^Tli^be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock

d

. m., Eastern War time,

Monday« September IS. 1944

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»
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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 resoonsible and recognized dealers in investment securi^
ties.

Tenders from others must be ac.comoanied by payment of 2 percent rf 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

TREASURY DEPARTMENT
Washington

F O R R E L E A S E , MORNING, NEWSPAPERSFriday, S e p t e m b e r 15, 1944.
§ - 14-44
:

T h e S e c r e t a r y of the Treasury, by this p u b l i c notice,
invites tenders for $ 1 , 2 0 0 , 0 0 0 , 0 0 0 , or thereabouts, of 9 1 -day
T r e a s u r y bills, to be i s s u e d on a d i s c o u n t b a sis u n d e r c o m 
pet i t i v e a n d fixe d - p r i c e b i d d i n g as h e r e i n a f t e r p r o v ided.
The
bills o f this series w ill be dated S e p t e m b e r 21, 1944, a n d will
m a t u r e D e c e m b e r 21, 1944, when]-the face a m o u n t will be payable
w i t h o u t interestj>
T h e y w i l l be i s sued in b e a r e r f o r m only, and
in d e n o m i n a t i o n s of $1,000,: $5,000, $10,000, &±00-,MQ¿tSOQ* 0 00,a n d
$ 1 , 0 0 0 , 0 0 0 ( m a turity value)!.
T e n d e r s wil l be re c e i v e d at Federal Reserve B a n k s a n d
B r a nches u p to the c l o s i n g h o u r , . t w o o ’clock p.m., E a s t e r n W a r
time, ‘Monday, S e p t e m b e r 18, 1944.
T e n d e r s will not be rec e i v e d
at the T r e a s u r y Department, W a s h i n g t o n ,
E a c h t e n d e r m u s t be
for an, eve n m u l t i p l e of $1,000, a n d the p r i c e o f f e r e d m u s t be
e x p r e s s e d on the b a sis 'of 100, w i t h n ot m o r e than three decimals,
e*
99.925.
Fractions m a y not b a used.
It is u r g e d that
tenders be m a d e on the p r i n t e d forms a n d f o r w a r d e d in the special
envelbpes w h i c h wil l be s u p p l i e d b y Federal R e serve Banks or
Br a n c h e s on a p p l i c a t i o n therefor.
T e n d e r s will be received' w i t h o u t deposit f r o m i n c o r p o r a t e d
banks a n d trust companies a n d f r o m r e s p o n s i b l e a n d r e c o g n i z e d
dealers in i n v e s t m e n t securities.
T e n d e r s f r o m others m ust be
a c c o m p a n i e d b y p a y m e n t of 2 p e r c e n t of the face a m o u n t of
T r e a s u r y b i lls a p p l i e d for, u n l e s s the tenders are a c c o m p a n i e d
by a n e x p r e s s g u a r a n t y of pa y m e n t b y a n i n c o r p o r a t e d b a n k or
trust company.
I m m e d i a t e l y a f t e r the c l o s i n g hour, tenders will be o p e n e d
at the Federal R e s erve B a n k s an d Branches, f o l l o w i n g which
public a n n o u n c e m e n t will b e m a d e by the S e c r e t a r y of the T r e a s u r y
of the a m o u n t a n d p r i c e r a n g e o f a c c e p t e d bids.
Those sub
m i t t i n g t e n ders will be a d v i s e d o f the a c c e p t a n c e or r e j e c t i o n
thereof.
T he S e c r e t a r y of the T r e a s u r y e x p r e s s l y r e s erves the
right to a c c e p t or reject a n y o r all tenders, in whole or in
part, a n d his a c t i o n in a n y s u c h respect shall be final.
Subject
o these.reservations,, tenders f o r $ 1 0 0 , 0 0 0 or less f r o m a n y
one b i d d e r at 9 9 , 9 0 5 e n t e r e d on a f i x e d - p r i c e b a sis will be
a c c e p t e d in full.
P a y ment of a c c e p t e d tenders at the prices
of f e r e d m u s t be m a d e or compl4fs@dat the Federal R e s e r v e B a n k
in cash or o t h e r i m m e d i a t e l y a v a i l a b l e funds on S e p t e m b e r 21.
1944.
,
*
43-32
Over

'

2
The income 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 interest
or g a i n f r o m t h e s a l e 'o f o t h e r d i s p o s i t i o n of the bills, shall
n o t have a n y e x e m p t ! o h , - a s - s u c h , an d loss f r o m the sale or other
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 shall not h a v e a n y special t r e a t 
ment, as such, u n d e r Federal tax A c t s n o w or h e r e a f t e r enacted.
T he bills shall be subject to estate, inheritance, gift, or
o t h e r excise taxes, w h e t h e r •F e d e r a l 'or State, b ut shall be
exempt f r o m all 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 on the principal
o r interest th e r 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 the U n i t e d States, or b y a ny local t a x i n g a u t h o r i t y *
For
p u r p o s e s of t a x a t i o n the a m o u n t o f 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 are o r i g i n a l l y sold b y the U n i t e d S t ates shall be considered
to be interest.
U n d e r Sections 42. a n d 117 is.) (1) of the Internal
Re v e n u e Code, as a m e n d e d b y S e c t i o n 11 5 o f the Revenue A c t of 1941,
the 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 sold
shall not b e c o n s i d e r e d to a c c r u e until s u c h b i lls shall b e sold,
r e d e e m e d o r 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 re exclu d e d
f r o m c o n s i d e r a t i o n as c a p ital a s sets.
A c c o r d i n g l y , t h e . o w n e r of
T r e a s u r y b i l l s (other than lif e i n s u r a n c e companies) i s sued h e r e 
u n d e r n e e d include in his income tax r e t u r n o n l y the d i f f erence
b e t w e e n the p r i c e p a i d f o r s u c h bills, w h e t h e r on o r i ginal issue
or on subs e q u e n t purchase., a n d 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 sale or r e d e m p t i o n at m a t u r i t y d u ring ’the taxable
y e a r f o r w h i c h the return 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*( 418, as amended, a n d this
notice, pr e s c r i b e the terms o f the T r e a s u r y b i l l s a nd g o v e r n
the c o n d i t i o n s o f t h e i r issue*
Copies of the c i r c u l a r m a y be
o b t a i n e d f rom a n y Federal R e s erve B a n k or Branch*

oOo

TREASURY DEPARTMENT
Washington

D u r i n g t h e m o n t h of 3tnie7 1944

teed securities

of t h e G o v e r n m e n t 1 f or

Treasury.investment and other accounts

Secretary Morgenthau announced today

September 7f 1944

J

Daring the aonth of August, 1944, the following m r k e t
transactions took place In direct m d guaranteed securities
of the Govermsenti

Seles

....... 119,007,000

Purchases *•*•*•«*

*••••*•*

iet sales «♦ft«-**

HNaud
9/7/ M

íMmJBQ

TREASURY DEPARTMENT
Bureau of Accounts

MR. GREENBERG

T R E A S U R Y .D E P A R T M E N T
Washington

P O R I M M E D I A T E RELEASE,
Friday, S e p t e m b e r 15, 1 9 441

D u r i n g t h e m o n t h of August,
transactions
ties

P r e s s S e r vice
No. 43-33

1944,

market

in d i r e c t a nd g u a r a n t e e d s e c u r i 

of t h e G o v e r n m e n t f o r T r e a s u r y inv e s t m e n t

a n d o t her a c c o u n t s r e s u l t e d in net sales

of

$ 1 8 , 9 9 2 , 5 0 0 , 'Secretary M o r g e n t h a u a n n o u n c e d
today.

-oOo-

J

b*

FOR/RELEASE,
Bsidey, September Ü&* 19U1|

TREASURY DEPARTMENT
Washington
Press Service
•idee
/
No«
Jì / 3
3 - 3 </'

1 JOINT STATEMENT BX TREASURY ANS WAR DEPARTMENTS

Belgian franc currency and coins have been made available to
the Supreme Commander, Allied Expeditionary Forces, for the use of
the Allied Liberation Forces in Luxembourg, under arrangements com
pleted some time ago between officials of the Suited States and the
British Governments and representatives of the Luxembourg and Belgian
Governments in London in anticipation of the operations of the Allied
Forces noir progressing within Luxembourg* This currency and coin
is the same as is being used by the Allied Forces in Belgium« Before
the war, Belgian currency was used in every-day transactions in
Luxembourg, and was freely interchangeable with Luxembourg currency«
The rates of exchange selected by the Belgian Government for
use in Belgium, 2*3*773 Belgian francs to $1 and 176*625 Belgian francs
to £l, have been made applicable in Luxembourg at the instance of the
Luxembourg Government* Complete records are being kept and a detailed
accounting procedure has been set up in connection with the use of the
Belgian currency in Luxembourg by the Allied Military forces« These
records will be used in the future in reaching inter governmental settle
ments for Allied expenditures in Luxembourg«
Arrangements have been made whereby U* S* military personnel may
remit all or any portion of their pay which they receive in Belgian
francs to the united States against payment here in dollars* United
States soldiers leaving Luxembourg may exchange Belgian franc currency
held by them for dollar currency* Nhan United States forces obtain
Belgian francs for military expenditures, the relevant Army appropria
tion will be charged for the dollar equivalent thereof« In this manner
the control of Congress over the expenditures of the United States Army
is maintained«

TREASURY DEPARTMENT
Washington

POR I M M E D I A T E RELEASE,
Saturday, S e p t e m b e r 16,

Press Se r v i c e
No. 4 3 -34

1944«

JOINT S T A T E M E N T BY T R E A S U R Y A N D W A R D E P A R T M E N T S
B e l g i a n franc c u r r e n c y a n d coins hav e b e e n m a d e a v a i l 
able to the S u preme Commander, A l l i e d E x p e d i t i o n a r y Forces,
for the u se o f the A l l i e d L i b e r a t i o n Forces in L uxembourg,
u n d e r a r r a n g e m e n t s c o m p l e t e d some time ago b e t w e e n off i c i a l s
of the U n i t e d Stat e s a n d the B r i t i s h G o v e r n m e n t s a n d r e p r e 
sentatives of the L u x e m b o u r g a n d B e l g i a n G o v e r n m e n t s in
L o n d o n in a n t i c i p a t i o n of the o p e r a t i o n s of the A l l i e d
Forces n o w p r o g r e s s i n g w i t h i n L u x e m b o u r g .
This c u r r e n c y
a n d coin is the same as is b e i n g u s e d by the A l l i e d Forces
in Belgium.
B e f o r e the war, B e l g i a n c u r r e n c y was u s e d in
e v e r y - d a y t r a n s a c t i o n s in L u x e mbourg, a n d w as f r e e l y i n t e r 
changeable w i t h L u x e m b o u r g currency.
The rates of ex c h a n g e s e l e c t e d by the B e l g i a n G o v e r n 
m e n t for u s e in Belgium, 4 3 . 7 7 3 B e l g i a n francs to {1 a n d
1 7 6 . 6 2 5 B e l g i a n francs to j >1, hav e b e e n m a d e a p p l i c a b l e in
L u x e m b o u r g at the instance of t he L u x e m b o u r g G overnment.
Co m p l e t e records are b e i n g k e p t a n d a d e t a i l e d a c c o u n t i n g
p r o c e d u r e has b e e n set up in c o n n e c t i o n w i t h the u se of the
B e l g i a n c u r r e n c y in L u x e m b o u r g b y the A l l i e d M i l i t a r y forces
These records will be u s e d in the future in r e a ching i n t e r 
g o v e r n m e n t a l sett l e m e n t s for A l l i e d e x p e n d i t u r e s in
L u x e m bourg.
A r r a n g e m e n t s have b e e n m a d e w h e r e b y U. S. m i l i t a r y
per s o n n e l m a y remit all or a n y p o r t i o n of t h e i r p a y w h i c h
they receive in B e l g i a n francs to the U n i t e d States a g a i n s t
p a y m e n t here in dollars.
U n i t e d S t ates soldiers l e a v i n g
L u x e m b o u r g m a y excha n g e B e l g i a n franc c u r r e n c y h e l d by t h e m
for d o l l a r currency.
W h e n U n i t e d States forces o b t a i n
B e l g i a n francs for m i l i t a r y e x p e n ditures, the r e l e v a n t A r m y
a p p r o p r i a t i o n w ill be c h a r g e d for the d o l l a r equivalent*
thereof.
In this m a n n e r the control of C o n g r e s s over the
e x p e nditures of the U n i t e d S t a t e s A r m y is m a i n t a i n e d .

oOo-

3

TREASURY DEPARTMENT
Washington
FOE .RELEASE, W m m F m S S K P E B S
Friday, September ifx, 19UU

~i>b

Press Service
No#

JOINT STATEMENT BY TREASURY AND WAR DEPARTMENTS
Netherlands currency and coin have been made available by the
Netherlands Government to the Supreme Commander, Allied Expeditionary
Forces, for the use of the Allied liberation Forces in the Netherlands#
These arrangements were completed seme time ago between officials of
the United States and the British Governments and representatives of
the Netherlands Government in London in anticipation of the operations
of the Allied Forces now progressing within the Netherlands» The cur
rency and coin supplied by the Netherlands Government include currency
recently printed in the United States and new series of one guilder,
twenty-five cent, and ten cent coins minted for the Netherlands Govern
ment by the United States l£Lnt*

The rates of exchange "which have been established for the Nether
lands are 2*614957 guilders to $1 and 10*691 guilders to £1* These rates
were selected by the Netherlands Government in London* Complete records
are being kept and a detailed accounting procedure has been set up in
connection with the use of the guilder currency by the Allied Military
forces* These records will be used in the future in reaching inter
governmental settlements for Allied expenditures in the Netherlands*
Arrangements have been made ifcereby U* S* military personnel
may remit all or any portion of their pay which they receive in guilders
to the United States against payment here in dollars* united States
soldiers leaving the Netherlands may exchange guilder currency held by
them for dollar currency* Ihen United States forces obtain guilders
for military expenditures, the relevant Army appropriation w i n be
charged for the dollar equivalent thereof# In this manner the control
of Congress over the expenditures of the united States Army is maintained*

TREASURY DEPARTMENT
Washington
FOT? I M M E D I A T E RELEASE,
Saturday, S e p t e m b e r 16»

1944-.

Press Se r v i c e
No, 4 3 -35

JOINT:STATEMENT BY TREASURY A N D W A R DEPARTMENTS
N e t h e r l a n d s c u r r e n c y a n d coin have b e e n mad e a v a i l a b l e
by the N e t h e r l a n d s Gove r n m e n t to the S u p r e m e Commander, A l l i e d
E x p e d i t i o n a r y Forces, for t h e u s e of the A l l i e d L i b e r a t i o n
Forces in the N e t h e r l a n d s #
These arrangements were completed
some time ago b e t w e e n off i c i a l s of the U n i t e d States an d the
B r i t i s h G o v e r n m e n t s a n d r e p r e s e n t a t i v e s of the N e t h e r l a n d s
G o v e r n m e n t in L o n d o n in a n t i c i p a t i o n of the o p e r a t i o n s of
the A l l i e d forces n ow p r o g r e s s i n g w i t h i n the N e t h e r l a n d s .
The c u r r e n c y a n d coin s u p p l i e d b y the N e t h e r l a n d s G o v e r n m e n t
include cu r r e n c y r e c e n t l y p r i n t e d In the U n i t e d states a n d
n e w seri e s of one guilder* twen t y - f i v e cent, a n d ten cent coins
m i n t e d for t h e N e t h e r l a n d s G o v e r n m e n t by the U n i t e d S t a t e s
Mint.
T h e rates o f e x c h a n g e w h i c h have b e e n e s t a b l i s h e d for the
N e t h e r l a n d s are 2, 6 4 9 5 7 g u i l d e r s to $1 a n d 10,691 gu i l d e r s
to El. T h ese rates
w e r e s e l e c t e d b y the N e t h e r l a n d s G o v e r n m e n t
in London, • C o m p l e t e records a r e b e i n g kep t a n d a de t a i l e d
a c c o u n t i n g p r o c e d u r e has b e e n set up in c o n n e c t i o n w i t h the
use of the g u i l d e r c u r r e n c y by the A l l i e d M i l i t a r y forces,
These r e c o r d s will b e u s e d in the futu r e in reaching i n t e r 
gove r n m e n t a l s e t t l e m e n t s for A l l i e d e x p e n ditures in the
Netherlands?:
A r r a n g m e n t s ' have b e e n m a d e w h e r e b y U, s. m i l i t a r y
p e r s o n n e l m a y r e mit all or a n y p o r t i o n of t h e i r p a y w h i c h they
receive" in g u i l d e r s to the U n i t e d States against p a y m e n t here
in d o l l a r s .
U n i t e d States soldiers l e a v i n g the N e t h e r l a n d s
m a y e x c h a n g e g u i l d e r c u r r e n c y held b y t h e m for d o l l a r currency.
W h e n U n i t e d States forces o b t a i n g u i l d e r s for m i l i t a r y e x p e n d i 
tures, the relevant A r m y a p p r o p r i a t i o n will be c h a rged for
the d o l l a r e q u i v a l e n t thereof.
In this m a n n e r the control
of C o n g r e s s o v e r the e x p e n d i t u r e s of the U n i t e d States A r m y is
maintained.

Surely, wi

are «ntltlad lo greci pri&e

meat# ef this san, cmr ferver eesrade*

in thè acconplish*

And our pride In hi» eccospllsh*

»«il« 1« tospered only by sur «ttotsi In thè tr&gedy th&t he dìd noi U v «
to set II«« Itvjr hi e V i s i o n and hi» a g g r e s jjtv e a e s s helped create, drive thè
aggressore fra» thè Berm Sene*

tfeable te preeent te hi» thè avara he

richly deeereed, ve are happy end proud in thè presente here toàny of thè
gellant lady é o «Ine« thelr narriate in 1898 had beea hit I m e helpsate,
sharing hi« eaerlfiees and hi« respensiblllti«• —

Mr*. A m i e leld Inox.

lire* Suor, bere in Ohleage vhere your hueband reaehed thè peak of his
brilU&nt career In business and JonmaXle», bere In thè pretense ef hit
friend and asiiitnol end «ucce« «or 9 Jl» Forrestal, who helped your bua band
bulld thè grette*! Bavy in thè verlà, bere In this conpaay ef thè repressa!»
» U v e e ef ltUGO,000 ef yenr hnehand9« eoar&des, I band you this Distingui«hed
Service hed&X ef thè Anerteaa Legioa*

fhls sedai yenr hnehand eoa hy » lift-

tino ef deveted and distingui shed servine te his country*

X neh

o u to aeeept

this sedei ss a sysbol ef thè respeet, thè loyalty end thè gennlae effeetlon
thè sen mai vene» ef thè Aserlean l»eglen vili eXveys hev» far yenr husbnnd*
Se long es thsre renala* an Aserlean Leglon thè aesory ef frante Inox vili
resaln brighi*

And if ve* ef thè American Legion succe ed in ©nr avoved

pur pose c# paseing on te peeteHty thè tradì tions «ad thè ideale that bave
sede America i m i ,

thè» se leng es flghtlng ss» with fightiag hearts sali

thè esse in thè flghtlag shlps ef thè tJfcited Stette Sevy9 thè «pirli ef yenr
hnehand« Frank Xeon« vili live*

3
As & buck private la thè Rough Ridere, he fought agaiast Spada under
thè leadership of his idei, feàdy Roosevelt»
as a major in Trance*

Se festst thè Boche la *1$

la 19*10, though he h&d heea thè last lepublleaa

candidate fer thè Vice Presideney and was one of thè leaders of thè opposition

party, he dld aet Restiate te sasrlfiee his osa personal business,aad politicai

\rJr

pÀj

’

>

Interests, by proaptly respondie% to thè cali of President franklin Belano
Roosevelt and Recane thè Secretary of thè Sftty,

To this naa In 19^0 —

as

threughout his life « thè nation** ne ed was his paraaouat concem.
le was a charter nenber of thè Anerlean légion.

Se helped organise thè

légion in lev Hampshire and basane ite first Department Commander,

for twenty-

slx years ho was not only one of the légion* s flnest friands and best booster* —
he was oae of our finest légionnaires,
for forty years in eivllian life he was always found in the advanee
gnard of those who sought to awakon and nonld public opinion in the national

interest.

In three States where he spent nest ef his adult life, Michigan,

Sew Hampshire and Illinois, he «ns always reeogalsed an an en ergetic, fortbrighi,
honorable leader ef men*

Few men in America foresaw the avfnl certainty ef

our becoaing involved in this war as elearly as he —

and few men dld as auch

te prepara the nation fer that eontingency* jv
ln one ef the nest dlffieult perioda ef American history he bearne one
ef thè greatest Secretarle* the Savy has aver had.

In les* thaa four years

ef his admlmt strati en the personnel of the Savy increased froa 190,000 efflcers
and nsn to mere thaa 3*155,000 persone,
aircr&ft*

When he teek office the Savy had 2,112

At the end cf Sis administration it had ^2,600 airplanes»

Daring

his administration the Dnlted States Savy rose fron third place to by far the
aoet powerful aggregatlen ef shlps, planes, equipment and personnel in the
1'ÿ Â
■
Jf. ■ ■

naval hlstory ef the world

‘t-

jffiäflRF

- 2 m

inspiration that can be found In tike lives of the champions of liberty,
that the Auerlean Legion established ite M e t ingoi shed Service Medal Award»
la the last twenty-two years» this sedai has been awarded to eighteen great
aea —

everyone of who« has a m p l i f i e d the highest traditions ef the America»

Legion: \
■
— ’
I
General Pershing
Admiral Counts
Admiral Sins
Judge Landis
Gemerai MacArthur
Marshall Foch
Charles Bertrand
Comte BsJean of France
deaerai Jacques of Belgian

deaerai Bias of Italy
Admiral Beatty
deaerai Lord Allenby of Brest Britain
deaerai Josef Haller
Breader Paderewski of Poland
Admiral Xing
General Marshall
deaerai Arnold
Henry Ford

This is the roster of the recipients cf the Legion*s distinguished Berries
Medal, —

these are the aea who hear our accolade» the sen we teach our chil

dren and grandchildren to honor and to esalate*
Today we add to this list a nans net only worthy cf d m company it Joins»
hut a name which adds latter tc this award*
The asm who hors that asms possessed the ideals and the character that
made America great*

Be served his country in three wars and sms definitely

a war casualty cf the present conflict*

.

when he died America lest ime of her

finest patriot* - and 1 lest ass cf ay dearest friends.

For ms - as for so

many others « 2m had long been a source of strength and inspiration*

^

Be died -

as ha had lived» - giving the last fell measure of his very being to the service
of his country.

gs scares had nssd to doff U s pride or slough the dross of
Barth —
1*00 aa he trod that day to God so walked he from his birth»
In simpleness and gentleness and honour and clean mirth«

1

S&w?
<U» <C3y^„
X^SriBnfiiflEHii Legion
Presentation of tl^ X&stinguisia^ iService Medal
Awarded to the late Secretary of the/ Kavy, Frank Incx, by Assistant Secretary
the Treasury, John L. Sullivan,/®S Chicago, September 20, 1944, at 12*30 p.m**
Medal to be accepted by Mrs. Aside Said Inox, widow of the late Secretary ^
of the Navy.

of£

j

C

Twenty-six years ago American veterans returning froa the first World far
determined to continue to serve their country, and associated themsekees to
gether in the American Legion.

In a spirit of consecration to the bright,

constant flame of love of country which was our heritage, we pledged to serve
oar country as faithfully, as loyally and as tirelessly in peace a# we had in war,
The years from 1918 to 1944 were neither easy nor uneventful.
the road has been rough and the future obscure*
women of the American Legion filtered.

At many time«

But not once have the men and

Hot once have we deviated fro® our h i #

purpose.
The Aaeriean Legion meets here today in our twenty-sixth annual convention.
We do not meet as has-beens.

He do not meet as a group who, laving fought in

one war, and having assumed more than our share of responsibility in civilian
affairs for a qaartei^ofyi^century, are now content to rent on our record,

fe

meet as Americans who first learned to love our country by offering our lives
to preserve it, as a group who through twenty-six years of devoted and soulsatisfying service to our communities, states, and nation have learned to appre
ciate and to cherish our country and our way of life.

We meet as a thoroughly

tested and loyal group who look forward to many remaining years of the prime of
our lives to devote to the continuing service of the greatest country this world
has ever known —

cur beloved America.

a group have accomplished,

It is not for us to talk about whet we as

lather oar 3ob is to plan and to work for those

greater things we are yet to do.
The experience of our generation w a r m as that difficult problems lie
ahead and that our country will need ue.

However, we can draw strength and

determination from our own past achievements, and from the personal example
a few great men have set us.

Perhaps it was because of the need of that

TREASURY DEPARTMENT
Washington

FOR RELEASE OR DELIVERY
I
Presentation of the Distinguished Service Medal of the American Legion
awarded to the late Secretary of the Navy, Frank Knox» by Assistant Secretary of
the Treasury, John L. Sullivan» at the 26th Annual Convention of the American Legion,
in theïColieeum»«Chicago» September 20, 1944, at 12s30 P*M*, Central War Timef
The medal to he accepted by Mrs, Annie Reid Knox, widow of the lfcetSecretary of
the Eafry*
^
v, ~
f/"'-

Twenty six years ago » etc*

Ü

43-36

TREASURY DEPARTMENT
Washington
FOR RELEASE ON DELIVERY
(.Presentation of the Distinguished Service Medal of the American
Legion awarded to the late Secretary of the Navy, Frank Knox, by
- Assistant Secretary of the Treasury, John L# Sullivan, at the 26th
Annual Convention of the American Legion, in the Coliseum, Chicago,
September 20, 194-4-5 at 12:30 P.M., Central War Time. The medal to be
accepted by Mrs, Annie Reid Knox, widow of the late Secretary of the
Navy.)

Twenty-six years ago American veterans returning from the first World
War determined to continue to serve their country, and associated themselves
together in the American Legion. In a spirit of consecration to the bright,
constant flame of love4 of country which was our heritage, we pledged to serve
our country as faithfully, as loyally and as tirelessly in peace as we had in
war.
The years from 1918 to 194-4- were neither easy nor uneventful. At many
times the road has been rough and the future obscure. - But not once have the
men and women of the American Legion faltered. Not once have we deviated
from our high purpose.
The American Legion meets here today in our twenty-sixth annual conven
tion. We do not meet as has-beens. We do not meet as a group who, having
fought in one war, and having assumed more than our share of responsibility in
civilian affairs for a quarter of a century, are now content to rest on our
record. We meet as Americans who first learned to love our country by offering
our lives to preserve it, as a group who through twenty-six years of devoted
and soul—satisfying service to our communities, states, and nation have learned
to appreciate and to cherish our country and our way of life. We meet as
a thoroughly tested and loyal group who look forward to many remaining years of
the prime of our lives to devote to the continuing service of the greatest
country this world has ever known — our beloved America, It is not for us
to talk about what we as a group have accomplished. Ratherrour job is to
plan and to work for those greater things we are yet to do.
The experience of our generation warns us that difficult problems lie
ahead and that our country will need us. ;However, we can draw strength and
determination from our own past achievements, and from the personal example
a few great men have set Us. Perhaps it was because of the need of that
inspiration that can be found in the lives of the champions of Liberty, that
the American Legion established its Distinguished Service Medal Award. In
the last twenty—two years, this medal has been awarded to eighteen gteat men —
everyone of whom has exemplified the highest traditions of the American Legion:

43-36

- 2 General Pershing
Admiral Coontz
Admiral Sims
Judge Landis
General MacArthur
Marshall FoCh
Charles Bertrand
Comte DeJean of Francs
General Jacques of Belgium

General Diaz of Italy
Admiral Beatty
General Lord Allenby of Great Britain
General Josef Haller
Premier Paderewski of Poland
Admiral King
General Marshall
General Arnold
Henry Ford

This is the roster of the recipients of the Legion's Distinguished, Service
Medal, — these are the men who bear our accolade, the men we teach our chil
dren and grandchildren to honor and to emulate#
Today we add to this list a name not only worthy of the company it joins,
but a name ’which adds luster to this award#
The man who bore that name possessed the ideals and the character that
made America great. He served his country in three wars and was definitely
a war': casualty of the present conflict. When he died America lost one of her
finest patriots - and I lost one of my dearest friends. For me - as for so
many others ~ he had long be«n a source of strength and inspiration* He
died - as he had lived, - giving the last full measure of his very being to
the service of his country#
Hq scarce had need to doff his pride or slough the dross of
Earth
E ’en as. he trod that day to God so walked he from his birth,
In simpleness and gentleness and honour and clean mirth..
As a buck private in the Hough Riders, he fought against Spain under
the leadership of his idol, Teddy Roosevelt, He fought the Boche in l18
as a major in France# In 194-0, though he had been the last Republican
candidate for the Vice Presidency and was one of the leaders of the opposi
tion party, he did not hesitate to sacrifice his own personal, business, and
political interests, but promptly responded to the call of President Franklin
Delano Roosevelt and became the Secretary of the Navy, To this man in 194-0 —
as throughout his life - the nation’s need was his paramount concern#.
He was a charter member of the American Legion. He helped organize the
Legion in New Hampshire and became its first Department Commander, For
twenty-six years he was not only one of the Legion’s finest friends and best
boosters — he was one of our finest Legionnaires,.
For forty years in civilian life he was always found in the advance
guard of thos e who sought to awaken and mould -public opinion In the national
interest. In three states where he spent most of his adult life, Michigan,
New Hampshire and Illinois, he was always recognized as an energetic, forth
right, honorable leader of men* Few men in America foresaw the awful certain
ty of our becoming involved in this war as clearly as he — and few men did
as much to prepare the nation for that contingency#.

- 3 In one of the most difficult periods of American history he became one
of the greatest Secretaries the Navy has ever had. In less than four years
of his administration the personnel of the Navy increased from 190,000
officers and men to more than 3,155,000 persons. When he took office the
Navy had 2,112 aircraft. At the end of his administration it had 42;600
airplanes. During his administration the United States Navy rose from third
place to by far the most powerful aggregation of ships, planes, equipment
and personnel in the naval history of the world.
Surely, we Legionnaires are entitled to great pride in the accomplish
ments of this man, our former comrade. And our pride in his accomplishments
is tempered only by our sadness in the tragedy that he did not live to see
the Navy his vision and his aggressiveness helped create, drive the aggressors
from the Seven Seas. Unable to present to him the award he richly deserved,
we are happy and proud in the presence here today of the gallant lady who
since their marriage in 1898 had been his true helpmate, sharing his sacri
fices and his responsibilities — Mrs. Annie Reid Knox.
Mrs. Knox, here in Chicago where your husband reached the peak of his
brilliant career in business and journalism, here'in the presence of his
friend and assistant and successor, Jim Forrestal, who helped your husband
build $he greatest Navy in the world, here in this company of the represent
atives’of 1,4-00,000 of your husband's comrades, I hand you this Distinguished
Service Medal of the American Legion. This medal your husband won by a life
time of devoted and distinguished service to his country. I ask you to accept
thismmedal as a symbol of the respect, the loyalty and the genuine affection
the men and women of the American Legion will always have for your husband.
So long as there remains an American Legion the memory of Frank Knox will
remain bright. And if we, of the American Legion succeed in our avowed
purpose of passing on to posterity the traditions and the ideals that have
made America great, then so long as fighting men with fighting hearts sail
the seas in the fighting ships of the United States Navy, the spirit of your
husband, Frank Knox, will live.
oOo

TREASURY DEPARTMENT
Washington

Press Service

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, September 19«

1944»

S K , J^

The Secretary of the Treasury announced last evening that the tenders for
$1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated September 21 and
to mature December 21, 1944, which were offered on September 15, were opened at the
Federal Reserve Banks on September 18.
The details of this issue are as follows!
Total applied for - $2,088,342,000
Total accepted
- 1,215,528,000
Average price

, J
(includes $63,050,000 entered on a fixedprice basis at 99.905 and accepted in full)
- 99.905/ Equivalent rate of discount approx. 0.375# per annum

Rangs of accepted competitive bids:
High
Low

- 99.910 Equivalent rate of discount approx. 0 .356# per annum
0 ft
w
«
0.376% •
"
- 99.905
"

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

Federal Reserve
District

Total
Applied for

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

#

40,165,000
28,890,000
18,815,000
8,093,000
313 ,656,000
22,967,000
5,055,000
21,575,000
12,569,000
123.070.000

27 ,512,000
802,372,000
25,219,000
23,380,000
15,737,000
7,952,000
178,978,000
14,719,000
5,050,000
18,779,000
11,629,000
84 .2OI.OOO

(2,088,342,000

(1,215,528,000

47 ,205,000
1 ,446,282,000

TOTAL

Total
Accepted

I

$

TREASURY DEPARTMENT
Washington
F OR RELEASE, M O R N I N G N E W S P APERS,
Tuesday, S e p t e m b e r 19, 1944.
9-18-44

Press S e r vice
No. 45-57

T h e S e c r e t a r y of the T r e a s u r y a n n o u n c e d last e v e n i n g that
tenders f or $ 1 , 2 0 0 , 0 0 0 , 0 0 0 ,

or thereabouts,

of 9 1 - d a y T r e a s u r y

bill's to be d a t e d S e p t e m b e r 21 a n d to m a t u r e D e c e m b e r 21,
w h i c h were o f f e r e d on S e p t e m b e r 15,
Reserve Banks

were

the

o p ened at the

1944,

Federal

on S e p t e m b e r 18.

T he d e tails

of this

issue are as

follows:

T o t a l a p p l i e d for - $ 2 , 0 8 8 , 5 4 2 , 0 0 0
Total accep'ted
1,215,528,000
(includes $ 6 5 , 0 5 0 , 0 0 0
e n t ered on a f i x e d - p r i c e basis at 9 9 . 9 0 5 a n d a c c e p t e d in
full)
A v e r a g e price

9 9 ,905/E q u i v a l e n t
0.575% per annum

rate of d i s c o u n t approx.

Range of a c c e p t e d c o m p e t i t i v e bids:
High

- 99.910
0.556^
- 99.905
0.576^

Low

(55 p e r c e n t

E q u i v a l e n t rate of d i s c o u n t approx.
per annum
E q u i v a l e n t rate of d i s c o u n t approx,
per annum ‘

of the a m o u n t bi d f o r at the lo w p r ice was accepted)

Federal Reserve
District

Total
Applied for

T o tal
Accepted

Boston
New York
Philadelphia
Cleveland
Richmond
A t l anta
Chicago
St. L o uis
Minneapolis
Kansas C ity
Dallas
S an Francisco

$
47,205,000
1,446,282,000
40.165.000
28.890.000
18.815.000
8.095.000
515.656.000
22.967.000
5.055.000
21.575.000
“1 2 , 5 6 9 , 0 0 0
125.070.000

$

TOTAL

$2,088,542,-000

27,512,000
802.572.000
25.219.000
25.580.000
15.757.000
7.952.000
178.978.000
14.719.000
5.050.000
18.779.000
11.629.000
84.201.000

$1,215,528,000

THE A SORT DEPARTMENT

Washington

FOR RELEASE, HORNING NEWSPAPERS
Wednesday, September 20, 1944«

Press Service

Secretary of the Treasury Morgenth&u today announced that on Monday,
September 25th, an offering will be made, through the Federal Reserve
Banks, of 7/S percent Treasury Certificates of Indebtedness of Series
€H945, open on an exchange basis, par for par, to holders of Treasury
Certificates of Indebtedness of Series F-1944, maturing October 1, 1944*
Cash subscriptions will not be received.
Hie certificates now offered will be dated October 1, 1944, and
will bear Interest from that date at the rate of seven-eighths of one
percent per annum, payable semiannually on April 1 and October 1, 1945*
They will mature October 1, 1945« They will be issued In bearer fora
only, with two interest coupons attached, in denominations of $1,000,
$5,000, $10,000, $100,000 and #1,000,000.
Pursuant to the provisions of the Public Debt Act of 1941, inter
est upon the certificates now offered shall not have any exemption, as
such, under Federal tax Acts now or hereafter enacted. The full provi
sions relating to taxability are set forth in the official circular to
be released September 25*
Subscriptions will be received at the Federal Reserve Banks and
Branches and at the Treasury Department, Washington, and should be
accompanied by a like face amount of the maturing certificates. Sub
ject to the usual reservations, all subscriptions will be allotted in
full.
There are now outstanding $3,519,047,000 of the Series F-1944
certificates.
The text of the official circular will be made public on Septem
ber 25th.

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Wednesday, September 20, 1944«
9-19-44

Press (Seryice
No. 43-38

Secretary of the Treasury Morgenthau today announced
that on Monday, September 25th, an offering will be made,
through the Federal Reserve Banks, of 7/3 percent Treasury
Certificates of Indebtedness of Series G-1945? open on an
exchange basis, par for par, to holders of Treasury Certifi
cates of Indebtedness of Series F-1944? maturing October 1,
19 4 4 , Cash subscriptions will not be received.
The certificates now offered will be dated October 1,

1944 , and will bear interest from that date at the rate of
seven-eighths.of one percent per annum* payable semiannually
on April 1 and October 1, 1945They will mature October 1,
1 9 4 5 . They will be issued in' bearer form only, with two
interest coupons attached, in denominations,of $ 1 ,0 0 0 ,- $ 5 ,0 0 0 ,
$ 1 0 ,0 0 0 , $ 1 0 0 ,0 0 0 and $ 1 ,0 0 0 ,0 0 0 .
Pursuant to the provisions of the Public Debt Act of

19 4 1 ? interest upon the certificates now offered shall not
have any exemption, as such, under Federal tax Acts now or
hereafter enacted.
The full provisions relating to taxa
bility are set forth in the official circular to be released
S ept emb er 25.
Subscriptions will be received at the Federal Reserve
Banks and Branches and at the Treasury Department, Washington,
and should be accompanied by a like face amount of the,maturing
certificates.
Subject to the usual reservations, all subscrip
tions will be allotted in full.
There are now outstanding $ 3 ?519?047?000 of the Series
P-1944 certificates.
The text of the official circular will be made public on
September 25th.

-oOo-

• u

*

Brstton Woods there mas muoh discussion of details but there
ms complete unity of purpose among some 40 nations to make
effeotive concerted plans for economic harmony and for world
wide industrial and economic development. Agreement ms
reached for a plan of currency stabilization« among the most
basic of needs for expanded and healthy world commerce« and
also for an international bank which« under the auspices end
with the participation of all the member nations, will super
vise, guarantee or make loans for economic development in all
lands.
These plans are Intended to lay the basis for exchanges
of goods and for supplies of capital where it can he most
useful in building modern economies which can yield high
standards of living.

Their purpose is rsoonstruotion and new

eoonomio development for war-wasted lands. For the United
States they will mean, when they and companion measures have
been made affective % legislation, more prosperous and there
fore better customers and better neighbors.
Americans generally look toward the future with high hope.
They have been derided for it.

But derision has not stopped

us in the past, nor have the prophets of gloom often been
good prophets.

** 1 3 »

dustriallsed production and world-wide trade. The industrially
under-developed nations have some right to expect of us that
we show the» how to convert this knowledge into higher standard!
of living for then as well as for us.
Our opportunity lies in the evident feet that our best
hope of domestic prosperity Is in a prosperous world« a world
of inoreasad demand and higher standards of living.
This most destructive of wars» which has revealed the
basest aspects of human nature and the blaekest depths of
barbarism among peoples wearing the outer clothing of civilisa
tion» has also Its brighter side. It hae shown us possibili
ties for material advancement of which we had scarcely dreamed»
and it has shown us also that a common humanity and a common
hatred of cruelty and tyranny can still bring men together to
battle for their mutual protection and for the general good.
the unity of the United and Associated Hattons is not a
more front. The power and sinearity behind it has been shown»
not only in war collaboration» but In successive eonfereneaa
to plan for the peace to earns. The monetary conference eallsd
by the President this summer and hald under Secretary
Morgenthau's leadership at Sretton Woods» Hew Hampshire» in
duly» is probably the west notable example of this. At

\

' ■; , ..

\ ; ,,

^

>;J| \>/

m

jji

“

'

**

Th* groundwork for such a policy was laid in the Atlantic
Charter of August* 1941» and it waa further advanced in the
Lend-Lease agremente of 1942» which apeak of "the expansion,
by appropriate international and domestic measures* of pro
duction, employment and the exchange and consumption of goods,
which are the material foundation of the liberty and welfare
of all peoples»* • « • "the elimination of all forms of dis*
criminatory treatment in international commerce** and "the
reduction of tariffs and other trade barriers,*
These declarations in favor of opening up the channels of
trade in the interest of world prosperity have their basis in
sxperienee more than in theory.

They refleet the sad experl*

enee of the eeonomie warfare- which proeedod the war of arme»
a warfare in which trade

quotas* tariffs* sxehsngo controls

sad competitive depreelation of currencies first helped to
create a depression and then to prolong it.
In the very fact of the extension of their buying and
their selling* their production and their distribution through
out the world* the world-trading nation«» of which the United
States has been ons sines colonial days end the era of the
clipper chip, have incurred responsibility ss well as oppor
tunity.

VC have shown the world the possibilities of in*

I

The problem
of

tie

Is

not merely domestic} n

interdependence of nations to know

national«

have soon «nough

thdl

It is inter-

Our experience has shown us that wa certainly oan

not hope to solve it by ill-considered attempt« at national
self-suffioieney and the imposition of harriers against
international trade.

Both our domestic experience and our

foreign trade experlenee indicate that the remedy is in just
the opposite direction.

They point to the conclusion that

improvement in transportation, improvement in communications,
the development of backward areas, the multiplication of de
mand, the further subdivision and specialisation in productive
effort —

all these will increase world prosperity end ours

with it*
There Is significance in the composition of the trade
of this country before the war.

The great bulk and the most

remunerative part of our trade wee with the netlone meet
advanced industrially.

It would

teem

then that wa need not

foresee any danger in supplying lees advaneed nations with
the machinery for development.
them better customers*

The proeese should merely make

10
the supply of goods — productive power as expressed la output —
towers above the normal needs — the normal consumption —
of our people.

Ve have learned that we are capable of pro**

ducing just about twice as such of useful pods and services
as we produced in any year before the «nr. Xf basic human
needs are not adequately met, it is not for lack of productive
capacity.
The lesson of the productiveness of the modern industrial
machine and modern agriculture has not been eonfined to the
United States. Other industrialised countries have made the
same discovery, the dlseovery that the earth can be made to
yield abundance for all. Tha demonstration of that faet will
probably ba held in tha future to have been one of the moat
Important developments of this era.
Tha very faet that ms have solved so brilliantly one
great economic problem, the problem of production, lead« soma
to ba pessimistic about our ability to solve another equally
important, that of making abundance available to those who
need it. X don't know why this should be so. It would seem
that wa ought to ho encouraged by the triumph —• the relatively
recent triumph —* in one field, to hope for a» brilliant
progress in another.

• 9 *

to the machinery of production.

It might have been expected

that'the hug# demand* for war supplies and equipment would
have reduced very greatly the supplies of civilian goods and
forced us to live on short rations and with few luxuries.
Actually nothing of the kind has occurred.

We are pro*

ducing for civilian use in quantities as great as for any non*
war year.

We are not going ragged} we are not starving} we are

not even denying ourselves in any important or significant way
to meet the war*# demands. We have plenty of the necessities
of life and a considerable proportion of us aré more amply
supplied with luxuries than ever before,

The supplies of

some foods and a few other commodities are limited and there
is rationing, not generally because of reduced supply but be
cause of Increased demand.

Further than that, we are not

setting ourselves any difficult task cf reconstruction through
using up any considerable part of our capital goods.

Much

of the increase in plant capacity for war purposes may be
fact be useful for peacetime production.
With all this abundance of consumer goods we are producing
materials of war in quantity and value only slightly less
yÉÉr

■'

S

¡ J '

| . ' jg* i '

. I | pgfÉ Ipl

than the record abundance we are producing for domestic use.
The unescapable drama of the situation is the manner in which

** 8 m

route and that the greatest possible freedom for and stimu~
lation of world trade Is the first necessary step in that
direction#
American soldiers with their allies on the continent of
Europe are now engaged in dealing the death blows to the
most menacing tyranny the modern world has seen*

I t Tiotopl”

th#y

*oa uad"

the spectacu-

*u # lead8r# *iT* °*rtalny

evidence of their courage, their versatility, their excellent
training and their patriotic devotion*
something more*
mn

But they reflect

Like the equally splendid victories of our

in the southwest Pacific and on the continent of Asia

they tell the story of an immense productive achievement by
the American people that is perhaps the most amassing development
of this war*
Our foes are being overcome by the might of armed forces
supplied with weapons and equipment which In sheer weight and
volume exceed anything ever before thought to be possible*
As a war achievement this assures us victory and fills
us with pride.

But It has significance in another way.

For

it has within it promise of the satisfaction of the material
wants of humanity on a far more liberal and abundant scale
than has ever been enjoyed before,

normally our productive

equipment operates to supply current needs* with some additions

f~

To Miff ourselves to & world of further restricted
international trade or even to a world of static trade would
require us to face a program of wholesale reorganisation of
our productive habits and processes* If we wish to see growth
along the lines to which our agriculture and our industry
have adjusted themselves our interest is in expanding trade
and an expanding world economy*
There seems to have been prevalent in the past an illusion
about world trade — an Illusion as fallacious as that Mich
treats of national income and national productive power as
definitely limited amounts for which labor and capital* pro
prietor and consumer must struggle to get each his fair share*
The Illusion about world trade is that there art closely
limited markets in which we can expand our business only by
taking business sway from other nations* In this country we
have learned that to create a market for a new product and to
enlarge its sales does not mean taking something out of
national income; on the contrary* it is more likely to mean
creating employment* creating purchasing power and adding to
national Income* America has prospered by creating and
satisfying new wants.

There seems not the slightest reason

to doubt that the path of world prosperity lies along the same

6-

Our export*,^.» normal years before the warsg^SSfeiggg^
to something like 10 per cent of our output of movable goods,
are also of very great importance to us* Since the home
market takes 80 per cent of our goods it might be thought
we could improve the domestic market to take the other 10
per cent* But the matter is not so simple* Industries have
grown up largely dependent on the foreign market* If they
are ruined others largely dependent on them get into diffi
culties* Our experience in 1928 and the years immediately
following it ought to have shown how that works*
The loss of 10 per cent or much less than 10 per cent
of the market for our products, if translated into anequivalent
amount of unemployment, could easily mean the difference be
tween a relatively high employment level and a low employment
level*

It is a great mistake to think of ours as a balanced

economy, spilling over a little of its surplus production to
foreign countries and buying a few of their products in ex
change* We have only to think of cotton, tobacco, food
products, petroleum, chemicals, steel, automobiles, machinery,
agricultural implements, typewriters, sewing machines,
electrical goods — to say nothing of our great new industry
of aircraft building — to realise what a mistake that would be»

-

5

-

the 8 » world at all. It ia a wholly differ«! world.
There Is no room on It any more for a country or a civilisa
tion which oan develop Independently of the reat of the world.
We here in the United States are subject to the influence
of political events in Europe, As ia or Africa; we are subject
also to the influence of eoonomio events in any of those
continents*

We have learned this the hard way; that is,

by bitter experience. We have learned also that mistakes
we make react against us. We can expect this to be even more
true in the future than in the past.
This country is probably more nearly self~sufficiont than
any other country In the world* and it may well continue to
be so# We .have here nearly all the natural resources requisite
to the needs of a modern civilisation* and certainly we are
skillful enough to make anything that can be manufactured*
We have nearly all we need* but not all; and what we lack is
important to us* Some of it* such as rubber and certain
metals * is essential to our manufactures# Some of it consists
of food products and other articles that are the growth or
manufacture of others which we are accustomed to enjoying and
feel we must continue to have.

* 4 #

continued persistently.
The development of international air transport — of
transoceanic air transport — for passengers and precious
freight« has hurst on us suddenly..

The war has given It

tremendous impetus. We can't yet appraise its full effect»
nor the full effect of other mechanical developments that
will tend to increase transport speeds and reduce costs*
But certainly we oan deduce that the effect will not he to
promote isolation» hut rather to promts intercommunication
and increased trade.
We have seen in the way this war burst upon us and in
developments since how unimportant are the wide oceans which
surround as as harriers against an aggressor and how closely
we are tied in« for better or for worse» with the political
systems of the whole world.

We

have learned that the first

outbreak of civil persecution» savagery and oppression snywhere
in the world is a sign of danger to us. Just as an uncontrolled
fire anywhere in a city might menace a l l its inhabitants. How
oan we sxpeet that in the economic field the situation oan he
any differeat?

In fact we know that it is not. The plain

fact is that the world in which we live is not the world of
1778, or 1800 or even of 1844,

Physically it is Just not

« 3 *

Possibly we don*t always appreciate the part that
transportation development has played in ths growth and
eohssiont even ths political unity» of ths United States«
Increasing speed» reductions in cost» hare promoted regional
Interdependence« This trend has meant not only sharing of
specialties» overcoming climatic and soil limitations» but
has promoted productive efficiency and prosperity« It has
contributed to increases In the standard of living* These
developments have been made possible by the absence of
political barriers between states and regions and by positive
governmental steps such as the creation of a unified monetary
system and encouragement to investment and to settlement«
International trade has followed the same trend and
been subject to some of the same influences* The exchange
of products on a large scale has promoted specialisation and
efficiency and has contributed to higher standards of living
in many areas all around the world« But of course the parallel
with our progress in the United States is far from complete«
Instead of one government whose support has been given toward
actions that promoted cohesion and unity» in the world area
there have been many governments and their influence has
often been exerted toward division and separatism* In spite
of actions of this sort the trend toward interdependence has

- ■
'* 1 '

1
■
'
•:y 1 T v
m M •» .
1ix-■'

•

*
•

Zt bat become an old saying that the earth le constantly
shrinking, beoause of improvements in the methods of travel.
That mas said in the days of the clipper ships out of Boston,
said again in the days of railroad building and again with
the coming of fast ocean liners.

But perhaps we should

revise our thoughts and think of time as having attained a
nem quality. At least the tinterspace equation is greatly
modified.
A hundred years ago there mas muttering in Boston and
Philadelphia and along the Potomac and the James about the
admission of any more States in the mast. Ve read quotations
such as these: "What do those mild nun out thsrs knots about
our aftirs?

What have me in common mlth them?

Is

it

possible that so vast an araa can bs governed as on# Nation?”
It mas transport that knit it together and defeated the
expectations of those mho looked to see three or four or a
half-dozen ooloniee or republics spring up bstmsen Canada
and Mexico. That and the spirit of adventure. From the
standpoint of the movement of goods end persons distance is
measured by time and cost. They are both being mhittled dornn;
time most spectacularly right sow.

X

4

1

' ^ *

Draft of Speech¿for Christ Church Forum
low fork, H.T., September 20-21, 1944.
Just before this wsr started Hew fork was separated
from England and France by a space of about one week, if
you came or went by a good ship. The separation now by
a common route of travel is about 24 hours. It will be less.
It is not exactly a secret that out at LaOuardia Field
the big planes are leaving daily for trans-Atlantic trips —
often several in a day — and are arriving as frequently.
I talked not so long ago to an officer of another
government who had remained at work in an office in the
British Isles until after midnight, had breakfasted in
Montreal, put in approximately a full working day there, had
dinner in Hew York and spent an hour or two in conference
there, and had been able to keep a late appointment in
Washington — all in one calendar day, with the benefit of
five extra time-differential hours.
This Is the picture of a full day in the life of a busy
man, but it also gives you a vivid conception of what is
happening to world transport.

- 15 If hope means courage an& willingness to face our
problems squarely, it is its own best promise that we
shall|^Ee-riai progrei«/
/
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A n o t h e r step in i n t e r n a t i o n a l
to b r i d g e

collaboration designed

the t r a n s i t i o n f r o m a w a r t i m e to a p e a c e t i m e

econom^^is

the U n i t e d R e l i e f a n d R e h a b i l i t a t i o n

Administration*

T his is a s e r vice a g e n c y set u p b y 44

member governments

to h e l p solve

the u r g e n t p r o b l e m s o f

r e l i e f a n d r e h a b i l i t a t i o n f o r l i b e r a t e d c ountries.
A l t h o u g h the p r o g r a m of U M R R A ,as it is c o m m o n l y known,
deals o n l y w i t h a short time p h a s e of the world» s w a r d i s r u p t e d a f f a i r s a n d is n o t d e s i g n e d to e n t e r into
postwar reconstruction,

it is a s i g n i f i c a n t h a r b i n g e r

of economic humane collaboration among nations«

* 14 *
Bretton Woods there was much, discussion of ¿stalls But there
was complete unity of purpose among some 40 nations to make
effective concerted plans for economic harmony and for world*
wide industrial and economic development* Agreement was
reached for a plan of currency stabilization* among the most
basic of needs for expanded and healthy world commerce* and
also for an international bank which, under the auspices and
with the participation of all the member nations, willfaufpp
jCjuCulJCtL

\

—-"muuui

for ooonomic development in all

Sm m £MK8S!2

lands*
These plans are intended to lay the basis for €9s*mgas
.P

^ U J

can be mmt
siie

useful in building modern economies wMrehi
standards of living*

MTSigh

Their purpose is recointructlon and new

economic development for war-wasted lands* For the United
States they will mean* when they and companion measures^h&ve
been made effective by legislation* more prosperous and there
fore better customers and better neighbors*
iYjuAk^s^ Americans generally look toward the future with high hope*
They have been derided for it*
"$Ltiw

But derision has not stopped

in the past* nor have the prophets of gloom often been

good prophets.

4j&+

ip t ^

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- 13
dustrialized production and world-wide trade#

The industrially

under-developed nations have some right to expect of us that
we show them how to convert this knowledge into higher standards
of living for them as well as for us*
Our opportunity lies in the evident fact that our hast
hope of domestic prosperity is in a prosperous world, a world
of increased demand and higher standards of living*
This most destructive of wars, which has revealed the
basest aspects of human nature and the blackest depths of
v
.
■ ■
:■ «' .
barbarism among peoples wearing the outer clothing of civiliza
tion, has also its brighter side*

It has shown us possibili

ties for material advancement of which we had scarcely dreamed,
and it has shown us also that a common humanity and a common
hatred of cruelty and tyranny can still bring men together to
battle for their mutual protection and for the general good*
The unity of the United and Associated Hâtions is not a
mere front*

The power and sincerity behind it has been shown,

not only in war collaboration, but in successive conferences
to plan for the peace to come#

The monetary conference called

by the President this summer and held under Secretary
Morgenthau's lumimtlÉÉp at Bretton Woods, Hew Hampshire, in
July, is probably the most notable example of this.

At

The groundwork for such a policy was laid in the Atlantic
Charter of August, 1941, and it was further advanced in the
lead-Lease agr Aments of 1942, which speak of *the expansion,
by appropriate international and domestic measures, of pro
duction, employment and the exchange and consumption of goods,
which are the material foundation of the liberty and welfare
of all peoples,* * * * *the elimination of all forms of dis
criminatory treatment in international commerce,* and *the
reduction of tariffs and other trade barriers#*
If
, r, ~
These declarations in favor of opening up the channels of
trade in the interest of world prosperity have their basis in
experience more than in theory*

They reflect the sad experi

ence of the economic warfare which preceded the war of arms,
a warfare in which trade

quotas, tariffs, exchange controls

and competitive depreciation of currencies first helped to
create a depression and then to prolong it*
In the very fact of the extension of their buying and
their selling, their production and their distribution through
out the world, the world-trading nations, of which the United
States has been one since colonial days and the era of the
clipper ship, have incurred responsibility as well as oppor
tunity.

We have shown the world the possibilities of in-

-

11 -

The problem Is not merely domestic* we have seen enough
of the interdependence of nations to know th%t It is inter
national.

Our experience has shown us that we certainly can

not hope to solve it by ill-considered attempts at national
self-sufficiency and the imposition of barriers against
international trade*

loth our domestic experience and our

foreign trade experience indicate that the remedy Is in ju#t
- the opposite direction*

They point to the conclusion that

improvement in transportation, improvement In communications,
the development of backward areas, the multiplication of de
mand, the further subdivision and specialisation in productive
effort —

all these will Increase world prosperity and ours

with it*
There is significance in the composition of the trade
of this country before the war*

The great bulk and the most

remunerative part of our trade was with the nations most
advanced industrially*

it would seem then that we need not

foresee any danger in supplying less advanced nations with
the machinery for development*
them better customers*

The process should merely make

-

10

-

the supply of goods ** productive power as expressed In output **
towers above the normal needs
of our people*

the normal consumption

We have learned that we are capable of pro*

ducing j\w4Md£*t twice as much of
as we produced in any year before the war*

p o d s and services
If basic human

needs are not adequately met, it is not for lack of productive
capacity*
fhe lesson of the productiveness of the modern industrial
machine and modern agriculture has not been confined to the
United States#

Other industrialised countries have made the

same discovery, the discovery that the earth can be made to
yield abundance for all*

The demonstration of that fact will

probably be held in the future to have been one of the most
important developments of this era*
The very fact that we have solved so brilliantly one
great economic problem, the problem of production, leads some
to be pessimistic about our ability to solve another equally
important, that of making abundance available to those who
need it#

I don*t know why this should be so#

It would seem

that we ought to be encouraged by the triumph ** the relatively
recent triumph •• in one field, to hope for aa brilliant
progress in another*

* 0 **

to the machinery of production*

It might have been expected

that the huge demands for war supplies and equipment would
have reduced very greatly the supplies of civilian goods and
forced us to live on short rations and with few luxuries.
Actually nothing of the kind has occurred*

We are pro*

ducing for civilian use in quantities as great as for any non*
war year*

We are not going ragged; we are not starving; we are

not even denying ourselves in any important or significant way
to meet the war’s demands* We have plenty of the necessities
of life and a considerable proportion of us are more amply
supplied with luxuries than ever before*

The supplies of

some foods and & few other commodities are limited and there
CL**4j &

,,
/yxS".

is rationing! not gonepwa?ly because of reduced supply but W

J/te

tUhMcuJ

a m m o of increased demand*

Further than that* w© are not

A

setting ourselves any difficult task of reconstruction through
using up any considerable part of our capital goods*

Much
»

of the increase in plant capacity for war purposes may ^
fact be useful for peacetime production.
With all this abundance of consumer goods we are producing
materials of war in quantity and value only slightly less
than the record abundance we are producing for domestic use*
The unescapable drama of the situation is the manner in which

— B m

route and that the greatest possible freedom' for and stimu
lation of world trade is the first necessary step in that
direction.
American soldiers with their allies on the continent of
Europe are now engaged in dealing the death blows to the
most menacing tyranny the modern world has seen.

The spectacu

lar victories they have won under able leaders give certain
evidence of their courage, their versatility, their excellent
training and their patriotic devotion.
something more.

But they reflect

Like the equally splendid victories of our

men in the southwest Pacific and on the continent of Asia
they tell the story of an immense productive achievement by
the American people that is perhaps the most amasing development
of this war.
Our foes are being overcome by the might of armed forces
supplied with weapons and equipment which in sheer weight and
volume exceed anything ever before thought to be possible*
As a war achievement this assures us victory and fills
us with pride.

But it has significance in another way.

for

it has within it promise of the satisfaction of the material
wants of humanity on a far more liberal and abundant scale
than has ever been enjoyed before,

formally our productive

equipment operates to supply current needs, with some additions

m.f m

To adapt ourselves to a world of further restricted
international trade or even to a world of static trade would
require us to face a program of wholesale reorganization of
our productive habits and processes*

If we wish to see growth

along the lines to which our agriculture and our industry
have adjusted themselves our interest is in expanding trade
and an expanding world economy*
There seems to have been prevalent in the past an illusion
about world trade **** an Illusion as fallacious as that which
treats of national Income and national productive power as
definitely limited amounts for which labor and capital, pro
prietor and consumer must struggle to get each his fair share*
The illusion about world trade is that there are closely
limited markets in which we can expand our business only by
taking business away from other nations*

In this country we

have learned that to create a market for a new product and to
enlarge its sales does not mean taking something out of
national incomei on the contrary, it is more likely to mean
creating employment, creating purchasing power and adding to
national income*

America has prospered by creating and

satisfying new wants*

There seems not the slightest reason

to doubt that the path of world prosperity lies along the same

** 0"»

to something like 10 per cent of our output of movable goods,
are also of very great importance to mi* Since the home
market takes 90 per cent of our goods it might be thought

tween a relatively high employment level and a low employment
level.

It is a great mistake to think of ours as a balanced

economy, spilling over a little of its surplus production to
foreign countries and buying a few of their products in ex*
change.

We have only to think of cotton, tobaceo, food

products, petroleum, chemicals, steel, automobiles, machinery,
agricultural implements^
electrical goods —

|j|

to say nothing of our great new industry

- 5 •

the same world at all*

It is a wholly different world.

There is no room on it any more for a country or a civiliantion whkilHie>vdavelop independently of the rest of the world.
We here in the United States are subject to the influence
of political events in Europe, Asia or Africa; we are subject
also to the influence of economic events In any of those
continents*

We have learned this the hard way; that Is,

by bitter experience.

We have learned also that mistakes

we make react against us*

We can expect this to be even more

true in the future than in the past.
This country is probably more nearly self-sufficient than
any other country in the world, and it may well continue to
be so*

We have here nearly all the natural resources requisite

to the needs of a modern civilisation, and eswWerjly we are
skillful enough to make rnytMtm .¿kwh

he manufactured

We have nearly all we need
important to us.

Some of

mafeawlaiiirpAe essential to our mwm£*
nnmifpw4ur8C(f ’Soms

bf«41■

«

ei? food products and other articles that are the growth or
manufacture of others which we are accustomed to enjoying and
feel we must continue to have*

s

i

4

continued persistenti;
The development of international air transport ~~ of
transoceanic air transport —

for passengers"and precious

freight, has burst on us suddenly.
tremendous impetus.

The w a s h e s given it

We c a n H yet appraise its full effect,

nor the full effect of other mechanical developments that
will tend to increase transport speeds and reduce costs*
But certainly we can deduce that the effect will not be to
promote isolation, but rather to promote intercommunication
and

f

developments since^how unimportant are the wide oceans which
surround us as barriers against an aggressor and how closely
we are tied in, for better or for worse, with the political
systems of the whole world*

We have learned that the first

outbreak of civil persecution, savagery and oppression anywhere
in the world is a sign of danger to us, just as an uncontrolled
fire anywhere in a city might menace all Its I n h a b i t a n t s . ^ ^
can we expect that in the economic field the situation can be
any different?

In fact we know that it is not.

The plain

fact is that the world in which we live is not the world of
1776, or 1800 or even of 1844,

Physically it is just not

* s *

Possibly we don't always appreciate the part that
transportation development has played in the growth and
coheaionf even the political unity, of the United States*
Increasing speed, reductions in cost, have promoted regional
interdependence*

This trend has meant not only shaping of

‘overcoming climatic and soil limitations, but
has promoted productive efficiency and prosperity*
contributed to increases in the standard of living*

It has
these

developments have been made possible by tfea-ofroonce of
O^d t t u L u

political barriers between states and regions and by positive
governmental steps such as the creation of a unified monetary
system and encouragement to Investment and to settlement*
International trade has followed the same trend and
been subject to some of the same influences*

The exchange

of products on & large scale has promoted specialization and
efficiency and has contributed to higher standards of living
in «any area* all around the world. ^ B u t of court* the parallel
with our progress in the United States is far from complete.
Instead of one government whose support has been given toward
actions that promoted cohesion and unity, in the world area
there have been many governments and their influence has
often been exerted toward division and separatism*

In spite

of actions of this sort the trend toward interdependence has

•

2

-

It has become an old saying that the earth is constantly
shrinking, because of improvements in the methods of travel*
That mas said in the days of the clipper ships out of Boston,
said again in the days of railroad building and again with
the coming of fast ocean liners*

But perhaps we should

revise our thoughts and think of time as having attained a
new quality*

At least the time-space equation is greatly

modified.

K

/ A

'
rVAJb
hundred years ago there was muttering in Boston and

Philadelphia and along the Potomac and the James about the
admission of any more States in the west* ‘We read quotations
such as these:
our af&irs?

*What do those wild men out there know about
What have we in common with them?

Is it

possible that so vast an area can be governed as one Nation?11
It was transport that knit it together and defeated the
expectations of those who looked to see three or four or a
half-dozen colonies or republics spring up between Canada
and Mexico*

That and the spirit of adventure*

from the

standpoint of the movement of goods and persons distance is
measured by time aud cost.

They are both being whittled down;

time most spectacularly right now* 7

(p

Just before this war started lew York was separated
from England and France by a space of about one week, if
you came or went by a good »hip*

The separation now by

a common route of travel is about 24 hours*

It will be less*

It is not exactly a secret that out at LaGuardia Field
the big planes are leaving daily for trans-Atlantic trips —
often several in a day —

and are arriving as frequently*

1 talked not so long ago to an officer of another
government who had remained at work in an office in the
British Isles until after midnight, had breakfasted in
Montreal, put in approximately a full working day there, had
dinner in Hew York and spent an hour or two in conference
there, and had been able to keep a late appointment in
Washington —

all in one calendar day, with the benefit of

five extra time-differential hours.
This is the picture of a full day in the life of a busy
man, but it also gives you a vivid conception of what is
happening to world transports

TREASURY DEPARTMENT

Washington /
• '- 3 % 4 ^
FOR RELEASE,

t

M O R N I N G NEWS P A P E R S ,

Thursday. Sautamher 21. 1944.

/)

yie,

3-37

Address of Herbert E. Gaston, Assistant, Secretary
of the Treasury, to he delivered at the evening
session of the Christ Church Forum, New York,
New York, Wednesday, September 20, 1944.

3

A(Jf? )fYreiC^r

’

«

1

Pf?o,iPs*(rj

m
rf\spU;

TREASURY DEPARTANT
Washington

FOR RELEASE, MORNING NEWSPAPERS,

B pess Service

Thursday, September 21, 1944.

No. 43-39

Address of Herbert E. Gaston, A ssistan t Secretary
of the Treasury, to be delivered at the evening
session of the Christ Church Forum, New York,
Sew. York, Wednesday, September 20, 1944.
OUR INTEREST JN WORLD PROSPERITY
Just before th is war started .New York was separated
from England and France by a space of about one week, i f you
came or went by a good ship. The'separation now by a common
route of travel is about 24 hours. It w ill be le s s .
It is not ex a ctlyv a secret that out at LaGuardia Field
the big planes are leaving d a ily for trans-A tlantic trip s - often several in a day - - and are arriving as frequently.
I talked not so long ago to an o ffic e r of another
government who had remained a t work in an o ffic e in the B ritish
Isle s u n til after midnight, had breakfasted in Montreal, put
in approximately a f u l l working day there, had dinner in
New York and spent an hour or two in conference there, and had
been able to keep a la te appointment in Washington - - a l l in
one calendar day, with the b en efit of fiv e extra timed iffe r e n tia l hours.
This^is the picture of a f u l l day in the l i f e of a busy
man, but i t also gives you a vivid conception of what i s
happening to worlcl transport.
It has become an old saying that the earth is constantly
shrinking, because of improvements in the methods of tra v el.
That was^said in the days of the clipper ships out of Boston,
said again in the days of railroad building and again with
the coming of fa s t ocean lin e r s . But perhaps we should revise
our thoughts. and think of time as having attained a new quality.
At le a s t the time-space equation is greatly modified.

-

2

-

A. hundred years or so ago there was muttering in Boston
and Philadelphia and along the Potomac and the James about the
admission of any more States in the w est. We read quotations
such as these; lfWhat do those w ild men out there know about
our a ffa ir s? What have 'we in common with them? Is i t
possible that so vast an area can be governed as one Nation?”
It was transport that k nit i t together and defeated the
expectations of those who looked to s'ee three or four or
a half-dozen colonies or republics spring up between Canada
and Mexico. That and the s p ir it of adventure. From the
standpoint of the movement of goods and persons distance is
measured by time and c o s t. They are both being w h ittled down-
time most spectacularly righ t now.
Possibly-we don’ t always appreciate the part that
transportation development has played in the growth and
cohesion, even the p o lit ic a l u nity, of the United S ta tes.
Increasing speed, reductions in c o st, have promoted regional
interdependence. This trend has meant not only wide markets
for^ sp ecialized products, overcoming clim atic and s o il lim ita*-'
ta tio n s, but^has promoted productive e ffic ie n c y and p rosp erity.
It has contributed to increases in the standard of liv in g .
These^developments have been made p ossib le by a minimum of
p o lit ic a l and trade barriers between sta te s and regions and
by p o sitiv e governmental steps such as the creation of
a u nified monetary system and encouragement to investment and
to settlem ent.
International trade has followed the same trend and been
subject to some of the same in flu en ces. The exchange of products
on a large sca le has promoted sp e c ia liz a tio n and e ffic ie n c y and
has contributed to higher standards of liv in g in many areas all'
around the jjrarld*
But of course.the p a r a lle l with our progress in the
United btates is far from complete. Instead of one government
whose^support has been given toward actions that promoted
cohesion and u nity, in the.world area there have been many
governments and th eir influence has often been exerted toward
d ivision and separatism. In sp ite of actions of th is sort the
^rend toward interdependence has continued p e r s is te n tly .

- 3 The development of in tern ation al air transport ~ of
transoceanic air transport ~ for passengers and precious
fr eig h t, has burst on us suddenly. The war has given i t
tremendous impetus. We can’t yet appraise i t s f u ll e ffe c t,
nor the f u ll e ffe c t of other mechanical developments that
w ill tend^to increase transport speeds and reduce c o sts.
But certa in ly we can deduce that the e ffe c t w ill not be to
promote is o la tio n , but .rather to promote intercommunication
and increased trade.
We have seen in the way our enemies struck- in th is war
and in developments since then how unimportant are the wide
oceans which surround us as barriers against an aggressor and
how c lo s e ly we are tied in , for b etter or for worse, .with
the p o lit ic a l systems of the whole world. We have learned
that the f i r s t outbreak of c i v i l persecution, savagery and
oppression anywhere in the world is a sign of danger to us,
just as an uncontrolled f ir e anywhere in~a c it y might
menace a l l i t s in hab itan ts.

How can we expect that in the economic f ie ld the situ a tio n
can^be any d ifferen t? In fa c t we know that i t is not. The
plain fa c t is that the world in which we liv e is not the
world of 1776, or 1800 or even of 1844. P h ysically i t is ju st
not the same world a t a l l . It i s a wholly d iffer en t world.
There is no room on i t any more for a country or a c i v i l i z a 
tion to liv e and develop independently of the r e st of the
world.
We here in the United States are subject to the influence
of p o litic a l^ ev e n ts in Europe, Asia or Africa; we are subject
also to the influence of economic events in any of those
continents. We have learned th is the hard way; that i s , by
b itter experience. We have learned a lso that mistakes we
make react against us. We can bxpect th is'to ' be~evefi'more-'
true in the future than in the past,
This country is probably more nearly s e lf - s u f f ic ie n t
than any other country in the world, and i t may w ell continue

- 4 to be so. We have here nearly a ll the natural resources
req u isite to the needs of a modern c iv iliz a t io n , and we are
s k illf u l enough to make any of the manufactured.goods that
we use, We have nearly, a l l we need, but not a ll; and what
we lack is important to us. Some of the metals and other
m aterials are e s s e n tia l to our manufacturing. Then there
are food products and other a r tic le s that are the growth or
manufacture of others which we are accustomed to enjoying
and f e e l we must continue to have.
Our exports, amounting in normal years before the war
to something lik e 10 per cent of our output of movable
goods, are also o f very great importance to us. Since the
home market takes 90 per cent of our goods i t might be
thought we' could, improve the domestic market to take the
other 10 per cent. But the matter is not so simple. We
4^ e<^ +.?r ° ne
markets for a far greater output
»
1 . Pre~war production. Also, some of our important'
industries have grown up la rg ely dependent on the foreign :•
market. If they are ruined others dependent on them get
into d i f f i c u l t i e s . Our experience in 1929 and the years
imme la e ly follow ing i t ought to have shown how that works.
W couldn t sa c r ific e that 10 per cent without lo sin g far
more.
& ±ai
eVei / he ?-?SS ° f 10 por cent of the market for our
/ f K could e a s ily mean the d ifferen ce between a re la tiv e ]
g employment le v e l and a low employment le v e l. It is
a great mistake to think of ours as a balanced economy
s p illin g over a l i t t l e of i t s surplus production to forei™
?6W °4 th eir .products »In e L h L g e /
we nave only to think of cotton, tobacco, food products
petroleum, chemicals, s t e e l, automobiles machinery
5"“ ”“ =

-

buildino' * to7 nothm g of our great new industry of a ircr a ft
ding - to re a liz e what a mistake that would be
—

To adapt ourselves to a world of further r e str ic te d
in tern ation al trade or even to a world of s ta tic trade
would require us to face a program of wholesale reorganization
of our productive habits and p rocesses. If we wish to
see growth along the lin e s to which our agriculture and
our industry have adjusted themselves our in te r e st is in
expanding trade and an expanding world economy.
There seems to have been prevalent in the past an
illu s io n about world trade - - an illu s io n as fa lla c io u s
as that^which trea ts of national income and national
productive power as d e fin ite ly limited;amounts for which
labor and ca p ita l, proprietor and consumer must struggle
to get each his fa ir share. The illu s io n about world
trade is that there are c lo se ly lim ited markets in which
we can expand our business only by taking business away
from other natrons. In th is country we have learned that
to create a market for a new product and to enlarge i t s
sa les does not mean taking something out of national
income; on the contrary, i t i s more lik e ly to mean creating
employment, creating purchasing power and adding to
national income. America has prospered by creating and
sa tisfy in g new wants. There seems"not the s lig h t e s t reason
to doubt that the path of world prosperity l i e s along the
same route and that the .greatest p ossib le freedom for
and stim ulation of ivorld trade i s the f i r s t necessary sten
in that d irectio n .
*
1
American sold iers with th eir a l l ie s on the con-___
;inent
of Europe are now engaged in dealing the death blows to
the most .menacing tyranny the modern world has seen. The
spectacular v ic to r ie s they have 'won under able leaders give
certain evidence of th eir courage, th eir v e r s a t ilit y , their
e x c elle n t train in g and their p a tr io tic devotion. But they
r e fle c t something more. Like the equally splendid v ic to r ie s
oi our men m the southwest P a cific and on the continent
oi Asia they t e l l the story o f an immense productive
achievement by the American people that is perhaps the most
amazing development of th is war.

-

6 -

9ur i*9es are b-eing overcome by the might of armed forces
supplied with weapons and equipment which in sheer weight and
volume exceed anything ever before thought to be p o ssib le.
^As a war achievement th is assures us v icto ry and f i l l s
us w ith pride. But i t has sig n ifica n ce in another way, For
i t has witjain i t promise of the s a tis fa c tio n of the m aterial
wants of humanity on a far more lib e r a l and abundant scale
than has ever been enjoyed before, Normally our productive
equipment operates to supply current needs, with some additions
to the machinery of production. It might have been expected
that the huge demands for war supplies and equipment would have
reduced^very g rea tly the supplies of c iv ilia n goods and forced
us to liv e on short rations and with few lu xu ries.
A ctually nothing of the kind has occurred. We are pro
ducing for c iv ilia n use in q u an tities as great as for any non
war year. We are not going ragged; we are not starving; we are
not even denying ourselves in any important or sig n ific a n t way
to meet, the war’s demands. We have plenty of the n e c e s sitie s
of l i f e and a considerable proportion of us are more amply
supplied with luxuries than ever before. The supplies of some
foods and a few other commodities are lim ited and there is
rationing, sometimes because of reduced supply due to m ilita ry
need but mostly because of increased c iv ilia n demand. Further
than th at, we are not se ttin g ourselves any d if f ic u lt task of
reconstruction through using up any considerable part of our
ca p ita l goods.. Much of the increase in plant capacity for war
purposes may in fa c t be u sefu l for peaetime production.
With a l l th is abundance of consumer goods we are producing
m aterials of war in quantity and value only s lig h t ly le s s than,
the record abundance we are producing for domestic, use. The
unescapable drama of the situ a tio n is the manner in which the
supply of goods - - productive power as expressed in output - towers above the normal needs - - the normal consumption -of our people. We have learned that -we are capable of produc
ing nearly twice as much of goods and services as we produced
in any year before the war. I f basic human needs are net
adequatelyimet, i t is not for lack of productive cap acity.
y h e lesson of the productiveness of the modern in d u stria l
machine and modern agricu ltu re has not been confined to the
Jnited States.. Other in d u stria lized countries have made the

J: ,r ~

same discovery, the discovery that the earth can be made to *
y ield abundance for a l l . The demonstration of that fa c t w ill
probably be held in the future to have been one of the most
important developments of th is era.
The very fa c t that we have solved sq b r illia n t ly one
great economic problem, the problem of production, leads some
to be p essim istic about our a b ilit y to solve another equally
important, that of making abundance availab le to those who
need i t . I don't know why th is should be so. It would seem
that we ought to be encouraged by the triumph - - t h e r e la tiv e ly
recent triumph — in one f ie ld , to hope for as b r illia n t
progress in another.
The problem is not merely domestic: we have seen enough
of the interdependence of nations to know that i t is in te r 
national. Our experience has shown us that we certa in ly can
not hope t o ;solve i t by ill-c o n sid e r e d attempts at national
s e lf-s u ffic ie n c y and the im position of barriers against
international trade. Both our domestic experience and our
foreigh trade experience in dicate that the remedy is in ju st
the opposite d irectio n . They point to the conclusion that
improvement In transportation, improvement in communications,
the. ^development of backward areas, the m u ltip lica tio n of de
mand, the further subdivision and sp e c ia liz a tio n in productive
e ffo r t —- a l l these w ill increase world prosperity and ours
with i t .
There is sig n ific a n c e in the composition of the trade of
th is country before the war. The great bulk and the most
remunerative'part of our trade was with the nations most
advanced in d u str ia lly . It-would seem then that we need not
foresee any danger in supplying le s s advanced nations with
the machinery for development. The process should merely make
them b etter customers.
The groundwork for such a p o licy was la id in the A tlan tic
Charter of August, 1941, and i t was further advanced in the
Lend-Lease agreements of 1942, which speak of ”the expansion,
by appropriate in tern ation al and domestic measures, of pro
duction, employment, and the exchange and consumption of goods,
which are the m aterial foundation of the lib e r ty and welfare
° f . a l l people," * * * "the elim ination of a l l forms of d is 
criminatory treatment in in tern ation al commerce,u and nthe
reduction of t a r if f s and other trade b a r r ie r s .n

-

8

-

These declarations in favor of. opening up the channels of
trade in the in te r e st of world prosperity have th eir basis in
experience more than in theory. They r e f le c t the sad experiA
enee of. the economic warfare which preceded the war of arms,
a warfare in which trade quotas, t a r if f s , exchange controls
and com petitive depreciation of currencies f i r s t helped to
create a depression and then to prolong i t .
In t h e v e r y f a c t o f t h e e x t e n s i o n of t h e i r buying and
t h e i r s e l l i n g , t h e i r p r o d u c t i o n and t h e i r d i s t r i b u t i o n th r o u g h 
out th e w orld, t h e w o r l d - t r a d i n g n a t i o n s , of which the U nited
S t a t e s has been one s in c e c o l o n i a l days and the era of- the
c l i p p e r s h i p , have i n c u r r e d r e s p o n s i b i l i t y as w e l l as oppor
t u n i t y . lie have shown th e w orld t h e p o s s i b i l i t i e s of i n d u s t r i 
a l i z e d p r o d u c t i o n and world-w ide t r a d e . The i n d u s t r i a l l y und
u n d er-d ev elo p ed n a t i o n s have some r i g h t to ex p e c t of us t h a t
we show them how to c o n v e r t t h i s knowledge i n t o h i g h e r s t a n d a r d s
of l i v i n g f o r them a s w e l l a s f o r u s .

Our opportunity l i e s in the evident fa c t that our best
hope of domestic prosperity is in a prosperous world, a world
of increased demand and higher standards of liv in g .
This most d estru ctive of wars, which has reveàled the
basest aspects of human nature and the blackest depths of
barbarism among^peoples wearing the outer cloth in g of c i v i l iz a 
tion , has also i t s brighter sid e . It has shown us p o s s ib ilid it i e s , f ór;m aterial advancement of which we had scarcely dreamed,
and i t has shown us a lso that a common humanity and a common
hatred of cru elty and tyranny can s t i l l bring men together to
b a ttle for th eir mutual protection and for the general good.
The unity of the United and Associated Nations is not
a mere fro n t. Thè power and sin c e r ity behind i t has been shown,
not only in war collab oration , but in su ccessive conferences
to plan for the-peace to come. The monetary conference ca lled
by the President th is summer and held under Secretary
Morgenthau’s chairmanship at Bretton Woods, New Hampshire, in
July, is probably the most notable example of t h is . At
Bretton Woods there was much d iscu ssion of d e ta ils but there
was complete unity of purpose among some 40 nations to make
e ffe c tiv e concerted plans for economic harmony and for world
wide in d u stria l and economic development. Agreement was

- 9&
reached for a plan of currency sta b iliz a tio n , among the most
basic or- reeds for expanded and healthy world commerce, and
also for sn in tern ation al bank which, under the auspices and
wit h the p a rticip a tio n of a l l the member nations, w ill encourage and f a c il i t a t e in tern ation al investment for economic
development in a l l lands.
These^plans are intended to lay the b asis for in tern ation al
trade and in tern ation al investment that can be u sefu l in build 
ing^ modern economies capable of y ield in g high standards of
liv in g . Their purpose is reconstruction and new economic de
velopment for wrar-wasted lands. For the United States they
w ill mean, when they and companion measures with the same great
objective^have been made e ffe c tiv e by le g is la tio n , more pros
perous and therefore better customers and b etter neighbors.
Another step in in tern ation al collaboration des igned to
bridge the tr a n sitio n from a wartime to a peacetime economy
is the United R elief and R eh ab ilitation Administrati on. This
is a service agency s e t up by 44 member governments to help
solve the urgent problems of r e l i e f and r e h a b ilita ti on for
lib erated countries. Although the program of UNRRA, as i t is
commonly known, deals only w ith a short time phase of the
world’s war-disrupted a ffa ir s and is not designed to enter in 
to postwar recon stru ction , i t is a sig n ific a n t harbinger of
economic humane collaboration among nations.
Americans generally look toward the future with high hope.
They have been derided for i t . But d erision has not stopped
them in the p ast, nor have the prophets of gloom often Veen
good^prophets. 'Perhaps the ch ief reason for that is that
Americans^have never yet been w illin g to accept defeat and that
their asp iration s for a world of wider opportunity and greater
justice^ are. a liv in g force that has been handed down from
generation to generation.
I f hope means courage and w illin g n ess to face our problems
squarely, i t is i t s own best promise that we sh a ll continue to
make real progress toward an ever-advancing goal.
- - 0O 0-—

FOR IMMEDIATE RELEASE
September 19» 19^4

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1* 19^3 § provided for in the later—
American Coffee Agreement, proclaimed by the President on April

15#

l^bl,

as follows}

?
Country of Production

t

s

Quota Quantity
(Pounds) 1/

:
:
t

Authorized for entry
for consumption
As of (Pate) ? (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 ,621,630,^79
5^ 9,261,936
3^,873,77^
13,9>t9,562
20,881,883
26,155,330
lA,621,3a
93,287,jeh
**7,951,373
3,*f86,928
82,825,279
3^,001,91+3
U,359,288
73.23^,872

Hon-Signatory Countries?

61,900,935

September 9, 19*& 1,198,107,280
(Import quota filled)
September 16, ISkk 2/ 31,382,186
September 9, 19*& ~
8,^77,821
September 16, 19*& 2/ 19,073,628
September l6t 19bb 2/ 22,089,097
September l6t 19bb 2/100,762,1*97
September l6t 19**b 2/ 89,983,798
September 9, 19*0* ~ 1*2,10b, 285
(Import quota filled)
(Import quota filled)
September 16, I9I& 2/ 28 ,86b , 593
September 9, 19bb “
3 ,596,361
September 9 * 19*&
b3,l66,86b
September 9,

19bb

i*,l*59»775

3./

Quotas as established by action of the Inter—American Coffee Board on
April 21, l$kk.

2/

Per telegraphic reports*

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, September 19, 1944,

p resg

jy0

S e rv ic e

43-40

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas for
the 13 months commencing October 1, 1943, provided for in the Inter-American
Coffee Agreement, proclaimed by the President on April 15, 1941, as follows:

Country of Production

:

Qaata Quantity
(Pounds) 1/

:
:
:

Authorized for entry
for consumption
As of
(Date)
:
(Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1,631,630,479
549,361,936
34,873,774
13,-949,563
30,881,883
36,155,330
104,631,331
93,387,384
47,951,373
3,486,938
83,835,379
34,001,943
4,359,388
73,234,872

Non-Signatory Countries-:

1/

61,900,935

September 9, 1944

4,459,775

Quotas as established by action of the Inter-American Coffee Board on
April 31, 1944,

>Spy *(

2/

September 9, 1944
1, 198,107,280
(import quota filled)
September 16, 1944 2/
31,382,186
Septémber 9, 1944
8,477,821
September 16, 1944 2/
19,073,628
22,089,097
September 16, 1944 2/
September 16, 1944 2/
100,762,497
September 16, 1944 2/
89,983,798
September 9, 1944
42,104,285
(import quota filled)
(import quota filled)
September 16, 1944 2/
28,864,593
September 9, 1944
3,596,361
September 9, 1944.
43,166,864

iffa

-V.'

Per telegraphic reports.

0O 0

COTTON CARD STRIPS!/ /OMBER- WASTE, LAP WASTE, SLIVER WASTE» ■AM), ROVING WASTE,
'.'.RETHER OR HOT MMOTACTURED OR OTHERWISE ADVANCED IN VALUE. Annual quotas
commencing September SO, "by Countries of Origin:

. '

■ , ■ ■■ - : ■ -

,

z;

Total quota, provided, however, that hot more than 33-1/3 per-cent/, of the
quotas shall be’filled by cotton,wafetes other thfch card strips./ and comher
wastes made from cottons of 1— 3/16 inches or more in staple length in the
Case Of the following countries: United Kingdom* Prance* Netherlands*
Switzerland* Belgium, Germany and Italy: •

•
:TOTAL IMPORTS .{ESTABLISHED:Imports Septl 20,
•
Established
:Sept.
20, 1943 :33-1/3$ of :1943, to
Country of Origin
-V. ^PTAU QUOTA S e p t e m b e r 9 * 1 9 h h i t o „tal Quo.taBept ♦ *. 1 9 U
1
r-i^r

9

United Kingdom....
CancicLci•
*•
Prance............ ft•
British India....
Netherlands*.... *•*
Switzerland...... ft*
Belgium.*••.•»>..*
Japan..............
China........... ..
Egypt.............
Cuba.,:.... .
Germany...........
Italy,......... ...

4,323,457
239,690
227,42a
69,627
68,240
44,388
38,559
341,535
17, 32 a
8,1.35
6,544
76,329
21,263

29,398

TOTALS

5,482,509

29,398

mm

r- .
-

—

1,441,152
- ■
75,807
...-r
' $2*747 .
14,796
12*853.
t

-•
-

.......
—

-

,.. ■,— ,
25,443,
7,088

m

—

—

..

—

1,599,886-

•
.- .
— ■
mm

.......

-

1/ - Included in total imports, Column 2*
¿/"‘The Presidents 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~

,

FÇE M E D I A T E RELEASE
September
19hh

S S Ili

a he 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, 1929,
and December 19» 1940, as follows, during the period 'September 20, 1943, to

September

9

and. 16, 191*1*.

COTTON HAVING A STAPLE OF LESS THAN l~ll/l6 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS.AND BLANKETING, AND OTHER THAN LINTERS), Annual quotas
commencing September 20, by Countries of Origin!
(In Pounds)

•

<

Staple length less : Staple length 1-1 /81
1 or more
than ' 1 — 1 / 8”
:
but less than 1-11/16H
•
■ .!Imports
Sept#: Established : Imports Sept.
Established! 20, .1943, to . - : . . -Quota..
20, 1943, to
t _
Quota
Sect. 9 , . 1 9 Î ) : 45.656.420 S e c t . 16. 1 Q ) i ) i
«

J

Country of:
Origin v .
\

i

i

Egypt and the AngloEgyptian Sudan. . . . . . . „
Peru. ............... ..... .......... ♦
British India.
China.. .................
Mexico ......................... ..........
Brazil......... .....
Union of Soviet
Socialist Republics...
Argentina.. . . . . . . . ♦ ; , . * .
Hai ti . .
,
Ecuador..... ..........
Honduras............. .....
Paraguay.. . . . . . . . . . . . . . .
Colombia................. ..................... .....
Iraq,, .......................................................
British East Africa..,.*
Netherlands East Indies.
Barbado s........ ..... ..... .....
Other British West
Indie's 1/ ....... .....
Nigeria. ..................................................................................
Other British West
Af rica 2/*
.
Other French Africa 3/.
Algeria and Tunisia,,..,

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

¿/

—
7 3 , 5 7 6

<^917^07T^

»

.■

mm "

8

, 8

8

3

, 2

5

►

9

•

f

1 0 . 7 , 5 8 0

• *
*

475,124
5,203
237
9,333
.
752
-871
124
195
2,240
71 , 388

•»’
»

•

*

.

*

■

'

*

.

< *■' ♦

—

, /

-

t

■.

' ■

mm

* V —
'

. - < » . . » •

1 ,« •
—

’* r

-

$b *

—

•

■ —
—

—
—

—

-

—

»
—

21,321
5,377
16,004
689
-

14,516,882

1/
¿¿/

j

mm

mm

mm

mm

mm

mm

m.

mm

m.

mm

mm

mm

. mm
-

-

9

, 3

7

k

, l û

S

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Coast and Nigeria,'
Other than Algeria, Tunisia, and Madagascar.

3 5 , 2 7 i * , 6 0 6

• '

TREASURE DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Wednesday. September 20, 1944.

Press Service
No. 43-41

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 Presidents proclamations of September 5, 1939,
and December 19, 1940, as follows, during the period September 20, 1943, to
September 9 and 16, 1944.
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 MANU
FACTURE OP BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origin:

Countzy of
Origin
Egypt and the AngloEgyptian Sudan....*...
Peru..... .
British India.
China... ....... .
Mexico. .................
Brazil...... ... .......
Union of Soviet
Socialist Republics...
Argent ina...............
Haiti.... .
Ecuador...... ..........
Honduras....... .
Paraguay..... ..........
Colombia................
Iraq...... .
British East Africa....
Netherlands, East Indies.
Barbados................
Other British West
Indies 1/ ............
Nigeria....... .........
Other British West
Africa 2/.. ..........
Other French Africa 3/..
Algeria and Tunisia.....

(In Pounds)
Staple length less
than 1- 1/8”
:Imports Sept.
Established:20, 1943, to
Quota
:Sent. 9, 1944
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
71,388
-

21,321
5,357
16,004
689
•r
14,516,882

1/
2/
3/

Staple length 1-1/8” or more
but less than 1-11/16”
Established
Imports Sept.
: 20, 1943, to
Quota
45,656,420 : Sept, 16,1944

73,576
-

33,357,¿33
1,917/073
-

T-

8,883,259
417,580

-

-

—

-

-

—
-

-

-

—
~

—
—

—
—

—

-

1-

—

-

-

9,374,415

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Coast and Nigeria*
Other than Algeria, Tunisia, and Madagascar.

35,274,606

- 2 2/
COTTON CARD STRIPS,/“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 of 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:
. ______________

(in Pounds^_______ __________________,
i TOTAL IMPORTS sESTABLISHED: Imports Sept. 20,
: \Established : Sept. 20, 1943 ;33-1/3$ of :1943, to
• 1
TOTAL QUOTA :Septemb er 9,1944 :Total Quota?Sept. 9, 1944 1/

1

Country of Origin

United Kingdom......
Canada..............
British India.......
Netherlands.........
Switzerland.,...*..,
Belgium....... .....
Japan.
China............. .
Egypt.... .
.,
Cuba..,...........
Germary.............
Italy..,,...... .
TOTALS

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

1,441,152
29 ,398

—

75,807
._
22,747
14,796
12,853

—

—

—
—

—

'L¿

—
—

-

_

—

j
—

5,482,509

-

25,443
7,088

29 ,398

1,599,886

1/

Included in total imports, column 2.

§/

The President*® 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-

4.

-

-3 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. 41B, as amended, and this notice, pre
scribe 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.

m

- 2Reserve Banks and Branches, follovang which public announcement will be made by the
Secretary of the Treasury of the amount and'Price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final,
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

September 28, 1944

~~

4$)c

The income derived from. Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such/
and loss from the sale or other disoosition 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 by the United States
shall be considered to be interest.

Under Sections

42

and

11?

(a) (l) of the

Internal'Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

H ï ^ ' lìti

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday* September
22* 1 % k
j- Y

XkH

The Secretary of the Treasury, by this public notice, invites tenders
for $1,200,000,000

.M

, or thereabouts* of

•day Treasury bills, to be issued

-----

on a discount basis under competitive and fixed^price bidding as hereinafter pro
vided,

The bills of this series will be dated September 2&, 1944

mature

, when the face amount will be payable without

December 28, 1944

interest*

» and will

They will be issued in bearer form only, and in denominations of $1,000,

$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o’clock

p

. m., Eastern War time,

Monday* September 25* 1944

Tenders will not be received at the Treasury Department, Washington.

.

Each tender

must be for an even multiple of $1,000, and the price offered must be expressed
on the basis of 100, with not more than three decimals, e. g., 99.925.

Fractions

may not be used. ’It is urged that tenders be made on the printed forms and for
warded in the special envelopes which Yd.ll 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 securi^
ties.

Tenders from others must be accompanied by payment of 2 percent of the face

amount of Treasury bills applied^for, unless the tenders are accompanied by an
express guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal

TREASURY- DEPARTMENT

FOR RELEASE,

Washington

Friday, September 22, 1944«_____

MORNING NEWSPAPERS,

The Secretary of the Treasury, by this public notice>
invites" tenders for $•!,200,000,000, or thereabouts/ of 91-day
Treasury bills, to be issued on a discount basis under competitive
and-fixed-price bidding as hereinafter provided.
The bills of
this series will be dated September 28, 1944, and will mature
December 28, 1944, when the face amount will be payable without
interest.
They will be issued in bea<rer form only, and in
'denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and
$1,000,000 (maturity value).
Tenders will be received at .Federal Reserve Banks and Branches
up to the closing hour, two o'clock p,m,, Eastern War Time, Monday,
September 25, 1944, 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., 99,925i
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 2 percent of the face amount of Treasury
bills applied for, unless the tenders are accompanied by an express
guaranty of payment by an incorporated bank or trust company*
Immediately after the closing hour, tenders will be opened
at the Federal Reserve Banks and Branches, following vhich 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, ahd his action
in any such respect shall be final. Subject to these reservations,
tenders for $100,000 or less from any one bidder at 99*905 entered
on a fixed-price basis will be accepted in full* 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 September 28, 1944,45-42
(Over)

2
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the b i lls, shall.not
have any exemption, as such, and loss from the sale or other.
disposition of Treasury bills shall not have any special treatment,
as such, under 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 tax
ation 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 ihterest. FUnder Sections 42 and
117 (a.) (;!.) of the Int ernal Revenue Code, as amended by Section
115 of^the Revenue Act of 1941, the .amount of discount at which
bills issued hereunder are sold shall not be considered to accrue
until such bills shall be sold, redeemed or otherwise disposed of,
and such, bills are excluded from consideration as capital assets.
Accordingly, the owner of Treasury bills (other than life in
surance companies) issued hereunder need include in his income
tax return only the difference between the price paid for such
bills, whether on original issue or on subsequent purchase, and
the amount actually received either upon sale or redemption at
maturity during the taxable year for which the return is made,
as ordinary gain or loss.
Treasury Department Circular No. 418, as amended, and this
notice, prescribe the terms of the Treasury bills and govern the
conditions of their issue*
Copies of the circular may be ob
tained from any Federal Reserve Bank or Branch*

oOo

M

m

ignorant change

m

m
Mat« aM Ig

opposition le change sa th« *$fe*f%*
■ V« api iaáay experiencia a great aoeelersitlo» la those eoeande sM social farast wltîÂ* m Mr.
M il eagre ”21«* lik e * ili# « n r «ornamitie s which are
only half cenicìoìu oí ti liât »M afe la befa! lian ih«*»"
le mut Stali fast to the gaoâ,

l e mut alao a ijust

thought «ai '«etimi.to the present extremity atti te the
prospect et that eorli which, aot «áthoat pr<ed.se, lie s
beyoná the harisca «f »ar.

fggfe
Za cenci u sles, aay I be fendtted te «pota
« ea »are a Ira »«al«»## writtea ìsy «a« ef rar e lu si«
economista a graat «aajr jreara *g>» Xt ss# » te era??«««
a great daal e l wlsdam late a tei? fa* «orda, fa«
autber la John Staart UHI, «ad ha «aldi

"Mater? ahotm tbat graat «concole aad
arala! fere«« flew liba a ti&e w«p »»saniti#* aaly

M f cenaci««# ef tbat «bleh la bafalllag $umu Via«
statesaen tea««« «hat tlaa la tirai briaglag# «ad tiy
to sbafa laatltutlras «ad soli oan'a thraebta la
accordane« nitb tba ehanga Usai la elianti? maiitg m*
fh s

tasila« are these «àie brlag notbing ooaatamctive

t» tb# frraaas, aad Ae graat!? lapparli tfea future ef
rarirtnd by leasing great ftiaatiraa te ba ieagbt rat

-14often difficult business of staking loans» supplying tbe

necessary credit of the community and exerting leader*

ship in an independent and competitive economy.

1 trust 1 shall net be misunderstood here.

X am certainly net suggesting that the bankers of this

country should assume the role of the entrepreneur and

go into the business of providing venture capital.

I

am not inviting any extension of credit idiich can not

be Justified by proper banking standards.

But short

of such a reeklsas abuse of a banker's trusteeship

there lies a broad field in the eating postwar world

which should be diligently explored and covered.

The

extent to which this field is pre-empted will determine

the future of private banking in the imeriean scene.

fia*!!?, and swat laportant of a U # there

renal» the p n i n l question ef Just « a t role the basks

of these United States will flay la the postear world«

they

m

* la splendid condition to » e t an l a s » «hieb

le fuatesatal«

If we ere te ha*» e seelety of free

enterprise «aá personal InitiaiI

t s

,

ef iadlTldualim

la the iaorleaa tradition, we seed a banking 7 1 U 1 l U n

t® Its responsibilities for providing credit for industry

saâ agriculture,

«ad determined te de «Mfe « good Job

th#t it will rofiire am i w r diminishing anount

f r » either federal er State authorities«

ef

support

The proper

faaoiiaa ef hsnkiag le net the eajegpnt ef a eenfentable

•ecurity la the fera ef laceas from governacat obligations

aaâ government pareatssd pepcr, tat rather th# hard and

of

a U H o n a of .*#»!«#

t t M É M

«te oro « s i s » to re-establish

la business # M la agriculture.

1* w e d the««

has

m i

mm

by society.

rtsedgaissâ the

A great debt

fha Federal Soreraaaat

iap« H i n g nature of It by paseing

legislation designed to asslat then li* their W

ê m c MIWM

to piek up the threads of their U r e a etere they were

dropped.

S o w of tide XagteXatlea prorldes for a partial

aasuaptioa of ride by the Federe! Oorerawat of «rodil

«tended to rotondag Tatar««.

Wo aro not yet fanillar

with the regulation* which are to be

Tetera» * f e M

iitSft d o n

by the

la those natterai, bat the awperwirery

authorities ea aall as the basks thenaolvea lure certain

to bo confronted with eery delicate facet! ent growing

oat of thla g o m m i situation*

thought

to

thla satter.

lo should be glTiag

m$«rvÍME7 «afcteplfci**.

Tefc X«ataII t&®4 «Ith tte

sáwaS &£ y§#§ it is
■ tete t-teP T O tea te

^fiüUlSS

‘Mf#r te i ttrt'fii ifciM'Klii ‘jiii'fr -ni

-rfite

4BK %t)L :ML,-

&§
KiMÉ<‘ ilÉI *T' Yfi T r ' w

Sis# INIjpllr

iitk'!r trtl':¿lák'%i'if W iMiÉii

jáfcífflF'

l| ^ W r rffc. jft “Ü8K

ilfe&jIMhk $ '

tó t T í

« fe

#¡* SllpjyF 4|i&JpSSIIJ>> Sil

«átt. * iii«w twwác tte É W d ^ £ Í M «bloh
*

v

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^ac..^u .tt*^^JgPiii^t¿iltoAAi^Mti!

#* %

& '% f c * t e t e t e

tefiMfW f iif t e Ater tfi lf ti iliy

1»"#

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u

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-IhffSMffp ' t»' T

# iP h»4»S1»^«w» IHImNmpI IPp £1$||¿Nrí w l * *

á^É üá

3J!S# m m

-flÉi fWh'Biifi' flfti

É iH r r

ir t t á h 'iW iiiitH

W *a& mi

li:

Ü Ü nifÉ

i €#®lw#JyS4 A m m M ^

ttéM» teiteliUy iilth §w& «Mvtapf hlg^ UfaMIfy
«aá larga a m U a & X » txm&* te th» imñ» «t tí» p r t

Ipitti® ttepe n t wnm #. w
,

fl®pwteMW ttiw te approiMth

X

*3$!Wiws#ps iissis «Sw' iwwNi n* m w p |. sji^ j>
j*
in

sts<toi#
t t M X i ' f itep# le

is# t e t e a

jw b l* te p M i » Istlaas p^sáag oat of ti» r#tw a

^ij|p§

teiellet* «meera 1 « that Ibis haek lag «•** guaraatee
#f filmi siitele eoneualng power sai eaploysseat
he wsS ueeé usili reconeereion

«igplied gecóa 1$

SHjjJfe

fi» eeeeadprehls» ubici

11 m u m *

la m

m «¡.gài dlaou** m g eorselvee 1« ttat ef hank #ap*
Italisatlaa.

deaeraHy speaklsg» beale telar ire

I» w iy etraag positi*®»

S ielr aesets are lariely

eewpesed af goreraaest beala, p r a m É ^oarsateed
psper u si ««&.*

fin ir Ktfc aseets sre fe®* fin ir

esmisga are e&tiefactery.

dut thè eaigeneia« af

m e fiaaaelag tere greatly tereaeeé deposita witbeut
a esaaraisarais tersa«« ls esp ilai protecti® .

All

ef tU * beo t e a ineriteble, sai. «e reoegaiseè ly a ll
i

la «f Ito s i a*earltl«s to «torsi * market for food* mbleb
osa aot to iaatoiately preda««!»

fto Soorstiuy of

tto TreMary too «xproesto ài* oaaild«aoo la feto good
•os«« of ito ¿seriosa poopl* la ib is r*gord»

ti»

Soortoary fool* tto t poopl* gsasrslly ber* too* tsugbt
to aero «ad tto t ttoy «r* aot golag te to so falek te
■pend after ito «or 1* osar»

1 sy I sto tto t tto

wei$it of year la ilasas* to mato to support tb ls bop*
sai «rpsotstloa, *ad tto« to peoroat tba fosttriag of
bloek aarkat* sad tto furttor unnecessary absorption
of govozaaeat aoomrltioe by tto to á is.

Sure i% of

a « fse t *a taproaoiro took log to purchasing poser la
ttoss

47

b illie s dollars to ia&lvldael s a tin s «hieb

«oy to to slfalflosat u n it i la tto fatar«*

ear

Halt« ita demnd fer M w *

Éitts pii* «til

ttaae geode «as ta toned eut la Tolone I f car Itattetriitl

S
»
mlIs war effort« - It le «m

plant reaoûTcrieâ

tta t ratiealag and frie* eoatrel «LU piaf tta ir part*
la ita sonili* ataad,
' a ¿etemialag « e ,

tat

»1U

a very lapertaat 'factor, alnasat
ta tta queetioa ef tact tta

ladividaal iw eaier de«« wttà Me taU iags ef gerene»

3M& bead*, i
M lliea ¿Miara«

umat tta l ^ r u t l o te la i of sene 47
Tta tasta tare .¿ese ¡rraas eorviee

La praaotiag tta sale ef w

band* te ladivlcaaia* tal

i t mo devolve* wpa tta a , is tta ir own Interest «i
■ore ia p rta a tly la tta istorost of tta eotattry, i f as#
tta ir influence everywhere to provost a general mating

ué

- là* probi*** wbAÄ aew m a f? « ! th©su
af

| | 1* oar âaty,

t© te l* thm ê» tM s» «ai I «houli I t o I©
a&taatag« af ajr «arly position ©a th* pro g rs* #£

thl* ©aaf*r«ac* t© 1% tafor* yea f« r th o a ^ t « g dit*
$

eu**!©© ©en» ©f là© natter* whleh* ta ay Jaàgss&t, s i l i
fc© «f iaftsrsat *aâ ooaosra f s i « b « I . bsaklsg dariag
tk i iaçsa&lag «saw rsisa ported. I t le passible tin t
tîa»Bg^ m

sxehaag* m m m *® aoy b© aU s te tasalap

* progrsa liileà *411 b« ©I assista»«s darlag this trylag
tin*»
I t l* geaerally agreed th at aa* *f Ih* m ia
d iffic u ltie s la th© tra s s i tic a of ear seoaoap fra* war
t© peaee w ill h© the m essslty ©f hoMiag w lthia proper

to look took for
os

o

i t e l i « ü tblak h m s o il basklog

« ta sti tattoa boa *urrl?*d it s mn? fo rilo # »«»«g

ottoni tbs firotos who threatened I t la the days of n »

ËsmmUe Ime», tèa royal rejradiaUons of the Sixteeatb aai Seventeenth Centuries* the fir s t lasset of
•tàa

hmUm& «T«l« »bleh

mm

» with ti» XafogMáL

lioTolaUoa, m l la th is ooaatry tbs torrera of «U¿»
oot days sad depreeiated paper oarrenel«* sfelA followed
I

tbo deotraction of tbo Soeese Soak of tbo Halted States,
ìbis history of earrivel through oil tbs rleissltades
fro« iafaaey to protoni aotarlty soggette tbot hanking
institutions are essential to our world. aal tbot they
•ill Had# I f trial « i error. tbo atme to eopo with

p M M

©f ili econosqr, e* «e ara» »ut 4» ©rigirai

tàiafclag. ' f i » u t raaraipate w n d m fra» tra Ava»
•ani e£

tist

p*st| m » u t iaraat ara M atta fa r a ara

»fife
latita ì m thè arai» ©estera ai cewteree sai

t o l w i t era tra bsnklag straetur# la Ita «ntirety
I» «a iadlasolabXe pari ai say eeoraagr» aha&ra l i be
free or controllai!.

Xf m rara rat eottrersaat «dth ih©

«tlm latiag hiatery af beakiag throsjghout tra assy pura
la «MA i t h&s p ara sud tarara sa lategraX pari af
sor «▼erydey ©xietesee» m slght n ell ioabt ita espaolty
la arai tra te st af th ls reeasvsraiea jerlet*

Gertalaly

Ita leaiers i t t i ra p ire s i i tra fibre «MA bua Sia»

tiEgulahed tralr prsdesessors.

Sii lt la reessariag

th* «aotlonal arg* A M «arriad m fomwd int«
hoatlUtias*

foaaod tu find & “»oral

fftff th* glaaour «M exeitiag twasioa iMch a tk ii «31
thlag*

wh*a sw* bordor* «re tbr«*t«tt*dU Ma»

tiii* tr&asltian froa war to fe&ea w aajr am oxpaat t©
find IM flM b of opiaton, th* oosfliot t£ «coaasl«
thooriM* th* selfiahaaa* of partlaaa grooj» and a ll
th*** ,fc|# tl« ü Ä lA *7« teapararlly «lasw p d is th*
ca»oa «ffert darlag «xtaraaX c s a flic t.
M m m *

thl* war k s M d

haaä u p m th* U v » * »f all

mm

ear#*lv»a to th* faet that m

ha«k to th* world aa m

toe badiy* «ad

a ll

m

aaoh * m U p a a t

t m i r*oo&all*

ar* aet alaply geiag

k u m it.

It ba* b**n »haken

«ko ar* co&eeraed »ith th* m j o r

I m r tei Ite world M ergaaiate
Ite sxelusifs

t e t e n

of

w er

as i t

for

la tkl# letal*

te *

liarían straggle «tete «as farete apea m ly Ite*» ate
asa t i ßeraaay ate Japaaf nevar tes Itere teen such a
««aflate ste violent etengs la Ite «tele scontale
organisation ®jf tesse Halted fíales*

Hda aetaaer*

ir ta ne&se le m i t %m and# notier t e
nseesslty »i caapresslag g r u í eteages late a ainiaaa
e í tima ** «141 tte saasy already aa ti® marte* V ili
teal «Spedition, « à tew wall It was aecæaplâtted,
ti» «orli acknowledges today*

I t le m» isto ria si

reason why tea ¿U les state en tte threshold ef enees»«*

Tte road tete le p e se
jgiLjw .teikrfte&.itei'

teK Steitete w wMW-afeJ9£''S

te s m

w r'te ia te te -

a te s t e n ¿afta.

"■•' 1» ,

oXòs© v , ■■. t ••■-ì<!J■■ £01? ‘
•ì‘,y mjjk

a tela intonse and
‘'

w* s v ia te

%iimi

-«Bìì ®'ttiflfttfifr

ii%m

m m

tea. tefesolr

0$wL

«telette f« M ** »hi eh tìureateaei io « sgo li m ,
look faraoni ta p w ,
thaa ttle p «

Se

KaiMag « m ìl te m m wslcoae

and Uw opportunità which lt gire« »

te tara our tkoagfct m i « fla ti trattivi building «f «
c irllie sU e a «hleh «t o s e I I» I l «eeaed m eeaM «a»
tltdjf J ® * %

'

Tel 8*1»

peone tria g a

«Uh l t «djostae&t*

«ai probi«® «àisìt «IH rasjalre Mgb, «paliti#® far

Ih» ir

solution, *aà wM«è coso«« »11 «f th è t e a l t «I m e
eonple* eeenoale «sé anelai U fi»

lt l s 9 s f m w s® #

èbrlmu lt« l Ih«*« adjuetotale «fi# preti««» re*eh late
th* f lassel ai f ia li la »M A se me* priasriiy iatereated*
Lei us sol saderesttaate 8 » «xteai «si ite tifili, ef ite
ehaBge eith «hleh m m e* eeafroated la IM* iapealiag
trassìtioa fra® «tur te pese«.

I l I* » lik a g r » i t e i «{ latew st tkat I eoa*
te seat « i l I I » Rati osai Aeaoeiatioa t l Sapervi*«?* «C
Stai* Beai« t& U tei«»» ef 1044*

l i i m i te a* l i la

a jartìealarly p*?iiii*at Ila* fa? ut te fewgatliar 1«?
a ¿ieeaaalea ef ss® reap saiM litie* la tea f i e l i e f
teak *»ain*tÌ0a «uà auparrlaleiu
1* a eift liiitft*

Tlw p » ef thloge

Sia*» «e aei far eeonael a jrear ago

Ibi?* ìia* cUtvalopd a d*#yly s a tlif/ls g ehaage la ite
wap s iim i! oa»

The orai** ef lite lllte d lati«ae a?*

•varyter* saeeasaftilf &ad Ite ereaecado e f thl* «accesa
le acw fia le« te « A aa «xteat teat m

««agiuna»

fclvaly look ferearà te a» eofly «Malnati on ef thè**

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Ol
3XVQ

Nouvaïwnwwoo aouwo

wsani

iN3iN±avd3a A H n s v s d x

2
(
•s
i
i

hich will
all of the
course,
nancial
estimate
fronted in

t

0
b
a
T
n
t:
w

b business
bd upon us
kch a complete
\ United States,
Lling
— with
r well it
portant

r
___ _.____■__kX---*
xiuurviu5 xuoense ana close organization
for war will lack the stimulus and the emotional urge 'which carried us
forward into hostilities. Vie need to find a "moral equivalent" for
the glamour and exciting tension vfhich makes all things possible when
our borders are threatened. Into this transition from war to peace we
may now expect to find the clash of opinion, the conflict of economic
theories, the selfishness of partisan groups and all those frictions
which are temporarily submerged in the common effort during external
conflict.

TREASURY DEPARTMENT
Washington

(The following address by
Preston Delano,
Comptroller of the Currency, before the National
Association of Supervisors of State Banks at
Milwaukee, Wisconsin, is scheduled for delivery
at 11 a.m., Central- War Time, Thursday. September 28,
1 9 4 4 / and is for release a t ‘that time,) '

O F FIC E O F
THE COM PTROLLER O F THE CURRENCY

9-22-44
Mr. Dillon:

Attached is fin a l and approved copy
of Mr. Delan o fs address in Milwaukee. W ill
you do the necessary as to processing?

I

would appreciate i t i f th is office could be
furnished w ith 25 mimeographed copies.

Miss Cotter

TREASURY DEPARTMENT
Washington

(The folio-wing address by Preston Delano, Comptroller
of the Currency, before the National Association of
Supervisors of State Banks at Milwaukee, Wisconsin,
is scheduled for delivery at 11 a.m.. Central War Time,
Thursday, September 28, 194-4, and is for release at
that time.)

It is with a great deal of interest that I come to meet with the
National Association of Supervisors of State Banks this Autumn of 1944.
It seems.to me it is a particularly pertinent time for us to foregather
for a discussion ox our responsibilities in the field of bank examination
and supervision. The pace of things is swift indeed. Since we met for
counsel a year ago there has developed a deeply satisfying change in
the war situation. The armies of the Allied Nations are everywhere
successful, and the crescendo of this success is now rising to such an
extent that we may conservatively look forward to an early elimination
of those vicious forces which threatened to engulf us. We now look
forward to peace.. Nothing could be more welcome than this peace and
the opportunity which it gives us to turn our thought and effort toward
building up a civilization which at one time it seemed we could
entirely lose.
Yet this peace brings with it adjustments and problems which will
require high qualities for their solution, and which concern all of the
elements of our complex economic and social life. It is, of course,
obvious that these adjustments and problems reach into the financial
field in which we are primarily interested, let us not underestimate
the extent and the depth of the change with which we are confronted in
this impending transition from war to peace.
Never has the world so organized itself for the exclusive business
of war.;-as it'has in this totalitarian struggle which was forced upon us
by these mad men of Germany and Japan3 never has there been such a complete
and violent change in the whole economic organization of these United States.
This metamorphosis from peace to war was made under the compelling
necessity of compressing great changes into a minimum of time — with
the enemy already on the march. With what expedition, and how well it
was accomplished, the world acknowledges today. It is one important
reason why the Allies stand on the threshold of success.
The road back to peace from this intense and close organization
for war will lack the stimulus and the emotional urge which carried us
forward into hostilities. We need to find a ’’moral equivalent” for
the glamour and exciting tension which makes all things possible when
our borders are threatened. Into this transition from war to peace we
may now expect to find the clash of opinion, the conflict of economic
theories, the selfishness of partisan groups and all those frictions
which are temporarily submerged in the common effort during external
conflict.
43-43

-r 2 ~

Because this war has laid such a malignant hand upon the lives of
all men we must reconcile ourselves to the fact that we are not simply
going back to the world as we knew it. It has been shaken too badly,
and all who are concerned with the major processes of its economy, as
we are, must do original thinking. We must emancipate ourselves from
the dead wood of the past; we must invent new wisdom for a new age.
Banks are the nerve centers of commerce and business, and the
banking structure in its entirety is an indissoluble part of any economy,
whether it be free or controlled. If we were not conversant with the
stimulating history of'banking throughout the many years in which it has
grown and become an integral part of our everyday existence, we might
well doubt its capacity to meet the test of this reconversion period.
Certainly its leaders will require all the fibre which has distinguished
their predecessors. But it is reassuring to look back for a minute and
think how well banking as an institution has survived its many perils among others the pirates who threatened it in the days of the Hanseatic
League, the royal repudiations of the Sixteenth and Seventeenth
Centuries, the first impact of the business cycle which came with the
Industrial Revolution, and in this country the terrors of wildcat days
and depreciated paper currencies which followed the destruction of the
Second Bank of the United States, This history of survival through all
the vicissitudes from infancy to present maturity suggests that banking
institutions are essential to our world, and that they will find, by
trial and error, the means to cope with the problems which now confront
them,- It is our duty, of course, to help them do this, and I should
like to take advantage of my early position on the program of this
conference to lay before you for thought' and discussion seme of the
matters which, in my judgment, will be of interest and concern to banks
and banicing during the impending conversion period. It is possible
that through the exchange of ideas we may bo able to develop a program
which will be of assistance during this trying time.
It is generally agreed that one of the main difficulties in the
transition of our economy from war to peace will be the necessity of
holding within proper limits the demand for consumers* durable goods
until these goods can be turned out in volume by our industrial plant
reconverted from its war effort. It is assumed that rationing and
price control will play their parts in the months ahead, but a very
important factor, almost a determining one, will bo the question of
what the individual investor does with his holdings of government bonds,
now at the impressive total of some 47 billion dollars,, The banks have
done yeoman service in promoting the sale of war bonds to individuals,
but it now devolves upon them, in their own interest and more
importantly in the interest of the country, to use their influence
everywhere to prevent a general cashing in of these securities to storm
a market for goods which can not be immediately produced. The Secretary
of the Treasury has expressed his confidence in the good sense of the
American people in this regard. The Secretary feels that people
generally have been taught to save and that they are not going to be so
quick to spend after the war is over* May I ask that the weight of
your influence be used to support this hope and expectation, and thus

to prevent the fostering of black markets and the further unnecessary
absorption of government securities by the banks. There is* of course,
an impressive back log of purchasing power in these 47 billion dollars
of individual savings which may be of significant service in the future.
Our immediate concern is that this back log — a guarantee of future
ultimate consuming power and employment — be not used until reconversion
has supplied goods to buy.
The second problem which it occurs to me we might discuss among our
selves is that of bank capitalization. Generally speaking, banks today
are in very strong position. Their assets are largely composed of
government bonds, government guaranteed paper and cash. Their risk assets
are few. Their earnings are satisfactory. But the exigencies of war
financing have greatly increased deposits without a commensurate increase
in capital protection. All of this has been inevitable, and so recognized
by all supervisory authorities• Yet I submit that with, the advent of peace
it is desirable that the management of banks reappraise the relationship
of their capital to deposits with a-view towards the changed conditions
which will soon confront them, conditions which we hope will move them
vigorously into an expanded commercial loaning field. Certainly with
good earnings, high liquidity and large available funds in the hands of the
general public there was never a more opportune time to approach investors
with the idea of increasing their commitments in bank stocks.
Thirdly, there is developing for banks a problem in public relations
growing out of the return of millions of service men who are anxious to
re-establish themselves in business and in agriculture. A gr'eat debt
is owed these men by society. The Federal Government has recognized the
impelling nature of it by passing legislation designed to assist them in
their endeavors to pick up the threads of 'their lives viiere they were
dropped. Some of this legislation provides for a partial assumption of.
risk by the Federal Government of credit extended to returning veterans.
We are not yet familiar with the regulations which are to be laid down by
the Veterans’ Bureau in these matters, but the .supervisory authorities
as well as the banks themselves are certain to be confronted with very
delicate questions growing out of this general situation. We should be
giving thought to this matter*
Finally, and most important of all, there remains the .general
question of just what role the banks of these.United States will play in
the postwar world. They are in splendid condition to meet an issue which
is fundamental. If we are to have a society of free enterprise and
personal initiative, of individualism in the American tradition, we need
a banking system alive to its responsibilities for providing credit for
industry and agriculture, and determined to do such a good job that it
will require an ever diminishing amount of support from either Federal
or State authorities. The proper function of banking is not the
enjoyment of a comfortable security in the form of income from government
obligations and government guaranteed paper, but rather the hard and
often difficult business of making loans, supplying the necessary credit
of the community and exerting leadership in an independent and competitive
economy.

- 4 -

I
trust I shall not be misunderstood here.- I am certainly not
suggesting that the bankers of this country should assume the role of the
entrepreneur and go into the business of providing venture capital.
I an not inviting any extension of credit which can: not be justified by
proper banking standards. But short of such a reckless abuse of a banker’s
trusteeship there lies a broad field in the coming postwar world which
should be diligently explored and covered. The extent to which this field
is pre-empted will determine the future of private banking in the American
scene.
In conclusion, may I be permitted to quote once more a few sentences
written by one of our classic economists a great many years ago.. It seems
to compress a great deal of wisdom into a very few words. The author is
John Stuart Mill, and he saidi
’’History shows that great economic and social forces flow like a tide
over communities only half conscious of that which is befalling them. Wise
statesmen foresee what time is thus bringing, and try to shape institutions
and mold men’s thoughts in accordance with the change that is silently
coming on. The unwise are those who bring nothing constructive to the
process, and who greatly imperil the future of mankind by leaving great
questions to be fought out between ignorant change on one hand, and ignorant
opposition to change on the other,”
We are today experiencing a great acceleration in those economic and
social forces which, as Mr. Mill says uflow like a tide over communities
which are only half conscious of that which is befalling themJ1 We must
hold fast to the good. We must also adjust thought and action to the
present extremity and to the prospect of that world which, not without
promise, lies beyond the horizon of war.

0O0

TR1ASURT DEPART&OTT
Washington

FOR RELEASE, MORR ING NEWSPAPERS
Tuesday, September 26, 1944»

Press Service

/
Secretary of the Treasury Mergenthau announced today that the subscrip
tion books for the current offering of 7/8 percent Treasury Certificates of
Indebtedness of Series G-1945, open to the holders of Treasury Certificates
of Indebtedness of Series P-1944 maturing October 1, 1944, mill close at the
close of business Wednesday, September 27, except for the receipt of subscrip
tions from holders of 1100,000 or less of the maturing certificates.

The sub-

scrlptlon books will elose for the receipt of subscriptions of the latter class
at the close of business Saturday, September JO.
Subscriptions addressed to a Federal Reserve Bank or Branch, or to the
Treasury Department, and placed in the mail before midnight of the respective
closing days will be considered as having been entered before the close of
the subscription books.
Announcement of the amount of subscriptions and their division among the
several Federal Reserve Districts will be made later.

¿

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, September 26, 1344•
9-25-44

Press Service
No. 43-44

Secretary of the Treasury Morgenthau announced today
that the subscription books for the current offering of
7/8 percent Treasury Certificates of Indebtedness of
Series G-1945» open to the holders of Treasury Certifi
cates of Indebtedness of Series P - 1 9 4 4 * maturing October 1,

1944 , will close at the close of business Wednesday,
September 27, except for the receipt of subscriptions
from holders of $100,000 or less of the maturing certifi
cates.

The subscription books will close for the receipt

of subscriptions of the latter class at the close of
business Saturdajr, September 30*
Subscriptions addressed to a Federal Reserve Bank or
Branch, or to the Treasury Department, and placed in the
mail before midnight of the respective closing days will
be considered as having been entered before the close of
the subscription books.
Announcement of the amount of subscriptions and their
division among the several Federal Reserve Districts will
be made later.
-o0o~

the d e g r e e of A.B* a n d L.L.E.
v e r s i t y a n d L.L.M.

f r o m George W a s h i n g t o n U n i 

f r o m the H a r v a r d L a w School.

s e r v e d w i t h the Legal

D i v i s i o n of the

t r o l l e r of the C u r r e n c y f r o m May,

Office of the C o m p 

1 9 3 3 to November,

w h e n he w as c o m m i s s i o n e d a n o f f i c e r in the U.
Reserve*

Mr. R o b e r t s o n

194 3

S. Naval

TREASURY DEPARTMENT
C o m p t r o l l e r of the C u r r e n c y
Washington

FOR IMMEDIATE RELEASE
Tuesday, S e p t e m b e r 26,

PressService

N o0

194 4

The C o m p t r o l l e r of the Currency,

j-

P r e s t o n Delano,

t o day

a n n o u n c e d the a p p o i n t m e n t of L. H. S e d l a c e k as D i s t r i c t
Chief Na t i o n a l B a n k E x a m i n e r f o r the F o u r t h F e d e r a l R e s e r v e
District,

Cleveland,

Ohio.

At the same time it w as

a n n o u n c e d that J. L. R o b e r t s o n

h a d b e e n a p p o i n t e d a D e p u t y C o m p t r o l l e r of the C u r r e n c y to
take

the p l a c e b e i n g v a c a t e d b y M r.
Mr.

Sedlacek.

S e d l a c e k is a n a t i v e of Spencer,

Nebraska.

He

e n t e r e d the b a n k e x a m i n a t i o n f i e l d in 1924 as a n A s s i s t a n t
N a t i o n a l B a n k Examiner, w a s l a t e r p r o m o t e d to N a t i o n a l Bank
Examiner,

then Ninth District

Minneapolis,

and since August,

Chief N a t i o n a l Bank E x a m i n e r in
1 9 4 1 has b e e n s e r v i n g as a

D e p u t y C o m p t r o l l e r of the Currency.

He w as c a l l e d to W a s h 

i n g t o n f r o m the f i e l d in 1 9 3 3 to a s s i s t

in the r e o r g a n i z a t i o n

of b a n k s a f t e r the b a n k i n g holiday.
Mr.
1907.

R o b e r t s o n was b o m

He w as

in B r o k e n Bow,

e d u c a t e d in Gri n n e l l C o l lege

N e b r a s k a in October
in Iowa an d George

W a s h i n g t o n U n i v e r s i t y i n the D i s t r i c t of Columbia.

He h o l d s

TREASURY' D E P A R T M E N T
C o m p t r o l l e r of the C u r r e n c y
Washington

F OR I M M E D I A T E RELEASE
Tuesday, S e p t e m b e r 26,

Press Service
No. 43-45

1944«

The C o m p t r o l l e r of the Currency, P r e s t o n Delano, t o d a y
a n n o u n c e d the a p p o i n t m e n t of L*. H. S e d l a c e k as D i s t r i c t
C h i e f N a t i o n a l B a n k E x a m i n e r for the F o u r t h Fe d e r a l Reserve
District, Cleveland, Ohio*
A t the same time it w a s a n n o u n c e d that J. L. R o b e r t s o n
h a d b e e n a p p o i n t e d a D e p u t y C o m p t r o l l e r of the C u r r e n c y to take
the place b e i n g va c a t e d b y Mr. Sedlacek.
•Mr. S e d l a c e k is a n a t i v e of Spencer, N e b r a s k a .
He e n t e r e d
the b a n k e x a m i n a t i o n field in 1924 as a n A s s i s t a n t N a t i o n a l
B ank E x a m i n e r , was l a t e r p r o m o t e d to N a t i o n a l B a n k Examiner,
then N i n t h D i s t r i c t C h i e f N a t i o n a l B a n k E x a m i n e r in M i n n e apolis,
a n d since August, 1941 has b e e n s e rving as a D e p u t y C o m p t r o l l e r
of the Currency.
He w a s call e d to W a s h i n g t o n f r o m thè f i e l d in
1 9 3 3 to a s s i s t in the r e o r g a n i z a t i o n of banks a f t e r the b a n k i n g
h o l iday.
Mr. R o b e r t s o n was b o r n in B r o k e n Bow, N e b r a s k a in October,
1907.
He was e d c u a t e d in G r i n n e l l C o l lege in Iowa a n d George
W a s h i n g t o n U n i v e r s i t y in the D i s t r i c t of Columbia.
He h o l d s
the degrees of A.B. a nd L . L . B . f r o m George W a s h i n g t o n U n i v e r s i t y
and
f r o m the H a r v a r d L a w School.
Mr. R o b e r t s o n served
w i t h the Legal D i v i s i o n o f the Offi c e of the C o m p t r o l l e r of the
C u r r e n c y f r o m May, 1 9 3 3 to N o v e mber, 1943 w h e n he was c o m m i s s i o n e d
a n o f f i c e r in the U. S. N a v a l Reserve.
1

oOo

1

; '

'

■I

1 I I p v- I

I

||§p I I

\1

THEASTOT DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, September 26, 1944«

Press Service
yl
7 *, « (/w

The Secretary of the Treasury announced last evening that the tenders for
$1 ,200,000,000, or thereabouts, of 91~day Treasury bills to be dated September 28 and
to mature December 28, 1944, which were offered on September 22, were opened at the
Federal Reserve Banks on September 25.
The details of this issue are as follows:
Total applied for - $2,244,401,000
Total accepted
— 1,218,104,000
Average price

(includes $55,103,000 entered on a fixed-price
basis at 99.905 and accepted in full)
- 99.905/ Equivalent rate of discount approx. 0.375% per annus

Range of accepted competitive bids:
High
Low

- 99.908 Equivalent rate of discount approx. 0.364$ per annum
»
tt
»
n
tt
- 99.905
0.376* »
"

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

Federal Reserve
District .

Total
Applied for

Total
Accepted

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

*
52,9X5,000
1,514,808,000
61,385,000
42,355,000
22,668,000
8,780,000
326,388,000
32,057,000
9,447,000
15,568,000
13,490,000
144.540.000

#

12,244,401,000

#1,218,104,000

TOTAL

32,375,000
788,836,000
34,466,000
33,515,000
19,782,000
8,530,000
165,474,000
17,237,000
6,327,000
13,436,000
12,606,000
85.520.000

TREASURY DEPARTMENT
Washington
FOR RELEASE,

Tuesday,
9-25-44

M O R N I N G NEWSPAPERS,

Press

September 26, 1944»____

Ko,

Service

43-46

S

The S e c r e t a r y of the T r e a s u r y a n n o u n c e d last
the tenders for $ 1 , 2 0 0 ,000,000,

or thereabouts,

evening that

of 9 1 - d a y T r e a s u r y

bills to be d a t e d S e p t e m b e r 28 a nd to m a t u r e D e c e m b e r 28,
which w e r e o f f e r e d on S e p t e m b e r 22,
Reserve Banks
]

w e r e o p ened at t he F e d e r a l

on S e p t e m b e r 25.

T h e details

of this

issue a re as follows:

Total applied for - $2,244,401,000
Total accepted
1,218,1^4,000
entered on a f i x e d - p r i c e basis at
f ull )
Average price
Range

(48

1944,

(includes $ 5 5 , 1 0 3 , 0 0 0
arid a c c e p t e d in

99 *,905

- 99 *905;4Equivalent r a t e of disco u n t approx.
0 .375 $ per a n n u m

of a c c e p t e d c o m p e t i t i v e bids:

High

- 9 9 . 9 0 8 E q u i v a l e n t r a t e of d i s count approx.
0 .364®| p er a n n u m

Low

- 99.905 E q u i v a l e n t r ate
0 .376/b p e r a n n u m

p e r cent

of di s c o u n t 'a p p r o x

of the amou n t b id f o r at t he low pri .ce wa s a c c epted)

Federal R e s e r v e
District

Total
A p p l i e d for

Boston
New Y o r k
Philadelphia
Cleveland
R i c hmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o

$

TOTAL

52 ,915,000
1 ,514 ,808,000
61 , 385,000

Tot al
A c c ept ed
$

32,375,000

788 ,836,000
34 ,466,000
33,515,000

42,355,000
22 ,668,000
8 ,780,000
326 , 388,000
32,057,000
9,447,000
15 ,568,000
1 3 ,490,000
144,540,000

165,474,000
1 7 ,237,000
6 ,327,000
13,436,000
12,606,000
85 ,520,000

$ 2 ,244 ,401,000

$ 1 ,218 ,104,000

-0O0-

19 , 782,000
8 ,530,000

Boston
Sev fork
Philadelphia
Cleveland
Hlchœoad
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Balias
San Francisco

991
1143
860
1180
971
1050
2422
1457
1270
1785
937

TOTAL

ill

§1

L4571

f:

^

644
955
697

65

878

670
619
1815
810
909
1120

693
32S
10135

San Francise^ ' *-—
lai information that that district bas
total of 1728 eligible banking 'fices, and 1403 of then are qualified or established
for paying bonds.

ÄbTtr 9*

Banks will

r e c e i v e / m o d e s t c o m p e n s a t i o n front tÿie Treasures©!»,

h a n d l i n g the r e d e m p t i o n s *
T he f o l l o w i n g c o m p i l a t i o n by-fehé -Federal Reaerve Banks- shows
the n u m b e r of b a n k s é l i g i b l e a n d s o / f a r q u a l i f i e d u n d e r the

*Û

regulations, by^districts

a

3

PROPOSED PRESS RELEASE

M o r e than 1 0 , 0 0 0 hanks,
that a r e eligible,

7 0 p e r c e n t o f a ll s u c h institutions

a l r e a d y h a v e q u a l i f i e d to participate in the

T r e a s u r y * s p l a n f o r s i m p l i f y i n g r e d e m p t i o n o f S e r i e s E W a r Bonds,
a n d Seri e s A, B, C, a n d D S a v i n g s Bonds,

Secretary Morgenthau

a n n o u n c e d today#
T h e n e w plan, w h i c h b e c o m e s
banks

e f f e c t i v e O c t o b e r 2, p e r m i t s

to m a k e i m m e d i a t e p a y m e n t u p o n s a t i s f a c t o r y i d e n t i f i c a t i o n

o f the a p p l i c a n t owner,

in r e d e e m i n g the b o nds#

Heretofore

p a y m e n t s w e r e h a n d l e d b y check t h r o u g h the Fe d e r a l R e s erve
b a n k s or u p o n d i r e c t a p p l i c a t i o n to the Treasury, a p r o c e d u r e
inv o l v i n g

some delay#

S e c r e t a r y M o r g e n t h a u t e r m e d the r e s p o n s e o f the n a t i o n ’s
b a n k i n g i n d u s t r y to the n e w p r o g r a m " e x t r e m e l y g r a t i f y i n g # ”
At

the same time the S e c r e t a r y e x p r e s s e d h o p e that the

s i m p l i f i c a t i o n of r e d e m p t i o n p r o c e d u r e w i l l n o t

encourage bond

o w ners to p r e s e n t b o n d s f or p a y m e n t e x c e p t in cases o f a b s o l u t e
necessity#

Mr# M o r g e n t h a u p o i n t e d out that h u g e

r e q u i r e d for w a r e m e r g e n c y e x p e n d i t u r e s .
s h o u l d r e m e m b e r that the b o n d s
are h 9 l d -

in c r e a s e

sums still are

He sai d e v e r y b o n d owner
in value the l o n g e r they

' o O o

T he n e w reden^ption p r o c e d u r e d oes n ot a p p l y fo S e r i e s F and
G S a v ings B o n d s #
The

s y s t e m iloes n o t e f f a 6 t the stipula t i o i / t h a t S a v i n g s Bonds

are n o n - t r a n s f e r a b l e ,

n o r dq4s

it a l t e r the r e q u i r e m e n t

be h e l d @0 days f r o m t h e ispue d a t e b e f o r e

that bonds

they b e c o m e redeemable#

Treasury Department
Office of the Under Secretary

To*
From*

C O M M ISSIO N ER

OF

THE

PU B LIC

^

*7ik*

fsz
1sKl
JL

DEBT

<pin^sr
<*"'1«•-»

^

/ l * f ^ IGZi¿ - ' y —

■ * ~ ~ <-

TREASURY DEPARTMENT
Washington

F O R I M M E D I A T E RELEASE,
Tuesday, S e p t e m b e r 26,

M o r e t h a n 1 0 , 0 0 0 banks,
i n s t i t u t i o n s that are
participate
tion

70 p e r c e n t

eligible,

Savings Bonds,

a l r e a d y h ave q u a l i f i e d to

a n d Series A,

B,

C,

and D

S e c r e t a r y M o r g e n t h a u a n n o u n c e d today.

T h e n e w plan,
to mak e

w h i c h b e c omes

e f f e c t i v e O c t o b e r 2, p e r 

imm e d i a t e p a y m e n t u p o n s a t i s f a c t o r y

i d e n t i f i c a t i o n of t h e a p p l i c a n t
bonds.

of a l l s u c h

in t h e T r e a s u r y * s pla n f or s i m p l i f y i n g r e d e m p 

of Series E W a r Bonds,

mits banks

Press S e r v i c e
, No. 4 3 -47

1944«

owner,

in r e d e e m i n g the

H e r e t o f o r e p a y m e n t s w e r e h a n d l e d by check t h r o u g h

the F e d e r a l R e s e r v e banks
Treasury,

or upo n direct a p p l i c a t i o n to t h e

a p r o c e d u r e i n v o l v i n g some delay.

S e c r e t a r y M o r g e n t h a u t e r m e d the r e s p o n s e of the
n a t i o n * s b a n k i n g i n d u s t r y to t h e n e w p r o g r a m ” e x t r e m e l y
g r a t i f y i n g .n
At t h e same t i m e the S e c r e t a r y

e x p r e s s e d h o p e t hat the

s i m p l i f i c a t i o n of r e d e m p t i o n p r o c e d u r e w i l l not

e n c ourage

b o n d owners to p r e s e n t

in cases

a b s o l u t e necessity.

bonds f o r p a y m e n t

except

M r . M o r g e n t h a u p o i n t e d out t h a t hug e

sums s t i l l are r e q u i r e d f o r w a r e m e r g e n c y expenditures.
He said
increase

every b o n d owner s h o u l d r e m e m b e r tha t t h e bonds
in v a l u e t he l o n g e r t h e y are held.

-oOo-

of

^3 - //

FOR IMMEDIATE RELEASE
September 26, I 9I4.I4.

The Bureau of Customs announced today that the quota of 8,883,259
pounds of cotton having a staple length of less than 1-1/8“ (other than
harsh or rough cotton of less than

3 / k f i

in staple length and chiefly

used in the manufacture of blankets and blanketing, and other than linters)
the product of Mexico, was filled on September 20,

1 9 h k ,

the opening day of

the quota for the period September 20, 19UIj. through September 19,

19k$.

TREASURY DEPARTMENT
Washington

POP IMMEDIATE RELEASE
Wednesday t September 27, 1944*

Press Service
No, 43^48

The Bureau of Customs announced today that the quota
of 8,883,259 pounds of cotton having a staple length of less
than l^l/8n (other than harsh or rough cotton of less

than

3/4^ in staple length and chiefly used in the manufacture of
blankets and blanketing, and other than linters) the product
of Mexico, was filled on September 20, 1944, the opening day
of the auota for the period September 20, 1944 through
September 19, 1945.

0O 0

*vf)
-

:i i p

2-

2/
COTTON CARD STRIPS,7~COMBER WASTE, IAP WASTE, SLIVER WASTE, AMD 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 of 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:

#•

Established
:TOTAL QUOTA

Country of Origin

United Kingdom. .

. . .
.

France ............
British India....
Netherlands . . . . . . .
Switzerland. . . . . . .
Belgium...........
Japan.
China.............

Egypt.*..........
Cuba..............
Germany.............
Italy.............

TOTALS

.
.
.

.
.
.

.

:TOTAL IMPORTS ESTABLISHED:Imports Sept. 20,
:Sept. 2 0 , 19U3
:Sept. 19, 191*1*

U,323,U57
239,690
227,1*20
69,627
.68,21*0
1 *
1*,388
38,339
311,535
17,322
8,135
- 6,511*
76,329
21,263
5,E82,509

«■Ü

1, t o , 1$2

-

-

-

T5,807
22,71*7
• * 1U,796
'* * 12,8^3

-

-

•25 >1*1*3

7,088

'1^599,886

1/

Included in total imports, column 2.

2/

The President’s proclamation, signed March 31, 19U2, exempts'from import
quota restrictions card strips made from cottons having a staple 1-3/16
inches or more in length.

iQceiv^d at .
lata

.

y

>*&&■
FOR M E D I A T E RELEASE
September 26, 19U*

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 Presidents proclamations of September 5* 1939,
and December 19, 19U0, as follows, during the quota year September 20, 191*3, to
September 19, 19l*l*, inclusive.
COTTON HAVING A STAPLE OF LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3A / I N C H IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origins

(In Pounds)
s
s

Staple length less
than 1-1/8”

SStaple length 1-1/8” or more
s but less than 1-11/16”

* , . ■ . .‘Imports Sept* Established : Imports Sept.
«Established,2Qj ^
to «
Quota
. 20, i?U3, to
Quota
■•aegt.. 19,, 19UU*
20—

-

Egypt and th e A ngloEgyptian Sudan. . . . . . .
783,816
P e r u . . . . ......... ......................
21*7,952
B r it i s h . I n d ia
.............. 2,003 ,1*83
C h in a ..............................
1 /3 7 0 ,7 9 1
Mexico .................... ............. 8,883 ,259
B r a z il....................................
~6l8,723
Union o f S o v ie t
S o c i a l i s t R e p u b lic s ..
1*75,121*
A r g e n tin a ...........................
5*203
H a i t i ...............
237
Ecuador.............................
9,333
Honduras...............................
752
P araguay.................
_
871
Colombia........................
12l*
Iraq. . . . . . . . . . . . . . . . . . .
195
B r it is h E ast A f r ic a .. . .
2,2l*0
N etherlands E ast In d ie s
71,388
Barbados..........................
Other B r it is h West
In d ie s 1 / .........................
21,321
N ig e r ia ........... ................
5*377
Other B r itis h West
A fr ic a 2 / ...........................
16,001*
Other French Africa 3/ •♦
Algeria and Tunisia.....

• 33,669,318

73,576

8 ,8 8 3 ,2 5 9
1*17,580

1,917,073

.........................
* y ........... ;

689

A , 516,882

9,37U,Ul5

US,656,1(20

1/ Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.

7/ Other than Gold Coast and Nigeria.
J/ Other than Algeria, Tunisia, and Madagascar.

35,586,391

TREASURY DEPARTMENT
Washington
EOR IMMEDIATE RELEASE
Wednesday, September 27, 1944

press Service
No. 43-49

TherBureau 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 Presidents proclamations of September 5,
1939, and December 19,- 1940,: as follows, during the,quota, year September 20,
1943, to September 19, 1944, inclusive.'
COTTON HAVING A STAPLE OE LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OE LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY.USED IN THE MANU
FACTURE OE BLANKETS AND BLANKETING, AND OTHER THAN LINTERS), Annual quotas
commencing September 20, by Countries of Origin:

Country of
Origin

(In Pounds)
Staple length less v jStaple length 1-1/81’ or more
: but less than l-ll/16u
than 1-1/811
Imports Sept.:Established
Imports Sept..
Established: 20, 1943, to » *■ Quota ' ' 20, 1943, to
Quota
: Sept, 19,1944: 45,656.420' : Sept, 19, 1944

Egypt and the Anglo'Egyptian Sudan,.♦,.,
783,816
Peru..............
247,952
73,576
’
Brit ish India.
2,003,483
China..'.... .
1,370,791
Mexico,............... 8,883,259
8,883,259
1
Brazil..... ..........
618,723
417,580
Union of Soviet
~
'Socialist Republics.
475,124
‘ Argentina.
. 5,203
Haiti......... .......
• 237
Ecuador...... .
9,333
—
Honduras..............
752
'
rParaguay
871
—
Colombia.
124
IT*cLC[
*•}'•••♦ *-'«•« f«
19677
-■ '•
'.A ‘p '
British East Africa.,,
2,240
■- , ?*
Netherlands East Indies
71,388
T
*
~ 1
Barbados..............
Other British West
... ••••.*
Indies 1/......... .
21,321
5,377
Nigeria.,.............
Other British West
Africa 2
....
16,004
689
Other French Africa 3/
—*
—
Algeria and Tunisia...
14,516,882
1/
2f
3/

9,374,415

“

'

—
.A

■-

7

■
.’'
■

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Coast and Nigeria.
Other than Algeria, Tunisia, and Madagascar,

(Over)

'33,669,318
'1,917,073
_..
*—
. ..

■• —
—
—
—
A •
—
—
—

-

-

35,586,391

-2COTTON 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 itot more than 33-1/3 percent
shall be filled by cotton wastes other than card strips 2] and
made from cottons of 1-3/16 inches or more in staple length in
the following countries: United Kingdom, France, Netherlands*
Belgium, Germany and Italy:

of the quotas
comber wastes
the case of
Switzerland,

_______ _______ ______

■ ■_____(In Pounds)_____ »____________________________
:TOTAL IMPORTS
.'ESTABLISHED:Imports Sept. 20,
Countiy of Origin:Established :Sept. 20, 1943 :33-l/3$ of :1943, to
:TOTAL QUOTA :Sept. 19, 1944
:Total Quota:Sept. 19, 19441/

T

United Kingdom.,.,.
Canada...,..
France..... .
British India.... ,
Netherlands,.....,,
Switzerland.*.,....
Belgium..,,,......
Japan,......,.....
China........ .....
Egypt.,,,...,.....,
Cuba.......
...,,.
Germany............
Italy..............
TOTALS

rr

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

w
■v ■
-

1,441,152
75,807
22,747
14,796
12,853
• T
25,443
7,088

-

1,599,886

-

5,482,509

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-

■j . c /ì
<-/ i w o o

FOR IMMEDIATE RELEASE
September 26« 19****

The Bureau of Customs announced today preliminary figures shoving the
quantities of coffee authorized for entry for consumption under the quotas for
the 12 months commencing October 19 19*4-3» provided for in the Inter-American
Coffee Agreement» proclaimed by the President on April 15» 19*+1, as follows!

Country of Production

1
e
5
e
e

Quota Quantity
(Pounds) 1/

:
:
:

Authorized for entry
for consumption
As of (Date)
i (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rioa
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 ,621,630,1*79
51*9 ,261,936

Non-Signatory Countries?

3H.873.771*
13,9H9,562
20,881,883
26,155.330
10**,621,321
93.287.38H
H7,951.373
3 ,1*86,928
82,825,279
3U.OOl.9U3
H. 359.288
73.23H,872

61,900,935

September 1 ^ 1 9 ^ ) 1,251,755,170
(Import quota filled)
September 23* 19**** 2/ 31.382,555
September l6, 19*+**
8.H77.835
September 23« 19**** 2/ I9 ,11**,I65
*
2/ 22,152,193
"
h 100,761,509
90,5H3.357
■
.. &
l*2,10U ,293
September lo, 19****
(Import quota filled)
(Import quota filled)
September 23* 19**** 2/ 28,863,818
3,596,361
September l 6t 19****
H
**3 ,166,86**
0

H,1*59,775

1/

Quotas as established by action of the Inter-American Coffee Board on
April 21, 19****.

2/

Per telegraphic reports

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Wednesday, September 27, 1944.

presS Service
Ho. 43-50

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1, 1943, provided for in the InterAmerican Coffee Agreement, proclaimed by the President on April 15, 1941,
as follows:

•

Country of Production

l
:

Quota. Quantity
(Pounds) 1J

:
:
: As of

Authorized for entry
fov consumption
(Date)
: (Pounds)"”*

Signatoiy Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-Signatory Countries;

1,621,630,479
549,261,936
34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47,951,373
3,486,928
82,825,279
34,001,943
4,359,288
73,234,872
61,900,935

September 16, 1944
(import quota filled)
September 23, 1944 2/
September 16, 1944
September 23, 1944 2/

"
"
»

2j

¡7

z]

September 16, 1944
(import quota filled)
(import quota filled)
September 23,1944 2/
September 16, 1944

1,251,755,170
31,382,555
8,477,835
19,114,165
22,152,193
100,761,509
90,543,357
42,104,293

|'

n

28,863,818
3,596,361
43,166,864

it

4,459,775

1/

Quotas as established by action of the Inter-American Coffee Board on
April 21, 1944,

2/

Per telegraphic reports.

oOo

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 »rdinary gain or loss.
Treasury Department Circular No. 418> as amended,- and this notice, pre
scribe 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,

-

2

~

Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final. |
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

October ^

1944

The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under 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 42 and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941* 'the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,

The Secretary of the Treasury, by this public notice, invites tenders
for $ 1.200.000.000 , or thereabouts, of
91 -day Treasury bills, to be issued
S
'
on a discount basis under competitive and fixed-price bidding as hereinafter provided*

The bills of this series will be dated _October *

1944

» and will

$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity, value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o !clock p. m.,’Eastern War time,

Monday, October 2« 1944

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 mu s t b e expressed
on the basis of 100, with not more than three decimals, e. g., 99.925,
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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
and4«from
and face
recognized
investment
securi
mature
January
1945responsible
, when the
amount dealers
will be in
payable
without
ties. Tenders
mustin
bebearer
accompanied
by payment
2 percent rfofthe
face
interest.
They from
will others
be issued
form only,
and in of
denominations
#1,000,
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

TREASURY DEPARTMENT
Washington

F O R R E L E A S E , M O R N I N G NEWS P A P E R S ,
Friday, S e p t e m b e r 29, 1944;
9 **28-44
.

T he S e c r e t a r y of the Treasury, b y this publ i c notice, invites
tenders f o r $>1,200,000,000, or thereabouts, of 91 **day T r e a s u r y
bills, to be i s s u e d on a d i s c o u n t b a s i s u n d e r c o m p e t i t i v e and
fixed-price b i d d i n g as h e r e i n a f t e r p r o v ided.
The b i l l s of this
series will be d a t e d O c t o b e r 5, 1944, and w ill m a t u r e J a n u a r y 4,
1945, w h e n the face a m o u n t wil l be p a y a b l e w i t h o u t interest.
They
will be issued in b e a r e r f o r m only,, and in d e n o m i n a t i o n s of $1,000,
$5,000/ $10,000, $100,000, $500,000, and $ 1 , 0 0 0 , 0 0 0 ( m a t u r i t y
value)•
T e n d e r s w ill be r e c e i v e d at Fe d e r a l Reserve Banks a n d ' B r a n c h e s
up to the cl o s i n g hour, two o fc l o c k p,m., E a s t e r n W a r time, Monday,
October 2, 1944,
Tenders will no t be r e c e i v e d at the T r e a s u r y
Department, ■W a s h i n g t o n .
E a c h tend e r must be f o r an even m u l t i p l e
of $1,000, an d ; t h e price o f f e r e d m u s t be e x p r e s s e d on the basis
of 100, w i t h not m o r e than three d e c i mals, e . g . , 99.925.
Fractions
may n ot be used.
It is u r g e d that tenders be mad e on the p r inted
forms and f o r w a r d e d in the special env e l o p e s /which will b e supplied
by F e d e r a l Reserve Banks or B r a n c h e s on a p p l i c a t i o n therefor.
T e n d e r s will be r e c e i v e d w i t h o u t de p o s i t f r o m i n c o r p o r a t e d
banks and trust companies and f r o m r e s p o n s i b l e a n d r e c o g n i z e d
dealers in i n v e s t m e n t securities.
Tenders f r o m others m u s t be
a c c o m p a n i e d b y p a y m e n t of 2 p e rcent of the face amou n t of T r e a s u r y
bills a p p l i e d for, u n l e s s the tenders are a c c o m p a n i e d by an express
g u a r a n t y of p a y m e n t b y an i n c o r p o r a t e d b a n k or t r ust company, .
I m m e d i a t e l y a f t e r the closing hour, tenders will be o p e n e d
at the F e d e r a l R e s e r v e B a nks an d Branches, f o l l o w i n g w h i c h public
annou n c e m e n t will be m a d e by the S e c r e t a r y of the T r e a s u r y of the
amount and price range of a c c e p t e d bids.
T h o s e s u b m i t t i n g tenders
will be a d v i s e d of the a c c e p t a n c e or r e j e c t i o n thereof*
T he
Secretary o f the T r e a s u r y e x p r e s s l y reserves the r i ght to accept
or reje c t a ny or all tenders, in whole o r in part, and his a c t i o n
in a ny s u c h respect shall be final.
S u b j e c t . t o these reservations,
tenders f or $ 1 0 0 , 0 0 0 or less f r o m any one b i d d e r at 9 9 . 9 0 5 entered
on a f i x e d - p r i c e b a s i s will be a c c e p t e d in full.
Payment of
accepted tenders at the p r i c e s o f f e r e d m u s t be m a d e a r com p l e t e d
at the Federal Reserve B a n k in cash or o t her i m m e d i a t e l y ava i l a b l e
funds on O c t o b e r 5, 1944.
43-51

(Over)

2
The 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 interest or
g a i n f r o m the sale or o t h e r d i s p o s i t i o n of the bills, shall not
have any exemption, as such, and loss f rom the sale o r other
d i s p o s i t i o n of T r e a s u r y bills shall n o t have any special treatment,
as such, u n d e r Federal tax Acts n ow or h e r e a f t e r enacted*
The
bills shall be subject to estate, inheritance, gift, or o t her
excise taxes, w h e t h e r F e d e r a l or State, b u t shall be exempt from
all t a x a t i o n n o w or h e r e a f t e r i m posed on the pr i n c i p a l o r interest
thereof by any ^tate, or any of the p o s s e s s i o n s of the U n i t e d States
or by any l o cal taxing authority.
For pu r p o s e s of t a x ation the
the amount 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 áre o r i g i n a l l y 'sold
by the U n i t e d States shall be c o n s i d e r e d to be interest.
U n der
S e c t i o n s 42 and 117 (a) (1) of the I n t ernal R e v enue Code, as
a m e n d e d by S e c t i o n 115 of the Revenue Act of 1941, the amount of
d i s c o u n t at, w h i c h b i l l s issued h e r e u n d e r are sold shall not be
c o n s i d e r e d to accrue u n t i l such, b i lls shall, be sold, r e d e e m e d or
oth e r w i s e d i s p o s e d of, and such b i l l s are e x c l u d e d f r o m consider
a t i o n as capital assets.
A ccordingly, the o w n e r of T r e a s u r y bills
(other t h a n life i n s uran ce companies) issued h e r e u n d e r n e e d in
clude in his income tax return o n l y the d i f f e r e n c e b e t w e e n the
p r ice p a i d for such bills, w h e t h e r on original issue or on
s u b s e q u e n t purchase, and t h e amou n t a c t u a l l y r e c e i v e d either upon
sale 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 able y e a r for which
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 Cir c u l a r No* 418, as amended, and this
notice, prescribe, the terms of the T r e a s u r y b i l l s and g o v e r n the
c o n d itions of their issue.
Copies of the ci r c u l a r m a y be obtained
f r o m a n y Federal Reserve Bank o r Branch*

oOo

dl dl dl dl dl dldldldldldl dl (t d l d l d l d l d l d l d l d l d

Secretary Morgenthau announced today th at the Sixth War
Loan w ill s ta r t on November 20, 1944.
The goal w ill be $14 b illio n d o lla rs, of which 5 b illio n
w ill come from, the sale of bonds to individuals.
The Secretary said that subscriptions fo r Savings Bonds
and Savings Notes processed through the Federal Reserve Banks
between November 1 and December 31 w ill be counted towards the
drive in order th a t the m illions of persons employed in the
nation*s in d u stria l corporations may be permitted to p a rtic i
pate in the drive through the purchase of bonds acquired by
weekly or semi-monthly deductions from th e ir pay during th is
period.
The marketable secu rities which are to be offered during the
drive and which are purchased prim arily by large- investors and
corporations w ill be on sale from December 1 to December 16.
Further d e ta ils concerning the terms and ch a ra c te ristic s of the
marketable se c u ritie s w ill be announced next week.

B

S e c re j^ y pointed out th a t the fin an c ial demaï0s of
in' t j ^fnext „few months w ill-be veqy^nigh ap& willy
^ su b stan tially unchanged level u n t i l ]

\

te r

TREASURE DEPARTMENT
Washington

FOR I M M EDIATE RELEASE
Thursday, S e p t e m b e r 28,

.
1944»

Press S e r vice
No# 4 3 - 5 2

S e c r e t a r y M o r g e n t h a u a n n o u n c e d today that the S i x t h W a r
L o a n w i l l start on N o v e m b e r 20, 1944.

will

The goal will be $ 1 4 , 0 0 0 , 0 0 0 , 0 0 0 , of w h i c h $ 5 , 0 0 0 , 0 0 0 , 0 0 0
come f r o m the sale of b o nds to individuals.

The S e c r e t a r y said that s u b s c r i p t i o n s for S a v i n g s Bonds
and Savings N o t e s p r o c e s s e d t h r o u g h the F e d e r a l R e s e r v e Banks
b e t w e e n N o v e m b e r 1 and D e c e m b e r 31 wil l be c o u n t e d towards
the d r ive in order that the m i l l i o n s of p e r s o n s e m p l o y e d in
the n a t i o n 1s I ndustrial c o r p o r a t i o n s m a y be p e r m i t t e d to
p a r t i c i p a t e in the d r i v e th r o u g h the p u r c h a s e of bonds a c q u i r e d
by w e e k l y o r s e m i - m o n t h l y d e d u c t i o n s f r o m their p a y d u r i n g
this period.
&
The m a r k e t a b l e s e c u rities w h i c h are to be o f f e r e d d u r i n g
the dri ve and w h i c h are p u r c h a s e d p r i m a r i l y b y large investo rs
and c o r p o r a t i o n s w ill be on sale f r o m D e c e m b e r 1 to D e c e m b e r 16*
Further details c o n c e r n i n g the terms and c h a r a c t e r i s t i c s of
the m a r k e t a b l e s ecurities will be a n n o u n c e d n e x t week.

oOo

Mr. Frederik Smith, A ssistant to Secretary Morgenthau
since May, 1943, has resigned to accept a position with the
Blue Network as D irector of Advertising and Promotion, i t was
announced today.

\ Secretary

Morgenthau'said Mr. Smith w ill retu rn to the

Department for service during the Sixth War Loan, scheduled
to s ta rt in November, and w ill a s s is t in a consultive capacity
"whenever I need him."
■

I Before his appointment as A ssistant to the Secretary, Mr.
Smith for several months gave technical assistance to the War
Finance Division*

He came to the Treasury from the advertising

firm of Young & Rubicam, Incorporated, New York City, where he
was head of the agency*s public re la tio n s d iv isio n .
Mr. Smith w ill assume his position with the Blue Network
immediately.

treasury: department

Washington

F O R RELEASE, A F T E R N O O N N E W S P A P E R S
Friday, S e p t e m b e r 29, 1 9 4 4 , _____

Mr.

F r e d e r i k Smith,

since May,

1943,

Assistant

Press Se r v i c e
No* 4 5 -53

to S e c r e t a r y M o r g e n t h a u

has r e s i g n e d to accept a p o s i t i o n w i t h the

Blue N e t w o r k as D i r e c t o r of A d v e r t i s i n g a nd Promotion,

it was

a n n o u n c e d today*
S e c r e t a r y M o r g e n t h a u said Mr.
Department
to start

S m i t h will

r e t u r n to the

f or s e r vice d u r i n g the S i x t h W a r Loan,

in N o v e mber,

and wil l

assist

scheduled

in a cons u l t i v e

capacity

" w h e n e v e r I n e e d him."
B e f o r e his a p p o i n t m e n t as A s s i s t a n t
Mr.

S m i t h f or several m o n t h s gave

W a r Finance D i v i sion*

to the Secretary,

technical

a s s i s t a n c e to the

He came to the T r e a s u r y f r o m the

a d v e r t i s i n g f i r m of Y o u n g &

Rubicam,

Incorporated,

N e w Y o r k City,

where he w as h e a d of the a g e n c y ’ s p u b l i c r e l a t i o n s division.
Mr.

Smith will

assume his p o s i t i o n w i t h the Blue N e t w o r k

immediately*

oOo

Assets and liabilities of all active banks in the United States and possessions, by
classes, June 30, 1944 - Contd.
(In thousands of dollars)
:

•

total
• all banks

LIABILITIES
Demand deposits of individuals, partner
ships , and corporations........ ........... • $58,420,660
Time deposits of individuals, partnerships, and corporations............. .
. 33,440,899
U. S. Government and postal savings deposits. . 19,650,768
Deposits of States and political subdivisions •
5,043,991
Deposits of banks«3/........ ...........
. 11,240,113
Other deposits (certified and cashiers*
checks, etc.).......... ..... .
.
1,570,816
Total deposits J j • .............. ..... * . 129,367,247
Bills payable, rediscounts, and other
liabilities for borrowed money............ .
87,116
Acceptances executed by or for account of
reporting banks...... ....................« •
64,690
Other liabilities.......... ................. *
685,111
Total liabilities......... .
c.... « 130,204,164
CAPITAL ACCOUNTS
Capital notes and debentures................ .
Preferred stock...... ...................... .
Common stock.... ...................•«•«••••• .
Surplus....... .............. ............... .
Undivided profits...... ..................... .
Reserves (and retirement account for pre
ferred stock and capital notes and
debentures .)......*................. .
.
>.
'
Total capital accounts................. •
Total liabilities and capital
accounts...........

s
:
* National î
*
banks :

132,745,584

$25,675,076

$25 ,526,270

$22,375

$126,431

11,056,548
2,998,352
7,403,551

22,384,351
8,825,640
2,045,639
3,836,562

9,947,604
8,824,165
2,041,990
3 ,796,622

12,419,2133
1,208
1,296
315

17,534
267
2,353,
39,625

804,090
65,833,253

766,726
63,533,994

763,909
50,900,560

1,472
12,445,879

1,345
187,555

6,205

80,9131

79,025.

14

10 ,825,128

37,869
413,009
66,290,336

86,569

-

112,220
1 ,441,358
1,692,172
604,198

26,821
272,102
63,913,828
86,569
123,392
1,273,354 .
2,536,992
917,967

567,279
9,355,501

260,661

306,618

4,110,609

5,244,892

. 139,559,665

70 ,400,945

69,158,720

2/ Excludes reciprocal interbank demand balances with banks in the United States*

%

f

l £12 J

V

235,612
2,714,712
4,229,164
1,522,165

All banks*
Banks other than national
other than:
State
: Mutual
: Private
national :(commercial) : savings :

20,430
228,923
51,228,938
81,853
123,392
1,266,859
1 ,598,866
568,691

262,281

6,391
42,697
12,488,590
4,716
<9*
925,956
348,940

482
196,300
••
—

6,495
12,170
336

42,028

2,309

3,901,942 , 1,321,640

21,310

55 ,130,880

13 ,810,230

217,610

Page ^
Assets and liabilities of all active banks in the United States and possessions, by classes,
June 30, 1944 1/
(-In thousands of dollars)
:
m
0
0
0

:
Total
all banks

ASSETS'
Loans on - real estate.... .... ................
Other loans, including rediscounts and
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 stocks of
Federal Reserve banks.... ..............
Total securities....... .............

•

0
0

0
0

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

*

;

National
banks
................

All banks
other than
t; national

03

•

•

• *

*

. 5

5,042

9,556

#8,798,273

#2,038,770

#6,759,503
_ 7,515,155
14,274,658 .

...

8,973

536

47

#2,408,132

#4,349,063

#2,308

7.405.499
2 ,812m

75,144*235
985,642

38,156,365
634,504

36,987,870
351,138

29,629,355
345,208

3,639,392
3,401,421

2,032,998
1,318,488

1,606,394
2,082,933

1,424,458
1,135,956

_ 545,901
83,716,591

146.168
42.288.523
820,570

399.733
41.428,068

15,239,164

11,466,188

10,965,786

532,377
25,582

569,771
226,393

464,298
77,342

49,356
34,003
181,690

45,410
23,827
321,784
69,158,720

33,924
17,725
261,482
55,130,880

Currency and coin...... ..................
1,623,191
Balances with other banks, including
reserve balances ¿ /....................
26,705,352
Bank premises owned, furniture and
fixtures................................
1,102,148
Real estate owned other than bank premises
251,975
Investments and other assets indirectly
representing bank premises or other real
estate.......... .......................
94,766
Customers* liability on acceptances..... *
57,830
Other assets.......... ...................
503,474
Total assets................... .... * 139,559,665

70,400,945

802,621

1/ Excludes banks in Guam and The Philippines on account of the war.
2/ Includes trust companies and stock savings banks.
2/ Excludes reciprocal interbank demand balances with banks in the United States.

«
#

:

0

14,598

9,190,910
16,706,065
25.504,338 _ 11.229.680

:
Banks other than national
î
v ’
State
Mutual # . . 5. k »-i
î (commercial)2/ î savings
î Private

53.762
___56,070
-.4*4PÂ*9£Z'_
55,894

7 ,288,5a
5,744

69,974
186

159,283
936,531

22,653
10,446

236.417
157.461
8.547.560
.... 32,7,71,39.4..
725,298
75,304

5.855
109.114
2,019

457,955

42,447

104,908

565

148,5a

510

11,455
59,550
13,810,230

31
6,102
752
217,610

Comparison of assets and liabilities of all banks - Continued

(,In thousands of dollars)
j
5

¿June 30,
19U

LIABILITIES
Deposits of individuals, partnerships, and corporations:
Demand...... ..........................................
158,420,660
Time.......... ....... ...................................
33, 440,899
U. S.- Government and postal savings deposits............... ..
19,650,768
Deposits of States and political subdivisions ................. *
5,043,991
Deposits of banks 1/............. .............................
11,240,113
Other deposits (certified and cashiers* checks, etc.)........ .
1,570,816
Total deposits l/........ ....................... ........
129,367,247
Bills payable, rediscounts, and other liabilities for
borrowed money..................................... .,.......
87,116
Acceptances executed by or for account of reporting banks.... .
64,690
Interest, discount, rent, and other income collected but not
earned........ ..... .............. .......... ...........,,#)
Interest, taxes, and other expenses accrued and unpaid....... «)
685,111
Other liabilities..............................................)L..............
Total liabilities........................ .......
130.204.164
CAPITAL ACCOUNTS
Capital notes and debentures............. ............
86,569
Preferred stock................. ......... ............
235,612
Common stock...........................................
2,714,712
Surplus......... ......... ............................
4,229,164
Undivided profits......................................
1,522,165
Reserves and retirement account for preferred stock and
capital notes and debentures.......... ..
567,279
Total capital accounts................
9.355,501
Total liabilities and capital accounts
139,559,665
1 / Excludes reciprocal interbank demand balances with banks in the United States

:
i

(
(
(

Dec« 31,
1943

Page
j
î

.

June 30,
1943

#59,384,625
30,725,252
10,532,131
4,972,081
11,031,848
1.690.189
118,336,126

#54,286,973
28,417,460
8,163,576
4,855,015
10,904,248
1.156.827
107,784,099

51,650

31,657

60,157

69,075

45,390
208,391

374,573
119.076.287

)
)
)

576,880
108.461.711

90,142:

94,691

253,545
2,667,913
4,105,016
1,370,352

270,175
2:,614,581
3,871,503
1,406,340

558,723
9,045.691
128,121,978

533.405
8.790.695
117,252,406

Assets and Liabilities of all Active Banks in the United States and Possessions on June
December 31* 19^3» and June 30* 19^3

30, lÿ-1-U,

(Amounts in thousands of dollars)
4
4

June 30,
19-44
Number of banks................... ......................

14.598*

»

*
#

»

Dec* 31,
1943

•
#

June 30,
1943

f

14.661#

____ 14,621*

ASSETS'
Loans on real estate.....................................
$8,798,273
$8,9 a , 065
$9,155,381
Other loans, including overdrafts.......... .
16.706.065___________ 14.733,474________ 13,168,672
Total loans.........................................
25.504.338___________ 23.674,539
--- 22.324.053
U. S. Government securities:
Direct obligations......... ....... ...............
75,144,235
63,690,025
55,176,155
Guaranteed obligations........ .....................
985,642
2,569,359
2,786,903
Obligations of States and political subdivisions........
3,639,392
3,775,406
3,564,275
Other bonds, notes, and debentures............ ..........
3,401,421
3,351,967
3,554,7a
Corporate stocks, including stocks of Federal Reserve
banks...... ...........................................
545.901
550.620
591.727
Total securities...... ............................. ...83,716.591
73.726.246
65,884,932
Currency and coin............ ...........................
1 ,612,252
1,623,191
1,606,564
Balances with other banks, including reserve balances l/0
26,705,352
25,210,347
26,999,933
Bank premises owned, furniture and fixtures.............
1 ,102,148
1 ,162,458
1,128,014
Real estate owned other than bank premises............ .
332,110
251,975
443,677
Investments and other assets indirectly representing bank
111,317
94,766
101,589
premises or other real estate........................ .
57,830
49 ,488
61,279
Customers* liability on acceptances outstanding.........
Interest, commissions, rent, and other income earned or
220,194 )
accrued but not collected................... ........
447,779
503,474
|
277,613 )
Other assets.............................................
128.121.978
117.252.406
Total assets........................................
139.559.665
_ _
-T-— T

■»•Excludes banks in Guam and f he Philippines on account of the war.

-

Loans and discounts amounted to $2 5 ,50U,000,000, an increase of
$3,180,000,000, or

1I+.2U percent, since June 19*43»

Cash and balances with other banks, including reserve balances, on June

30,

19*4*4 amounted to $28,329»000,000, which was an increase of $1 ,512,000,000 in
the year, but a decrease of $283,000,000 since December
Total capital accounts on June
$8,791,000,000 on June

19U 3 ,

30 , 19*4*4 were $9,356,000,000, compared with

30 , 19*43, an increase of $565,000,000,

The total assets of all commercial and savings hanks in the United States
and possessions on June

30» 19*4*4 reached

a new peak of $139»560,000,000,

Comptroller of the Currency Preston Delano announced today.

This figure, which

covers the returns of the 1*4,59S active hanks of all classes, exceeds by
$22,308,000,000, or 19.03 percent, the total assets of hanks on June

30» 19*43»

Consolidated figures for all active hanks are made possible through the co
operation of State supervisory authorities who furnish the Comptroller with
summaries of the returns of banks under their supervision.
The total deposits of banks on June

30* 19*+*+ amounted

to $129»3^7»000,000,

also a new peak, in comparison with $107*78*4,000,000 at thè end of June in 19*+3»
an increase of $21,583*000,000, or 20.02 percent.
partnerships and corporations were
in the year, or

7*62 percent;

$58 ,*421,000,000,

Demand deposits of individuals,
an increase of $*4,13*4,000,000

time deposits of individuals, partnerships and

corporations were $33»*4*41,000,000, an increase of $5,02*4,000,000, or 17*68 percent,
and deposits of U. S. Government, including postal savings, were $19,651,000,000,
an increase of

$11 »*487 »000 »000» or

1*40,70 percent.

At the end of June 19*4*4 the banks held obligations of the U. S. Government,
direct and guaranteed, of $76,130»000,000, as compared to $ 57»963,000¿000 at the
end of the previous June, an increase of $18,167,000,000.
and political subdivisions held on June

30, 19*4*4- amounted

Obligations of States
to $3,6*40,000,000, a

V

decrease for the year of $135,000,000, but an increase of $ 76,-000,000 since the
end of December 19*43.

Other securities held decreased $199»000,000 in the year,

and amounted to $3,9*47»000,000.
on June
assets.

3O",

The aggregate of all securities held by the banks

19*4*+ was $83»717»000,000 and represented 59*99 percent of their total

D E L I V E R

M

ROOM

TO

DIRECTOR

PUBLIC RELATIONS

REMARKS
Please furnish the
Statistical Division of the
Comptroller*s Office, Room

5039» 250 copies of the at
tached press release^

FROM
(Name, not initials)

TREASURY DEPARTMENT
Comptroller of the Currency
Washington
EOR RELEASE MORNING NEWSPAPERS
Wednesday, October h, 1 9 ^

Press Service
ITo. h3~5h

The total assets of all commercial and savings "banks in the
United States and possessions on June 30, 19^h reached a new peak of
$139,560,000,000, Comptroller of the Currency Preston Delano announced
today. This figure, which covers the returns of the lh,59S active
banks of all classes, exceeds by $22,308,000,000, or 19.03 percent,
the total assets of banks on June 30, 19^3* Consolidated-figures for
all active banks are made possible through the cooperation of State
supervisory authorities who furnish the Comptroller with summaries of
the returns of banks under their supervision.
The total deposits of banks on June 30» 1 9 ^ amounted to
$1 2 9 ,3 6 7 »0 0 0 ,0 0 0 , also a new peak, in comparison with $107,78^,000,000
at the end of June in 19^3, an increase of $21,583,000,000, or 20.02

percent. Demand deposits of individuals, partnerships and corporatipns
were $58,^21,000,000, an increase of $U, 135-,000,000 in the year, or
7 .6 2 percent; time deposits of individuals, partnerships and corpora
tions were $33,^1,000,000, an increase of $5,02h,000,000, or 1 7 .6 8
percent, and deposits of U. S. Government, including postal savings,
were $19,651,000,000, an increase of $11,^87,000,000, or 1*40.JO percent
At the end of June 1 9 ^ the banks held obligations of the U. S.
Government, direct and guaranteed, of $76,130,000,000, as compared to
$57,963,000,000 at the end of the previous June, an increase of
$18,167,000,000.
Obligati ons of States and political subdivisions
held on June 30» 1 9 ^ amounted to. $3,6^0,000,000, a decrease for the
year of $1 3 5 ,0 0 0 ,0 0 0 , but an increase of $7 6 ,0 0 0 ,0 0 0 since the end of
December 19*43 • Other securities held decreased $199,000,000 in the
year, and amounted to $3,9^7,000,000. The aggregate of all securities
held by the banks on June 3 0 , 1 9 ^ was $83,717,000,000 and represented
59*99 percent of their total assets.

Loans and discounts amounted to $25,50h,000,000, an increase of
$3,180,000,000, or lh.2U percent, since June 19^3*
Cash and balances with other banks, including reserve balances,
on June 30» 19^H amounted to $28,329,000,000, which was an increase of
$1 ,5 1 2 ,0 0 0 ,0 0 0 in the year, but a decrease of $283,000,000 since
December 19^3*
Total capital accounts on June 30, 19^+ were $9,356,000,000,
compared with $8,791,000,000 on June 30, 19^3, an increase of
$565,000,000.
The complete tables are attached:

page 2
Assets and Liabilities of all Active Banks in the United States and Possessions on June 30, 19kk,
December J\, 19^-3-»- an& June 30» 19^3
(Amounts in thousands of dollars)

June 30*
19kk

*■
•

lk,o21*

lk,59s*

Humber -of banks.... .............
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. • •
•
t
•
•
Other bonds, notes, and debentures
Corporate stocks, including stocks of Federal Reserve
- • • » • » •- • •♦ • • » t ♦ * »
• • • #*♦ V •
banks.
Total securities.....
Currency and coin...... ..
Balances with other banks, including reserve balances i f
Bank premises owned, furniture and fixtures..
• • • • • •
Real estate -owned other than bank premises...

.

»
:
»

30,
1943

June

ik,661*

$ 8,793,273
16.706,065
25.504,333

$s,9kl ,065
14.733.474
23.674,539

$9,155,331
13.16s . 672
22,724,053

75,144,235
985,6k2
3 .639,392
3 ,.koi,k2i

63,690,025

55,176,155
2,786,903
3,775,406
3,554,741

3U 5.901

550.620
73 ,726,2k 6
i, 6l2^252

2,569,359
3,564,275
3,351,967

■591.727

251*975

332,110

65.8Sk .932
1 ,606,56k
25,210,347
I,l62,k58
443,677

9k ,766

101,539
k9,kss

111,317
61^279

S3,716,591
1 ,623,191
26,705,352
1 ,102,Iks

26,-999,933
l,12S,0lk

ik
premises or other real e
s
t
a
t
e
.
*
Customers* liability on acceptances outstanding,......•
Interest, commissions, rent, and other income earned or
accrued but not c o l l e c t e d . . )
0 ther assets.♦».»».»•«»•«»•»•»..««•»««.*
• «• i
• • •§§• • •
• • • ««
Total assets.........*-..

Dec. 31 »
19k3

57,330

503
139.559,665

(
(

220,194)
277,617)
12s,121,:97s

447,779
117.252,ko6

Page
Comparison of assets and liabilities of all hanks

Continued.

June 30,
1944
'LIABILITIES
Deposits of individuals, partnerships, and corporations:
Demand.....
T
i
m
e
......
U. S. C-overnment and postal savings deposit s. .••....•••••.. •
Deposits of States and political subdivisions......... .
Deposits of hanks l/.......... ..........
Other deposits (certified and cashiers1 checks, etc.).......
Total deposits l/..*...............
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.........,)
0 ther liabillties. . . . . . . . . . . . . . . ,.•»••»•»••)
Total liabilities.
CAPITAL ACC GUM'S
Capital notes and debentures.................................
Preferred stock,.............................
Common stock.,....................... ..........
••.
Surplus
~
.................................
Undivided profits....... ........... . ••• ••••...................
Reserves and retirement account for preferred stock and
capital notes and d e b e n t u r e s . ♦,.,*©••••••••.
Total capital accounts..... .
Total liabilities and capital accounts....... .
37

Excludes

re c ip ro c a l

3

(In thousands of dollars)

:
:

Dec. 31»
1943

i
:

30,
1943 ■

June

$ 58,1+20,660
33,^0,899
19,650,768
5,0^3,991
11,240,113
1 ,570,816
129,367,247

$ 59,38^,625
30,725,252
10,532,131
4,972,081
11,031,848
1,690.189
”"118,336,126

$ 54,286,973
28,417,460
8,163,576
4 ,855,015
10,904,248
1 ,156,827
107,784,099

87,116
64,690

51,650
60,157

31,657

685,111

(
(
(

130,204,161+

86,569
235,612
2,714,712

4.229.164
1 .522.165
567,279
9.355,501
139.559.fcfe5

interbank demand balances with banks in the United States.

45,390
20.8,391
374.573
119,076,287

69,075

)
)
)

576,880
108,461,711

90,142

94,691

253,545
2,667,913
4,105,016
1 ,370,352

270,175
2,614,581
3 .271,503
1,4o 6,340

558,723
9,045.691

533.405
8,790,695
117,252,406

128,121,978

...

Page- *4
Assets and liabilities of all active banks in the United,.States and possessions, by classes,
June 30, 19*4* 1/
(in thousands of dollars)
:
*

Total
all banks

Humber of banks.............
14,592
ASSETS
Loans on real estate.............. . . $8,795,273
Other loans, including rediscounts
and overdrafts.................... 16,706,065
Total loans .................. .. 25.504,338

?
: Nati onal
:
banks

i. All banks
: other than
: nat ional

l_____ Banks other than national
:
State
:
1 (commercial)2/ ;
»

Mutual
savings

; Private
•

5,042

9,556

8,973

536

47

*2,038,770

$6 .759,503

$2,408,132

$4 ,349,063

$2,308

9,190,910
11,229,680

7 ,515.155
• 1^,274,658

7,405,499
9,813,631

55,894
4.404,957

53,762
56,070

U. S..Government securities:
Direct obligations............. 75.144,235
38,156,365
36,987,870
29,629,355
Guaranteed obligations.........
63*4,50*4
9S5. 6*42
3*45,208
351,138
Obligations of States and political
sub-divisions......................
1 ,606,39*4
1, *42*4,*458
2,032,992
3.639.392
Other bonds, notes and debentures.,.. 3, *401, *421
1,318,*488
1.135.956
2,082,933
Corporate stocks, including stocks
of Federal Reserve banks..........
1*46,16S
545,901
236,*417
_ 399,732_
Total securities..........
41,428,068
83,716,591
32,771,394
^42,288,523
Currency and coin.......... .........
1 ,623,191
820,570
802,621
725,29s
Balances with other banks, including
reserve balances
............. . 26,705.352
11,*466,188
15,239.164
10,965,786
Bank premises owned, furniture and
fixtures....... ...................
1*102,1*48
*46*4,298
532,377
569.771
Real estate owned other than bank
premises ................ ..........
25,582
251,975
77,342
226,393
Investments and other assets indirectly
representing bank premises or other
real estate................
94,7bb
*45,*410
49,356
33.924
Customers* liability on acceptances,*
34,003
57,^30
23,827
17,725
Other assets..................
503,474
181,690
321,784
261,*482
Total assets................
139,559,665 70,400,945 ^697158,720
55,130,880
if Excludes banks in Guam and The Philippines on account of the war.
2/ Includes trust companies and stock savings banks.
3/ Excludes reciprocal interbank demand balances with, banks in the United States.

7,288,541
5,7^
159,283

69.974
186

22,653

936,531

IQ-,*4*46

157^61

5,855
109,11^4 ’

8,547,560
75,304

2,019

457,955

42,447

10*4,908

565

1*48,5*41

510

11.455
-

59,550
13,810,230

31

6,102
752
217,610

Page 5
Assets and liabilities of all active banks in the United States and possessions, by
classes, June 30» 19*4 “ Contd.
(in thousands of dollars)
•

n
:

Total
all banks

LIABILITIES
Demand deposits of individuals, partnerships, and corporations......... ........... $5S,42Q,bbO
Time deposits of individuals, partnerships, and corporations....................
33,440,899
U. S. Government and postal savings deposits.. 19,650,768
5 ,01*3,991
Deposits of States and political subdivisions.
11,240,1138
Deposits of banks. 3/......... •> ........
Other deposits (certified and cashiers'
1,570,816
checks, etc.) *..... ..................
Total deposits 3/................... .
129.367.2U7
Bills payable, rediscounts, and other
87,116
liabilities for borrowed m o n e y . •
Acceptances executed by or for account of
64,690
reporting banks............................
Other liabilities....... .....................
685,111
Total liabilities........ ............... 130,204,l64
CAPITAL ACCOUNTS
8^6,569
Capital notes and debentures..............
Preferred stock..............................
235.612
2,714,712
Common stock...... *..........................
4,229,164
Surplus.... .....................
Undivided profits.............. ............*.
1,522,165
Reserves (and retirement account for pre
ferred stock and capital notes and
debentures)..... ...........................
567,279
Total capital accounts....... ...........
9,355.501

3/

•
:
;

National
banks

: All banks
:other than
: national

:
BaitfKs other than national
:
State
: Mutual
: Private
¡(commercial^ savings •

$32.745.584

$25,675,076

$25,526,270

11,056,548
10,825,128
2.998,352
7,403,551

22,384,351
8,825,640
2,045,639
3 ,836,562

9,947,604

804,090
65,833,253

766,726
63,533.994

6,205

80,911

79,025

l4

M l?

37.869

26,821
272,102
63,913,828

20,430
228,923

-

42,697

6,391
*82

413,009
66,290,336
112,220
1,441,358
1 ,692,172
604,198

86,569
123,392
1 ,273,354.
2,536,992
917.967

260,66l
4,110,609

$22,375 $126,431

1,296
315

17.534
267
2.353
39.625

1,472
763,909
50,900,560 12,445,879

1.3*5.
167,555

8,824,165
2,o4i,990
3,796,622

12,419,213
1,208

51,228,938 12,488,590

81,853
123,392
1 ,266,859
1 ,598,866

4,716
-

196,300
-

568,691

925,956

6,495
12,170

348,940

336

306,618

262,281

5,244,892

3,901,942

4&2Q2S
1,321,640

2*309
21,310

55,130.880 13,810,230

217,610

Total liabilities and capital....... . ..„
accounts...................... ....... 139,559,665
69,158,720
70,400,945
Excludes reciprocal interbank demand balances with banks in the United States.

-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday. October 3» 1944*

pre8e Service

the Secretary of the Treasury announced last evening that the tenders for
#1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated October 5, 1944,
and to mature January 4, 1945, which were offered on September 29, were opened at the
Federal Reserve Banks on October 2«
The details of this issue are as follows:
Total applied for - #2,307,978,000
Total accepted
- 1,217,995,000
Average price

(includes #56,097,000 entered on a fixedprice basis at 99*905 and accepted in full)
- $¡9*905/ Equivalent rate of discount approx. 0,375% per annum

Range of accepted competitive bids:
High
Low

- 99*908 Equivalent rate of discount approx. 0.364?» per annum
- 99*905 ■ ■
w
e
e
«
0.376# n
■

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

Federal Reserve
District

Total
Applied for

Total
Accepted

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

i
70,970,000
1,482,251,000
40,425,000
58,955,000
29,045,000
5,145,000
341,662,000
25,002,000
16,815,000
73,153,000
21,335,000
143.220.000

>

12,307,978,000

#1,217,995,000

TOTAL

35,884,000
722,937,000
25,373,000
40,337,000
23,731,000
4,986,000
168,591,000
15,144,000
10,455,000
65,362,000
17,625,000
87.570,000

TREASURY DEPARTMENT
Washington
FOR RELEASE, M O R N I N G N E W S P A P E R S ,
Tuesday, O c t o b e r 3., 1944.
10-2-44 .

Press S e rvice
No. 43-55

T h e S e c r e t a r y o f the T r e a s u r y a n n o u n c e d last
tenders

for $ 1 , 2 0 0 , 0 0 0 , 0 0 0 ,

or thereabouts,

to be d a t e d O c t o b e r 5, 1944,

e v ening that the

of 9 1 - d a y T r e a s u r y bills

and to m a t u r e J a n u a r y 4, 1945,

were o f f e r e d on S e p t e m b e r 29,

were o p e n e d at the F e d e r a l

which

Reserve

Banks on O c t o b e r 2.
The de t a i l s

of this

issue are as follows:

T o tal a p p l i e d for - $ 2 , 3 0 7 , 9 7 8 , 0 0 0
Total'accepted
1,217,995,000
(Includes $ 5 6 , 0 9 7 , 0 0 0
e n t e r e d on a f i x e d - p r i c e b a s i s at 9 9 .905 and a c c e p t e d in full)
Average price

-

9 9 . 9 0 5 / E q u i v a l e n t rate of d i s c o u n t approx.
0 . 3 7 5 ^ per a n n u m

Range of a c c e p t e d c o m p e t i t i v e bids:
High

-

Low

-

99.908
0.364*$
99,9 0 5
0.376^

'

E q u i v a l e n t rate of d i s c o u n t approx.
p er a n n u m
E q u i v a l e n t rate of d i s c o u n t approx.
pe r a n n u m

(47 p e r c e n t of the a m o u n t b i d for at the l ow p r ice was accepted)
Federal Re serve
District
Boston
New Y o r k
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. L o u i s
Minn e a p o l i s
Kansas City
Dallas
San Francisco

$

TOTAL

Total
A p p l i e d f or

Total
Accepted

70,970,000
1,482,251,000
40.425.000
58.955.000
29.045.000
5,145,000
341.662.000
25.002.000
16.815.000
73.153.000
21.335.000
145.220.000

$

$2,307,978,000

oOo

35,884,000
722.937.000
25.373.000
40.337.000
23.731.000
4,986,000
168.591.000
15.144.000
10.455.000
65.362.000
17.625.000
87.570.000

$1,217,995,000

29 19*Wr
TREASURY DEPARTMENT
WASHINGTON, D.C

-relSAse Tuesday

morning*

Military forces under General Eisenhower are using Allied military
marks in German territory*
Reichsmarks*

Allied military marks circulate at par with

No general rate of exchange between the Allied military

mark or Reichsmark and the dollar has been established*

For purposes

of computing the pay of troops, however, a provisional basis of 10
Union of Soviet Socialist
CA**

\**Y

-4«* this action*

TREASURY" D E P A R T M E N T
Washington

F O R I M M E D I A T E RELEASE
Tuesday, O c t o b e r 5, 1944

Press S e r v i c e
No« 43~56

,

JOINT T R E A S U R Y - W A R D E P A R T M E N T

Military
military marks
c i r c ulate

PRESS

RELEASE

forces u n d e r General E i s e n h o w e r are u s i n g A l l i e d
in G e r m a n territory.

at. p a r w i t h Reichsmarks«

A l l i e d m i l i t a r y marks
No g e n e r a l

rate of

exchange b e t w e e n the A l l i e d m i l i t a r y m a r k .or R e i c h s m a r k and
the d o l l a r has b e e n established.
the p ay of troops,

however,

For pur p o s e s

a p r o v i s i o n a l basis

of computing
o f 10 marks

to the d o l l a r is b e i n g used*
T he U n i o n of S o viet S o c i a l i s t

R e p ublics has b e e n kept

f u lly i n f ormed c o n c e r n i n g this action«

oOo

>e a r n i n g s , e x p e n s e s , a n d d i v i d e n d s o f n a t i o n a l b a n k s i n t h e s i x
MONTH PERIODS ENDED JUNE 30, 19^4 AND JUNE 30, 19>*3, AND THE
YEAR ENDED DECEMBER 31, 19^3
(Amounts in thousands of dollars)
t
*

6 months ended
June 30,
19V*

• June 30,
:

iq*n

:
•
:

Year ended
Dec. 31,

19113

5.oi«

5,066

5,oit6

1 ,5511.061
it,n o , 609

1,1*98.680
3,S25,V>5

1 ,532.096

300,055
177.656
30,277

232,025
182,9911
25.11511

21,555
16,778
35.953
582,27V

15 ,001*
33,612
505 .25s

1 ,061,763

162,877

151 ,01*0

3llt, 712

1*6,161

1*2,280

git, 606

1*6
60,661*
94,101

131,5611
I9i.59li

Total current operating expenses..

181
84,835
105,991
400,045

3118.131

722,6115

Net earnings from current operations...

182,229

157,127

339,118

31.376
29,390
11,155
71,921
34,1^9

16,207
23,673
8,171
Its,051
23 .99s

59.652
52,900

106,4io

72.0119

187,31+3

36,3711
18,173

31,866
15,610

66,008
1*3,101

26,310

2U , 262

80,857

71,738

66,895
176,004

207,782

157.1138

350,1157

2,7^5

3,198

6,158

66,198

61,836

22,887

2,270

125.357
1+1,378

91.S70
Percent
*****"kZ"

67.3011
Percent

Capital stock, par value l ] ...........
Capital funds l/......................
Earnings from current operations:
Interest and dividends on securities.
Interest and discount on loans..... •
Service charges on deposit accounts..
Other service charges, commissions,
fees, and collection and exchange
charges................ ............
Trust department....................
Other current earnings..............
Total earnings from current operations
Current operating expenses:
\
Salaries and wages of officers and employees, and fees paid to directors
for attendance at hoard or committee
meetings...........................
Interest on time deposits (including
savings deposits)„ .............. .
Interest and discount on borrowed
money............... ....... .......
Taxes, including income taxes.......
Other current operating expenses....

Recoveries:
On securities.......................
On loans............................
All otlicr##»•••»••••*»•**•«#•••••••♦•
Total recoveries.................
Profits on securities sold or redeemed.
Total recoveries and profits on se
curities sold or redeemed.......
Losses and charge-offs:
On securities.......................
On loans............................
All other, including depreciation on
hanking house, furniture and fixtures
Total losses and charge-offs.....
Net profits before dividends..........
Dividends:
On preferred stock..................
On common stock:
Cash dividends....................
Stock dividends...................
Total dividends.................
Annual rate of net profits:
To capital funds 1/.............. .
Annual rate of cash dividends:
■ .To
To capital funds l/.................
l/

At end of period.

10.11
3-36

16,109

3.959.lti!2

5011,069
365,597
53,59ii

36,1187
3li,307
67,709

169

20,669
133.221

511,122

172.893
rercen*

8.23

8.85

- g .pO *"
3 .1*0

3.32

;P

-

2

~

Cash dividends declared on common and preferred stock totaled $68,983»000,
in comparison with $ 65»03^»000 in the first half of

19^ 3 * The annual, rate of

cash dividends was 3*3^ percent of capital funds.
On June
to

30» 19W

in 19^3.

there were

national hanks in operation as compared

TREASURY DEPARTMENT
COMPTROLLER OF THE CURRENCY
Washington
*+—— •

^

Comptroller of the Currency Preston Delano announced today that the
national hanks in the United States and possessions reported net operating
earnings of $182,229,000 for the six months ended June
of $25,102,000 over the first half of

30, 19I&,

an increase

19^ 3»

Adding, to the net operating earnings, profits on securities sold of
$ 3^*^89*000 and recoveries on loans and investments, etc*, previously charged
off of $ 71»921,000, and deducting therefrom losses and depreciation of
$80,857,000, the net profits before dividends for the six months ended June

19^ »

amounted to $207,732,000, which at an annual rate amounts to

of capital funds*

10*11

30,

percent

This figure of net profits before dividends was $50,3U U ,000

more than the amount reported for the six months ended June

30, 19U 3,

The principal items of operating earnings in the six month period ended
June

30» 1 9 ^ »

were $177,656,000 from interest and discount on loans, a decrease

of $5*333,000 under the corresponding period in

19^ 3?

and $ 300,055,000 from

interest and dividends on bonds and securities, an increase of $67,970,000.

The

principal operating expenses were $162,877,000 for salaries and wages of officers
#
and employees and fees paid to directors? $H6,l6l ,000 expended in the form of
interest on time and savings deposits; and $8U,835*000 for taxes, including income
taxes,

Cross earnings of $582,27^*000 were reported for this six month period.

This represents an increase of $77 j016,000 over the gross earnings for the first
six months of 19^3*

Operating expenses were $^00,0^5*000 as against $3^8,131,000

for the first half of

19^ 3»

D E L I V E R

M

TO

DIRECTOR

I
ROOM

PUBLIC RELATIONS

I
REMARKS
Please furnish the
Statistical Division of the
Comptroller1s Office, Room 5039,
200 copies of the attached
press release*

PROM
(Name, not initials)

TREASURY DEPARTMENT
C O M P T R O L L E R OP T H E C U R R E N C Y
Washington
FO R RELEASE, M O R N I N G NEWSPAPERS,
Thursday, O c t o b e r 5. 1944.
10-3-44

Press S e rvice
No. 43-57

C o m p t r o l l e r of the C u r r e n c y P r e s t o n D e l a n o a n n o u n c e d
t o d a y that t h é n a t i o n a l banks in t h e U n i t e d States a n d p o s s e s 
sions r e p o r t e d net o p e r a t i n g earnings of $ 1 8 2 , 2 2 9 , 0 0 0 f or the
s ix months ended June 30, 1944, an i n c r e a s e of $ 2 5 , 1 0 2 , 0 0 0
over t h e f i r s t h a l f of 1943.

Çb Ü1

Adding, to t h e net o p e r a t i n g earnings, pr o f i t s on s e c u 
rities s o l d of $ 3 4 , 4 8 9 , 0 0 0 a n d r e c o v e r i e s on loans a n d i n v e s t 
ments, etc., p r e v i o u s l y c h a r g e d off of $71,921,000, a n d d e d u c t 
ing t h e r e f r o m losses a n d d e p r e c i a t i o n of $80,857,000, t he net
p r o fits b e f o r e d i v i d e n d s f o r t he six mont h s ended June 30,
1944, a m o u n t e d to $ 2 07,782,000, w h i c h at an a n n u a l r a t e a m o unts
to 1 0 . 1 1 p e r c e n t of c a p i t a l funds,
T h i s f i g u r e of net p r ofit
b e f o r e div i d e n d s was $ 50 , 344,000 mor e tha n t he a m o u n t r e p o r t e
f o r th e six months ended J u n e ' 30, 1943.
T h e p r i n c i p a l items of o p e r a t i n g earnings in t he six
m o n t h p e r i o d ended June 30, 1944, w e r e $ 1 7 7 , 6 5 6 , 0 0 0 f r o m i n t e r 
est a n d di s c o u n t on loans, a d e c r e a s e of $ 5 , 3 3 8 , 0 0 0 u n d e r the
c o r r e s p o n d i n g p e r i o d in 1943: a n d $ 3 0 0 , 0 5 5 , 0 0 0 f r o m interest
a nd d i v i dends on bonds a nd securities, an increase of
$67,9 7 0 , 0 0 0 .
T he p r i n c i p a l o p e r a t i n g expenses w e r e
$ 1 6 2 , 8 7 7 , 0 0 0 for sa l a r i e s a n d w a ges of officers a n d employees
a n d fees p a i d to directors; $ 4 6 , 1 6 1 , 0 0 0 ex p e n d e d in the f o r m
of interest on time a n d savings deposits; a n d $ 8 4 , 8 3 5 , 0 0 0 fo r
taxes, i n c l u d i n g income taxes.
Gross earnings of $ 5 8 2 , 2 7 4 , 0 0 0
w e r e r e p o r t e d f o r this s i x m o n t h period.
This r e p r e s e n t s an
increase of $ 7 7 , 0 1 6 , 0 0 0 ove r th e gross earnings f o r the first
s i x months of 1943.
O p e r a t i n g expenses w e r e $ 4 0 0 , 0 4 5 , 0 0 0 as
a g a i n s t $ 3 4 8 , 1 3 1 , 0 0 0 f o r t h e f i rst half of 1943.
C a s h div i d e n d s d e c l a r e d on c o mmon and .preferred s t o c k
t o t a l e d $68,983,000, in c o m p a r i s o n w i t h $ 6 5 , 0 3 4 , 0 0 0 in t he
first h a l f of 1943# The a n n u a l r a t e of c a s h d i v idends was
3#36 p e r c e n t of c a p i t a l funds.
On June 30, 1944 t h e r e w e r e 5,042 n a t i o n a l banks
a t ion as c o m p a r e d to 5,066 in 1943.

in o p e r 

- 2 -

EARNINGS, EXPENSES, AND DIVIDENDS OF NATIONAL BANKS IN THE SIX
MONTH PERIODS ENDED JUNE 30, 19AA AND JUNE 30, 19A3, AND THE
YEAR ENDED DECEMBER 31, 19A3
________ • (Amounts in thousands of dollars)________
6 months ended
Year ended
Dec. 31,
June 30,
June 30,
•19'A3
19 A3 *
19AA
1,A9S,680
3,825,A05

5,046
1 ,532,096
3 ,959,442

300,055
177,656
177,656
30,277

232,085
182,99A

5 OA,O69
365,597

25,454

53,59A

21 555
16,778
35.953
ms5B2,27A

16,109
15,00A
505,258

36,487
3A,307
67,709
1,061,763

162,877

151,0A0

31A,712

A6,161

A2,280

181
84,835
105,991
AOO,0A5
182,229

A6
60,66 A
9A , 101
3A8,131
157,127

31,376
29,390
11,155
71,921
34,489

16,207
23,673
8,171
A3,051

237998

133,221
5A ,122

106,AIO

72,0A9

187,343

36,37A
18,173

31,866
15,610

66,008
A3,101

!S 26,310
80,857
207,782

2A, 262
71,738
157,438

66,895
176,00A
350,A57

2,785

3,198

6,158

66,198

6 l , 836

22,887
91,870
Percent

2,270
67,30A
Percent

10 .11

8.23

125,357
41,378
172,893
Percent
8.85

3.36

3,AO

Number of banks,

Earnings from current operations: .
Interest and dividends on securities*
Interest and discount on loans..*...*
Service charges on deposit accounts
Other service charges, commissions,
fees, and collection and exchange
charges................ .......
Trust department........... .
Other current earnings...........

5.042
1,554,061
4 ,110,605

Current operating expenses:
Salaries and wages of officers and employees, and fees paid to directors
for attendance at board or committee
meetings.............. ......... ,
Interest on time deposits (including
Interest and dis count on borrowed
money.................... .........
Taxes, including income taxes......
Total current operating expenses,..
Net earnings from current operations....
Recoveries;
On securities................... .
On loans....................... .....
All other..........................
Total recoveries......... ......
Profits on securities sold or redeemed.
Total recoveries and profits on
Losses and charge-offs:
On securities. ......................
On loans
.................. ...
All other, including depreciation on
Total.losses and charge-offs.
Net profits before dividends.......
Dividends:
On preferred stock.,
On common stocks. ...
Cash 'dividends...,
Stock dividends...
To'fcal dividends,
Annual irate of net profits:
Tot c apital funds 1/..
Annual rate of cash divi dends:
To capital funds 1/

y

At end of period.

.

5,066 .

33,612

8A*SC6'6
169

131,564
191,59A
722,6A5
339,113' '

59,652
52,900
20,669

3.32

cf 3 ^ &

O

FOB IMMEDIATE RELEASE
October S* 1 9 ^

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the

12

months commencing October

1*

191*3» provided for in the Inter-

American Coffee Agreement, proclaimed by the President on Ajril 15, 1 9^»
as follows:

Country of Production

f
e
:
•
•

Quota Quantity
(Pounds) 1/

:
:
:

Authorized for entry
for consumption
As of
(Date) : (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Bica
Cuba
Dominican Bepublic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

1 ,621,630,1*79
5U 9,261,936
3M 73 .771*

Non-Signatory Countries:

13,3*19,562

20,881,883

26,155.330

10^,621,321
93,287,3«^
*7,951.373
3,1*86,928
82,825,279
3U.001.9U3
1*,359,288
73 .23U .872

61,900,935

September 23, 19UU 1,277,596,U52
(Import quota filled)
September 30, 1 9 ^ 2/ 31 ,639,872
8.U77.8U5
September 23, 1 9 ^
September 30* 19l*l* 2/ i9 .llU.l65
22,396,366
"
^
100,827,600
"
K
"
,, £/ 92.395.197
September 23, 19*&
1*3,636,1*50
(import quota filled)
(import quota filled)
September 30, 19*& 2/ 28,863,818
3 ,718,621*
September 23, 19^*
it
1*3 ,166,861*
n

U.U59.776

1/

Quotas as established by action of the Inter*American Coffee Board on
April 21, I9I&.

2/

Per telegraphic reports.

. TREASURE DEPARTMENT
Washington
EOR IMMEDIATE RELEASE
Wednesday. October 4. 1944.

Press Service
No. 43-58

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorised for entry for consumption under the quotas
for the 12 months commencing October 1, 1943, provided for in the InterAmerican Coffee Agreement,, proclaimed by the President on April 15, 1941, as
follows:

Country of Production

:

%

Quote Quantity
(Pounds) 1/

:
:
:

Authorized for entry
for consumntion
As of
(Date)
:
(Pounds)

1,621,630,479
549,261,936
.34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47*951,373
3,486,928
82*825,279
34,001,943
4,359,288
73,234*872

September 23, 1944
1 ,277,596,452
(import quota filled)
31,639,872
September 30, 1944 2/
8,477,845
September 23, 1944
19,114,165
September 30, 1944 2/
22,396,366
“
§
"
2/ 100,827,600
92,395,197
“
3/
43,636,450
September 23, 1944
(import quota filled)
(.Import quota filled)
28,863,818
September 30, 1944 2/
3,718,624
September 23» 1944
ii
43,166,864

Signatory Countries:
Braz il
Colombia
Costa Rica
Cuba
Dominican Republic.
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-Signatory Countries£-

61,900,935

it

4,459,776

1/ Quotas as established by action of the Inter-American Coffee Board on
April 21, 1944.
2/

Per telegraphic reports.

-oOo'

ill
FOR IMMEDIATE RELEASE,

W x
■
TREASURY DEPARTMENT
x Washington

Wednesday. October A. 1944.
" :

'd.-VV
'

Press Service

>•''$

The Secretary of the Treasury today announced the final subscription
and allotment figures with respect to the current offering of 7/8 percent
I

Treasury Certificates of Indebtedness of Series 0-1945*
Subscriptions and allotments were divided among the several Federal
Reserve Districts and the Treasury as follows 1
Federal Reserve
District_______
Boston
New Tork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St* Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTAL

Total Subscriptions
Received and Allotted

# 104,639*000
1,894,026,000
95*968,000

176 ,159*000
82,717,000
99*139,000
441.483.000
92 ,644,000
82 ,425,000

.

117 005.000
66,992,000
235,674,000
2.818.000
$3,491,689,000

Hi

TREASURY DEPARTMENT
Washington

Press S e r v i c e
No » 43-59

FOR I M M E D I A T E RELEASE,
Wedn e s d a y , O c t o b e r 4, 1944

The S e c r e t a r y o f the T r e a s u r y t o day a n n o u n c e d the final
s u b s c r i p t i o n and a l l o t m e n t figures w i t h r e s p e c t
o f f e r i n g of 7/8 p e r c e n t T r e a s u r y C e r t i f i c a t e s

to the current

of I n d e b t e d n e s s

of Series G-^1945#
Subscriptions
several F e d eral

a nd a l l o t m e n t s w ere d i v i d e d a m o n g the

Reserve D i s t r i c t s

and the T r e a s u r y as follows:

Federal Reserve
District

Total Subscriptions
R e c e i v e d and A l l o t t e d

Boston
New York
Philadelphia
C2e v e l a n d *
Ri chrnond
A t l anta
Ch i c a g o
S t • Louis
-Minneapolis
K a nsas C i t y
Dallas
San Francisco
Treasury

I

TOTAL

oOo

104,639,000
1,894)026,000
95.968.000
176.159.000
82.717.000
99.139.000
441.483.000
92.644.000
82.425.000
117.005.000
66.992.000
235.674.000
2,818,000

$3,491,689,000

- 3 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 »rdinary gain or loss.
Treasury Department Circular No. 418, as amended, and this notice, pre
scribe the terms of the Treasury bills and govern the conditions of their issue.
Copies of the circular may be obtained from1any Federal -Reserve Bank or Branch.

-

2

~

Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final,
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

October 13. 1944

The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under 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.an3^ State, or any of the possessions of
the United States, or by any local taxing authority.

For purposes of taxation the

amount of discount at which Treasury bills are originally sold by the United States
shall be considered to be interest.

Under Sections 42' and 117 (a) (l) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not- be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (o^her than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday. October 6. 1944_____
— gj-

The Secretary of the Treasury, by this public notice, invites tenders
for $ J 7j^OQ^OOQ1Ogo_, or thereabouts, of

J O -.day Treasury bills, to be issued

on a discount basis under competitive and fixed-price bidding as
vided,

The bills of this series will be dated

hereinafter pro

October 13. 1944

and will

mature ---> when thQ iace amount will be payable without
interest.

They will be issued in bearer form only, and in denominations of $1,000,

$5,000, $10,000,, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock o. m., Eastern War* time,

Monday. October 9. 19A4

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.
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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 securi
ties.

Tenders from others must be accompanied,by payment of 2 percent rf 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

TREASURY DEPARTMENT
Washington

DOR RELEASE, MORNING NEWSPAPERS,
Friday-, October 6, 1944*____ __
10-5-44

The Secretary of the Treasury, by this public notice,
invites^ tenders for $1,300,000,000, or thereabouts, of 90-day •
Treasury bills, to be issued on a discount basis under competi
tive and fixed-price bidding as%hereinafter provided. The bills
of this series will be dated October 13, 1944, and will mature '
January 11, 1945? when the face amount will be .-payable without. ■
interest. They will be issued: in bearer form only, and in
denominations of.$1,000, $5,000, $10,000, $100,000, $500,000,
and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and
Branches up to the closing hour, two, o ’clock p.m., Eastern War ,
time, Monday, October 9, 1944. 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 ex
pressed on the'basis of 100, with not more than three decimals,
e. g.,.99.925. Fractions may not be used. It is urged that
tenders be made on the printed forms and forwarded in the
special envelopes which will be supplied by Federal Reserve
Banks or Branches on application therefor.
Tenders will be received without deposit from incorporated
banks and trust companies and from responsible and recognized
dealers in investment securities. Tenders from others must be
accompanied by payment of 2 percent of the face amount of
Treasury bills applied for, unless the tenders are accompanied
by ah express guaranty of payment by ah incorporated bank or
trust company.
Immediately after the closing hour, tenders will be opened
at the Federal Reserve Banks and Branches, following which pub
lic announcement will be made by the Secretary of the Treasury
of the amount and price range of accepted bids. Those sub
mitting 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, Sub
ject to these reservations, tenders for $100,000 or less from
any one bidder at 99.905 entered on a fixed-price basis will be
accepted in full. 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 October 13,
1944

43-£o

(Over)

2
The income derived from Treasury bills, whether interest or
gain from the sale or other disposition of the bills, shall not
have any exemption, as such, and loss from the sale or other
disposition of Treasury bills shall not have any special treat
ment, 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 by the United States shall be considered to be
interest. Under Sections 42 and 117 (a) (1) of the Internal
Revenue Code, as amended by Section 115 of the Revenue Act of
1941, the amount of discount at which bills issued hereunder
are sold shall not be considered to accrue until such bills shall
be sold, redeemed or otherwise disposed of, and such bills are
excluded from consideration as capital assets. ,Accordingly, the
owner of Treasury bills (other than life insurance companies)
issued hereunder need include in his income tax return only the
difference between the price paid for such bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which, the return is made, as ordinary gain or
loss.
Treasury Department Circular No, 418, as amended, and this
notice, prescribe the terms of the Treasury bills and govern the
conditions of their issue# Copies of the circular may be ob
tained from any Federal Reserve Bank or Branch.

«oOo

O c t o b e r 1944

STATUTOBI DEBT LIMITATION
AS Of SEPTEMBER 30« 1944

q

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 $260,000,000,000 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

$260, 000, 000,000

Outstanding as of September 30 , 1944:
Interest-bearing:
Bonds Treasury
$S1,270,101,650
Savings (Maturity
value)*
6 175 557.200
Depositary
488 809,250
Adjusted Service
715.988,307

*.

Treasury notes
Oertificates of
Indebtedness
Treasury Bills
(Maturity value)

.

,

$128,b50,M-5b,t>07

35.849.041.000
36.259.875.000
15.7*17.367.000

Matured obligations on
which Interest has ceased
Bearing no interest
U«S* Savings stamps
168,253,280
Excess profits tax refund
bonds
326.933.66l
race amount of obligations
issuable under above authority

- 8J.85b.283.000
|216,50b,739,b07
232,048,475

495.186.94l

217,233.975.023
$ 42.766.024.977

Reconcilement with Daily Statement of the United States Treasury
Sentember 30. 1944
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act*
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 (Postal Savings, etc,,)
$195.917*540
Matured obligations on which
interest has ceased
7,506,865
Bearing no interest
qiO.WI.ffiffi
Total gross debt outstanding as of September 30 » 1944
^Approximate maturity value, Principal amount (current
redemption value) according to preliminary public debt
statement $37*3^3.276,3^0.

RHM/bf

$217.233.975.023
8.852.280.840
208*381,694,183

1.114.024.^64

»209.495.718.541

. tM

October 5, 1944
STATUTORY DEBT LIMITATION
AS OF SEPTEMBER 30, 1944
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 $260,000,000,000 outstanding at 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
Outstanding as of September 30, 1944:
Interest-bearing:
Bonds Treasury
$81,270,101,850
Savings (Maturity
46,175,557,200
value)*
Depositary
488,809,250
Adjusted Service
715,988,307
Treasury notes
35.849.041.000
Certificates of
Indebtedness
36.259.875.000
Treasury Bills
(Maturity value)
15.747.367.000
Matured obligations on
which interest has ceased
Bearing no interest
U. S. Savings stamps
168,253,280
Excess profits tax refund
bonds
32,6-,9433,-661
Race amount of obligations
issuable under above authority

$ 260 , 000 , 000,000

$128,650,456,607

87,856,283,000
$216,506,739,607
232,048,475

495,186,941

217,233,975,023
$ 42,766,024,977

Reconcilement with Daily Statement of the United States Treasury
September 30, 1944
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act,
$217,233,975,023
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 (Postal Savings, etc.)
$195,917,540
Matured obligations on which
interest has ceased
7,506,865
Bearing no interest
910,599,959
Total gross debt outstanding as of September 30, 1944
*Approximate maturity value, Principal amount (current
redemption valu,e) according to preliminary public debt
statement $37, 323,276,360.
43-61

8,852,280,840
208,381,694,183

1,114,024,364
$209,495,718.547

- 3a s o f December 1 5 , 1944 in a v a ila b le denom inations, and accrued in t e r e s t w i l l
be charged from December 1 to December 15 on the new s e c u r i t i e s .
Commercial banks, which are d efin ed fo r t h i s pgAxjse a s banks a ccep tin g
^
demand d e p o s its , w i l l not be perm itted to own th e
Bonds o ffer ed in the
d r iv e u n t i l December 1 , 1954, nor to own th e
Bonds (other than th o se acquired
in exchange fo r th e c a lle d
Bonds) u n t i l December 18, 1944, except fo r a limited
investm ent o f tim e d e p o s its in th e se is s u e s under a formula to be p rescrib ed in
the o f f i c i a l o ffe r in g c ir c u la r s .

U%

2%

2-1/2%

/

-

2

-

2-1/2%

The
Bonds to be o ffer ed in the d r iv e w i l l be dated December 1,1
1944, due March 1 5, 1971, c a lla b le March 1 5 , 1966.
. The bonds w i l l be
issu ed in coupon or r e g is te r e d form a t the o p tion o f th e buyers, in denominations
from $500 to $ 1 , 000, 000.

2%

The
Bonds w i l l be dated December 1 , 1944, due December 1 5 , 1954,
c a lla b le December 1 5, 1952, and w i l l be issu ed in coupon or r e g is te r e d form
a t th e op tion o f th e b u yers, in denom inations o f $500 to $1 , 000, 000.
The 1 -1 /4 $ Notes w i l l be dated December 1 , 1944, due September 15, 1947,
and w i l l be issu e d in denom inations o f $1,0 0 0 to $1 , 000,000 and in coupon form
o n ly .
The 7 /8 $ C e r t if ic a t e s o f Indebtedness w i l l be dated December 1 , 1944,
due December 1 , 1945, and w i l l be issu ed in denom inations o f $ 1 ,0 0 0 to $1,000,000
and in coupon form o n ly .
The Treasury w i l l req u est th a t th ere be no tra d in g in the marketable
s e c u r it ie s and no purchases o f such s e c u r it ie s oth er than on d ir e c t su b scrip tion
u n t i l a f t e r th e c lo s in g o f th e d r iv e .
The procedure fo r handling su b sc r ip tio n s o f d e a le r s and brokers w i l l be
sim ila r t o th a t prescrib ed in th e F if t h War Loan D riv e.
To avoid un necessary tr a n s fe r s o f funds from one l o c a l i t y to a n oth er, the
Treasury again u rges th a t a U su b sc r ip tio n s by co rp o ra tio n s and firm s be entered
and paid fo r through the banking i n s t it u t io n s where funds are lo c a te d . This
req u est i s made to prevent d istu rb a n ce to th e money market and th e banking
s it u a t io n . The Treasury w i l l undertake, a s in the F if t h War Loan D r iv e, to see
th a t s t a t i s t i c a l c r e d it i s given to any l o c a l i t y fo r such su b sc r ip tio n s a s the
purchaser may r eq u e stj except th a t su b sc r ip tio n s from insurance companies w i l l
be c r e d ite d t o th e S ta te o f th e Home o f f i c e a s in th e p a s t.
In order to h e lp in a c h iev in g it s o b je c tiv e o f s e l l i n g a s many s e c u r it ie s
as p o s s ib le o u tsid e o f the banking system , th e Treasury r eq u e sts the cooperation
o f a l l banking i n s t it u t io n s in d e c lin in g to make sp e c u la tiv e lo a n s fo r the
purchase o f Government s e c u r i t i e s . The Treasury i s in fa v o r o f the banks making
loan s to f a c i l i t a t e permanent investm ent in Government s e c u r it ie s provided such
loan s are made in accord w ith th e j o in t statem en t issu ed by th e N a tion al and
S ta te Bank Su pervisory A u th o r itie s on November 23, 1942 •* However, the Treasury
r e q u e sts the banks not to make lo a n s fo r th e purpose ofV acquiring th e d riv e
s e c u r it ie s la t e r f o r t h e ir own acco u n t.
/ / / /

/I

C oncurrently w ith th e d r iv e , but not a s a p a rt o f i t , th e H olders o f t he _
C e r t if ic a t e s maturing December 1 , 1944 w i l l be o ffe r e d on or about November^
a 0 .9 0 $ Treasury Note dated December 1 , 1944 and maturing January 1 , 1946, in
exchange fo r such C e r t i f i c a t e s ;^ * ^ 6 commercial bank h o ld ers o f the 4$ Treasury
Bonds o f 1944-54 c a lle d fo r redemption on December 15, 1944 w i l l be o ffer ed on
or about November 20 th e 1 -1 /4 $ Note and th e 2$ Bond o ffe r e d in th e d r iv e , in
exchange fo r such bonds; a l l o th er h o ld ers w i l l be o ffer ed th e 1-1/4% N ote,
the
Bond and th e 2 -1 /2 $ Bond. The exchanges f o r th e 4$ bonds w i l l be made

2%

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
F rid ay. October 6 . IQ44 _______ _

Press Service
No*

Henry Morgenthau, J r , , S ecreta ry o f the Treasury, announced today
th e terms o f th e s e c u r it ie s to be so ld in th e S ix th War Loan which w i l l
l ^ r L ° n November 20 and w i l l run through December 16. The g o a l w i l l be
’
vsfcich * 5 ,0 0 0 ,0 0 0 ,0 0 0 i s to come from s a le s to in d iv id u a ls
and $ 9 ,0 0 0 ,0 0 0 ,0 0 0 to other non-bank in v e s to r s .

"t

. Since January 1 , 1 9 4 4 ,” the S ecreta ry s a id , "the d ir e c t c o s ts o f the
war have exceeded $ 6 9 ,0 0 0 ,0 0 0 ,0 0 0 . The c r i t i c a l phases o f th e war are s t i l l
ahead o f u s , and fo r th a t reason we can n ot exp ect any m a ter ia l d e c lin e in
expenditu res during th e n ex t s e v e r a l months. The $ 1 4 ,0 0 0 .0 0 0 ,0 0 0 i s
th e r e fo r e , u r g e n tly needed."

’

The S ecreta ry pointed out th a t the major emphasis throughout the
e n tir e period o f th e d r iv e w i l l be placed on the quota o f $ 5 , 000, 000.000 fo r
in d iv id u a ls .
’
During th e period from November 20 to December 1 , o n ly s a le s to
in d iv id u a ls w i l l be reported by th e Treasury, although su b sc r ip tio n s w i l l be
r eceiv ed from a l l non-banking in v e s to r s during th e e n tir e period o f the d r iv e.
The campaign to s e l l to in d iv id u a ls w i l l be supplemented s t a r t in g December 1
w ith an in te n s iv e campaign to s e l l a l l o th er non-banking in v e s to r s .
The S ecreta ry said th a t su b sc r ip tio n s fo r Savings Bonds and Savings
| N otes P rocessed through th e F ed eral R eserve Banks between November 1 and
i December 31 w i l l be counted towards th e d r iv e in order th a t th e m illio n s o f
I persons employed in the n a tio n * s in d u s tr ia l co rp o ra tio n s may be perm itted to
p a r tic ip a te in th e d r iv e through th e purchase o f bonds acquired by weekly or
sem i-m onthly ded u ction s from t h e ir pay during t h is p erio d .
The g o a l and the s e c u r it ie s to be o ffe r e d were determined by th e Treasury
a f t e r c o n su lta tio n w ith a group o f chairmen o f th e S ta te War Finance Committees,
o f f i c i a l s o f th e F ederal Reserve System , a Committee o f the American Bankers
A s s o c ia tio n , and other investm ent a u t h o r it ie s .
The s e c u r i t i e s , which w i l l be so ld under th e d ir e c tio n o f th e S ta te
War Finance Committees, are a s fo llo w s :
•

)(

S e r ie s E, F and G Savings Bonds
S e r ie s C Savings N otes
Bonds o f 1966-71
Bonds o f 1952-54
1 -1 /4 $ N otes o f 1947
7 /8 $ C e r t if ic a t e s o f Indebtedness

2-1/2%
2%

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday, October 6, 1944«_______

Press Service
No. 43-62

Henry Morgenthau, Jr., Secretary of the Treasury, announced
today the terms of the securities to be sold in the Sixth War
Loan which will start on November 20 and will run through
December 16. The goal will be $14,000,000,000, of which
$5,000,000,000 is to come from sales to individuals and
$9,000,000,000 to other non-bank investors.
’’Since January 1, 1944,n the Secretary said, ’’the direct
costs of the war have exceeded $69,000,000,000. The critical
phases of the war are still ahead of us, and for that reason we
cannot expect any material decline in expenditures during the
next several months. The $14,000,000,000 is, therefore, urgently
needed.”
The Secretary pointed out that the major emphasis throughout
the entire period of the drive will be placed on the quota of
$5,000,000,000 for individuals .
During the period from November 20 to December 1, only sales
to individuals will be reported by the Treasury, although sub
scriptions will be received from all non-banking investors during
the entire period of the drive. The campaign to sell to individ
uals will be supplemented starting December 1 with an intensive
campaign to sell all' other non-banking investors.
The Secretary said that subscriptions for Savings Bonds and
Savings Notes processed through the Federal Reserve Banks between
November 1 and December 31 will be counted towards the drive in
order that the millions of persons employed in the nation’s indus
trial corporations may be permitted to participate in the drive
through the purchase of bonds acquired by weekly or semi-monthly
deductions from their pay during this period.
The goal and the securities to be offered were determined by
the Treasury after consultation with a group of chairmen of the
State War Finance Committees, officials of the Federal Reserve
System, a Committee of the American Bankers Association, and
other investment authorities.

2
The securities, which will be sold under the direction of
the State War Finance Committees, are as follows:
Series E, F and G- Sayings Bonds
Series C Savings Botes
2-1/2# Bonds of 1966-71
2# Bonds of 1952-54
1-1/4# Botes of 1947
7/8# Certificates of Indebtedness
The 2-1/2# Bonds to be offered in the drive will be dated
December 1, 1944, due March 15? 1971? callable March 15, 1966*
The bonds will be issued in coupon or registered form at the
option of the buyers, in denominations from $500 to $1,000,000.
The 2# Bonds, will be dated December 1, 1944, due December 15,
1954, callable December 15, 1952, and will be issued in coupon or
registered form at the option of the buyers, in denominations of
$500 to $1,000,000.
The 1-1/4# Botes will be dated December 1, 1944, due Septem
ber 15, 1947, and will be issued in denominations of $1,000 to
$1,000,000 and in coupon form only.
The 7/8# Certificates of Indebtedness will be dated Decem
ber 1, 1944, due December 1, 1945, and will be issued in denomi
nations of $1,000 to $1,000,000 and in coupon form only.
The Treasury will request that there be no trading in the
marketable securities and no purchases of such securities other
than on direct subscription until after the closing of the drive.
The procedure for handling subscriptions of dealers and
brokers will be similar to that prescribed in the Fifth War Loan
Drive.
To avoid unnecessary transfers of funds from one locality
to another, the Treasury again urges that all subscriptions by
corporations and firms be entered and paid for through the banking
institutions where funds are located. This request is made to
prevent disturbance to the money market and the banking situation.
The Treasury will undertake, as in the Fifth War Loan Drive, to
see that statistical credit is given to any locality for such
subscriptions as the purchaser may request; except that subscrip
tions from insurance companies will be credited to the State of
the Home office as in the past.

- 3 In order to help in achieving its objective of selling as
many securities as possible outside of the banking system, the
Treasury requests the cooperation of all banking institutions
in declining to make speculative loans for the purchase of
Government securities, The Treasury is in favor of the banks
making loans to facilitate permanent investment in Government
securities provided such loans are made in accord with the joint
statement issued by the national and State Bank Supervisory
Authorities on November 23* 1942, (Attached) However, the Treas
ury requests the banks not to make loans for the purpose.of ac
quiring the drive securities later for their own account.
Concurrently with the drive, but not as a part of it, the
holders of the Certificates maturing December 1, 1944 will be
offered on or about November 2,0th a 0 , 3 0 % Treasury Note dated
December 1, 1944 and maturing January 1, 1946, in exchange for
such Certificates. Also the commercial bank holders of the 4%
Treasury Bonds of 1 9 4 4 - 5 4 called for redemption on December 13,
1944 will be offered on or about November 20 the l ~ l / 4 % Note and
the 2 % Bond offered in the drive, in exchange for such bonds; all
other holders will be offered the 1-?l/4^ Note, the 2 Bond and
the 2 ~ l / 2 % Bond, The exchanges for the 4 % bonds will be made as
of December 15, 1944 in available denominations, and accrued inter
est will be charged from December 1 to December 15 on the new
securiti es,

%

Commercial banks, which are defined for the purpose as banks
accepting demand deposits, will not be permitted to own the 2 ~ \ / 2 %
Bonds offered in the drive until December 1, 1954, nor to own the
2% Bonds (other than those acquired in exchange for the called 4%
Bonds) until December 18, 1944, except for a limited investment
of time deposits in these issues under a formula to be prescribed
in the official offering circulars.

-oO0~

The Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System, and
the Executive Committee of the National Association of Supervisors of
State Banks make the following statement of their examination and super
visory policy with special reference to investments in and loans upon
Government securities.
1. There vri^l he no deterrents in examination or supervisory
policy to investments by hanks in Government securities of all types,
except those securities made specifically ineligible for hank in
vestment hy the terms of their issue*
2. In connection with Government financing, individual subscribers
relying upon anticipated income may- wish to augment their subscriptions
by temporary borrowings from banks. Such loans will not be subject to
criticism but should be on a short term or amortization basis fully
repayable within periods not exceeding six months.
3. Banks will not be criticized for utilizing their idle funds
as far as possible in making such investments and loans and availing
themselves of the privilege of temporarily borrowing from or selling
Treasury bills to the Federal Reserve Banks when necessary to restore
their required reserve positions.

,_

Joseph D. Hunan, Jr. Commissioner of Int ernal Revenue, made the following
\
statement;
"The Republican candidate for President made a fifteen-minute radio address
nation Tuesday evening on taxes.

In the course of that address he said;

fA Treasury agent of this Administration went into the plant of the Lincoln
Electric Company and announced that a man who worked with. his hands -should not
be paid as much as five thousand dollars a year’.
"Mr

Dewey was evidently quoting James E. Lincoln, President of the Lincoln

Electric Company, who accused Jesse E. Gregory, head of the Central Division of
the Technical Staff , Cleveland, Ohio, of making such a statement.
has denied

Mr. Gregory

making any such statement and is supported in his denial by two

employees of his office present at the time he was supposed to have made the
statement.
"The Treasury Department has never had any such rule.

In fact, in this case

the Government’s final notice to the taxpayer, the Lincoln Electric Company,
.permitted deductions for payments in excess of five thousand dollars each to
.129 factory workers and 41 foremen who worked with their hands,

Every dollar

of w^ages actually paid, to employees by this company was allowed as a legitimate
operating expense.
"The tax dispute with the Lincoln Electric Company is not over wages
actually paid^.rfSjgar&less of their amount^but relates to the validity of certain
deductions for annuity premiums and shares in a profit sharing trust.
"Mr. Lincoln, President of the company, informed representatives of the
Bureau, of Internal Revenue, that if they did not concede his position he would
try the case in the public press.

Evidently he is using Mr. Dewey for that

TREASURY DEPART MEUT
Bureau of Internal Revenue
Washington
POR RELEASE, MORNING- NEWSPAPERS,
Friday, October 6, 1944.
10-5-44

Press Service
No. 43-63

Joseph D. Nunan, Jr, Commissioner of Internal Revenue,
today made the following statement;
nThe Republican candidate for President made a fifteenminute radio address to the nation Tuesday evening on taxes.
In the course of that address he said:
’A Treasury agent
of this Administration went into the plant of the Lincoln
Electric Company and announced that a man who worked with
his hands should not be paid as much as five thousand dollars
a year1.
”Mr, Dewey was evidently quoting James P. Lincoln,
President of the Lincoln Electric Company, who accused
Jesse P, Gregory, head of the Central Division of the
Technical Staff, Cleveland, Ohio, of making such a statement.
Mr. Gregory has denied making any such statement and is sup
ported in his denial by two employees of his office present
at the time he was supposed to have made the statement,
,lThe Treasury Department has never had any such rule. In
fact, in this case the Government’s final notice to thé tax
payer, the Lincoln Electric Company, permitted deductions for
payments in excess of five thousand dollars each to 129 fac
tory workers and 41 foremen who worked with their hands. Every
dollar of wages actually paid to employees by this company
was allowed as a legitimate operating expense.
”The tax dispute with the Lincoln Electric Company is not
over wages actually paid, regardless of their amount, but
relates to the validity of certain deductions for annuity
premiums and shares in a profit sharing trust.
nMr. Lincoln, President of the company, informed repre
sentatives of the Bureau of Internal Revenue that if they did
not concede his position he would try the case in the public
press, Evidently he is using Mr, Dewey for that purpose,”

-oOo-

* 3 *

least a year and a half to defeat Japan after Germany is
beaten»

And we shall be able to do it in that time only if

we put every bit of our strength into the effort* The enemy
has short, interior lines of co muniqation, while we must move
men and materials across the vast distances of the Pacific be
fore we can bring our power to bear*

The costs of this kind

of warfare will certainly be very high, higher even than they
were in Eum pe.
You cannot rost on your laurels*
campaign lies immediately ahead*

The Sixth War Loan

Its challenge must be con

fronted just as resolutely as in the past*

And I tell you

frankly that even on the most optimistic assumption there will
have to be a Seventh Loan*

Your job is to make the people of

America understand that there can be no let-down on the Ham©
Front now, that the time has not yet come to relax or celebrate*
I know that America can count upon you to see your job through
to its end*

-7~

battle bad to be fought and won in the field —
by sustained, unstinting, tireless service*

fought and won

You have given
\

that service*

You have given it with a resourcefulness and

enthusiasm and good cheer that have overridden every difficulty*
You have given it at real sacrifice of time and comfort and
self-interest*
yond my praise.

I think that the job that you have done is be
I know that the richest reward you can receive

for it is the knowledge that it has been done supremely well,
that it has played an indispensable part in our forward march
to victory*

Still, I should like, on behalf of the Treasury

Department to say one simple word to you —
venture nothing more than this*

Thanks*

I shall

But I know that this one word

is echoed, and will be reechoed, by every one of your fellowAmerloans.
When you enlisted in this program, you enlisted for the
duration*

The term of your service has not yet reached its end.

The truth is that the toughest part of your job still lies ahead.
Let us look at the future realistically*

The war news of

late has been extremely good* The enemy in Europe is on the run.
How soon he will collapse, none of us can tell. But even when
that great day comes, tliere will still be a hard and costly
victory to be won in Asia*

Our military and naval authorities

made the grim assertion just recently that it will take us at

least & ve&r

do to help?1

Our plan to offer securities attractive to all

classes of investors is an attempt to answer this question*
I can think of no other single wav in which so many people can
become partners of their Government in facing this emergency.
It is the purpose of the Treasury to raise money for national
defense by methods which strengthen the national morale.*- *
The desire of the people *to help,w the sense of par
ticipation in the national cause, could never have been
realized except through & voluntary program*

You will recall,

of course, the clamor that arose for forced or compulsory
savings*

There were many who declared that only in this way

could the stupendous sums needed for victory be raised*

There

#.

were times, indeed, when those of us who had faith in voluntary
methods seemed lonely voices crying in the wilderness*
there was one voice that never failed to support us —
voice of the President of the United States.
p§?,*V •>*

’■

* **?■>’
*

$.

But
the

He believed

vV :

always that the people would respond to any call tfc&t m i made
upon them. He knew that the enlistment of their support could
be best attained through a voluntary program adapted to the
democratic pattern of American life*
But & voluntary program could succeed, of course, only
through the

effort.#

of volunteer workers*

We in the Treasuxy

4

could fulfill only the functions of a general staff*

.

The real

There is one aspect of the War Bond program in which 1
take particular pride and
congratulations to you*

’#
___ „ c____

~ f m t to offer my warm
__4* program has Been

conducted on a genuinely voluntary, democratic basis#

Frox&s

the beginning, we were resolved to avoid certain high-pressure
sales tactics which, unavoidably, attended the fund-raising of
World War I*

It was determined that there should be no com

pulsion, no hysteria, no slacker lists and no invidious com
parisons between those who bought Bonds and those who did not.
There m s to be room in this program for the individual with
special burdens and responsibilities who could contribute only
in very small amounts —
not share at all.

and even f or the individual who could

I think you know, and the whole Nation knows,
\

how scrupulously this policy has been observed*
There was a good reason for it#

In the early days of 1941,

when I first asked Congress for authorisation to borrow from the
general public through a Defense Savings Bond campaign, I said
this:

’’There exists in the country today an overwhelming desire

on the part of nearly every man, woman and child to make some
direct and tangible contribution to the national defense#

We

ought to give them a sense of personal participation beyond that
w M e h comes from doing their daily job faithfully and well#
Every day, letters come to me from people who ask, ’What can I

'

«*■ 4 —

holder# of marketable securities in the event of decline in
market value#

In short, they are more likely to be retained

as investments«
It is worth while to recall the experience following
World War I when Liberty Bonds plunged down into the eighties,
and frightened buyers,inexperienced as investors, unloaded*
They felt that their trust in their Government had been be
trayed.

Later they awoke to find that their loss had been

the gain of the speculators and the wealthy who then owned
their Bonds at prices that brought them truly handsome yields
JstMihe safest securities in the world# ^
The Series I War Bonds will have an immense value, I
believe, not only for the individual holders, but for the
economy of the country as a whole when the war is ended#

They

will constitute an invaluable back log of purchasing power in
the post-war decade#

Only a part, and I believe the smaller

part of this purchasing power will come from cashing the Bonds
themselves#

The most important part will come from the greater

spending of current incomes growing out of the sense of security
afforded to individuals by their War Bond holdings •

They will

provide, therefore, a strong bulwark against the sort of
deflation which struck this nation so disastrously in 192Q and
7921#

When the enemy struck,the machinery was ready and in
operation for the people’s financing of the war*

Defense

Bonds became War Bonds and through your efforts they have
XX, 0 0 0 , 0 0 0

been put into the hands of aighty-five-taillie» individual
Americans*

I congratulate you on the accomplishment.

Think

of it | Out of every thirteen men, women, children and babies
in the United states, more than eight have purchas
their Government *

Today there are approximately S3 billion:

SHBHPI i of Series E Bonds —

the people’s Bond —

all held by individual investors.

outstanding
jj

This Series E Bond was tailored specifically to meet
the need of the average American citi&ea able to set aside
modest savings for investment purposes.

As all of you know,

it is non-negotiable and through arrangements which have
recently been inaugurated, it is payable on demand 80 days
after issue date, at any bank.

Its investment yield If held

to maturity^ £ & 2 . 9 ^ and is the highest obtainable SaTany
United States Government security.
We designed this security in order to protect the small
investor against any possibility of loss as a result of
fluctuations in market value.

Non-negotiable securities

with guaranteed redemption values are not subject to panicky
liquidation which, experience shows, develops among small

We In the Treasury m u t e d to give every American a
direct personal stake in the maintenance of sound Federal

we believed, would serve as a bulwark against the constant
threats to Uncle £amfs pocketbook from pressure blocs and
special interest groups.

In short, we wanted the ownership

of America to be in the hands of the American people*

We

had made only a start in this direction, you will re

member, when war broke out in Europe and threatened the security
of the United States.

But the foundation had been laid for

real popular participation in an American preparedness program*
Savings Bonds became known as Defense Bonds.

And, as you all

know, they played an important part in making the Nation ready
for the great crisis which came upon us at the end of 1941.
They served not only as a vital factor in financing the re
armament of our fighting forces but, «hat seems to me even more
important, they gave to the average citizen a sense of athe m r fs
meaning and of the urgent nature of the national danger.

War Finança Speech
Sac. Morgenthau
f

Û * ? •*l§3u T

You may not be aware of it but this meeting today is &
kind of birthday celebration —
calendar.

Just about tan years ago the first

Savings Bonds —
days —

a very important birthday in ay
States

they used to be called Baby Bonds in those

were sold to the American public.

months —

United

next March to be precise —

And in just a few

the oldest of these Bonds

will reach its maturity and be presented to the Treasury of
the United States for redemption#
A birthday is a family affair*

And I am especially happy

to be able to celebrate this birthday with members of the
immediate family that made savings bonis the most popular and
most widely held form of investment ever conceived in the United
States.

I think you can be very proud of your ado
^KSWI»I—
*^

When the history of this war comes to be written I

_

eed,

that the savings bond program will have a highly honored place
in it a
so effectively will be recorded as one of the major contributions
to our victory*
I shouldllike to go back with you for a few minutes to
those early days, a decade ago, when War Bonds were Baby Bonds.
They were conceived then with a very definite purpose in view*
That purpose was, in a phrase, to democratise public finance
in the United States*

TREASURE DEPARTMENT
Washington

FOR RELEASE AT 1:30 P.M*, E.W.T.
Saturday, October 7, 1944»

f>re.ss Service
No, 43-64

(The fpllowing a£dpe§s £y Sgar^tayy. Mprgenthau
at a War'Bond Rally at the Hotel"Claridge,
A|;lapt|c pity, 1| Scheduled for delivery at
1 ;3Q f.l*, '¿WT, “'Saturday, October 7, 1944,
and is for release at that time»)
You may not he aware of it but this meeting today is
a kind of birthday celebration — a very important birthday in
my calendar* Just about ten years ago the first United States
Savings Bonds — they used to be called Baby Bonds in those
days — were sold to the American public* And in just a few
months — next March to be precise *■«* the oldest of these Bonds
will reach its maturity and be presented to the Treasury of
the United States for redemption*
A birthday is a family affair. And I am especially happy
to be able to celebrate this birthday with members of the
immediate family that made savings bonds the most popular and
most widely held form of investment ever conceived in the United
Stated. I think you can be very proud of your adopted child*
When the history of this war comes to be written I believe,
indeed] that the savings bond program will have a -highly honored
place in it and that the job which you have done so generously
and so effectively will be recorded as one of the major contri
butions to our victory*
I should like to go back with you for a few minutes to
those early days, a decade ago, when War Bonds were Baby Bonds*
They were conceived then with a very definite purpose in view.
That purpose was, in a phrase, to democratize public finance in the United States.
We in the Treasury wanted to give every American a direct
personal stake in the maintenance of sound Federal finances*
Every man and woman who owned a Government Bond, we believed,
would serve as a bulwark against the constant threats to
Uncle Sam* s pocketbook from pressure blocs and special interest
groups. In short, we wanted the ownership of America to be in
the hands of the American people*

2
W e h a d m a d e only a start in this, direction, y o u will
remember, w h e n w a r b r o k e out in E u r o p e and t h r e a t e n e d the
s e c u r i t y of the U n i t e d States«
But the f o u n d a t i o n h a d b e e n
laid for real p o p u l a r p a r t i c i p a t i o n in an A m e r i c a n p r e p a r e d n e s s
program*
Savings Bonds became, k n o w n as D e f e n s e Bond s *
And,
as y o u all know, they p l a y e d an i m p o rtant par t in m a k i n g the
N a t i o n ready for the g r e a t crisis w h i c h came u p o n us at the
end of 1941•
T h e y served n o t only as a vital f a ctor in
f i n a n c i n g the r e a r m a m e n t of o ur f i g hting forces but, w h a t seems
to me even m o r e important, t h e y g a v e to the a v e r a g e c i t izen
a sense of the w a r ’s m e a n i n g and of the u r g e n t n a t u r e o f the
n a t i o n a l danger*
W h e n the enemy struck, the m a c h i n e r y wa s r e ady and in
o p e r a t i o n for the p e o p l e ’s f i n a n c i n g of the war*
D e f e n s e Bonds
b e c a m e W a r B o n d s and t h r o u g h y o u r efforts t h e y have b e e n put
into the h a n d s o f 8 5 , 0 0 0 , 0 0 0 i n d i v i d u a l A m e r i c a n s *
I c o n g ratulate
y o u on the a c c o m p l i s h m e n t *
T h i n k of iti
O ut of e v ery t h i r t e e n
men, women, c h i l d r e n and babies in the U n i t e d States, m o r e t h a n
eight have p u r c h a s e d B o nds of t h e i r G o v e r n m e n t *
T o d a y there
are a p p r o x i m a t e l y $ 2 3 , 0 0 0 , 0 0 0 , 0 0 0 o f Series E B o nds -- the
p e o p l e ’s B o n d —
o u t s t a n d i n g all h e l d b y indi v i d u a l investors*
This Series E B o n d was t a i l o r e d s p e c i f i c a l l y to mee t the
n e e d of the a v e r a g e A m e r i c a n c i t i z e n able to set aside m o d e s t
savings for i n v e s t m e n t p u r poses*
As all of y o u know, it is
n o n n e g o t i a b l e and t h r o u g h a r r a n g e m e n t s w h i c h have r e c e n t l y b e e n
inaugurated, it is pa y a b l e o n d e m a n d 60 days a f t e r issue date,
at a n y b a nk*
Its i n v e s t m e n t y i e l d i f h e l d to mat u r i t y , 2. 9 % 9
•is the h i g h e s t o b t a i n a b l e on a n y U n i t e d States G o v e r n m e n t
security*
We d e s i g n e d this s e c u r i t y in o r d e r to p r o t e c t the small
investor against any p o s s i b i l i t y of loss as a result of
f l u c t u a t i o n s in m a r k e t value*
Nonnegotiable securities with
g u a r a n t e e d r e d e m p t i o n v a l u e s are not subject to p a n i c k y
l i q u i d a t i o n which, e x p e r i e n c e shows, d e v e l o p s a m ong small holders
of m a r k e t a b l e s e c u r i t i e s in the event of d e c l i n e in m a r k e t value*
In short, they are more l i k e l y to be ret a i n e d as i n v e s tments*
It is w o r t h - w h i l e to recall the e x p e r i e n c e f o l l o w i n g
W o r l d W a r I w h e n L i b e r t y Bonds p l u n g e d d o w n into the eighties,
a n d f r i g h t e n e d b u y ers, i n e x p e r i e n c e d as investors, unl o a d e d *
T h e y felt that their trust in t h eir G o v e r n m e n t h ad b e e n betrayed*
L a t e r t h e y a w o k e to f i n d that their loss h a d b e e n the gain of
the s p e c u l a t o r s and t h e w e a l t h y who t h e n o w n e d their B o nds at
p r i c e s that b r o u g h t t h e m t r u l y h a n d s o m e y i e l d s on the safest
s ecurities in the world*

3
The Series E War Bonds will have an immense value, I believe,
not only for the individual holders, but for the economy of the
country as a whole when the war is ended* They will constitute
an invaluable backlog of purchasing power in the post-war decade#
Only a part, and I believe the smaller part of this purchasing
power will come from cashing the Bonds themselves* The most
important part will come from the greater spending of current
incomes growing out of the sense of security afforded to
individuals by their War Bond holdings. They will provide,
therefore, a strong bulwark against the sort of deflation which
struck this nation so disastrously in 1920 and 1921.
There is one aspect of the War Bond program in which I take
particular pride and upon which I want to offer my warm congratu
lations to you* Throughout, the program has been conducted on
a genuinely voluntary, democratic basis# Prom the beginning,
we were resolved to avoid certain high-pressure sales tactics
which, unavoidably, attended the fund-raising of World War I#
It was determined that there should be no compulsion, no hysteria,
no slacker lists and no invidious’comparisons between those who
bought Bonds and those who did not# There was to be room in
this program for the individual with special burdens and responsi
bilities who could contribute only in very small amounts -- and
even for the individual who could not share at all. It hink you
know, and the w hole Nation knows, how scrupulously this policy
has been observed.
There was a good reason for it. In the early days of 1941,
when I first asked Congress for authorization to borrow from
the general public through a Defense Savings Bond campaign, I
said this: ’’There exists in the country today an overwhelming
desire on the part of nearly every man, woman and child to make
some direct and tangible contribution to the national defense#
We ought to give them a sense of personal participation beyond
that which comes from doing their daily job faithfully and well.
Every day, letters come to me from people who ask, !What can I
do to help?* Our plan to offer securities attractive to all
classes of investors is an attempt to answer this question.
I can think of no other single way in which so many people can
become partners of their Government in facing this emergency.
It is the purpose of the Treasury to raise money for national
defense by methods which strengthen the national morale.”
The desire of the people 11to help,” the sense of participation
in the national cause, could never have been realized except
through a voluntary program. You will recall, of course, the
clamor that arose for forced or compulsory savings. There were

many who declared that only in this way could the stupendous
sums needed for victory he raised# There were times, indeed,
when those of us who had faith in voluntary methods seemed
lonely voices crying in the wilderness. But there was one
voice that never failed to support us — the voice of the
President of the United States# He believed always that the
people would respond to any call that was made upon them# He
knew that the enlistment of their support could be best attained
through a voluntary program adapted to the democratic pattern
of American life.
But a voluntary program could succeed, of course, only
through the efforts of volunteer workers# We in the Treasury
could fulfill only the functions of a general staff. The real
battle had to be fought and won in the field -- fought and
won by sustained, unstinting, tireless service# You have given
that service# You have given it with a resourcefulness and
enthusiasm and good cheer that have overridden every difficulty.
You have given it at real sacrifice of time and comfort and
self-interest. I think that the job that you have done is
beyond my praise. I know that the richest reward you can receive
for it is the knowledge that it has been done supremely well,
that^it has played an indispensable part in our forward march
to victory# Still, I should like, on behalf of the Treasury
Department to say one simple word to you -- Thanks# I shall
venture nothing more than this# But X know that this one word
is echoed, and will be reechoed, by every one of your fellowAmerleans•
When you enlisted in this program, you enlisted for the
duration. The term cf your service has not yet reached its end#
The truth is that the toughest part of your job still lies ahead#
Let us look at the future realistically. The war news of
late has been extremely good. The enemy in Europe is on the
run. How soon he will collapse, none of us can tell. But even
when that great day comes, there will still be a hard and costly
victory to be won in Asia. Our military and naval authorities
made the grim assertion just recently that it will take us at
least a year and a half to defeat Japan after Germany is beaten.
And we shall be able to do it in that time only if we put every
bit of our ^strength into the effort# The enemy has short,
interior lines of communication, while we must move men and
materials across the vast distances of the Pacific before we
can bring our power to bear. The costs of this kind of warfare
will certainly be very high, higher even than they were in
Europe.

-

5 -

Y o u cannot rest on y o u r laurels.
The S i x t h W a r L o a n
campaign lies i m m e d i a t e l y ahead.
Its challenge m u s t he c o n f r o n t e d
just as r e s o l u t e l y as in the past.
A n d I tell y o u fr a n k l y that
even o n the most o p t i m i s t i c a s s u m p t i o n there wil l have to he
a S e v e n t h Loan.
Y o u r joh is to make the p e o p l e
of A m e r i c a
u n d e r s t a n d that there can he no l e t - d o w n on the Home F r o n t now,
that
the time has not yet come to r e l a x or celebrate.
I know
that A m e r i c a can count u p o n yo u to see y o u r joh t h r o u g h to
its end.

0O 0

jit 4 ;

J

- 9

i
Yoyr job is to
I

«te.

_

erccme any disposition among, th<*p to relax before final victory

I know that you will do this job as you have done the job
in the past*

The success of the War Bond program up to the present

time has been your handiwork.

It has been brought about because

you tackled it with fervor and resourcefulness and devotion.

I

know that you have done your job only at real sacrifice of time
and comfort and self-interest.

And I know also that the only

reward that you have sought for your services has been the knowledge
that you have played an indispensable part in the nation’s progress
to victory.

I convey to you the very warm thanks of the Treasury

Department, and I know that the work which you have done commands
the gratitude of all of your fellow Americans.

• 8 -

l and

sBa5^l4^ |

of

across the

the Pacific

| can afford no l e ^ S ^ ^ ^ ^ ^ ^ ^ r C d u c t i o n of ships and planes
d munitions wapt/Tth* Eastern end

has been beaten

Let me remind you, too, that war expenditures do not stop
abruptly with enemy capitulation.

During the first six months

following the Armistice in World War I, expenditures were
slightly greater than during the six months preceding the
Armistice.
paid for.

Completed and partially completed products must be
Enemy countries must be occupied.

Allied Nations will certainly be necessary.

Some relief for
The Armed Forces

must be brought home and demobilized and, in the meantime, they
must be paid and clothed and fed.

I am sure that no American

will want to fail in these responsibilities.
that must be met if we are to

make

They are costs

our victory compete and real.

And like the costs of the war itself they must be met in such a
j w * Alas to preserve and promote the stability of our economy.
The Sixth War Loan campaign, immediately ahead of us, is
one essential step in the performance of this job.

- 7 -

would have been almost a certainty, the likelihood of a postwar depression.
I have discussed the problems of War Finance and economic
stabilisation in such detail because I feel that you have been
and must continue to he vital partners in their solution.
record so far is one of which we can all he proud.

The

It lias been

good in its accomplishments, perhaps even better in the fine
cooperation

which

made these accomplishments possible.

If this

same tireless, unselfish cooperation is applied to the problems
of the post-war world, we need have no fear of the future.
But the kind of post-war world

which

we desire must still

he hacked from the enemy on the fields of battle.

The time has

not yet come for us to indulge in day dreaming or celebration.
I am not going to offer any predictions about the end of the
war in Europe.

I should like to remind you, however, that much
1

'

more competent military authorities than I have declared that
even after the European war is won it will take us at least a
year and a half to subdue our enemy in the far East.

The war

that faces us there is bound to be a long and tough and costly
one —

in certain respects more costly than the war against

Germany*
N

— S «*

inflationary pressures, has already amounted, by June 30 of
this year, to 70 billion dollars.
But the greatest and most important saving has been that
among the people themselves.

In the course of this war there

has been comparatively little of the reckless kind of silk
shirt buying that took place as a result of inflated pay en
velopes during World War I.
to black markets.

fhere has been very little recourse

Instead, people have used their incomes,

in considerable measure, to pay off their debts.

Since the

beginning of 1942, for example, farm mortgages have been
reduced

/<r percent. It is

War Bond program, by its encouragement of thrift, has contributed
significantly to this sensible restraint in the expenditure of
surplus income*
Of course, there have been other benefits of economic
stabilization, too.

The success of this policy has aided in

preventing the piling up of excessive profits by fortunate
business conceits, has helped to reduce industrial disputes
to a minimum —

and here I refer you to the factual record

rather than the headlines

has prevented the impoverishment of

recipients of fixed incomes including soldiers1 dependents^ and
probably most important of all, it has averted what otherwise

I feel confident that most of those who bought them will make
every effort to hold them to maturity.

But possession of the

Bonds will ¿iva to these people a sense of security about the
future which will permit them to spend their current incomes
more freely than would otherwise be possible*

We shall find

this purchasing power immensely helpful during the reconversion
period.

It will prove, I am certain, a vital asset in warding

off the sort of deflation which struck this nation so dis
astrously in 1920 and 1921 when weiturned from War to peace
production.

•

Our fiscal policy oi siphoning off excess buying power
by taxing and borrowing from the general public has been one
of two buttresses supporting the structure of economic stabili
sation.

The other buttress, of course, has consisted of direct

controls including rationing, price ceilings, allocations, etc.
During this war the country has devoted twice as large a
proportion of its resources to war purposes as in World War I.
In consequence, inii&tionary pressures have been very much
greater.

The fact is, however, that prices have been held

under much closer control.

Based on actual studies of price

changes in World War I as compared with World War II, the savings
to the Government, as a result of more effective control of

he Treasury Department has considered itself a trustee
for the ia>OTBiiyiaEr o ^ T i^'«^torwho ^purchased Government
Securities primarily to
Such

investor^place/ hi

c o u n t r ^ i ^ time of stress.

falthJLnJ^fGovej
Goverament.

We

wanted, therefore, to protect^ÎJü^ through a non-negotiable
Bond, against the kind of liquidation which, experience shows,
develops among small holders of securities in the event of a
decline in market value.
After World War I, Liberty Bonds dropped in value down into
the 8Gfs, and many persons who had bought them during the War
became frightened and sold them.

They discovered later that

their loss had been the gain of the speculators and the wealthy
who then owned their Bonds and gleaned.from them truly handsome
dividends on the safest security in the world.

It is not

unnatural that they should hav^ felt that their trust in their
Government had been betrayed.
The Series E Bonds have another virtue which will be of
benefit not only to those who have purchased them but to the
entire national economy.

When the war is over they will pro

vide an invaluable backlog of purchasing power*
I don’t think that these Bonds are going to be redeemed
in a sudden deluge immediately after Y**Day. /On the contrary,

only by its absolute magnitude but ala© by its rate of increase*
How, I do not think there has been anything confusing about
this.

The American people, recognizing the need for greatly in

creased Government revenues, have submitted to the highest taxes
in the nation’s history with remarkable^good grace and good cheer#
A sharp rise in taxes was absolutely necessary for the maintenance
of economic stability#
But even after these record collections there remained the
giant sum of izi billion dollars, expended during the last three
years, that had to be raised through some other means than taxation*
This money had to be raised by borrowing.

It would have been

relatively easy, of course, to raise it by borrowing from the banks,
But in order to avoid inflation, it was essential that a
of the increased debt be borrowed outside of the banking system —
that is from the general public#
In selecting the Serie^ E Bonds as our primary vehicle for
mass borrowing, we had in mind first of all the protection of the
interests of the small investor*

Sa&L&s, g Bands, non-

inves
7 \

WB
obligation

-

2

dollars, making a total government outlay for the course of the
war to date of 224 billions, ^ f w h ere has this tremendous sum come
from?

Well, 87 billion dollars, or 39 percent of the total bill,

has come from revenue,

T o » 'the‘«fl'
irire

.th^u a -H l mtT TTSTTH^ W wi

During the fiscal year just ended, eip enditures were slightly
more than 95 billion dollars and net receipts climbed to a little
over 44 billions, or 46 percent.

This means that there has been

an upward trend in our coverage of war costs through taxation.
It is a trend which may he surprising to some and which certainly
should be encouraging to all.
I want to put some emphasis on this trend since there have
been charges of late that the Treasury has confused the public
by persistent increases in the tax burden.

In the year ended

June 30, 1940, the last fiscal year before the beginning of the
defense program, net Treasury receipts were slightly less than
5 1/2 billion dollars.

The 44 billion-dollar total which, as I

have just told you the Government took in during the past year,
was an eight-fold increase —

a larger increase than has taken

place in the revenue collection of any other major belligerent of
this war.

This is an important thing to remember in international

comparisons because the burden of taxation must be measured not

Wap Bond Speech No. 2
Secretary Morgenthau
Chicago, Illinois
/

/

O ~~

Wars, now as always, are won on battle fields.

But in

modern war, which is total war, the Home front is intimately
involved.

Economic stability at home is one of the absolute

requisites to victory,

for without economic stability it is

impossible to maintain the vast and complex flow of supplies
necessary for the men on the fighting lines.
It has been the task of the Treasury Department to finance
the costliest war in history.

I should like this afternoon to

review with you in some detail the manner in which this task
has been executed.

Our problem has been something much more

difficult than the mere raising of vast sums of money

—

The nub of the problem has been to raise these sums in such a way
as to uia
strengther^ rather than weaken, the
national economy.
Half of the total resources of the United States are now
being devoted to waging war.

Since Pearl Harbor, war expenditures

have amounted to about 208 billion dollars.

During this same

neriod, non-war expenditures have been kept down to 16 billion

I know that you will do this job as you have done the
job in the past.

The success of the War Bond program up

to the present time has been your handiwork.

It has been

brought about because you tackled it with fervor and re
sourcefulness and devotion.

I know that you have done

your job only at real sacrifice of time and comfort and
self-interest.

And I know also that the only reward that

you have sought for your services has been, the knowledge
that you have played an indispensable part in the nation1s
progress to victory.

I convey to you the very warm thanks

of the Treasury Department, and I know that the work which
you have done commands the gratitude of all of your fellow
Americans.

v

dreaming or celebration.

I am not going to off^r any^predic-

tions about the end of the war in Europe.

I .should

remind you, however, that much more competent military
authorities than I have declared that even after the European
war is won it will take us at least a year and a half to
subdue our enemy in the far East.

The war that faces us there

is bound to be a long and tough and costly one —

in certain

respects more costly than the war against Germany.
let me remind you, too, that war expenditures "do not stop
abruptly with enemy capitulation.

During the first six months

following,.the Armistice in World War I, expenditures were
slightly greater than during the six months preceding the
Armistice.
be paid for.

Completed and partially completed products must
Enemy countries must be occupied.

for Allied Nations will certainly be necessary.

Some relief
The Armed

Forces must be brought home and demobilized and, in the mean
time, they must be paid and clothed and fed.

I am sure that,

no American will want to fail in these responsibilities.

They

are costs that must be met if we are to make our victory com
plete and real.

And like the costs of the war itself they

must be me^ in such a way as to preserve and promote the
stability of our economy.
The Sixth War Loan campaign, immediately ahead of us, is
one essential step in the performance of this 30b.
Your 30b is to -overcome any disposition among the American
people to relax before final victory has been achieved.

that the War Bond program, by its encouragement of thrift,
has contributed significantly to this sensible restraint
in the expenditure of surplus income.
Of course, there have been other benefits of economic
stabilization, too.

The success of this policy has aided

in preventing the piling up of excessive profits by for
tunate business concerns, has helped to' reduce industrial
disputes to a minimum —

and here I refer you to the

factual record rather than the headlines —

has prevented

the impoverishment of recipients of fixed incomes includ
ing soldiers* dependents; and probably most important of
all, it has averted what otherwise would have been almost
a certainty, the likelihood of a postwar depression.
I have discussed the problems of War Finance and
economic stabilization in such detail because I feel that
you have been and must continue to be vital partners in
their solution.
all be proud.

The record so far is one of which we can
It has been good in its a c'colnplishments7^*^

perhaps even better in the fine coop era ti bn ~lvhicEm d e
these accomplishments possible.

If this same "tireless,

unselfish cooperation is applied to the problems of the
postjwar world, we need have no fear of the future.
But the 3find of post-war world which we desire must
still be hacked from the enemy on the fields of battle.
The time has not yet come for us to indulge in day

- 5 turned from War to peace production.
Our fiscal policy of siphoning off excess buying power
by taxing and borrowing from the general public has been
one of two buttresses supporting^ the structure of economic
stabilization.

The other buttress, of course, has con

sisted of direct controls including rationing, price
ceilings, allocations, etc.
During this war the country has devoted twice as large
a proportion of its resources to war purposes as in World
War I.

In consequence, inflationary pressures have been

very much greater.

The fact is, however, that prices have

been held under much closer control.

Based on actual

studies of price changes in World War I as compared with
World War II, the savings to the Government, as a result
of more effective control of inflationary pressures, has
already amounted, by June 30 of this year, to 7 0 ,TwrMion
dollars #.
But the greatest and most important saving has been
that among the people themselves-

In the course of this

war there has been comparatively little of the reckless kind
of silk shirt buying that took place as a result of inflated
pay envelopes during World War I.
recovarse to black markets.

There has been very little

Instead, people have used their

incomes, in considerable measure, to pay off their debts.
Since the beginning of 1942, for example, farm mortgages
have been reduced 15 percent.

It is fair to say, I think,

- 4 -

the War became frightened and sold them.

They discovered

later that their loss had been the gain of the speculators
and the wealthy who then owned their Bonds and gleaned
from them truly handsome dividends on the safest security
in the world.

It is not unnatural that they should have

felt that their trust in their Government had been
betrayed.
The Series E Bonds have another virtue which will be
of benefit not only to those who have purchased them but
to the entire national economy.

When the war is over

they will provide an invaluable backlog of purchasing
power.
I don’t think that these Bonder are going to be re
deemed in a sudden deluge immediately after Y-Day.

On

the contrary, I feel confident that most of those who
bought them will make every effort to hold them to
maturity.

But possession of the Bonds will, give to

these people a sense of security about the future which
will permit them to spend their current incomes more
freely than would otherwise be possible.

We shall find

this purchasing power immensely helpful during the recon
version period.

It will prove, I am certain, a vital

asset in warding off the sort of deflation which struck
this nation so disastrously in 1920 and 19 2 1 when we

s

- 3'good grace and good cheer,

A sharp rise in taxes was abso

lutely necessary for the maintenance of economic stability.
But even after these record collections there remained

■J’

V*—P fr—

the giant sum of 13^ oill4r-en del:lays, expended during the
last three years, that had to be raised through some other
means than taxation.
This money had to be raised by borrowing.

It would

have been relatively easy, of course, to raise it by
borrowing from the banks.

But in order to avoid inflation,

it was essential that a major part of the increased debt be
borrowed.outside of the banking- system -- that is from the
general public.
In selecting the Series E Bonds as our primary vehicle
-

for mass borrowing, we had in mind first of all the pro
tection of the interests of the small investor.

The Treasury

Department has considered itself a trustee for the men and
women who purchased Government Securities primarily to help
their country in time of stress.
sfaith in their Government.

Such investors place their

We wanted, therefore, to protect'

them, through a non-negotiable Bond, against the kind of
liquidation which, expérience shows, develops among small
holders of securities in the event of a decline in market
value.
After World War I, liberty Bonds dropped in value down
into the 80's, and many persons Who had bought them during

2
During the fiscal year just ended, expenditures

climbed to a lit'tle over?44 uJ±rlums or 46 percent.

This

means that there has been an upward trend in our coverage
of war costs through taxation.

It is a trend which may be

surprising to some and which certainly should be encourag
ing to all.
I want to put some emphasis on this trend since there
have been charges of late that the Treasury has confused
the public by persistent increases in the tax burden.

In

the year ended June 30, 1940, the last'fiscal year before
the beginning of the defense program, net Treasury
receipts were slightly less than

H ar.

The

total which, as I have just told you

the Government took in during the past year, was an eight
fold increase -- a larger increase than has taken place
in the revenue collection of any other major belligerent
of this war.

This is an important thing to remember in

international comparisons because the burden of taxation
must be measured not only by its absolute magnitude but
also by its rate of increase.
Now, I do not think there has been anything confusing
about this.

The American people, recognizing the need for

greatly increased Government revenues, have submitted to
the highest taxes in the nationrs history with remarkab

Wars, now as always, are won on battle’fields.

But

in modern war, which is total war, the Home Front is
intimately involved.

Economic stability at home is one

of the absolute requisites to victory.

For without

economic stability it is impossible to maintain the vast
and complex flow of supplies necessary for the men on the
fighting lines.
It has been the task of the Treasury Department to
finance the costliest war in history.

I should like this

afternoon to review with you in some detail the manner in
which this'task has been executed.

Our problem has been

something much more difficult than the mere raising of
vast sums of money.

The nub of the problem has been to

raise these sums in such a way as to strengthen, rather than
weaken, the national economy.
Half of the total resources of the United States are
now being devoted to waging war.

Since Pearl Harbor, war

expenditures have amounted to about 20§L
During this same period, non-war expenditures have been
JJ

o*'% o 09 OOO

kept down t o ''16^ billion— doIlarc, making a total government
outlay for the course of the war to date of1 224 oiliionoo
Where has this tremendous sum come from?

Well/ 8 ^ 0

or 39 percent of the total bill, has come
f r o m r e v enue

©°o,

TREASURY DEPARTMENT
Washington

US'

r

FOR RELEASE AT 1.3©* P•M., RW.T.
Saturday . October TL 1944.«

7 ^ * y

yj

n/Jj

Press S er v ic e
No.

<9

j 3

(The fo llo w in g address by S ecreta ry Morgenthau
a t a War Bond R a lly a t the H otel 61aridgey
Atlantio—City, i s scheduled fo r d e liv e r y a t
I . ^ T p .M ,, fflrr. S a tu r d a y October
and i s fo r r e le a s e a t t h a \ time>)

ML
'

:

-

j

TREASURY DEPARTMEUT
W ashington
E O R R E L E A S E .ME— Ci 413 P»IT.1
";11 n iWi T

u e s d a y , O ctober I g , 1944.

^

Press Service
tr
Ho. 43-6 j

\

?

Wars, now a s alw ay s, a r e won on b a t t l e f i e l d s . But in
modern w ar, w hich i s t o t a l w ar, th e Home F ro n t i s in ti m a t e ly
in v o lv e d . Economic s t a b i l i t y a t home i s one o f th e a b s o lu te
r e q u i s i t e s t o v i c t o r y . F or w ith o u t economic s t a b i l i t y i t i s
im p o s sib le to m a in ta in th e v a s t and complex flo w o f s u p p lie s
n e c e s s a ry f o r th e men on th e f i g h t i n g l i n e s .
I t has been th e t a s k o f th e T re a su ry D epartm ent to fin a n e
th e c o s t l i e s t war in h i s t o r y . I sh o u ld l i k e t h i s a f te rn o o n to
rev ie w w ith you in some d e t a i l th e manner in w hich t h i s t a s k
has been e x e c u te d . Our problem has been som ething, much more
d i f f i c u l t th a n th e mere r a i s i n g o f v a s t sums o f money. The
nub o f th e problem has been t o r a i s e th e s e sums in such a way
as to s tr e n g th e n , r a t h e r th a n weaken, th e n a t io n a l economy.
H alf o f th e t o t a l r e s o u r c e s o f t h e U n ite d S ta te s a r e now
b ein g d ev o ted t o waging w ar. S in ce P e a r l H arbor, war e x p e n d i
t u r e s have amounted to ab o u t $ 2 0 8 , 0 0 0 , 0 0 0 , 0 0 0 . D uring t h i s
same p e r io d , non-w ar e x p e n d itu re s have been k e p t down to
$16, 0 0 0 , 0 0 0 , 0 0 0 , making a t o t a l governm ent o u tla y f o r th e
c o u rse of th e war to d a te of $ 2 2 4 ,0 0 0 ,0 0 0 ,0 0 0 .
Where has t h i s trem endous sum come from? W all,
$ 8 7 ,0 0 0 ,0 0 0 ,0 0 0 , o r 39 p e r c e n t o f th e t o t a l b i l |7 ) h a s come
from re v e n u e .
w'
D uring th e f i s c a l y e a r ju s t ended, e x p e n d itu re s were
s l i g h t l y more th a n $ 9 5 ,0 0 0 ,0 0 0 ,0 0 0 and n e t r e c e i p t s clim bed to
a l i t t l e o v er $44, 0 0 0 , 0 0 0 , 0 0 0 , o r 46 p e r c e n t. T h is means t h a t
t h e r e has been an upward tr e n d in our co v erag e o f war c o s ts
th ro u g h t a x a t i o n . I t i s a tr e n d w hich may be s u r p r i s i n g to
some and w hich c e r t a i n l y sh o u ld be en c o u rag in g t o a l l .

TREASURE DEPARTMENT
Washington
FOR RELEASE, AFTERNOON NEWSPAPERS,
Thursday, October 12, 1944#

'

Press Service
No* 43-65
t

(FOR RADIO RELEASE 1:45 P*M*, CVJT)

'

(The following address by Secretary Morgenthau
at a War Bond Rally at the Hotel Roosevelt,
New Orleans, is scheduled for delivery at
1:45 P * M * , ,CWT, Thursday, October 12, 1944* )
Wars, now as always, are won on battlefields* But in
modern war, which is total war, the Home Front is intimately
involved* Economic stability at home is one of the absolute
requisites to victory* For without economic stability it is
impossible to maintain the vast and complex flow of supplies
necessary for the men on the fighting lines*
It has been the task of the Treasury Department to finance
the costliest war in history* I should like this afternoon to
review with you in some detail the manner in which this task
has been executed* Our problem has been something much more
difficult than the mere raising of vast sums of money•, The
nub of the problem has been to raise these sums in such a way
as to strengthen, rather than weaken, the national economy*
Half of the total resources of the United States are now
being devoted to waging war* Since Pea.rl Harbor, war expendi
tures have amounted to about $20.8,000,000*000* ‘During this
same period, non-war expenditures have been kept down to
$16,000,000*000, making a total government outlay for the
course of the war to date of $>224,000,000,000*
Where has this tremendous sum come from? Well-,
$87,000,000,000, or 39 percent of the total bill, / has come
from revenue*
During the fiscal,year just ended, expenditures- were
slightly more than $9 5 ,000,0 0 0 ,0 0 0 , and net receipts climbed to
a little over $44,000,000,000, or 46 percent* This means that•
there has been an upward trend in our coverage of war costs
through -taxation » It is a trend which may be surprising to
some and which certainly should be encouraging to all#

*

' * 1*;

'

1

. vT /.•..*••>•" -fl. ;f

‘iMh ? .v.-\

-I want to p u t some em phasis'.oh th is :'tr e n d '" s in e e - .th e r e have
been ch a rg e s .o f la te., t h a t t h e T re a su ry has co n fu sed th e p u b lic
by p e r s i s t e h t inbi-ea'ses'- in t h e t a x . b u rd e n ,g ..In th e y e a r ended
J u n e '.50^1.19,4,0'; th e l a s t , f i s c a l y e a r b e fo re th e b e g in n in g o f th e
d e fe n s e program* *n e t -.T reasu ry r e c e ip ts /,w e re ...s lig h tly l e s s th a n
$ 5, 500VQdpVPP&’j ...Tlie $ 4 4 ,0 0 0 , 000,000 t o t a l w hich, ’ a s I have
j u s t .to ld you. th e'G o v ern m en t took- in d u rin g t h e p a s t y e a r, was
an e i g h tf o l d 'in c r e a s e .**w a, l a r g e r 'in c r e a s e th a n , has ta k e n p la c e
in th e rev en u e :c o l l e c t i o n o f any o th e r ma j o r '- b e l l i g e r e n t o f
■ this w ar, .This i s an im p o rta n t th in g to remember in i n t e r 
n a t i o n a l eom par i s one b ecau se th e -b u r d e n o f ta x a ti o n must be
^measured gnot. o n ly by i t s ’a b s o lu te .m agnitude: b u t :a ls o ;b y i t s r a t e
of increase* ",
"."
f ■•' V
1:
t\;v g
'

1 / How* I dp ;n d t 1t h i n k .th e re hap b e e n /a n y th in g cc o n fu sin g about
t h i s . The American p e o p le , r e c o g n iz in g th e need f o r 'g r e a t l y
.■'increased.G overnm ent re v e n u e s , have su b m itte d t o th e h ig h e s t
..•t.axes.t in-.•the<n a t i o n 1s h i s t o r y w ith , re m a rk a b ly g o o d -g ra ce and
• good cheer.-.'. A shftrp r is e ', in* ta x e s was a b s o lu te ly - n e c e s s a ry f o r
.the- m ain ten an ce ;o f . economic . s t a b i l i t y : ; .;
;•
„-But even a f t e r th e s e r e c o r d c p lle c tio h s-.-th e re .r.e m a :ih e d th e
. g ia n t, sum o f ,|1 3 7 ) 000, 000;, 000, ■expended: d u rin g th e . l a s t t h r e e
y e a r s , t h a t had t o be r a i s e d th ro u g h some o th e r means: th a n ta x a 
tio n * ..lid'. . /.\'; •' ' ■
; '
. .' ■ d ' r
' m
:-;This money h a d .t o -be : r a i s e d by bo r r o w i n g . I t Wou l d have
been r e l a t i v e l y e a s y , - h f course', - to /r a is e ..it., by ■borro w in g from
.the-, banks * . ’B u t\ in o rd e r to - a v o id i n f l a t i o n , ;, i t -was e s s e n t i a l
t h a t a ma j o r p a r t .o f th e in c re a se d - d eb t be borrow ed o u ts id e o f
th e banking', sy è te m l- - t h a t -vi s from ' t h e g e n e ra l ’p u b lic * '.'■/'I n , s e le c tin g , th e S e r ie s B'Bonds as •o u r p rim ary v e h ic le f o r
mass b o r ro w in g ,' We had in mind f i r s t b f ■a l l Jf&e' protection of
th e i n t e r e s t s ' o f th e sm a ll i n v e s t o r . The T u o asu fy -d ep artm e n t has
•c o n sid e re d i t s e l f ,a t r u s t e e f o r t h e men and women who p u rch ased
G overnm ent’'.S e c u r itie s . p r im a r ily t h elp ', t h e i r c o u n try in tim e of
. s t r e s s . . Such in v e s to r s ' place-, their* f a i t h in t h e i r G overnm ent.
.We w a n te d ,. t h ex*of o re , to. p r o t e c t ’-them ,/ th ro u g h a ' non.n egot i a b l e
■bond, ’.a g a in s t vf h e k in d / o f 1Iq/utda t i o n w h ich , ■e x p e rie n c e -shows,
d ev e lo p s among, s m a ll' h o ld e rs' o f J s e c u r i t i e s ; i n th e e v e n t o f a.
d e c lin e in m ark et’ Valxie.
r''
i
.
&

I , L ib e r ty Bonds dropped in v a lu e down in to
A f te r Worlc
th e 8 0 ! s , and, msny p e rso n s who had bought them d u rin g th e war
became f r ig h t e n e d and s o ld them* They d is c o v e re d l a t e r t h a t
t h e i r lo s s had been t h e g a in of th e s p e c u la to r s and th e w ealth y
a x

Who th e n owned t h e i r bonds and g le a n e d from them t r u l y handsome
k v i Sends on th e s a f e s t s e c u r i t y an th e w o rld , i t i s n o t
u n n a tu r a l t h a t th e y s h o u ld hav e f e l t t h a t t h e i r ■ tru st In th e x r .
Government had been b e tr a y e d .
T h e S e r i e s E B o nds h a v e a n o t h e r v i r t u e w h i c h w i l l be of
b e nefit not only to t h ose w ho h a v e p u r c h a s e d them but to the
entire n a t i o n a l e c o n o m y . . W h e n t h e w a r is over t h e y w i l l p r o v i d e
an i n v a l u a b l e b a c k l o g of p u r c h a s i n g power.
I d o n ’t t h i n k that t h e s e b o nds a r e g o ing t o be r e d e e m e d in
a s u d d e n deluge i m m e d i a t e l y a f t e r V-Day.
On t h e contrary, I xe
confident t h a t most of t h o s e - w h o b o u g h t t h e m w i l l m a k e 'xSwSii
effort t o h o l d t h e m to maturity.
But p o s s e s s i o n of the b o n & g j
will g i v e to t h e s e p e o p l e a s e nse of s e c u r i t y a b out t h e ^ f u t u r o
w h i c h w i l l p e r m i t t h e m to spend, t h e i r current incomes m o r e f r e e l y
than w o u l d o t h e r w i s e b e p o s s i b l e
We ^ a l l ^ i n d k h i s purchasing
p o w e r i m m e n s e l y h e l p f u l d u r i n g t h e r e c o n v e r s i o n peiiod.
It w i l l
prove,- I a m certain, a v i tal a s s e t m w a r d i n g off -th
.
def l a t i o n w h i c h s t r u c k this n a t i o n so d i s a s t r o u s l y m
192.0 a n d
1 921 w h e n w e t u r n e d f r o m w a r to p e a c e p r o d uction.
Our f i s c a l o o l i c v of s i p h o n i n g off excess b u y i n g p o w e r b y
t a x i n ^ a n d b o r r o w i n g f r o m t h e g e n e r a l p u b l i c has
one of two
b u t t r e s s e s ' s u p p o r t i n g t he s t r u c t u r e of ! ® n p m i b s l a b i l i z a t i o n ^
The other buttress, of course, has c o n s i s t e d of dire
i n c l u d i n g rationing* p r ice ceilings, allocations, etc.
l u r i n g t h i s w a r t h e c o u n t r y has d e v o t e d t w i c e r s l a rge a
p r o p o r t i o n of its r e s o u r c e s to w a r p u r p o s e s as m K o r l d W a r I.
In "consequence, i n f l a t i o n a r y p r e s s u r e s ' h a v e b e e n v e r y m u c h
greater.
T h e fact is, however, tna t pric e s nav e oeen h e l d u n d e r
m u c h c l oser control.. B a s e d on a c t u a l studies of p r i c e changes
in W o r l d W a r I a s 'co m p a r e d w i t h W o r l d W a r II, t he s a v i n g s ^ e
Government, as a , r e s u l t of m o r e eff e c t i v e c o ntrol of i n f l a v i o n c r y
pressures, has a l r e a d y amounted, b y June 30 of r h i s year, to

1 7 0 , 000 , 000 , 0 0 0 .
But t h e

greatest, an d most important; s a v i n g has b een that

a m o n g the p e o p l e ’t h e m s elves.
In t h e course 01 th:js 0? a «i 1 k ^ h i r t
has been c o m p a r a t i v e l y little of t he r e c k l e s s k i n d of -il k -nix
b u y i n g t h a t t o o k p l a c e as a r e s u l t of i n f l a t e d p a y envelopes
d u r i n 0* W o r l d W a r I. , T h e r e has b e e n .veiT l i t t l e r e c o u r s e to
b l a c k ° m a r k e t s . Instead, p e o p l e h a v e u s e d . t h e i r incomes, m
cons i d e r a b l e m e t s u r e , t o pay" off t h e i r debts.. S i n c e t h e b e g i w
of 194-2, f o r ’example,, f a r m m o r t g a g e s nave oeen r e d u c e d 13 p e i cent

p t i s f a i r t o say , I th in k , t h a t th e War Bond program , by
encouragem ent o f t h r i f t , has c o n tr ib u te d s i g n i f i c a n t l y to
s e n s ib le r e s t r a i n t in th e e x p e n d itu re of s u r p lu s incom e.
Of c o u rs e , t h e r e have been o th e r b e n e f i t s of economic
.¡S ta b ilis a tio n ," tpo* The su c c e s s o f t h i s p o lic y has a id e d : in
p r e v e n tin g th e p i l i n g up o f e x c e s s iv e p r o f i t s by fo rtu n a te - b u s i 
n ess c o n c e r n s ,’ has h e lp e d .to re d u c e i n d u s t r i a l d is p u te s to a
minimum
and h e re I r e f e r you t o th e f a c t u a l r e c o r d r a t h e r
th a n th e h e a d lin e s
has p re v e n te d th e im poverishm ent o f r e c i p 
i e n t s o f f ix e d incomes in c lu d in g s o l d i e r s 1 d e p e n d en ts; and p ro b 
a b ly most im p o rta n t of a l l ,: i t ‘has a v e r te d what o th e r w is e . would
have been alm o st a c e r t a i n t y , th e lik e lih o o d of a .p o s tw a r d ep res
s io n ,
I have d is c u s s e d th e problem s o f War f in a n c e and econom ic''
s t a b i l i s a t i o n in su ch d e t a i l b ec au se .1 f e e l t h a t you .have' been
and must c o n tin u e to be v i t a l p a r tn e r s in t h e i r s o l u t i o n ; The
r e c o r d so f a r . i s one o f w hich we can a l l be p r o u d .' I t has been
in i t s ac co m p lish m en ts, p erh ap s even b e t t e r in th e f i n e co o p e r
a t io n w hich made th e s e accom plishm ents p o s s ib le * . I f t h i s same
t i r e l e s s , u n s e l f i s h c o o p e ra tio n i s a p p lie d to th e problem s of
th e p o stw ar w o rld , we need have no f e a r o f th e f u t u r e ,
But -the k in d o f p o stw ar w o rld w hich We d e s ir e must s t i l l be
hacked fro m -th e enemy on th e f i e l d s o f b a t t l e . The tim e has n o t
y e t come f o r us* t o in d u lg e in day dream ing o r c e l e b r a t i o n . I am
n o t going t o o f f e r any p r e d ic tio n s ab o u t t h e end o f th e war in Europe., I sh o u ld l i k e t o rem ind you, how ever, t h a t much more
com petent m i l i t a r y a u t h o r i t i e s th a n I have d e c la re d t h a t even
a f t e r th e European war i s won i t w i l l ta k e us a t l e a s t a y e a r
and a h a l f to subdue our enemy in t h e . f a r E a s t. The war t h a t
f a c e s us t h e r e i s bound t o be. a lo n g and to u g h and c o s tly one —
in c e rtin -: r e s p e c ts more c o s tly th a n th e war :a g a i n s t Germany*
L et me rem ind you, to o , t h a t war e x p e n d itu re s do n o t . s to p
a b r u p tly w ith enemy c a p i t u l a t i o n . L u rin g th e f i r s t s i x months
.fo llo w in g th e A rm is tic e in World War I , e x p e n d itu re s w ere
:
s l i g h t l y ¡ g r e a t e r th a n .d u r in g th e s ix . months p re c e d in g t h e
A r m is tic e .v Com pleted and p a r t i a l l y com pleted p ro d u c ts must be
p a id f o r , . Enemy c o u n tr ie s must be o cc u p ied . Some r e l i e f f o r
A llie d B a tio n s w i l l c e r t a i n l y be n e c e s s a r y . The Armed F o rc es •
m ust be b ro u g h t home and d em o b iliz ed and, in th e m eantim e, th e y
must be paid., arid c lo th e d and f e d . I am s u r e t h a t no American
w i l l want to f a i l in th e s e r e s p o n s i b i l i t i e s , . They a r e c o s ts
t h a t must be met i f we a r e t o make our v ic to r y com plete and r e a l

- 5 -

And l i k e t h e c o s ts o f th e war i t s e l f th e y must be met in such a
way as to p r e s e rv e and prom ote th e s t a b i l i t y o f our economy.
T h e .S ix th War lo a n cam paign, im m ed iately ahead of u s , i s
one e s s e n t i a l s te p in th e p erfo rm an ce o f t h i s jo b . Your job i s
to overcome any d i s p o s i t i o n among th e American p e o p le to r e l a x
b e fo re f i n a l v i c to r y has been a c h ie v e d .
I know t h a t you w i l l do t h i s job a s you have done th e jobin th e p a s t . The s u c c e s s o f t h e War Bond program up t o th e p r e s 
ent tim e has been your handiw ork. I t has been b ro u g h t ab o u t
b ecause you ta c k le d i t w ith f e r v o r and r e s o u r c e f u ln e s s and devo
t i o n . I know t h a t you have done y o u r job o n ly a t r e a l s a c r i f i c e
of tim e and com fort and s e l f - i n t e r e s t . And I know a ls o t h a t th e
o n ly rew ard t h a t you have so u g h t f o r your s e r v ic e s has been th e
knowledge t h a t you have p la y e d an in d is p e n s a b le p a r t in th e
n a t i o n ’s p ro g re s s t o v i c t o r y . I convey to you th e v ery warm •
th a n k s of th e T re a su ry D epartm ent, and I know t h a t th e work w hich
you have done commands th e g r a t i t u d e o f a l l o f your fe llo w
A m ericans.

oOo-

TREASURY DEPARTMENT
Washington
FOR1'RELEASE AT 12:15. Pj.M . E.W*T*
Monday, October 9, 1944»

Press Service
No* 43-66

(The following address by Herbert E. Gaston,
Assistant Secretary of the Treasury, before
the 31st National Foreign Trade Convention
at the Hotel Pennsylvania, New York City,
is scheduled for delivery at 12:I5 P*M*,
EWT, Monday, October 9, 1944, and is for
release at that time*) '
As we meet here today to discuss the foreign trade
problems that we shall face after the war, none of us can fail
to be acutely aware of the fact that the victory is not.yet
won, that the greatest battle in the world1s history is being
waged just around that bend in. the earth and across a narrowiBg
sea, and another of equal ferocity and even wider geographical
scope is goimg on at the opposite curve of the earth*
These are the projects of the immediate present which take
precedence over all others* None of us would wish to spare a$y
energies that could possibly be devoted to advancing them* But
fortunately our resources have been so well organized fpr war
that we can look ahead toward the peace without taking anything
from the war effort* In fact we should be able to contribute
to the purposes for which we fight, if we lay plans to organize
the peace in such fashion that some of the causes of war may be
removed and liberty-loving nations may be made strong to resist
aggression*
It surely is not too soon to plan for peace* If the
victory is not here, if we are unable to prophesy even as to
the European battle whether the end is a matter of days or
weeks or months, we do know that victory will come. We know
that it will come, because it has been demonstrated that the
forces of democracy and liberty have attained definite military
^superiority over the forces of militarism, tyranny and aggression
In attaining that superiority we here in the United States
fand the same- thing is true, in Great Britain -- have developed
“economic powers
productive powers -- that have exceeded our
■°wn: expectations and even; our own most enthusiastic prophecies*
IJhis is not-'merely something to boast about* It is a fact that
-must affect our whole economic future, and our private and
public planning as well,
‘.

-

2

-

It has been said, that we are devoting half of our whole
national product to war*
But that hardly tells the story*
It seems to*create a picture of self-denial; Ojf restriction of
home consumption, which has not, in fact occupied* With some
allowance for special instances, we have not been called upon
to deny ourselves consumption goods* Instead what we have
done has been.approximately to double our national production
and to devote the increase to war# This great production
achievement has been made possible by practically unlimited
government orders for goods, by production engineering and
management of the very highest order, by a great upsurge of
American inventive genius, by an increase in hours and
numbers of persons employed, and generally by a popular will
to build a tremendous production record in support of our
military forces*
I think all of us will agree that this great production
momentum and production potential and their economic and social
consequences here in the United States are among the extremely
significant and important facts with which we shall deal in the
new economy, the new trade situation with which we shall be
faced — to a very considerable extent after the European victory
and before the victory over the Japanese, and to an increasing
extent thereafter*
There will be other striking and even revolutionary factors
in the situation* There is, for instance, the great fleet of
ships constructed in American yards to meet the wa.r!s transport
needs, and the men trained to operate them* There is the
advance that has been gained in air travel, under which it has
become commonplace to make in a day the journey that used to
take a week; and in three days or four the journey that used
to be an affair of months* Do you not think that this facility
in travel
this shrinking of the earth, as it is the custom
to speak of it ?r will make some difference not only in the
character of international transactions, but in their volume?
I feel sure of it*
But another difference in the economic situation will, we
may suppose, be of transcending importance for a time* That
difference is in the lamentable ruin that the enemies of
civilization have wreaked, east and west, In their invasion
of peaceful lands* There is an enormous job-of,reconstruction
and supply to be done. A part of that job will be the function
of UNRRA, the international organization for broad-scale relief*
But probably a.much greater part of it will become the responsi
bility of the people of the countries which have been devastated
and will^ transla te itself into a greatly enchanced volume, of
international trade, including a heavy demand for American
products, if appropriate means of financing the demand are found*

3

In the special s i t u a t i o n that will exist at the w a r s
end, f o r e i g n m a r k e t s m a y a nd s h o u l d o f fer a m e a n s of transition,
of c o n v e r s i o n from w a r p r o d u c t i o n and w a r s u p p l y to a n o r m a l
peace economy.
It is .cer t a i n l y h i g h l y a p p r o p r i a t e that we
should seek w a y s by w h i c h e x p o r t s w i l l aid us m
the p r o b l e m
of c o n v ersion*
O u r w a r s u p p l y p r o g r a m has b e e n a p r o g r a m ^ o x
m a n u f a c t u r i n g for export —
export of the e q u i p m e n t f o r vie ory
w h i c h h a p p e n s also to be the tools of d e s t r u c t i o n .
It will
well into the p i c t u r e if this p a r t i c u l a r expo r t p r o g r a m should
be t a p e r e d o f f in exports of the tools and e q u i p m e n t for
rec o n s t r u c t i o n .
B u t this does n ot m e a n that our f o r e i g n trade, can be a |
o n e - w a y street and that our interest in it^is m e r e l y in g e t t i n g
rid of a surplus of p r o d u c t i o n and p r o d u c t i v e capacity.
All,
of us k n o w how d e e p l y our imports as well as our e x ports hav e
b e e n t i e d in to our w h ole economy.
We k n o w ^ t h a t the v/orld-s
interest is in a p r o s p e r o u s A m e r i c a w h i c h will be ope of the
.
w o r l d !s b e s t customers.
W e n e e d to b u y m o r e as well as -to sell ,
more —
in the lon g run to b u y m o r e to be -able to sell more.
Our own d o m e s t i c h i s t o r y has t a ught us that m a r k e t s have no ¿J
fixed limits; that the y are expanded b y c r e a t i n g and s a t i s f y i n g
n e w wants a nd thus e n h a n c i n g the st a n d a r d of living.
W e kno w
too that our best- c u s t omers have b e e n those w i t h the m o s t ad-v
vanc e d m o d e r n economics.
We h a v e a solid interest in d e v e l o p i n g
the economies o f the less a d v a n c e d n a t ions.
If I w e r e to a s k y o u if y o u r interest in a' r e v i v e d export
trade w o u l d stop w i t h the era of r e c o n s t r u c t i o n a f t e r this war,
I think I s h o u l d get a v e r y p o s i t i v e answer.
P r o b a b l y no g r oup
in the n a t i o n has s u f f e r e d a more v i o l e n t d i s t o r t i o n of its
b u s i n e s s -- d i s t o r t i o n m a y not be the right w o r d
than the
f o r eign trader.
M ost of y o u w h o were e n g a g e d in foreign trade
a n d s h i p p i n g hav e simply h a d to find s o m e t h i n g else to^do, w h i c h
in a ver y great m a n y cases has
t a ken the f o r m of service to the
g o v e r n m e n t in its foreign t r a d i n g b u s i n e s s or in some o t her
b r a n c h of f i g hting a war.
Y o u will n o t be content, I a m sure,
w i t h going b a c k into the export and import b u s i n e s s a g a i n on a
t e m p o r a r y basis.
A nd indeed, I think, there is no r e a s o n w h y
y o u should.
T he T r e a s u r y has r e a c h e d c e r t a i n c o n c l usions on this
m a t t e r of f o r e i g n trade, c o n c l u s i o n s w h i c h are w h o l l y consistent
w i t h those r e a c h e d b y other a g e n c i e s of the G o v e r n m e n t and by
private business, as re v e a l e d b y a consensus of e x p r e s s i o n s Of
b u s i n e s s l e aders a m o n g w h i c h there d o e s n ’t s e e m to be a d i s s e n t i n g
voice.
-

A

The T r e a s u r y 1s m a i n c o n c l u s i o n has "been e x p r e s s e d in
a c t ions a l r e a d y t a k e n * ■ It is m o s t obvious that that c onclusion
is that it is u r g e n t l y d e s i r a b l e that o ur f o r e i g n trade be not
m e r e l y r e v ived but very g r e a t l y e x p a n d e d and that to a c h i e v e
that obj e c t i v e m a n y o b s t a c l e s w h i c h n o w h a m p e r f o r e i g n trade
ought to be r e m o v e d —
o b s t a c l e s c r e a t e d b y g o v e r n m e n t s in
the past w h i c h hav e b e e n h o b b l e s to free e n t e rprise#
T h è T r e a s u r y has t a k e n the l e a d . i n p r o p o s i n g ce r t a i n
d e f i n i t e m e a s u r e s f o r the p r o t e c t i o n and e n c o u r a g e m e n t of free
ente r p r i s e in the d e v e l o p m e n t of w o r l d - w i d e trade, m e a s u r e s
w h i c h w i l l a p ply to the m e r c h a n t s and traders of all land s and
wil l be the r e s p o n s i b i l i t y of m a n y free g o v e r n m e n t s acting
together#
T h e further, c o n c l u s i o n has b e e n r e a c h e d that as
a matter of course w a r r e s t r i c t i o n s on trade o u ght to be removed
at the e a r liest p o s s i b l e m o m e n t con s i s t e n t w i t h the p r o t e c t i o n
of our people.
The c o n v i c t i o n that p e r m a n e n t l y I n c r e a s e d f o r e i g n , t r a d e
wil l be g o o d for this c o u n t r y a n d ' f o r the countries w i t h w h i c h
It'trades, that it will tend to p r o m o t e w o r l d - w i d e prosperity,
is n o t the c o n s e q u e n c e of any n e w theory, b ut r a t h e r of ;
o b s e r v a t i o n of events w i t h w h i c h y o u as m e r c h a n t s and bankers,
e x p orters an d importers, are all familiar#
Y o u k n o w that a.1high
volume o f w o r l d t r a d e ,h a s «.a c c o m p a n i e d p r o s p e r i t y a n d that re 
s trictions on t r ade suc h as h i g h t a r i f f barriers, trade quotas,
c o m p e t i t i v e 'd e p r e c i a t i o n a nd c u r r e n c y r e s t r i c t i o n s w h i c h have
r e d u c e d trade have w o r k e d e c o nomic h a r d s h i p s on all n a t ions#
The I n t e r n a t i o n a l e c o n o m i c h i s t o r y o f the thirties ought, it
seems to many, to be s u f f i c i e n t e v i dence that the p o l i c y of choking
w o r l d trade t h r o u g h - g o v e r n m e n t a l r e s t r i c t i o n s is the w r o n g road
to follow#
S e c r e t a r y M o r g e n t h a u 1s specific p r o p o s a l s so far a d v a n c e d
for d e a ling w i t h the situation-.are as y o u all k n o w ‘e m b o d i e d
In the a g r e e m e n t s r e a c h e d at the B r e t t o n W o o d s c o n f e r e n c e at.:'
w h i c h he p r e sided#
T h o s e of y o u w h o a t t e n d
the B a n k i n g ' S e s s i o n
this a f t e r n o o n w i l l h e a r these p r o j e c t s d i s c u s s e d b y m e n w h o
have b een w o r k i n g d i r e c t l y on them, and are m u c h b e t t e r qualified
than I a m to talk about them#
T wo poin t s about the B r e t t o n W o o d s agreements, however,
s e e m to me to be w o r t h e m p h a s i z i n g #
T h e first is that they are
not p r o p o s e d as a r o u n d e d p r o g r a m f o r the future or a cure-all
for the Ills that in the p ast have a f f l i c t e d i n t e r n a t i o n a l trade.
T h e y a r e m e a n t instead to deal e f f e c t i v e l y w i t h two o u t s tanding
n e eds o f the p o s t w a r situation, the n e e d for m u t u a l stabilization
of currencies and the n e e d for i n t e r n a t i o n a l loans f o r r e c o n 
s t r u c t i o n and d e v e l o p m e n t .
The s e c o n d and m o s t imp o r t a n t point

m 5 «*

is that they r e p r esent a g r e e m e n t s among the r e p r e s e n t a t i v e s of
44 n a t i o n s w ho t h e r e b y t e s t i f y to their d e s i r e to w o r k t o g ether
and to t h e i r f a i t h in i n t e r n a t i o n a l a c t i o n as a m e a n s o f s o l ving
p r o b l e m s in the e c o n o m i c as w e l l as the p o l i t i c a l sphere.
W e shall have n e e d o f cooperation.
A f t e r five y e a r s of
b l o o d and s u f f e r i n g the m o o d of m u c h of the w o r l d is one of
defeatism, c y n i c i s m and despair*
W e are in d a n g e r even of
b e i n g i n f e c t e d b y it here*
But never, I think, has A m e r i c a * s
o p p o r t u n i t y to serve its o w n future an d to serve h u m a n i t y b e e n
g r e a t e r than it w i l l b e at this w a r !s end.
B e c a u s e the w o r l d is sic k to d e a t h o f wars, shall w e say
that w a r s c a n n o t be p r e v e n t e d ?
B e c a u s e w e have l e a r n e d how
to p r o d u c e in abundance for the w a n t s of m a n shall we say that
a surplus of p r o d u c t i v e a b i l i t y m u s t r e s u l t in u n e m p l o y m e n t
a n d w a nt?
It d o e s n * t make sense.
The i n t e l l i g e n c e and the courage
that a re equal to b e a t i n g d o w n the m o s t p o w e r f u l of a g g r e s s o r s
can sure l y serve to o r g a n i z e the w o r l d ag a i n s t f u t u r e a g g r e ssion.
T he g e n i u s t hat has solved the p r o b l e m s of p r o d u c t i o n can surely
make a b u n d a n c e ava i l a b l e for r e l i e v i n g the w o r l d of want.
We h a v e the raw m a t e r i a l s w i t h v h i c h to o r g a n i z e peace*
W e hav e the r a w m a t e r i a l s w i t h w h i c h to o r g a n i z e w o r l d p r o s p e r i t y .
W h a t do we l a c k ?
N o t hing, I believe, b u t the q u a l i t y that is
v a r i o u s l y c a l l e d courage, c o n f i dence, d e t e r m i n a t i o n
the
q u a l i t y that chiefly ex p l a i n s all that we have done -- the
refusal to r e c o gnize d e f e a t -■* the spirit that is r e p r e s e n t e d
in th e two w o r d s that hav e been, as m u c h as any, our na t i o n a l
m o tto: ”$ a n d o , ”

fOf

mutina dsparho ht

*!§§§

Washington
FOR RELEASE, MOHIISG HBTWSPAPERS,
Tueeday, October 10, 1944.

Press S endee
■'! ' •• J 3

7

The Secretary of the Treasury announced last evening that the tenders for
$1,300,000,000, or thereabouts, of 90-day Treasury bills to be dated October 13, 1944,
and to mature January 11, 1945, which were offered on October 6, were opened at the
Federal Reserve Banks on October 9«
The details of this Issue are as followss
Total applied for - $2,196,960,000
Total accepted
- 1,312,571,000
Average price

(includes $56,704,000 entered on a fixedprice basis at 99*905 and accepted in full)
- 99*906/ Equivalent rate of discount approx. 0.3761 per annum

Range of accepted competitive bids:
High
Low

- 99*910 Equivalent rate of discount 0.360* per annua
- 99*906
11
»
»
*
m m m - 0.376* per annum

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

Federal Reserve
District

Total
Applied for

Total
Accepted

Boston
Hew York
Phil.dalphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

•
64,350,000
1,471,024,000
41,470,000
35 ,950,000
23 ,235,000
18,635,000
337,740,000
10,157,000
7,620,000
26,407,000
23,660,000
136.520,000

$

$2,196,968,000

$1,312,571,000

TOTAL

39,226,000
871,979,000
26,700,000
26 ,462,000
11 ,297,000
15,178,000
195,133,000
7,653,000
5,650,000
12,267,000
14,671,000
64.355.00Q

TREASURY DEPARTMENT
W ashington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesdayj O ctober 10, 194410-9-44

P re s s S e rv ic e
No. 43-67

The S e c r e ta r y o f th e T re a s u ry announced l a s t evening t h a t
th e te n d e r s f o r $ 1 ,3 0 0 ,0 0 0 ,0 0 0 , o r th e r e a b o u ts , of 90-day T re a su ry
b i l l s to. be d a te d 'O c to b e r 13, 1944, and to m ature Ja n u ary 11,
1945, w hich were o f f e r e d on O ctober 6, were opened a t th e F e d e ra l
R eserv e Banks on O ctober 9.
The d e t a i l s o f t h i s is s u e a r e as fo llo w s :
T o ta l a p p lie d f o r - $>2,196,968,000
*
.
T o ta l a c c e p te d
- 1 ,3 1 2 ,5 7 1 ,0 0 0 ( in c lu d e s $ 5 8 ,7 0 4 ,0 0 0
e n te re d on a f i x e d - p r i c e b a s is a t 99.905 and a c c e p te d in
fu ll)
Average, p r ic e

9 9 .9 0 6 /B q u iv a le n t r a t e o f d is c o u n t approx
0 .3 7 6 ^ p e r annum

Range of a c c e p te d c o m p e titiv e b id s :
High

- 99.910. E q u iv a le n t r a t e o f d is c o u n t 0 ,3 6 0 ^
p e r annum

Low

• 99.906 E q u iv a le n t r a t e of d is c o u n t 0,376^
p e r annum

(57 p e r c e n t o f t h e amount b id f o r a t th e low p r ic e , was a c c e p te d )
F e d e ra l R eserv e
D i s t r i c t ______

T o ta l
A p p lied f o r

B oston
New York
P h ila d e lp h ia
C lev elan d
Richmond
A tla n ta
Chicago
S t . L ouis
M inneapolis
Kansas C ity
D a lla s
San F ra n c is c o

$

TOTAL

6 4 ,3 5 0 , 0 0 0
P, 4 7 1 , 0 2 4 , 0 0 0
4 1 .4 7 0 . 0 0 0
3 5 .9 5 0 . 0 0 0
2 3 .2 3 5 . 0 0 0
18.635.000

T o ta l
A ccented

$

39,226 ,0 0 0
871,979

,000^

2 8 , 7 0 0 ,0 0 0
26,462 ,0 0 0
11,297 ,0 0 0
1 5 , 1 7 8 ,0 0 0

7 ,8 2 0 , 0 0 0
2 6 ,4 0 7 , 0 0 0
2 3 , 6 6 0 , 000
136. 520.000

195,133 ,000
7, 653 , 0 0 0
5 ,6 5 0 ,0 0 0
12,267 ,0 0 0
14,671 ,0 0 0
84,555 ,0 0 0

$2 ,1 9 6 ,9 6 8 , 0 0 0

$1,312:, 571,000

3 3 7 .7 4 0 . 0 0 0
10,157,000

- 0O 0-

i

NAME OP OFFICER OR EMPLOYEE

NAME OF CORPORATION

STATE

Tobin, Frederick M#
Tone, Franohot
Traoy, Spenoer
Trumbo, Dalton
Turner, Lana

Tobin Packing Co, Inc,
Universal Pictures Company, Inc#
Loew*s Incorporated
Loew,s Incorporated
Loew *s Incorporated

New
New
New
New
New

Van Dyke, W. S.
Vidor, King

Loew’s Incorporated
Loew*s Incorporated

New York
New York

Wanger, Walter F#
Weingarten, L#
Wilson, Carey
Wise, William F*
Wolf son, P. J#
Woodhead, Harry
Work, Cliff

Universal Pictures Company, Inc#
Loew*s Incorporated
Loew*s Incorporated
The Aviation Corporation
Columbia Pictures Corporation
Consolidated Vultee Aircraft Corporation
Universal Pictures Company, Inc*

New York
New York
New York
New York
New York
California
New York

Young, Loretta
Young, Robert

Columbia Pictures Corporation
Loewfs Incorporated

New York
New York

Zimbalist, Sam

Loew 1s Inc or por ated

New York

y I

•

York
York
York
York
York

NAMES OF OFFICER OR EMPLOYEE

NAME OF CORPORATION

STATE

Katz, Sam
Klopman, William
Foster, Henry
Kyser, Kay

Loew’s Incorporated
Burlington Mills Corporation
Universal Pictures Company, Inc*
Loew’s Incorporated

New York
North Carolina
New York
New York

Laddon, I. M.
Laughton, Charle s
Lawrence, Vincent
Leonard, Robert Z*
Le Roy, Mervyn
Lewin, Albert
Liohtman, Al*
Loos, Anita
Love, J* Spencer

Consolidated Vultee Aircraft Corporation
Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Ijoew’s Incorporated
Burlington Mills Corporation

California
New York
New York
New Ycrk
New York
New York
New York
New York
North Carolina

Mandl, Hedwig K*
Mankiewiez, Joseph
Mannix, E* J»
Marcus, Charles
Mayer, J# 0*
Mayer, Louis 33*
McCrea, Joel
McGuinness, James J«
MoHugh, Thomas J*
MoLeod, Norman
McLucas, W. S*
Montague, Abraham
Morgan, Frank
Murphy, George

Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Bendix Aviation Corporation
Loew’s Incorporated
Loew’s Incorporated
Columbia Pictures Corporation
Loew’s Incorporated
The Atlantic Lumber Company
Loew’s Incorporated
National Bank of Detroit
Columbia Pictures Corporation
Loew’s Incorporated
Loew’s Incorporated

New York
New York
New York
Michigan
New York
New York
New York
New York
Massachusetts
New York
Michigan
New York
New York
New York

Nauheim, Milton J*

Sehenley Distillers Corporation

New York

Planters Nut and Chocolate Company
Universal Pictures Company, Inc.
The General Tire & Rubber Company

Virginia
New York
Ohio

Parish, Riohard L*
Pasternak, Joseph
Peruzzi, M*
Pidgeon, Walter
Powell, William
Prutzman, diaries D*

American Flange & Mfg* Co* Inc*
Loew’s Incorporated
Planters Nut and Chocolate Company
Loew’s Incorporated
Loew’s Incorporated
Universal Pictures Company, Inc*

Nevr York
New York
Virginia
New York
New York
New York

Rapf, Harry
Raphaelson, Samson
Ratoff, Gregory
Riskin, Everett «
Robinson, Edward G*.
Rodgers, William F,
Rooney, M e key
Rubin, J. Robert
Ruggles, Wesley

Loew’s Inc orporat ed
Loew’s Incorporated
Loew’s Incorporated
Loew’s Incorporated
Columbia Pictures Corporation

New
New
New
New
New

Lo ew ’s Inc or po ra-be à

New York

Loew’s Inc or porat ed
Loew’s Incorporated
Loew’s Incorporated

New York
New York
New York

Schary, Dore
Schenck, Nicholas M*
Schneider, Abraham
Scott, Randolph
Seidelman, Joseph
Seiter, Wm.
Sidney, Louis K*
Sothern, Ann
Stevens, George

Loew’s Incorporated
Loew ’s Incorporated
Columbia Pictures Corporation
Universal Pictures Company, Inc*
Universal Pictures Company, Inc#
Columbia Pictures Corporation
loew’s Incorporated
Loew’s Incorporated
Columbia Pictures Corporation

New
New
New
New
New
New
New
New
New

York
York
York
York
York
York
York
York
York

Taurog, Norman
Taylor, Robert
Thau, Benjamin
Thorp, Richard

loew’s
loew’s
Loew’s
Loew’s

New
New
New
New

York
York
York
York

Obioi, A,
Ole Oleson & Chic Johnson
O ’Neil, W.

-s

Incorporated
Incorporated
Incorporated
Incorporated

York
York
York
York
York

#

NAME OF OFFICER OR EMPLOYEE

Bud Abbott & Lou Costello
A h e m e , Brian
Arnold, Edward
Astaire, Fred
Bare&ge, Prank
Beech, Walter H*
Beery, Wallace
Berkeley, Busby
Berman, Pandro S*
Bernstein, David
Bisohoff, Samuel
Blumberg, N. J.
Borzage, Frank
Boyer, Charles
Breech, E. R.
Brown, Clarence
Buchman, Sidney
Bunker, Dumont
Buzzell, Edward
Carrillo, Leo
C o b u m , Charles
Coffee, Lenore
Cohn, Harry
Cohn, Jack _ _ ____ _
Cohn, J. J. ——
Considine, J, W,, Jr«
Conway, Jack
Cowdin, J* Cheever
Crawford, Joan
Cukor, George
Cummings, John S,
Del Ruth, Roy
Dieterle, William
Dietz, Howard
Donlevy, Brian
Dorsey, Tommy
Douglas, Donald W,
Dunne, Irene
Durbin, Edna Mae
Duvivier, Julian H.

e

>

NAME OF CORPORATION

STATE

Universal Pictures Company, Inc*
Columbia Pictures Corporation
Loewfs Incorporated
Columbia Pictures Corporation

New
New
New
New

Universal Pictures Company, Inc.
Beech Aircraft Corporation
L o e w ^ Incorporated
Loewfs Incorporated
Loew*s Incorporated
Loew*s Incorporated
Columbia Pictures Corporation
Universal Pictures Company, Inc.
Loew*s Incorporated
Universal Pictures Company, Inc*
Bendix Aviation Corporation
Loewfs Incorporated
Columbia Pictures Corporation
Burlington Mills Corporation
Loew*s Incorporated

New York
Kansas
New York
New York
New York
New York
New York
New York
New York
New York
Michigan
New York
New York
North Carolina
New York

Universal Pictures Company, Inc.
Columbia Pictures Corporation
Loew*s Incorporated
Columbia Piotures Corporation
• Columbia Pictures Corporation
— Loew *s Incorporated
Loew*s Incorporated
Loew*s Incorporated
Universal Pictures Company, Inc.
Loew*s Incorporated
Loew’s Incorporated
Loew 1 s Incorporated

/

New
New
New
New
New
New
New
New
New
New
New
New

York
York
York
York

York
York
York
York
York
York
York
York
York
York
York
York

Loew*s Incorporated
Loewfs Incorporated
Loewfs Incorporated
Loewi's Incorporated
Loewfs Incorporated
Douglas Aircraft Company, Inc.
Loew*s Incorporated
Universal Pictures Company, Inc.
Universal Pictures Company^ Inc.

New York
New York
New York
New York
New York
California
New York
New York
New York

Eckman, Sam, Jr*
Emanuel, Victor

Loew*s Incorporated
The Aviation Corporation

New York
New York

Fleming, Victor
Franklin, Sidney
Freed, Arthur
French, Edward V#

L o e w ’s Incorporated
Loew *s Incorporated
Loew*s Incorporated
The Atlantic Lumber Company

New York
New York
New York
Massachusetts

Garnett, Tay
Garson, Greer
Gibbons, Cedric
Gibson, C, J*
Girdler, T. M.
Goetz, Ben
Graessle, W, F,
Gumm, Frances

Loewfs Incorporated
Loew 1 s Inc orporated
Loew*s Incorporated
Gibson Refrigerator Company
Consolidated Vultee Aircraft Corporation
L oew 1 s Incorporated
T. M. Duche & Sons, Inc.
Loewfs Incorporated

New York
New York
New York
Michigan
California
New York
New York
New York

Hall, A1
Heintz, Ralph M.
Hepburn, Katherine
Homblow, Arthur, Jr*

Columbia Pictures Corporation
Jack & Heintz, Inc.
Loew*s Incorporated
Loew*s Incorporated

New York
Ohio
New York
New York

Jack, TUfeu R.
Jack, 1/foi. S.
Jacobi, Lester E.
James, Harry
Jenanyan, E, H.

Jack & Heintz, Ino.
Jack & Heintz, Inc.
Sohenley Distillers Corporation
Loew*s Incorporated
Planters Nut and Chocolate Company

Ohio
Ohio
New York
New York
Virginia

Xjai

^ — -

CALENDAR
NAME OF CORPORATION AND OFFICERS OR EMPLOYEES
OR FISCAL
SALARY
_________________________________________________ YEAR ENDED______

COMMISSION

BONUS

OTHER
COMFENSATICN

" "
TOTAL

NEW YORK
LOEW'S INCORPORATED
Weingarten, L.
Wilson, Carey
Young, Robert
Zimbalist, Sam
SCHENLEY DISTILLERS CORPORATION
Jacobi, Lester E.
Nauheim, Milton J.
TOBIN BACKING CO.,INC.
Tobin, Frederick M.
UNIVERSAL PICTURES COMPANY, INC.
Bud Abbott & Lou Costello
Barzag'e, Frank
Blumberg, N. J.
Boyer, Charles
Carrillo, Leo
Cowdin, J • Cheever
Durbin, Edna Mae
Duvivler, Julian H.
Foster, Henry
Ole Oleson & Chic Johnson
Scott, Randolph
Prutzman, Charles D.
Seidelman, Joseph
Tone, Franc hot
Wanger, Walter F.
Work, Cliff

8/ 31A 3

169» 000.00

107,000.00
108,500.00
8/31A 3
11/ 30A 3

222, 53^79

5 3 ,5 3 4 .7 9

107,000.00
108,500,00

9 4 ,2 0 8 .3 3

94,208.33
75.260.00
75.040.00

65,000.00

90,000.00

10/ 31A 3
208,000.00
9 5 ,8 3 5 .3 3
112 666.68
80,000,00
87,208.35
112,671,68

155,000.00
5 8 1 ,6 2 8 .8 9

,

1 26,553.69

126,553.69

282,250.00

789,628.89
95,833*33
239.220.37
80,000 .00
87,208.35
239.225.37
282,250.00

130,000.00
103,000.00

100,000.00

632,872.03

130, 000.00
103, 000.00
151.795.37
132. 187.50
136.159.51
136.159.51
101 ,111.01
710,372.03

6 2 .9 5 9 .5 1

162,626,18

5 1 ,7 9 5 .3 7

132,187.50
73.200.00

6 2 .9 5 9 .5 1
6 2 .9 5 9 .5 1

73.200.00
101,111.01
77,500.00
99,666,67

NORTH CAROLINA
BURLINGTON MILLS CORPORATION
Bunker, Dumont
Klopman, William
Love, J. Spencer

9/30 A 3

109.641.37
96.891.37
110,783.29

109.641.37

96.891.37
110,783.29

OHIO
THE GENERAL TIRE & RUBBER COMPANY
O'Neil, W.
JACK & HEINTZ, INC.
Heintz, Ralph M.
Jack, Win. R.
Jack, Wm. S.

H / 30A 3
1 0 /3 1 A 3

10,000.00

87,000.00

125,000.00
125,000.00
125,000.00

97. 000.
125. 000.
125. 000.
125. 000.

VIRGINIA
PLANTERS NUT AND CHOCOLATE COMPANY
Jenanyan, _E. H.
Obici, A*
Peruzzi, M.

9/30/43
4.800.00

89,400.39-

5 ,000.04 369,337.15
7.500.00 148,127.49

94,200.39
400.00 374,737.19
400.00 156,027.49

3

00
00
00
00

lME

OF CORPORATION M D OFFICERS OR EMPLOYEES

CALENDAR
OR FISCAL
YEAR ENDED

SALARY

COMMISSION

BONUS

OTHER
COMPEN
SATION

TOTAL

NEW YORK
JEW'S INCORPORATED
Coffee, Lenore
Cohn, J• J •
Considine, J. W,, Jr.
Conway, Jack
Crawford, Joan
Cukor, George
Cummings, John S.
Del Ruth, Roy
Dieterle, William
Dietz, Howard
Donlevy, Brian
Dorsey, Tommy
Dunne, Irene
Eokman, Sam, Jr.
Flaming, Victor
Franklin, Sidney
Freed, Arthur
Garnett, Tay
Garson, Greer
Gibbons, Cedric
¿Goetz, Ben
Guram, Frances
Hepburn, Katherine
Hornblow, Arthur^ Jr.
James, Harry
J£atz, Sam
Kyser, Kay
Lawrence, Vincent
Laughton, Charles
Leonard, Robert Z.
Le Roy, Mervyn
Lewin, Albert
Liohtman, Al.
Loos, Anita
MoGuinness, James J.
McLeod, Norman
Mandl, Hedwig K.
Mankiewiez, Joseph
Mannix, E. J.
Mayer, J. G.
Mayer, Louis B.
Morgan, Frank
Murphy, George
Pasternak, Joseph
Pidgeon, Walter
Powell, William
Rapf, Harry
Raphaelson, Samson
Ratoff, Gregory
Riskin, Everett
Rooney, Mickey
Rodgers, William F,
Rubin, J • Robert
Ruggles, Wesley
Schary, Dore
_§ch©nck, Nicholas M.
Sidney, Louis K.
Sothern, Ann
Taurog, Norman
Taylor, Robert
Thau, Benjamin
Thorp, Richard
Tracy, Spencer
Trumbo, Dalton
Turner, Lana
Van Dyke, W. S.
Vidor, King

8/ 31A 3

87,780.00
118,416.67
123,500.00
209,118.41
194,015.27
90,850.00
104,000.00
83,375.00
156,000.00
65,000.00
141,250.00
I65, 8I7 .9I
200,000.00
100,000.00
212,500.00
182,000.00
104,000.00
90,101.42
159,083.33
91,000.00
105,145.42
89,666.66
110,333.37
183,06c .01
128,559.69
156,000.00
I 99,999.93
* 100,333.33
128,562.50
208,000.00
182,000.00
90,333.34
156,000.00
86,625.00
91,000.00
92,560.00
88,250.00
153,000.00
158,600.00
78,000.00
104,500.00
185,680.50
83,666.66
143,000.00
99,333.33
251,250.00
80,375.00
78,750.00
151,388.64
104,000,00
81,166.66
104,000.00
88,400.00
210,600.00
97,750.00
105,300.00
76,750.00
84,333.32
156,000.00
176,983.07
91,000.00
91,000.00
219,871*82
76 ,250,00
87,000.00
109,083.33
208,000.00

87,780.(
118,416.6?
1 2 3 ,50 0 .(
209,118.1a I
194,615,27
90.850.00

104.000.
83,375.0o!
156.000.
1 3 ,0 0 0 .0 0

00
00|

7 8 ,000,00
1 4 1 ,250 .00 !
1 6 5 ,817.91
2 0 0 .00 0 .
00
1 0 0 .000 .00
2 1 2 .500.00
182.000.
00
00
1 0 4 .000 .
9 0 ,1 0 1 .1)2
1 5 9 .083.33
9 1 .0 0 0 . 00
1 0 5 ,145.142
8 9 ,666,66

110,333.37
183 060.01

.

128,559.69
370,139.4;
99,999.93

2l4,139*14

100.333.33
1 2 8 .562.50

00 I
00 !

208.000.
182.000.

90,333.34 i
316,604.36
86 625.00

160,604.36

.

9 1 .0 0 0 .00
9 2 ,560.00
8 8 ,250.00
1 5 3 ,000.00
214,139.Ill

372,739.14
78.000.

00

1,138,992.47
185.680.50
8 3 ,666.66
1 4 3 ,000.00

99,333.33
2 5 1 ,2 5 0 ^
109,847.76
7 8 .7 5 0 .0 0
1 5 1 ,3 8 8 ,6 4
1 0 4 ,0 0 0 .0 0
1 5 6 ,1 6 6 .6 6
1 1 5 ,4 0 0 .0 0

29,472.76

75 ,000.00
213,927.54

11,400.00
15,600.00 3 1 7 ,9 2 7 .5 4
2 1 0 ,6 0 0 .0 0

97.750.00

382,391.33

24,700.00

512.391.33
7 6 .7 5 0 .0 0

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

107*069.57

00

198,069.57
9 1 ,0 0 0 .0 0
2 1 9 ,8 7 1 ,8 2
7 6 .2 5 0 .0 0
8 7 ,0 0 0 .0 0
1 0 9 .0 8 3 .3 3
208.000.

2

00

P

CALENDAR
NAME OF CORPORATION AND OFFICERS OR EMPLOYEES
OR FISCAL
_____________ YEAR ENDED

SALARY
COMMISSION
____________

BONUS

OTHER----------- COMPENTOTAL
SAT ION

CALIFORNIA
CONSOLIDATED VULTEE AIRCRAFT CORPORATION
Girdler, T. M.
Laddon, I. M.
Woodhead, Harry
Notes

II/30/I4.3
;

119,166.67
81,666.67
81,666.67

5-00
5,00

119 166
81,671‘i l
81,671.67

The compensation of T. M. Girdler shorn above of $119.166.67 was paid to the Republic Steel Corporation
and not direct to Mr. Girdler.

DOUGLAS AIRCRAFT COMPANY, INC.
Douglas, Donald W.

tl/jO/lg
120,000.00

5OO.OO

120,500.00

769*23

82,990.04

KANSAS
BEECH AIRCRAFT CORPORATION
Beech, Walter H.

9/W k 3

i]0 ,000.06

22 ,220.75

20 ,000.00

MASSACHUSETTS
THE ATLANTIC LUMBER COMPANY
French, Edward V.
McHugh, Thomas J.

12^ 1/42
146,64 2 .6 6

146,642.66
IÌ4.6,642.66

146,642.66

MICHIGAN
BENDIX AVIATION CORPORATION
Breeoh, E. R.
Marcus, Charles
GIBSON REFRIGERATOR COMPANY
Gibson, C. J*
NATIONAL BANK OF DETROIT
McLucas, Vi. S.

9/ 30A 3
, ,
7/ 31A 5
I2/3 l A 2

79,999.92
54,999.96

58 ,000.00

32,000.00

137,999.92
86,999.96

100, 000.00

5,833.09

105,833.09

50,000.00

30,4.00.00 80,400.00

NEW YORK
AMERICAN FLANGE & MFG. CO., INC.
Parish, Richard L.
THE AVIATION CORPORATION
Emanuel, Victor
Wise, William F.
COLUMBIA PICTURES CORPORATION
Aheme, Brian
Astaire, Fred
Bisohoff, Samuel
Buohman, S idney
Cobum, Charles
Cohn, Harry
Cohn, Jack

11/ 30A 3
11/ 30A 3
6/ 30/4.3

125,000.00

90.000. 00

9 1 ,000.00

9 1 ,000.00

115,250.00
91,666.67
20,788.96 150,788 .£6^

91 ,666.67

130,000.00
78,000.00-

108.4.58.33
118.750.00
78.000. 00
129,166.67
78.000. 00
130.000. 00

10,394*48

•

101.282.00

87,500.00
85 . 0 0 0 . 00

8/31A 3

80,227.49
144.958.33
75,635.86

115,250.00

11/ 30A 3

90,000.00

28,227.50

51*999.99
144.958.33
75,635.86

H a l l , A1

McCrea, Joel
Montague, Abraham
Robinson, Edward G.
Schneider, Abraham
Seiter, Wm.
Stevens, George
Wolf son, P. J.
Young, Loretta
T. M. DUCHE & SONS, INC.
Graessle, W. F.
L0EWfS INCORPORATED
A m old, Edward
Beery, Wallace
Berkeley, Busby
__Berman, Pandro S.
Bernstein, David
Borzage, Frank
Brown, Clarence
Buzzell, Edward

125.000. 00

88,394.48
108.458.33
118.750.00
78.000. 00
129,166.67
78.000.
130.000.
101.282.00

87,500.00
85.000. 00

3,120.00

96,963.05 100,083.05

99,583.34
150,000.00

150,000.00

109,875.00
156,000.00
93.600.00
79.625.00
201.933.33
78,000.00

99,583.34

109,875.00

156 ,000.00
229,434.80

10,400.00

333,434.80
79,625.00
201.933.33
78,000.00

1

00
00

f

T,

REPORT OF PAYMENTS OF SALARY, COMMISSION
Beams OR OTHER COMPENSATION PAID^S^ScESS*
OF #75,000.00 COMPILED FROM INC01® RETURN'S,
SCHEDULE F-i, FILED FOR THE CALENDAR YEAR

19b2 AND FISCAL YEARS ENDED IN 1943
SUPPLEMENTAL # 1

I

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday. October 13, 1 9 4 4 . ____

Press Service
No. 43-68

• A supplemental list of 140 individuals who received frdm corporationscompensation in excess of $75,000 for personal services in the calendar year '
1942 or fiscal year ending in 1943 was made public today "by Henry Morgenthau, Jr.,
Secretary of the Treasury.
;
The public at ion, made in conformance with a provision of the Internal. Revenue
Code, augments an earlier listing of several hundred names last July.
The list comprises large corporations which requested-^ and were granted,
additional time in filing their voluminous income tax returns.
Under the code, the Secretary of the Treasury is required by Section 148 (f),
as amended by Section 407 of the Revenue Act of 1939, to make public the names of
such individuals as were reported by employing corporations in their income, tax
returns. The list compiled shows the amounts paid to officers and employees by
reporting corporations in .the form of salary, ‘
commission, bohus, or other compen
sation for personal services.
Section 148 (f) of the Internal Revenue Code, as amended by Section 407 of
the Revenue Act of 1939, is as followsî
^Compensation of Officers and. Employees: — 'Under regulations •'
\t
prescribed by the Commissioner with the approval of the Secretary, ■ • •
every- corporation subject to taxation under this chapter shall, in
its .return, submit a list of the names of all officers and employee^;,
of such corporation and the respective amounts paid to them during
the taxable year of the corporation by the corporation as salary,
commission, bonus, or other compensation for personal services
rendered, if the aggregate amount so paid to the individual is in
excess of $75,000.
'V
■
’The Secretary shall compile from the returns made a list con
taining the names of, and the amounts paid to, each such officer and
employee and the name of the paying corporation and shall make such
list available to the public.
It shall be Unlawful for any person to *•
sell, offer for sale, or circulate, for any.consideration whatsoever, <"
any copy or. reproduction of any list, or part thereof, authorized to i
bp made public by this Act or by any prior Act relating to the publi
cation of information derived from income tax returns; and any offense :
against the-foregoing, provision shall be à misdemeanor and be punished ,
by a fine not exceeding $ 1,000 br by imprisonment not exceeding .-one
■:
- year^ or both, at the discretion of the court: Provided, îïhat nothing:;
in-this sentence shall be construed to be applicable with .respect to Uany newspaper, pr other, periodical publication entitled-to admission j
•• to, the.mails'as, second-class matter. **v'. ’
.
• M ;
*v
--*
The'names of -the corporations and of the officers and employees who received
compensation-'in excess of $75,000, as reported to the Secretary by the Bureau of
Internal Revenue,''are as follows:

- 2

Calendar
name of corporation and officers or employees

or fiscal
YEAR ENDED

SALARY

coi*

OTHER
SS Io n . BONUS ' COMPEN
SATION

total

CALIFORNIA
consolidated vultse aircraft

corporation

11/30/43

Girdler, T. M.
Laddon, I* M*
Weodhead, Harry
Note:

DOUGLAS AIRCRAFT COMPANY, INC*
Douglas, Donald' W.

119,166.67
5.OO 81,671-67
5*00 8l.67i.67

119,166.67
81,666.67
81,666.67

The compensation of T. h. Girdler shown above of $ 119* 166*67 was paid
to. the Republic Steel Corporation and not direct to Mr. Girdler.

11/30/43

12Q,Q00.00

500.00 120,500.00

KANSAS
BEECH. AIRCRAFT CORPORATION
Beech, Walter H.

9/30/43

40,000.06

22,220.75

20,000.00 769.23 ’

82,990.04

MAS SACHU SETT S<
THE ATLANTIC LUMBER COMPANY
Erènch, Edward V.
McHugh, Thomas J*

I2/3I /42
146,642.66
146,642.66

• MICHIGAN
.BENDIX AVIATION CORPORATION
Breech* E. R.
Marcus,- Charles
GIBSON REFRIGERATOR COMPANY.
Gibson, -C. 3),
NATIONAL BANK OF DETROIT
* McLucas, W . ’S.

146,642.66
146,642.66
- .M

'

9/30/43
7 /31/43
12/31/42

79.999.92
54,999-96

32,000.-00

137,999.92
s6.999.96

100,000.00

5.333.09

105,833.09

50,000.00

58,000.00

30,400.00<

80,400.00

MANE OF CORPORATION AND OFFICERS OR EMPLOYEES

- 3 Ca l e n d a r
OF FISCAL
Sa LARY
YEAR ENDED

COMMISSION

BONUS

OTHER
COMPEN
SATION

TOTa L

NEW YORK
AMERICAN FLANGE & MFG. CO* » INC»
Parish, Richard. L*
THE AVIATION CORPORATION
Emanuel, ^Victor
Wise,* William F.
COLUMBIA PICTURES CORPORATION
AherfteBrian
Astaire, -Fred
Bischoff, Samuel
Buchman,' Sidney
Coburn, ^Charles
Cohii, Harry
Cohri, Jack
Hall, A1
McCrea,* Joel
Montague, Abraham
RRoblnson, Ed.ward.GG.
Schneicier, Abraham
Seiter,- Wm.
Stevens, George
Wolfson, P. J.
Young,- Loretta
T* k. DUCHE & SOi\io, INC*
Gr'aessle, Wi F.
LOEW1S INCORPORATED
Arnold, Edward
Beery, Wallace
Berkeley, Busby
Berman, Pandro S.

1Ï/30/U3
II/3O/I+3

6/39/43

•

•

•
12.5,000.00

125,000.00
*

30.000. 00
'51,999.99

28,227.50

11+4,958. 33

75.635.S6
.'91,000.00
115.250.00
917666..67
’130,000.00
7 78,000.00
. '108,1+58.33
118.750.00
* 78-,000. 00
■ 129,166.67
7.8.000. 00
’ 130,000.00
V 101,282.00
' 87,500.00
85.000.
00

11/30/43'
8/31/45
■

- 3 ,120.00
'99,5S3.3^
150.000.00
109,875.00
156.000.
00

90.000. 00
.80 ,227^1+9

11+17,958.33

29*788.96
iq,39U.48

.75 ,635.86
91.000.
115.250.00
91.666.67
150,788.96

88 ,394.48
108 ,1+58.3 3
118.750.00
78.000.
129.166.67
78,000.00
130.000.
101 282.00
87 500.00
85 000.00

.
,
. ,

96,963.05

00‘

00

00

100',083*.99
99.5*83.34

150.000. 00
.109,875100
156.000.
00

_ 4
NAME OF COLORATION AND OFFICERS OR EMPLOYEES

CALENDAR
OR FISCAL
YEAR ENDED

SALARY

COMMISSION

93.600.00
79.625.00

229,434. SO

BOBUS

OTHER
COMPENSATION

TOTAL

NEW YORK (CONTINUED)
LOEW1S INCORPORATED (CONTINUED)
Bernstein, David
Borzage, Frank
Brown, Clarence
Buzzell, Edward
Coffee,.Lenore
Cohn, J. J.
Considine, J.W., Jr*.
Conway, Jack
Crawford, Joan
Cukor, George
Cummings, John S.
Del .Ruth, Roy
Dieterle, William
Diet?# Howard
Donlevy, Brian
, Dorsey,.Tommy
Dunne, Irene
Eckman,.Sam, Jr»
Fleming, Victor
Franklin, Sidney
Freed, Arthur
Garnett» Tay
Gar son, .Greer
Giboons, Cedric
Goetz, Ben
Gumm, Frances
Hepburn,. Katherine
Hornblow, Arthur, Jr,
James, Harry
Kat z., Sam

8/31/43

*

•
•
•

201,933.33
7s,000.00
87,780.00
118,416.67
123,500.00
209,118.4l
19^,615.27
90,850.00
104,000.00
S3.375.00
156,000.00
65,000.00
141,250.00
165,817.91
200,000.00
100,000.00
212,500.00
182,000.00
104,000.00
90,101.42
159.083.33
91,000.00
105,145.42
89,666.66
110,333.37
183,060.01
128,559.69
156,000.00

214,139.14

10,400.00

333,43^.80.
79.625.OO
201.93 V 5 3
74,000.00
87,780.00
H8.4l6.67
123,500.00
209,118.41
194.615.27
90,850.00
.104,000.00
83.375.00
156,000.00
13,000.00 *'78,000.00
i 4 i ;250,o o
„ 165,817.91
800,000.00
100,000.00
212,500.00
182,000.00
104,000.00
■ * • '90,101.42
159,083.33
■ 91,000.00
105,145.42
89,666.66
110,333.37
183,060.01
128,559.69
370.139.1^

.

.

.

NAME OE CORPORATION AND OEEICERS OR EMPLOYEES

CALENDAR
OR FISCAL
YEAR ENDED

' SALARY

COMMISSION

BONUS

OTHER
:COMPENSATION

•TOTAL

NEW YORK (CONTINUED)
LOEW’S. INCORPORATED (CONTINUED)
.Kyser, Kay
Lawrence, Vincent
ILaughton, Charles
.Leonard, Robert Z.
.Le Roy, Mervyn
-Lewin, Albert
-Lichtman, Al.
-Loos, Anita
„McGuinness, James J,
McLeod, Norman
Mandl, Hedwig K.
.ManRiewiez, Joseph
;Mannix, B» J,
; .Mayer, J. G-,
Mayer, Louis B,
.Morgan, Frank
.Murphy, G-eorge
Pasternak,. Joseph
. Pidgeon, Walter
Pow'ëll, William
Rapf, Harry
Raphaelson, Samson
. Rat off, Gregory
. Riskin, Everett
. Rooney, Mi c.key
.Rodgers, William F.
.Rubin, J. Robert
Ruggles, Wesley
Schary, Dore
• Sc^enck, Nicholas M.

S/31/U3

*v

*

. ,'

“

.

99 ,999-93
100 ,333.33
128 ,562.50
208 ,000.00
182 ,000.00
90 ,333*34
156,000.00
86,625.00
91,000.00
92,560.00
88,250.00
153,000.00
15s,600.00
78,000.00
104,500.00
185,680.50
83,666.66
143 ,000.00
99 .333.33
251,250.00
80,375.00
78,750.00
151 ,388.64
104 ,000.00
81,166.66
104 ,000.00
88 ,400.00
210,600.00
97 ,750.00
105,300.00

160,604.36

214 ,139.14

1,034,492.47

29 .472.76

213 ,927.54

382 ,391.33

•99 ,999.93
100 ,333.33
128,562.50
208,000.00
182 ,000.00
90 ,333.34
316,604.36
.86,625.00
. .91,000.00
-, , . 92,560.00
. 88,250.00
153,000.00
372 ,739.14
76,000.00
•1,136,992.47
185 ,680.50
83,666.66
! 143,000.00
'
■
99,333.33
251,250.00
I
•
109 ,847..76
78,750.00
151 ,388.64
. 104 ,000.00
75.000.00
156,166.66
11 ,400.00 115 ,400.00
15,600.00 317,927.54
210,600.00
97,750.00
24 ,700.00 ,512,391.33

NAME OP CORPORATI OU AUD OPPICERS OR EMPLOYEES

- 6 - .
CAL-äiNDAR
OR EISCAL
SALARY
YEAR ENDED

COMMISSION

BONUS

OTHER
COMPENSATION

TOTAL

NEW YORK (CONTINUED)
LOEW’S INCORPORATED (CONTINUED)
Sidney, Louis K*
So them,, Ann
Taurog, Norman
Taylor, Robert
Thau, Ben jam in
Thorp, Richard
Tracy, Spencer
Trumbo, Dalton
Turner» Lana
Van Dyke, W. S.
Vidor, King
Weingarteni L.
Wilson, Carey
Young, Robert
Zimbalist, Sam
SCHENLEY DISTILLERS CORPORATION
Jacobi, Lester E.
Nauheim, Milton J.
TOBIN PACKING COMPANY, INC.
Tobin, Prederick M.
UNIVERSAL PICTURES COMPANY,INC.
Bud Abbott & Lou Costello
Barzage, Prank
Blumberg, N. J.
Boyer, Charles
, Carrillo, Leo
Cowdin, J* ‘Cheever
Durbin, Edna Mae
Duvivier, Julian H*
Koster, Henry
Ole Oleson & Chic Johnson

8/31/43

76.750.00

76.750.00
84.333.32

84,333-32

156,000*00
176,923*07
91,000.00
91,000100

156.000.00

176,983*07
198,069.57
.91,000.00

107*069.57

219,871.82

219,'871* 82
76.250.00

76.250.00
87,000.00

87.000. 00
109,083.33

109,083.33
208,000.00

169,000.00
107,000.00
108,500.00

53,534.79

208.000.

00

222,534.79
107.000.

00

108,500.00

94,208*33

94.208.33

8/31/43
75.260.00
75-,o 4o .OO

11/30/43
65.000.

00

90,000.00

155,000.00

10/31/43
208,000.00
95,833.33
112,666.6s
80.000.
87,208.35

581,6 $8.89 ^7.89,628.89
95.833.33
126.553.69 239,220.37
80.000. 00
87,208.35

00

112,671.68
282,250.00
130.000.
103.000.

00
00

100.000.

00

126.553.69

51,795.37

239,225.37
282,250.00
130.000.00
103,000100
151,795.37

- 7 calendar

NAME OF CORPORATION AND OFFICERS OR EMPLOYEES
NEW YORK (CONTINUED)
UNIVERSAL PICTURES COMPANY, INC* (CONTINUED)
Scott, Randolph
Prutzman, Charles D*Seidelman, Joseph
Tone, Franchot
Wanger, Walter F*'
Work, Cliff

OR FISCAL
YEAR ENDED

SALARY

COMMISSION

BONUS

OTHER
COMPEL7SATION

TOTAL

1 0 /3 1 /1+3

132 ,187*50
73 ,200*00
73,200*00
101 ,111*01
77»500*00
99 »666 *67

62,959.51
62,959.51
632 ,872*03
62.959.51

132 ,187*50
136,159.51
136,159.51
101 ,111.01
710,372.03
1 6 2 ,626*18

NORTH CAROLINA
BURLINGTON MILLS CORPORATION
Blinker, Dumont
Klopman, William
Love, J* Spencer

9/30/1+3
109 ,61+1.37
96 ,891*37
110 ,783*29

109 ,641.37
96,891.37
110,7S3*29

OHIO
THE GENERAL TIRE & RUBBER COMPANY
O ’Neil,.’W*
JACK & HEINTZ,- INC*+
Heintz, Ralph M.
Jack, Wm. R,
Jack, •Wm,.S,

11/30/1+3
10 ,000*00

87 ,000*00

97 *0 0 0 .0 0

10 /31/^3

125,000.00
125»000*00
125,000.00

125,000*00
125,000.00
125,000*00

VIRGINIA
PLANTERS NUT AND CHOCOLATE COMPANY
Jenanyan, E. H,

9 /30 /1+3
4 ,800.00
5,000.o4
7,500.00

Ohici, A*
Peruzzi, M*

eOo

89*400*39
369,337.0-5
148 ,127.>9

. 0
400*00
400.00

94,200.39
374 ,737/19
156,027*49

^ 3

- ó

FOR IMMEDIATE RELEASE
October 10« 19*&

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October l t 19^-3* provided for in the Inter«*
American Coffee Agreement, proclaimed by the President on April 15, 19^1,
as follows:

•
e
Country of Production

:
f
i

Quota Quantity
(Pounds) 1 /

:
:
:

Authorized for entry
for consumption
As 0£ (Date) : (Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Gkiat emala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-Signatory Countries:

1/

1 ,621,630,^79
549,261,936
34,873,774
13,9^9,562
20,331,333
26,155,330
104,621,321
93.287,384
*7.951.373
3,486.928
82,825,279
34 ,001,943
4,359,288
73,234,872

61 ,900,935

September 30* 19** 1 ,293 ,406,196
(Import quota filled)
September J) , 19**
31 ,639,546
it
8 ,769,436
N
19,114,772
H
22,395,598
it
100,32^,519
a
92 ,390,836
a
43,930,544
(import quota filled)
(import quota filled)
September 30. 19**
23*361,275
a
3 ,713,62*
a
44,317 ,43s
a

4 ,459,875

Quotas as established by action of the Inter-American Coffee Board on
April 21, 19*&.

TREASURY DEPARTMENT
Washington

POR IMMEDIATE RELEASE
Wednesday, October 11, 1944

Press Service
No. 43-69

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas
for the 12 months commencing October 1, 1943, provided for in the InterAmerican Coffee Agreement, proclaimed by the President on April 15, 1941,
as follows:

Country of Production

♦
♦
Quota Quantity .:
(Pounds) 1/
J

Authorized for entry
f o c consumpt ion
As of (.Date.) t (pounds)

Signatory Countries;
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-Signatory Countries:

u

1,621,630,479
549,261,936
34,873,774
13,949,562
20,881,883
26,155,330
104,621,321
93,287,384
47,951,373
3,486,928
82,825,279
34,001,943
4,359,288
73,234,872
61,900,935

September 30, 1944 1,293,406,196
(import cuota filled)
September 30, 1944
31,639,546
it
8,769,436
it
19,114,772
tt
22,395,598
tt
100,824,519
it
92,390,836
it
43,930,544
(import quota filled)
(import quota filled)
28,861,275
September 30, 1944
tt
3,718,624
tt
44,317,438

tt

4,459,875

Quotas as established by action of the Inter-American Coffee Board on
April 21, 1944.

oOo

'
%

'«Sir

-

•
*
— ----- ,

.
*

2

-

Unit
Established Quota
of
Period and Country ; Quantity ;
t Quantity

Silver or black
foxes, furs
and articles:
Foxes valued
under #250 each
and whole furs
and skins
Tails

May - Nov, 1944
All countries

12 months from
Dec, 1, 1943

39,174

Number

: Imports as of
: September 30,
:
1944

30,318

5,000

Piece

198

Paws, heads, or
other separated
parts

rt

300

Pound

487

Piece plates

ti

550

Pound

-

Articles, other
than piece
plates

tt

500

Unit

-oOo~

64

3 - 7 à
FOR IMMEDIATE RELEASE,
October 10. 1944.
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 September 30, 1944, inclusive,
as follows;

v

.

Established Quota
; Quantity *

pe r io d and Gountry

Unit
of
Quantity

: Imports as of
: September 30,
:
1944

Whole milk, fresh
or sour

Calendar year

3,000,000

Gallon

5,282

Cream, fresh or
sour

Calendar year

1,500,000

Gallon

764.

Fish, fresh or
frozen, filleted 3
etc., cod, had
dock, hake, pol
lock, cusk, and
rosefish
Calendar year

18,210,658

Found

Quota
filled

White or Irish
potatoes:
Certified seed
Other

90,000,000
60,000,000

Pound
Pound

31,883,384

2,153,984

Square

12 months from
Sept. 15, 1944

Rdd cedar shingles Calendar year
Cuban filler tobacco,
unsteramed or
stemmed (other than
cigarette leaf
tobacco;, and scrap
tobacco
Calendar year
Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
more than 6% of
total soluble
solids
Calendar year

1,095,-90S

Found
(unstemmed Quota
22,000,000 equivalent)
filled

1,500,000

(Over;

Gallon

296,054

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
.
Wednesday, October 11, 1944.

Press. Service
No. 43-70

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 September 30, 1944, inclusive,
as follows;

Commodity

Established Quota
Period and Country : Quantity

Unit
of
Quantity

Imports as of
September 30,
1944

Whole milk, fresh
or sour

Calendar year

3,000,000

Gallon

5,282

Cream* fresh or
sour

Calendar year

1,500,000

Gallon

764

Eish, fresh or
frozen, filleted,
etc., cod, had
dock, hake, po1lock, cusk, and
rosefish
Calendar year

18,210*658

White or Irish
potatoes!
Certified seed
Other

12 months from
Sept. 15, 1944

Red cedar shingles

Calendar year

90.000.
60.000.
2,153,984

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

22,000,000

Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
more than 6^ of
total soluble
Calendar year
solids

1,500,000

(Over)

Pound

Quota
f illed

000 Pound
000 Pound

31,883,384

Square

Pound
(unstemmed
equivalent)

Gallon

1,095,908

Quota
filled

296,054

l-

Commodity
:

Unit
: ^Imports as of'~
Established Quota
: September 30,
Period .and rOountrv : „Quantity^. : Quantity :
1941

Silver or 'black
foxes, furs
and articles:
May - Nov, 1944
Poxes valued
urder $250 each All countries
and whole furs
.and skips' _
Tails •

;•

12 months from
Pec... 1, ;194<5

Paws, heads, or
•„•■other separated
parts

n

Piece plates
Articles, other
than piece
plates

.

59,174

5,000

Number

. Piece.

500

Pound

n

550

- pound

it

500

30,318

•

—

198

; , • 4.87
•

Unit -* .1 <$ I

V-

*u’

' c.A

2 %

COTTON CARP STRIPS made from cottons having a stable of less than lr-3/16 inches
in length, COMBER WASTE, LA? WASTE, SLIVER WASTE, ANP ROVING WASTE, WHETHER
OR NOT MANUFACTURER OR OTHERWISE ARVANCEP IN VALUE, Annual quotas commencing
September 20, "by Countries of Origin!
Total quota, provided, however, that not mare than 33-1/3 percent of the quotas
shall be filled by cotton wastes other than card strips made from cottons
having a staple less than 1^3/16 inches In length and comber wastes made from
cottoiis of 1-3/16 inches or more in staple length in the case #f the follow
ing countries? United kingdom, Prance* Netherlands, Switzerland, Belgium,
Germany, and Italy?
(In Pounds)

"l’Established i TOTAL* IMPORTS T 'USTABJ/ISKBli 'Impo rt s
Country of Origin :
Sept. 20, 1944 * 33-1/35» of f Sept. 20, 1944
total quota j
?
A P aerofc.3©v 1 9 M Total Quota : tPSeDt.-50. 1/
■■■'. lSWt
Ifnited Kingdom..> ..,
4,323,457
1,441,152
Canada.......
.239 ,-690
Prance ..........,,.,
75,807
227,420
iBritish India.
69,627
- §
-*
Netherlands.........
22,747
68 ,240
14,796
Switzerland....... .
44,388
12,853
Belgium,............
38,559
J apan ...............
341,535
China....... .......
17,322
Egypt...............
8,135
rr.
'Cuba............
6,544
'i
■\ gU |f
25,443
Germany.....,.......
76,329
~
Italy...............
21,263
7,088
TOTALS
.."I

If

1,599,886

5,482,509.

r-........ i
— — i
Included in total imports, column

^oOo|

-

FOR HMSDIàffi RELEASE
October IO, X9Lii.

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
as amended by the proclamations- of'December 19, 1940, inarch 31, 1942, and June
29 1942, -during -vthe period- September 20, ,1944, to September 30/
COTTON HAVING- A STAPLE OF LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN .STAPLE LENGTH AND CHIEFLY USEE IN THE MANU; FACTUSE OF BLANKETS ANE BLANKETING, ANE OTHER THAN LINTERS). Annual quotas
commencing September-20, by 'Countries of Origins

Country of
Origin

.,. , :
(In Pounds) .
..... J.i...... ffet: | f.-y''.-'-'
f'.
:
Staple length less : Staple length 1-1/8» or more
:
than 1-1/8»
i but less than 1-11/16»
‘ '*\
' • ':Imports Sept.: Established : Imports Sept.
.Quota ..
20, 1944, to
{.Established:20, 1944, to \
45,656,430gept. 30
Quota gept. 30. 19lik

■ Egyptian Sudan.......
Peru...................
British India....... ,..
China. ........'..........
Mexico'..................
Brasil....... ..........
Union of Soviet
Socialist Republics...
Argentina....... .
Haiti...... ............
Ecuador.................
Honduras...............
Paraguay. ...............
Colombia................
Iraq...... ........'.. /, /
British East Africa,.-..,
Netherlands East Indies.
Barbado s................
Other British West
Indies if.... ........
Nigeria... f........ .
Other British West
Africa 2/
Other French Africa 3/ . . (
Algeria and Tunisia.. . . .

•*
783,816
247,952
—
2,003,483
■ «
1,370,791
8,883,259
8,883,259
618,723 '
475,124
5,203
237
9,333
752
871
124

751,502
1(6,803
: ‘'\ ;
- —

—
—

—
—

—

—
-

2,240
71,388, .

21,321
5,377
16,004
689 ■

m ■• ■

MM
-

-

mm

mm
mm

m
14,516,882

8,883,259

45,656,420

7

L
1J
2/
3/

Other than Barbados, Bermuda, Jamaica, Trinidad, and'Tobago.
Other than Gold Coast and Nigeria.
Other than Algeria; Tunisia, and Madagascar*

728,30$

TREASURE DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Wednesday, October LI. 1944.

Press Service
No. 43-71

The Bureaiof Customs announced today that preliminary reports from the
collectors of customs show imports of cotton and cotton waste chargeable to the
import ouotas established by the president^ proclamations of September 5, 1939,
as amended by the proclamations of December 19, 1940, March 31, 1943, and June
29, 1942, during t!;he period September 20, 1944, to September 30, 1944.
COTTON HAVING- A STAPLE OF LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OF LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANU
FACTURE OF BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origin:
(In pounds)
t
•

Countiy of
Origin

Staple length less
:
than 1-1/8”
:
•
:
f
Imports Sept. :
#
• Established:
20, 1944, to :
Quota
: Sept. 30. 1944:
;

Egypt and the Anglo
Egyptian Sudan • •
783,816
Peru......... .... . ....
247,952
British India...... 2,003,483
China............. , 1,370,791
Mexico..... ..
8,883,259
Brazil....... .... r, ,
618,723
Union of Soviet
Socialist Republics 475.124
Argent ina....... .. ..
5,203
Haiti.. , . . . ..... . ,
237
Ecuador.. . . . . . . . . . .
9,333
Honduras. . . . . . . . . . .
752
Paraguay.. . , ..... ..
871
Colombia., . . . . . . . . .
124
Iraq........ ..
195
British East Africa
2,240
Netherlands East
Indies..........
71,388
Barbados.. . . . . . . . . .
Other British West
Indies 1 ...... ..
21,321
Nigeria....................... ..
5,377
Other British West
Africa 2/........
16,004
Other French Africa 3/
689
Algeria and Tunisia

Staple length 1-1/8” or more
but less than 1-11/16”
Established : Imports Sept.
Quota
: 20, 1941, to
45.656.420 : Sept, 30. 1944

-,

751,502
46,803

—
mm
mm

8,883,259
4M»

ta*
ta*
mm

«r*

r»

j

14,516,882
1/
2/
3/

ta*

•ta
8,883,259

45,656,420

Other than Barbados, Bermuda, Jamaica, Trinidad, and Tobago.
Other than Gold Qoasi and Nigeria.
Other than Algeria, Tunisia, and Madagascar.

798,305

- 2 -

COTTON CARL STRIPS made from cottons having a staole of less than 1-3/16 inches
in length, 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 of the quotas
shall be filled by cotton wastes other than card strips made from cottons
having a staple less than 1-3/16 inches in length and comber wastes made from
cottons of 1-3/16 inches or more in staple length in the case of the follow
ing countries; United Kingdom, France, Netherlands, Switzerland, Belgium,
Germany, and Italy?
(in Pounds)
?

Country of Origin

1 TOTAL IMPORTS
: ESTABLISHED
?Imports
, Sept. 20, 1944 i
33-1/3$ of; Sept. 20,1944to
. TOTAL QUOTA
» t o Sept.30, 1944?
Total Quota?Sept. 30,19441/

United Kingdom.....
CcinQ.cl.cL«
••••••
France..........
British India,.,..,
Netherlands.
Switzerland.......
i^elgrunu •••••*••*•#'■
Japan..... .
China..............
Egypt............
C
u
b
a
.
•
Germany........
Italy............ *

lEstablished

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

-

m
Ü

•T 'f
TOTALS

1/

5,482,509

Included in total imports, column 2.

oOo

%
—
'H'Pi«'H

1,441,152
75,807
||
22,747
14,796
12,853
V
||

**

m
r—
**■*
—

25,443
7,088

-

1, £99.,886

-

FOR IMMEDIATE RELEASE
October ]J$, I 9I4I4.

''£ '6' e-0
* ^ tP .

VtA- i

^

L -f

^

/

~ *-7

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 proclama
tion of May 28, 19l|l, as modified by the Presidents proclamations of April 13,
19l|2, and April 29, 19li3, for the 12 months commencing May 29, I9I1I4 as follows;

Country
of
Origin

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

«Wheat flour, semolina,
«crushed or cracked wheal
«and similar wheat prodm

Wheat
Established
Quota

- * ____
*
w ■
s Imports
|Established : Imgrorts
«May 29, 19l|li, to s Quota
«lay 29, 19l|
s Sept. 30, 19iiU •9
>
+.r>
If) lfl

(Bushels')

(Bushels)

(Pounds)

795,000
-

795,000

3,815,000
2lj.,000

100
-

100
100

—

•
-

-

—

-

-

100
2,000
100
-

1,000

—
-

-

-

-

100

-

1

-

-

-

-

-

-

-

-

-

-

-

1,000
100
100
100
100

800,OCX)

13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
111,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

_

(Pounds) i
*

35,79li I
-

-

I
-

- i
-

-

-

_

—

-

-

—

-

am

1*,000,000

■

-

—

795,000

1

-

~

_

j

-

35,79li

;

TREASURI DEPARTMENT
WASHINGTON

FOR IMMEDIATE RELEASE
Wednesday/oVbôber1.I L / 1944*

Press Service
No* 43-72

The Bureau of *Customs announced today preliminary figures showing the
quantities of wheat and wheat flour entered* or withdrawn from warehouse* Tor
consumption under the import quotas established in the President's proclama
tion of May 28* 1941* as modified by the President's proclamations of April 13*
1942* and April 29, 1943, for the 12 months commencing May 29* 1944* as follows:

9
Country
pf
Origin

Wheat

:
:Established
: Quota
•

:

Imports
:i ay 29, 1944, to
: Sept. 30, 1944
(Bushels)

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

:Wheat flour* semolina,
« '"crushed, or cracked
• ■’whe§.t, and similar

795,000

795,000

-

100

100
100

—•
-

_

—'
_
—
_■
—
—
—

100
2*000
100
1,000

100

—

_

—

H

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.

-.
-r—
w
—
—
—

.-

¡1

■—
•—
1*000
, 100
100
100
100
800,000

/

—
—
_
—
—
_ '
—
_

:
wheat products
:Established: Imports
: Quota
:May 29* 1944
:
'
:to Sapt. 30,1944
(pounds)
(pounds)
35,794

_
—
—

_
...
_
,•■
_
_
-

/.

— '
795,000

4,000*000

“35/794

■ rj -

7J

FOR IMMEDIATE RELEASE
October 1 1 , 19h h

~ l^ £ > , ¿4 3 # " 7 III
The Bureau of Customs announced today that the tariff
rate quota of white or Irish potatoes, other than certified
seed potatoes, was 83% filled as of October 7 , 1944 • Pre
liminary data before the Bureau show that approximately
^0 ,000,000 pounds of such potatoes were imported during the
period September 15 to October 7 , 1944 , inclusive, an average
of 2\ million pounds per day.

Importers are required to

deposit estimated duties at the full tariff rate on all import
ations for consumption of other than certified seed potatoes
during the period October 10 , 1914;, through September 14 , 1945 ,
pending determination of the quota status of such importations#

TREASURY DEPARTI EN T
Washington

FOR »MEDIATE RELEASE,
Wednesday»-October II, 1944

Frees Service
No. A3-73

The Bureau of Customs announced today that- the tariff rate
quota of'White or Irish potatoes, other than certified seed
potatoes, was 83% filled as of October 7> 1944*

Preliminary

data before the Bureau show that approximately 50,000,000
pounds of such,potatoes were imported during the period
September 15 to October 7, 1944> inclusive, an average of
2-g- million pounds per day.

Importers are required to deposit

estimated duties at the full tariff rate on all importations
for consumption of other than certified

seed potatoes during

the period October 10, 1944.» through September 14, 1945^ pending
determination of tpe. quota status of such importations.

qOo

- 3 for such bills, whether on original issue or on subséquent purchase, and the amount
actually received either upon sale or redemption at maturity during the taxable
year for which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, as amended, and this notice, pre
scribe 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.

Reserve Banks and Branches, following which public announcement will be made by the
Secretary of the Treasury of the amount and price range of accepted bids.

Those

submitting tenders will be advised of the acceptance or rejection thereof.

The

Secretary of the Treasury expressly reserves the right to accept or reject any or
all tenders, in whole or in part, and his action in any such respect shall be final.
Subject to these reservations, tenders for $100,000 or less from any one bidder at
99.905 entered on a fixed-price basis will be accepted in full.

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

October 19, 1944

Sgc
The income derived from Treasury bills, whether interest or gain from
the sale or other disposition of the bills, shall not have any exemption, as such,
and loss from the sale or other disposition of Treasury bills shall not have any
special treatment, as such, under Federal tax Acts now or hereafter enacted.

The

bills shall be subject to estate, inheritance, gift, qr other excise taxes, whether
Federal or State, but shall be exempt from all taxation now or hereafter imposed
on the principal or interest 'thereof by any State, or any of the possessions of
the United States, or by. any local taxing authority.

For purposes of taxation the

amount of discount at which Treasury bills are originally sold by the United States
shall be considered to be interest.

Under Sections 42 and 11? (a) (1) of the

Internal Revenue Code, as amended by Section 115 of the Revenue Act of 1941, the
amount of discount at which bills issued hereunder are sold shall not be considered
to accrue until such bills shall be sold, redeemed or otherwise disposed of, and
such bills are excluded from consideration as capital assets.

Accordingly, the

owner of Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid

m m
TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday, October 13, 1944____
.
Ü5c

The Secretary of the Treasury, by this public notice, invites tenders
for $ 1.3(X3j^QQQ«QOO

or thereabouts, of

^91 -day Treasury bills, to be issued

on a discount basis under competitive and fixed-price bidding as hereinafter pro
vided.

The bills of this series will be dated

mature

January 18, 1945

interest.

October 19» 1944

, and will

, when the face .amount will be payable without

They will be issued in bearer form only, and in denominations of $1,000,

$5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).

t.
'■
Tenders will be received at Federal Reserve Banks and Branches up to the
closing hour, two o ’clock

d

. m., Eastern War time,

Monday, October 16» 1944

amt"'
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.
may not be used.

Fractions

It is urged that tenders be made on the printed forms and for

warded 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 securi
ties.

Tenders from others must be accompanied by payment of 2 percent tf 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

TREASURY DEPARTMENT
Washington

FOR RELEASE, M O R N I N G N E W S P A P E R S ,
Friday, O c t o b e r 15,-19444_______
10-12-44

The S e c r e t a r y o f the Treasury, b y this p u blic notice,
invites tenders f o r $ 1 , 3 0 0 , 0 0 0 , 0 0 0 , or thereabouts, of 9 1 - d a y
T r e a s u r y bills, to be issued on a d i s c o u n t b a s i s u n d e r comp e t i t i v e
and f i x e d - p r i c e b i d d i n g as h e r e i n a f t e r provided.. The b i l l s of
this series will be d a t e d O c t o b e r 19, 1944, and will m a t u r e
J a n u a r y 18, 1945, w h e n the'face amount w i l l be p a y a b l e w i t h o u t
interest.
T hey will be i s sued in b e a r e r . f o r m only, and in
d e n o m i n a t i o n s of $1,000, $5,000, $10,000, $100,000, $500,000,
and $ 1 , 0 0 0 , 0 0 0 (maturity v a l u e ) .
T e n d e r s will be r e c e i v e d at F e d e r a l Reserve B a n k s and
B r a n c h e s u p to t h e vc l o s i n g hour, two o ’clock p.m., E a s t e r n W a r
time, M o n d a y , O c t o b e r 16, 1944.
Tenders w i l l not be recei v e d
at the T r e a s u r y D e p a rtment, W a s h i n g t o n .
E a c h tender m u s t be
for an eve n m u l t i p l e of $1,000, and the p r ice o f f e r e d m u s t be
e x p r e s s e d on the b a s i s of 100, w i t h not m o r e than three decimals,
e. g., 99.925,
Fractions m a y n o t be used.
It is u r g e d that
tenders be m a d e on the p r i n t e d forms and f o r w a r d e d in the special
e n v e lopes w h i c h will be supplied by Pbderal R e s e r v e B a n k s or
B r a n c h e s on a p p l i c a t i o n therefor.
• T e n d e r s w ill be r e c e i v e d w i t h o u t d e p osit f r o m i n c o r p o r a t e d
b a n k s a nd trust companies and fro m r e s p o n s i b l e a nd r e c o g n i z e d
de a l e r s in i n v e s t m e n t securities.
T e n d e r s f r o m others m u s t be
a c c o m p a n i e d b y p a y m e n t of 2 ‘percent of the face amount of T r e a s u r y
b i lls a p p l i e d for, u n less the tenders are a c c o m p a n i e d by an express
g u a r a n t y of p a y m e n t by an i n c o r p o r a t e d b a n k or trust company.
I m m e d i a t e l y a f t e r the c l o s i n g hour, tenders will be o p ened
at the Federal Reserve B a n k s and Branches, f o l l o w i n g w h i c h
p u b l i c a n n o u n c e m e n t will be made b y the S e c r e t a r y o f the T r e a s u r y
o f the a m ount and p r ice range of a c c e p t e d bids.
Those submitting
tenders w i l l be a d v i s e d o f the a c c e p t a n c e or r e j e c t i o n thereof.
The S e c r e t a r y of the T r e a s u r y e x p r e s s l y r e s erves the right to
a c c e p t or r e ject any o r all tenders,, in w h o l e o r in part, an d
his a c t i o n in any s uch respect shall be final.
Su b j e c t to these
r eservations, tenders for $100, 0 0 0 or less f r o m any one b i d d e r
at 9 9 . 9 0 5 e n t e r e d on a fixe d - p r i c e basis will be a c c e p t e d in
full.
P a y m e n t of a c c e p t e d tenders at the prices o f f e r e d m u s t
be m a d e or c o m p l e t e d at the F e d e r a l R e s e r v e B a n k in cash- or
o t h e r i m m e d i a t e l y ava i l a b l e funds on O c t o b e r 19,. 1 9 4 4 *
43-74
(Over)

— .
T&e income 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 interest
or g a i n f r o m the sale or o t h e r d i s p o s i t i o n of the bills, shall
n o t h a v e any exemption, as such, and loss f r o m the sale or
o t h e r d i s p o s t i o n of T r e a s u r y bills shall n ot have any special
treatment, as such, u n d e r F e d e r a l tax A cts n o w or h e r e a f t e r
enacted*
The bills shall be subject to estate, inheritance,
gift, or o t h e r exci s e taxes, w h e t h e r Fe d e r a l or. State,,- but shall
be^ e x e m p t f r o m all t a x a t i o n n o w or h e r e a f t e r im p o s e d on the
p r i n c i p a l or interest t h e r e o f b y any State, or a ny o f the
p o s s e s s i o n s of the U n i t e d States, or b y a n y local taxi n g authority.
For pu r p o s e s of ta x a t i o n the 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 are .originally sold by the U n i t e d States shall be cons i d e r e d
to be
interest.
U n d e r S e c t i o n s 42 and 117 (a) ( l ) . o f the Internal
Re v e n u e Code, as a m e n d e d by S e c t i o n 115 of the Revenue Act of
1941, the a m o u n t of d i s c o u n t at w h i c h b i lls issued h e r e u n d e r are
sof d shall n o t be 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 shall be
sold, r e d e e m e d o r o t h e r w i s e d i s p o s e d of, and s u c h b i l l s are
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 capital assets.
A c c o r d i n g l y , the
o w n e r o f T r e a s u r y b i l l s (other t h a n life i n s urance companies)
i s s u e d h e r e u n d e r n e e d include in„his income tax r e t u r n only the
d i f f e r e n c e b e t w e e n the p r i c e p a i d f or s u c h bills, w h e t h e r , o n
o r i ginal issue or on s u b s e q u e n t purchase, 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 sale 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
taxable y e a r for 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, 418, as amended, and this
notice, p r e s c r i b e the terms o f thè T r e a s u r y b i l l s a n d g o v e r n
the c o n d i t i o n s o f their issue.
Copies of the 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 any F e d e r a l R e s e r v e B a n k or Branch,

ONiPACElS FIRST PARAGRAPH AT END OF SENTENCCE THE WORD QUESTIONMARK
WAS usd INSTEAD OF SYMBOL THE SIGN FOR QUETION MARK 1$ OF COREX COUfi
CORREDA

PAGE li IAST WORD IN FIRST PARAGRAPH IS BENEFICIARY
TO WA IM DID U UNDERSTAND THE CORRECTIONS THAT WERE MADE AS THE
MESSAGES BEING WRITTEN GA
m

YES * 1

MOM PLS OIL

. _______ __ « ......

■'

■

. .I

ALL FIFTEEN PAGES RECEIVED
WILSON GA . > ^
TO LA
m
YOU GET THE CORRECTIONS OK 6*
YES VX« ON XX ONE EXCEPTION
HILL YOU PLEASE REPEAT THE LAST LINE ON PACE 12 WHICH BEGINS
QUOTE
AT ALMOST EXACTLY END QUOTE
CA
OK QUOTE ITIALMOST EXACTLY THE-ALL-TIME HIGH LEVEL OF 1S20. UNQUOTE
1

get it

YES OK TAXX THANKS
OK SORRELS END OR CA VA 194
WILSON ENDa
END OR GA 4- LA
CRUBE END
SORRELS END V

.... N H H f l

'

SECRET SERVICE VA WILSON
OK TO LA ANC LS
SECRET SERVICE LA
GRUBE
THIS IS SORRELS
TO WA ISA COPY OF THIS SPEECH TO BE DELIVERED TO
NR SCHAEFFER IN PUBLIC RELATIONS
ACK WA 194
OK WILL DELIVER WB
TO 4
TO LA 321 COPY OF THIS SPEECH IS TO BE DELIVERED TO NR
THEODORE R GAMBLE UPON HIS ARRIVAL IN LA
ACK LA
IS NR GAMBLE WITH THE SECRETARY GA
YES
TO BOTH WA AND LA
THIS MESSAGE WILL BE LENGTHY AND COR
RECTIONS WILL BE MADE AT END
MESSAGE AS FOLLOWS
LOS ANGELES SPEECH
FOR THE LAST WEEK I HAVE BEEN ADDRESSING
AX NUMBER OF MEETINGS SUCH AS THIS IN VARIOUS PATXX PARTS
OF THE COUNTRY. DURING EHXX THE COURSE OF THESE TALKS.
I HAVE ENDEAVORED TO OUTLINE BRIEFLY SOME OF THE
PHILOSOPHY BEHIND AMERICAN WAR FINANCE AS HE AT THE
TREASURY DEPARTMENT VIEW ITM
THXX THE DEMOCRATIC MANNER IN WHICH THE FINANCING OF
THE WAR HAS BEEN HANDLED, I DESCRIBED LAST SATURDAY
AT ATLANTIC CTXX CITY.
ABOUT 85 JX MILLION INDIVIDUAL
AMERICANS HAVE BOUGHT BONDS OF THEIR GOVERNMENT.
THEY HAVE BOUGHT THEM NOT AS A RESULT OF COMPLXXXCOMPULSION
BUT FOR PRXX PURELY PATRIOTIC REASONS AND BECAUSE THEY ARE THE BEST INVES
XX INVESTMENT IN THE WORLD.
PAGE 2
THURSDAY, ADDRESSING A GATHERING SIMILAR TO
THIS AT NEW ORLEANS, I EMPHASIZED THE PART WHICH
WAR FINANCE HAS PLAYED IN ECONOMIC STABILIZATION.
THE HEAVY TAX BURDENS WHICH THE AMERICAN PEOPLE,
GENERALLY SPEAKING, HAVE ACCEPTED WITH EXTRA
ORDINARILY GOOD GRACE AND THE LARGE PROPORTION OF
THE INCREASE IN THE PUBLIC DEBT WHICH HAS BEEN
ABSORBED BY THE MEN AND WOMEN OF THIS COUNRY,
HAVE PLAYED A EXX VERY IMPORTANT PART IN HOLDING
INFLATION IN CHECK.
THE OPA HAS ESTIMATED THAT
IF PRICES DURING THIS WAR HAD RISEN AS SHARPLY AS
IN WORLD WAR 1, THERE WOULD HAVE BEEN APPROXIMATELY
A 70 BILLION DOLLAR INCREASE IN GOVERNMENT COSTS —
A 70 BILLION DOLLAR ADDITIONAL BURDEN FASTENED ONTO
THE COUNTRY.
PAGE 3
TODAY I WOULD LIKE TO CONCLUDE THIS RESUME
WITH A QUICK EXAMINATION OF INTEREST RATES AND A
GLANCE AT THE POSTWAR PUBLIC DEBT PROBLEM AS I
SEE IT.
THE GREAT EXPANSION IN THE FEDERAL DEBT HAS
BEEN ACHIEVED WITH VIRTUALLY STABLE INTEREST RATES—
THANKS LAGXX LARGELY TO YOUR EFFORTS.
SUCH CHANGE AS HAS
OCCURRED HAS BEEN TO SLIGHTLY LOWER LEVELS. THIS
CONTRASTS WITH WORLD WAR 1 WHEN ALMOST EACH NEW SERXX
SERIES OF BONDS CARRIED A HIGHER INTEREST RATE, SO
THAT THE COST TREND WAS ALMOST CONSTANTLY UPWARD.

ONLY 1-3/4 PER CENT ON THE WARTIME INCREASE' IfflHf
PUBLIC DEBT. THIS CONTRASTS WITH 4-1/4 PERCENT
FOR WORLD WAR 1.
PAGE A
THE RESULTING INTEREST SAVING APPROXIMATES
4 BILLION DOLLARS A YEAR — QUITE A TIDY SUM TO
HAVE SAVED FOR THE TAXPAYERS OF THIS NATION.
REALIZATION OF YOUR PART IN THIS SAVING. I BELIEVE,
SHOULD GIVE YOU, AS IT HAS US AT THE TREASURY, A
FEELING OF REAL ACCOMPLISHMENT.
MOREOVER, AND THIS IS A POINT DESERVING OF
PARTICULAR EMPHAIS, THE INTEREST ON ALL SE CXX SECURITIES
SOLD DURING THE WAR HAS BEEN FULLY TAXABLE WHILE THE
ISSUES MARKETED DURING WORLD WAR 1 WERE ALL
EITHER WHOLLY OR PARTIALLY TAX-EXEMPT. THIS HAS
RESULTED IN A FRXX FURTHER NET SAVING TO THE TREASURY
AMOUNTING TO SEVERAL HUNDRED MILLION DOLLARS A
YEAR.
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PAGE 5
FURTHER, THROUGH THE REMOVAL OF TAX EXEMPTION, ALL
PURCHASERS OF GOVERNMENT SECURITIES ARE TAXED THEIR
SHARE OF THE WAR COST IN PROPORTION TO THEIR ABILITY
TO PAY. THIS IS A POINT WHICH MAY NOT HAVE OCCURRED
TO YOU BUT WHIH XX WHICH SHOULD BE OF HELP IN THE SALE OF
E BONDS.
INCIDENTALLY, THE GOVERNMENT IN ELIMINATING
TAX EXEMPTION RELINQUISHED ANY "UNFAIR* ADVANTAGE
IT MIGHT HAVE HAD OVER PRIVATE BORROWERS IN SECURING
CREDIT. IT THEREBY SERVED TO STRENGTHEN THE PRIVATE
ENTERPRISE SYSTEM.
PRESIDENT ROOSEVELT, IN HIS 1945 BUDGET MESSAGE,
SUMMARIZED THE SITUATION AS FOLLOWS—
•THE PRIMARY ACHIEVEMENT OF OUR DEBT POLICY
HAS BEEN THE MAINTENANCE OF LOW AND STABLE
RATES OF INTEREST.
PAGE «
AVERAGE INTEREST RATES PAYABLE ON THE PUBLIC '
DEBT NOW ARE LESS THAN 2 PERCENT. INTEREST
RECEIVED FROM ALL NEW ISSUES IS FULLY TAXABLE.
AS A RESULT, THE NET COST PER DOLLAR BORROWED
SINCE PEARL HARBOR HAS BEEN ABOUT A THIRD THE
COST OF BORROWING IN THE FIRST WORLD WAR."
PERSONALLY. I DO NOT ANTICIPATE A RISE IN
INTEREST RATES IN THE FORESEEABLE FUTURE.
SAVINGS
ARE ABUNDANT AND PROMISE TO BE ADEQUATE TO MEET
ALL LIKELY DEMANDS. WE BELIEVE, THEREFORE, THAT
WE SHALL BE ABLE TO REFUND OUR OBLIGATIONS, AS THEY
COME DUE, AT RATES COMPARABLE TO THOSE NOW PRE
VAILING. THUS, THE SAVING TO THE TREASURY WILL
CONTINUE OEXX OVER A LONG PERIOD OF YEARS.
PAGE 7
AT THE SAME TIME THE PEOPLE TO WHOM YOU HAVE SOLD
THE WAR BONDS WILL CONTINUE TO BE SATISFIED RATHER
THAN DISGRUNTLED CUSTOMERS.
MOREOVER, QUITE APATXX APATXX APSXX APART FROM ITS VALUE TO
TOE TREAUSXX TREASURY -- AND, HENCE TO THE TAXPAYERS — THE
CONTINUANCE OF LOW INTEREST RATES, WILL PROVIDE
A STIMULUS TO THE NATIONAL ECONOMY IN THE POSTWAR
PERIOD. HIGH INTEREST RATES LIMIT ENTERPRISE AND
DISCOURAGE EMPLOYMENT. LOW INTEREST RATES STIMU-

LATE BUSINESS AND HAKE FOR EXPANDING EMPLOYMENT.
JUST AS I SEE NO REASON FOR SUBSTANTIALLY
HIGHER INTEREST RAEXX RATES IN THE POSTWAR PERIOD. I
DO NOT SEE ANY NEED FOR A WHOLESALE POSTWAR
FUNDING OF THE PUBLIC DEBT INTO LONG-TERM BONDS.
PACE 8
IN THE FIRST PLACE. IT WOULD COST THE
TAXPAYERS MORE IN INTEREST. NEXT. IT WOULD SHIFT
WHATEVER RISX THERE IS INHERENT IN FLUCTUATING
INTEREST RATES FROM THE GOVERNMENT, WHICH SXX IS
ABLE TO BEAR IT, TO INDIVIDUALS, INSTITUTIONS
AND CORPORATIONS.
CERTAINLY THE DAY IS PAST
WHEN THE UNITED STATES GOVERNMENT NEED ASK ITS
CITIZENS OR ITS BUSINESS ENTERPRISES TO INSURE
IT AGAINST CHANGES IN THE RATE OF INTEREST.
FINALLY, WE HAVE ENDEAVORED TO TAILOR THE
DEBT STRUCTURE TO THE NEEDS OF THOSE WHO LEND US
THE MONEY AND OF THE NATIONAL ECONOMY.
THE SMALL INVESTOR WHO PURCHASES THE SERIES
E SAVINGS BONDS PLACES BIS AXX FAITH IN HIS GOVERNMENT.
PAGE 9
COULD WE DO LESS THAN SEE TO IT THAT THE SECURITIE XX SECURITIES
OFFERED HIM WERE SUITED TO HIS MEEDS^ OUESYfOITKARK
THE SAVINGS BONDS, WHILE NOT A WAR DEVELOP
MENT, HAVING BEEN FIRST OFFERED TEN YEARS AGO,
HAVE PROVED AN ADMIRABLE WAR FIAXX FINANCE MEDIUM WHICH
WE EXPECT TO CARRY OVER INTO THE POSTWAR PERIOD.
WE HOPE THAT MARY MILLIONS OF PEOPLE WILL CONTINUE
TO HOLD A FINANCIAL STAKE IN THEIR GOVERNMENT.
INDUSTRIAL CORPORATIONS, AS YOU KNOW, HAVE
PRINCIPALLY PURCHASED CERTIFICATES OF INDEBTEDNESS
AND SERIES C NOTES. THESE CONSTITUTE A SUBSTANTIAL PART
OF THEIR RESERVES FOR RECONVERSION AND POSTWAR^
DEVELOPMENT. IT IS CLEARLY ADVANTAGEOUS NOT ONLY
TO THE CORPORATIONS BUT TO THE WHOLE ECONOMY THAT
THESE RESERVES BE LIOUID.
PAGE 10
THE CORPORATIONS THUS KNOW THAT THE MONEY WILL
BE AVAILABLE AND WITHOUT LOSS WHENEVER HXX THEY NEED
IT. WHEN THE PROPER TIME COMES THEY CAM PROCEED FULL SPEED NOT ONLY
WITH THEIR CONEXX CONVERSION BUT WITH ANY EXPANSION PLANS THEY MAY
HAVE.
FINALLY, THERE ARE THE GOVERNMENT SECURITIES
WHICH NOW CONSTITUTE A LARGE PROPORTION OF THE
ASSETS OF THE COMMERCIAL BANKS. MANY OF YOU ARE
BANKERS. YOU KNOW IT HAS BEEN OUR POLICY TO EN
COURAGE THE AXX BANKS TO PURCHASE ISSUES OF SHORT
MATURITY. AS A CONSEQUENCE, ABOUT HALF THE*
SECURITIES ACQUIRED BY THE COMMERCIAL BANKING
SYSTEM SINCE THE BEGINNING OF THE WAR HAVE BEEN
BILLS AND CERTIFICATES MATURING WITHIN ONE YAR
XXX YEAR AND PRACTICALLY ALL HAVE HAD A MATURITY OF
TEN YEARS OR UNDER.
PAGE 11
THE RESULT IS THAT THE BANKING SYSTEM OF THE
COUNTRY IS IN A POSITION OF UNPARALLELED LIQUIDITY.
THIS, WE BELIEVE, AFFORDS ASSURANCE AGAINST A RE
CURRENCE OF SUCH UNSETTLING DEFLATION AS CAME IN THE
AFTERMATH OF WORLD WAR1. FURTHER, IT PLACES THE
BANKING SYSTEM IN A STRONG POSITION TO MEET THE
SHIFTS IN DEPOSITS THAT MANY OF YOU ANTICIPATE WITH
RECONVERSION AND THE NEW BUSINESS DEMANDS FOR FUNDS

II

THAT SHOULD ACCOMPANY THE DEVELOPMENT OF A HEALTHY,
1 EX£A®ING ECONOMY.
-- IN A WORD, THE BANKS PART IN WAR FINANCE,
GREAT AS IT HAS BEEN, INSTEAD OF HAMSTRINGING THEM,
HAS LEFT THEM IN A POSITION TO SERVICE ENTHUSI- .
ASTICALLY A VIRILE PRIVATE ENTERPRISE SYSTEM.
PAGE 12
I MIGHT POINT OUT THAT THE BANKS HAVE NOT '
ONLY BEEN ABLE TO MAINTAIN A STRONGLY LIQUID
POSITION AS A EXX RESULT OF THE MANNER IN WHICH THE
NATIONS WAR FINANEXXX FINANCE HAS BEEN HANDLED, BUT ALSO
THEY NAVE FOUND AN OPPORTUNITY FOR PUBLIC SERVIEXX SERVICE.
THIS HAS ENHANCED THE ESTEEM WITH WHICH THEY ARE
HELD IN THEIR EXX RESPECTIVE COMMUNITIES. MOREOVER,
WHILE THEY HAVE BEEN MAKING THIS CONTRIBUTION TO
THE WAR EFFORT THEY HAVE ENJOYED AN INCREASE IN
EARNINGS. NET PROFITS OF ALL MEMBER BANKS OF
THE FEDERAL RESERVE SYSTEM LAST YEAR WERE BACK
AT ALMOST EXACTLY THE■’ALL-TIME HIGH LEVEL OF 1929.
PAGE IS
I WANT TO THANK YOU WHO HAVE BEEN THE
LEADERS IN THE WAR FINANCE WORK IN THESE GREAT
WESTERN STATES — THANK YOU UPON THE PART OF THE
TREASURY, WHOSE JOB IT HAS BEEN TO DIRECT THE
PROGRAM, AND, MORE IMPORTANT, THANK YOU ON BEHALF
OF THE UNITED STATES OF AMERICA, WHICH, OF COURSE,
IS THE REAL BENEFICIARY|T <
I AM NO PROPHET AS TO THE DURATION OF THE WAR,
BUT TODAY WE ARE HOPEFUL THAT UNCONDITIONAL SUR
RENDER BY GERMANY MAY NOT BE FAR AWAY. AT SUCH
,„
TIME ALL EYES WILL TURN TO THE WEST. THE SEVENTEENSTATES REPRESENTED AT THIS MEETING WILL TAKE ON NEW
OXX IMPORTANCE IN THE WAR. THE PACIFIC COAST WILL
BECOME THE SPRINGBOARD FOR THE ALL-OUT OFFENSIVE
AGAINST JAPAN.
PAGE 1«
THIS SHOULD PROMPT YOU WHO HAVE THE JOB
OF RAISING THE NECESSARY MONEY TO REDOUBLE
YOUR EFFORTS.
OUR IMMEDIATE TASK IS TO PUT OVER THE SIXTH
WAR LOAN, TO DO SO JUST AS DECISIVELY AS OUR
FIGHTING MEN ARE ESTABLISHING THEIR POSITIONS
IN EUROPE AND IN THE ISLANDS OF THE PACIFIC.
I KNOW YOU UNDERSTAND THE IMPORTANCE OF THIS
ABSOLUTELY ESSENTIAL LINK IN THE WAR EFFORT. BUT
YOU MUST DO MORE THAN UNDERSTAND IT, YOU MUST MAKE
THE PEOPLE UNDERSTAND IT, THE MEN AND THE WOMEN IN
STORES AND OFFICES, IN FACTORIES, ON THE FARMS AND
IN THEIR HOMES.
PAGE 15
THESE PEOPLE MUST UNDERSTAND, AS YOU DO, THAT
THE TIME HAS NOT YET COME TO RELAX OR CELEBRATE,
THAT WE MUST SPEED WEAPONS AND SUPPLIES FAR
ACROSS THE PACIFIC TO OUR ARMED FORCES WHO KNOW
FULL WELL THAT A HARD FIGHT STILL LIES AHEAD
BEFORE THEY CAN BRING US VICTORY OVER THE
JAPANESE — AND THESE WEAPONS AND SUPPLIES MUST
BE PAID FOR. THAT IS OUR TASK — I KNOW AMERICA
CAN COUNT UPON YOU EXCLAMATION POINT END OF SPEECH
MOM PLS
ON PAGE 4 SECOND PARAGRAPH

SECOND LINE

SECOND WORD IS

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W ESTERN
U N IO N \

1201

A. N. W ILLIA M S
PRESIDENT

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The filing time shown in the date line on telegrams and day letters is STANDARD TIME at point of origin* Time of receipt is STANDARD \ I f l E at point jfdestinatii

;{;HSA,97 6 NL GOVT C0LLECT=WUX HOUSTON TEX 1? * g \
C harles shaeffer«|

/ ✓ -y
'*

director of public relations tr

JUST yo BE SURE THAT NUMBER OF STATES REPRESENTED AT LOS
ANGELAS MEETING IS CHANGED FROM SEVENTEEN TO ELEVEN IN j
WASHINGTON RELEASE OF SPEECH«®
S

henry murphy#

T H E C O M P A N Y W IL L A P P R E C IA T E S U G G E S T IO N S P R O M I T S P A T R O N S C O N C E R N IN G IT S S E R V IC E

'

TREASURY DEPARTMENT
Washington

FOR. RELEASE,,AFTERNOON NEWSPAPERS,
Saturday/ Qbtobeir 14, 1944. .MM

. fSm RADIO RELEASE- 1:45

Press Service

No. 43-75 '
JWT)

(The following- address by Secretary Morgenthau
at a War Bond Rally at. the Hotel Biltmore,
Los Angeles, is scheduled for delivery at
1:45 P»M*«,IWT« Saturday, October 1441944»)

For. the last week I have been addressing a number
meetings such as this in various parts of the country. During
the course of these talks, I have endeavored to outline briefly
some of the philosophy behind.American war finance as we at the
Treasury Department view it*
The democratic manner in which the financing of the war has
been handled, I described last Saturday at Atlantic City* About
S 5 *000,000 individual Americans have bought bonds of their
government*; They have bought them not as,a result of compulsion
but for purely patriotic reasons and because they are the best
investment in the world»
- Thursday,, addressing, a gathering* similar to this at New
Orleans, I emphasized the part which war finance has played in
economic stabilization. The heavy tax burdens which the
American people, generally speaking, have accepted with extra~
. ordinarily good grace and -the large proportion of the increase
in the public debt'which has been absorbed by the men and women
of this country, have played,a very important part in holding
inflation in check# The 0PA has estimated that if prices
during this war had risen as sharply as in World War 1-, there
would have been approximately a $70,000,000,000 increase in
government costs — a $70,000,000,000 additional burden fastened
onto the country#
Today I would like to conclude this resume with a quick
examination of interest rates and a glance at the postwar public
debt problem as I see itv
'. .- The .great expansion in the Federal debt has been achieved
with virtually stable interest rates— thanks largely to your
efforts* Such change as has occurred has been to slightly lower
levels. This contrasts with World War I when almost each new

series of bonds carried a higher interest rate, so that the cost
trend was almost constantly upward. As a result, the average
interest cost has been only 1-3/4 percent on the wartime increase
in the public.debt. This contrasts, with 4-1/4 percent for World .
War I.
The resulting interest saving approximates $4*000,000,000 a
year — quite a-tidy sum to hâve, saved for the taxpayers of this ,
nation« Realization of your part in this saving, I believe,
should give you,, as it has us at the Treasury, a feeling of real,
accomplishment.
Moreover, and this is\a point deserving of particular empha
sis, the interest on all securities sold during the►war' has' been .
fully taxable while the issues marketed during World War I were
all either wholly or partially tax-exempt. • This has resulted in
a further net saving to the Treasury amounting to'Several hundred
million dollars a year. Further .through removal of,tax exemption,
all purchasers.of Government securities are taxed their share of
the war.cost in proportion to their ability to.pay. - This is a
point which may not have occurred to you but which should be of
help in the sale of E Bonds-.Incidentally, the Government in-eliminating tax exemption
relinquished any Munfair” advantage it might have had over
private borrowers in securing credit.
It thereby served to
strengthen the private enterprise system.
President Roosevelt, in his 1945 Budget Message summarized
the situation as follows—
-

nThe primary achievement of our debt policy has been the
maintenance of low and stable rates of interest. Average
interest rates payable on the public debt now are less than
2 percent. Interest received, from all new issues is fully
taxable. As a result, the net cost per dollar borrowed
since Pearl Harbor has been about a third the cost of
borrowing in the first World War.”

Personally, Î do not anticipate a rise in interest rates in
the foreseeable future. Savings'1are abundant and premise to be
adequate to meet all likely demands, W c believe, therefore, that
.we shall be able to refund our obligations, as they ccme due, at
rates comparable to those now prevailing. Thus,' the saving to
the Treasury will' continue 'over a long period of years. At the
same time the people -to whom you have sold the war bonds will
continue to be satisfied rather than disgruntled easterners.

- 3-

Moreover, quite apart from its value to the Treasury — and,
hence to the taxpayers- — the continuance of low interest rates,
will provide a stimulus to the national economy in the postwar
period* High interest rates limit enterprise and discourage
employment. Low interest rates stimulate business and make for
expanding employment.
.
Just as I see no reason f o r 'substantially higher interest
rates in the postwar period, I do not see any need for a whole*^
sale postwar funding of-the public debt into long-term bonds.
In the first place, it would cost the taxpayers more in
interest.,- Next, it would shift whatever risk thère ..is inherent
in fluctuating interest »rates frcm the Government, which is able
to bear it, to individuals* institutions and corporations. Cer
tainly the day. is past when the United States Government need ask
its citizens'or its business enterprises to insure it against
changes in the rate ■of interest.
.Finally, we have endeavored to tailor the debt structure to
the needs- of 'those1who lend us the money and of the national,
economy*
The small investor who purchases the Series E Savings Bonds
places his faith in his Government* Could we do less than, see to
it that the securities offered him were suited,to his needs?
The Savings Bonds, while not a war development, having been
first offered ten years ago, have proved an admirable war finance
medium which we expect to carry over into the postwar, period. We
hope that many millions of people will continue to hold a finan
cial stake in' their Government.'
Industrial corporations, as you knowy-have principally■pur
chased certificates of indebtedness and Series C Notes. These
constitute a substantial part of their reserves for reconversion
and postwar, developments • i t is clearly advantageous not only to
the corporations but to the whole economy that these reserves be
liquid. The corporations thus know that the money will be
available and without loss whenever they need it. When the
proper time comes they can proceed full speed not only with their
conversion but with any expansion plans they may have.
Finally, there are the Government securities which now- con
stitute a large proportion*of the assets of the commercial banks.
Many of you .are.-bankers* you know it has been our policy to
encourage the banks to purchase issues of short maturity. As a

•"*

4-

***

consequence, about half the securities acquired by the commer
cial banking system since the beginning of the war have been
bills and certificates maturing w/ithin one year and practically
all have had a maturity of ten years or under.
The result is that the banking system of the country is in
a position of^unparalleled liquidity. This, we believe, affords
assurance against a recurrence of such unsettling deflation as
came in the aftermath of World War I, Further, it places the
banking system in a strong position to meet the shifts in
deposits that many of you anticipate with reconversion and the
new business demands for funds that should accompany the develop
ment of a healthy, expanding economy.
In a word, the banks’ part in war finance, great as it has
been, instead of hamstringing them, has left them in a position
to service enthusiastically a virile private enterprise system,
I might point out that the banks have not only been able
to maintain a strongly liquid position as a result of the manner
in which the nation’s war finance has been handled, but also
they have found an opportunity for public service. This has
enhanced^the esteem with which they are held in their respective
communities. Moreover, wrhile they have been making this contri
bution to bhe wrar effort they have enjoyed an increase in earntngs. Net profits of all member banks of the Federal Reserve
system last year were back at almost exactly the-all-time high
level of 1929,
I want ho thank you who have been the leaders in the war
finance work in these great wrestern states — thank you upon the
part of the Treasury, whose job it has been to direct the program
and, more important, thank you on behalf of the United States
9
of America, wrhich, of course, is the real beneficiary-,
I am no prophet as to the duration of the wrar, but today we
are hopeful that unconditional surrender by Germany may not be far
away, At such time all eyes will turn to the West, The eleven
states represented at this meeting will take on newr importance in
the wrar. The Pacific coast Ytdll become the springboard for the
all-out offensive against Japan,
This should prompt you who have the job of raising the, neces
sary money to redouble your efforts.
Our immediate task is to put over the Sixth War Loan, to do
so just as decisively as our fighting men are establishing their
positions in Europe and in the islands of the Pacific,

- 5-

I know yon understand the importance of this absolutely
essential link in the war effort.. But you must do more than
understand it, you must make the people understand it, the men
and the women in stores and offices, in factories, on the farms
and in their homes.
These people must understand, as you do, that the time has
not yet come to relax or celebrate, that we must speed weapons and
supplies far across the Pacific to our armed forces who know full
well that a hard fight still lies ahead before they can bring us
victory over the Japanese — and these weapons and supplies must
be paid for. That is our task •— I know America can count upon
you;

oOp

2
I want to p u t some em phasis on t h i s tr e n d s in c e t h e r e have
been ch a rg e s of l a t e t h a t t h e T re a su ry has- co n fu sed th e- p u b lic '■
b y 'p e r s i s t e n t in c r e a s e s in th e t a x b u rd e n . - In t h e ‘y e a r ended
June 30, 1940, th e l a s t f i s c a l y e a r b e f o r e th e b e g in n in g o f th e
d e fe n s e program , net- -T reasury r e c e i p t s w ere s l i g h t l y l e s s th a n
1 5 ,5 0 0 ,0 0 0 ,0 0 0 , The $ 4 4 ,0 0 0 ,0 0 0 ,0 0 0 t o t a l w hich, as I have
J u s t >t o l d you th e Government to o k in d u rin g th e p a s t y ea r,- w as1
rane .e ig h tfo ld 'in c re a s e - - a l a r g e r in c r e a s e than' has ta k e n ^ la b e in th e re v e n u e c o l l e c t i o n of any o th e r m a jo r1b e l l i g e r e n t o f
t h i s war.:* T h is i s an im p o rta n t th in g t o remember in i n t e r 
n a t i o n a l com parisons b ecau se t h e burden o f ta x a ti o n must be
m easured n o t C-nly by i t s a b s o lu te m agnitude b u t a ls o by i t s r a t e
of increase** ’ .
; " ~' ■ ■ ■
,
.
how, I do n o t th i n k t h e r e has been a n y th in g c o n fu sin g ab o u t
t h i s . The American p e o p le ,' r e c o g n is in g .th e need f o r g r e a t l y
in c re a s e d Government re v e n u e s , have su b m itte d t o t h e h ig h e s t
ta x e s in t h e n a t i o n ’s- h i s t o r y w ith rem a rk a b ly good g ra c e and
good c h e e r, A sh a rp r i s e in ta x e s was a b s o lu te l y n e c e s s a ry f o r
th e m ainten an ce o f economic s t a b i l i t y .
But even a f t e r th e s e r e c o r d c o l l e c t i o n s th e r e rem ain ed th e
g ia n t sum o f $ 137, 000, 000, 000, .expended d u rin g t h e l a s t th r e e
y e a r s , t h a t had to be r a i s e d th ro u g h some o th e r means th a n t a x a 
tio n !
'
T h is money had to be r a i s e d b y b o rro w in g , I t would have
been r e l a t i v e l y . 'e a s y , o f c o u rs e , to r a i s e i t by borro w in g from
th e b a n k s. But i n 'o r d e r t o a v o i d * in f l a ti o n , i t was e s s e n t i a l
t h a t a m ajor p a r t o f th e in c re ase d , d eb t be borrow ed o u ts id e o f
th e banking sy stem
th a t, i s from th e g e n e ra l p u b lic .
In s e l e c t i n g th e S e r ie s B Bonds as our p rim ary v e h ic le f o r
mass b o rro w in g , we had in mind f i r s t o f a l l th e p r o t e c t i o n o f
th e i n t e r e s t s o f th e sm a ll i n v e s t o r . Thè T re a su ry D epartm ent has
c o n s id e re d i t s e l f a t r u s t e e , f o r 1t h e men and women w h o .p u rch ased
Government S e c u r i t i e s p r im a r ily to h e lp t h e i r c o u n try in tim e - o f
s t r e s s . Such in v e s to r s p la c e t h e i r f a i t h in t h e i r G overnm ent.
We w anted, t h e r e f o r e , to p ro te c t- them , th ro u g h a n o n n è g ó tia b le
bond, a g a in s t th e kind- o f l i q u i d a t i o n w hich, e x p e rie n c e shows,
d ev elo p s among sm all' h o ld e rs o f - s e c u r i t i e s in th e ev en t o f a
d e c lin e in m arket v a lu e .
A fter-"W orld War I , L ib e r ty Bonds dropped in v a lu e down in to
th e 8 0 ’s , and many p e rso n s who had bought them d u rin g th e war
became f r ig h t e n e d and s o ld them . They d is c o v e re d l a t e r t h a t
t h e i r lo s s had been th e g a in o f th e s p e c u la to r s and th e w ea lth y

TREASURE DEPARTMENT
Washington

i

FOR RELEASE, AFTERNOON NEWSPAPERS', •
C T — foursday., October 13V 1944«

/

.. W

Press Service
No • 13 G

.

(FOR RADIO RELEASE 1:45 P.M.,

&~4<.4

j

(The following address by Secretary Morgenthau
\
at a War Bond Rally at the Hotel„noo oovc3rby ¡JjJtMMJi'l
eaiitu, is scheduled for delivery at
1:45 P.M«,, 0WT, T3au r o ^ y > October M , 1944»)

.. (
'. '
■■
^ /(y/L
Wars, now as always, are won on battlefields# Eut in
modern war, which is total war, the Home Front is intimately
involved# Economic stability at home is one of the absolute
requisites to victory# For without economic stability it isimpossible to maintain the vast and complex flow of supplies
necessary for the men on the fighting lines •
It has been the task of the Treasury Department to finance
the costliest war in history# I should like this afternoon to
review with you in some detail the manner in- which this task
has been executed# Our problem has been something much more
difficult than the mere raising of vast sums of money# The
nub of the problem has been to raise these sums in such a way
as' to strengthen, rather than weaken, the national economy#
Half of the total resources of the United States are now
being devoted to waging war# Since Pearl Harbor, war expendi
tures have amounted to about. $208,000,000,000# “During this
same period, non-war expenditures have been kept down to
$16,000,000,000, making a total government outlay for the
course of the war to date of $224,000,000,000#
Where has this tremendous sum come from? Well,
$87,000,000,000, or 39 percent of the total bill,- has come
from revenue#
During the fiscal year just ended, expenditures were,
slightly more than $95,000,0 0 0 ,0 0 0 , and net receipts climbed to
a little over $44,000,000,000, or 46 percent# This means that,
there has been an upward trend in our coverage of war costs
through taxation* It is a trend which may be surprising to
some and which certainly should be encouraging to all.

TREASURY DEPARTMENT
Washington .

FOR REIFASE, AFTERNOON NEWSPAPERS, ■
Saturday, October 14-, 1944»

'

.. -

PressService.
No• 43r*75 .

. (FOR RADIO RELEASE 1:45 F.M., FWT)
(The folio-wing address t>y Secretary Morgenthau
at a War Bond Rally at., the Hotel Biltmore,
Los Angeles, is scheduled for delivery at
I s 45 P#M*, BIT, Saturday, October 14, 1944.)

For the last w e e k -I have been addressing a number ©f
meetings such as this in various parts of the country* During
the coursé of thèse talks, I have endeavored to outline briefly
some of the philosophy behind, American y/ar finance as we at the
Treasury Department view it*
The democ'ratic manner in which the financing of the war has
been handled, I described last Saturday at Atlantic City* About
85,000,000 individual Americans--have bought bonds, of their
government# They have bought them not as a result of compulsion
but for purely patriotic reasons and because they, are the oest
investment i n the world*
Thursday, addressing a gathering similar to this, at New
Orleans, I emphasized the part which war finance has played in
economic stabilization# The heavy tax burdens which the
American people, generally speaking, have accepted with extra***
ordinarily good grace and the large proportion o f .the increase
in the public debt which has been absorbed, by the men and women
of this country, have played a very important part in folding
inflation in check* ; The OPA has estimated that, if.prices
during this war had risen as sharply as in World-War I, there
would have been approximately a $70,000,000,000 increase in
government costs — a $70,000,000,000 additional burden fastened
Onto vthe ;country# ;
Today I would like to conclude this resume with a quick .
'examination of interest rates and a glance at the postwar public
debt problem as I see it*
•-The' great expansion in’the Federal debt has been achieved ,
with *virtually stable interest rates— *thahks largely to your .;
efforts*
Such change as has occurred has been to slightly lower
levels# This contrasts with World War I when almost each new

-

2

-

series of bonds carriéd.a .higher interest rate, so that the cost
trend.was almost constantly upward. As a result, the average
interest cost has been only 1-3/4 percent on the wartime increase
in the public debt. This .contrasts with 4-1/4 percent for World-

War I.
«r*

_

; ....; '
Mhwf x. * ."

The resulting interest saving approximates $4,000,000,000 a
year — quite a tidy sum-to have saved for-the taxpayers of this
nation. Realization of your part in this saving, I believe,
should give you, as it has us at the Treasury, a feeling of real
accomplishment.
Moreover, and this is a point deserving of particular empha
sis, the interest on all securities sold during the war has been
fully taxable while the issues marketed during World War I were
all either wholly or partially tax-exempt. This has resulted in
a further net saving to the Treasury amounting to several hundred
million dollars a year. Further through removal of tax. exemption,
all purchasers of Government securities are taxed their share of
the war cost in proportion to their ability to pay. This is a
point which may not have occurred to you but which should be of
help in the sale of E-Bonds.
Incidentally, the Government in eliminating tax exemption
relinquished any "unfair" advantage it might have had over
private borrowers in securing credit. It thereby served to
strengthen the private enterprise system.
President Roosevelt, in his 1945 Budget Message summarized
the situation as follows—
"The primary achievement of our debt policy has been the
maintenance of low and .stable rates of .interest. Average
interest rates payable on the. public debt now are less than
2 percent. Interest received frcm all new issues is fully
taxable. As a result, the net cost per.dollar borrowed
.. . since Pearl Harbor has .been about- a third the cost of
* borrowing i n .the first .World W a r ."
' •

•

•

-'V-

•'

‘

Personally, I do- not' anticipate a rise in. interest rates in
the foreseeable future. Savings are abundant and premise to be
adequate to meet all likely.demands. . We believe,, therefore, that
we shall be able to refund our obligations, as they cone-due, at
rates comparable to those now prevailing. Thus,.the-saving to
the Treasury will continue over a long period of years. At the
same time the. people -to whom you have sold the-war bonds will
continue, to be satisfied rather'than disgruntled -customers.

- 3-

4

'

Moreover, quite apart from, its value to the. Treasury — 'and,
hence to the taxpayers — the continuance of low interest rates,
will provide a stimulus to the national economy in the postwar
period. High interest rates limit enterprise and discourage
employment. Low interest rates stimulate'business and-make for
expanding employment.
Just as I see no reason for substantially higher interest
rates in the postwar period, I do not see any need for a whole
sale postwar funding of?the public debt into long-term bonds.
In the first plane, it would cost.the taxpayers more in
interest. Next, it would shift whatever risk there, is inherent
in fluctuating interest rates frcm the Government,, wh i c h is able
to bear it, to .individuals, institutions and' corporations. Cer
tainly the day is past when the United States Government need ask
its citizens or its business enterprises to insure-- it against
changes in -the.rate of interest.
.
Finally, we have endeavored to tailor the debt structure to
the needs •
’of those who lend us the money and of the national
economy.
. ■ ...
The small investor who purchases the Series E Savings Bonds
places his faith in his Government. Could.we do less than see to
it that the securities offered him were suited .to. his needs?
The Savings Bonds, While not a war development¿ having been
first offered ten* years ago, have proved an admirable war finance
medium which we. expect to carry over into the postwar period. We
hope that many millions of-people will'continue to hold a finan
cial stake in their Government.
. v.
•.
' Industrial corporations, as you kn.ow, have principally pur
chased certificates of indebtedness and Series C No t e s . . These
constitute a substantial part of their reserves fqr reconversion
and postwar development.
It is clearly advantageous not only to
the; corporations but tb the whole economy that, these reserves be
liquid. The corporations thus know that the money will be
available and without loss whenever they need it. When the
proper time comes they can proceed full speed not only with their
conversion but with any expansion plans they may have.
Finally, there are the Government securities which now con
stitute a large proportion of the assets, of the commercial banks.
Many of you are bankers. You know it has been; our policy to
encourage the banks to purchase issues of short maturity. As a

- 4~

■consequence, about half the securities acquired by the commer
cial banking system since the beginning of the war have been
bills and certificates maturing within one year and practically
all have had a maturity of ten years or under,
The result is that the banking system of the country is in
a position of^unparalleled liquidity. This, we believe, affords
• assurance against a recurrence of such Unsettling deflation as
came^in the aftermath of World W a r I. Further, it places the
banking system in a strong position to meet the shifts in
deposits that many of you anticipate with reconversion and the
new business demands for funds that should accompany the develop
ment of a healthy, expanding economy..
'
' . In a word, the banks1 part in war finance, great as it has
been, instead of hamstringing them, has left them in a position
to service enthusiastically a virile private enterprise system,
I might point out that the banks have not only been able
to maintain a strongly liquid position as a result of the manner
in which tne nation’s war finance has been handled, but also
they have found an opportunity for public service.. This has
enhanced^ the esteem with which they are held in their respective
communities. Moreover, while they have been making this contri
bution to the, war effort they have enjoyed an increase in earn- Net^ profits of all member banks of the Federal Reserve
system last year were back at almost exactly the-all-time high
level of 1929.
•
6
I want to thank you who have been the leaders in the war
finance work in these great western states — thank you upon the
part of the Treasury, whose job, it has been to direct the program
and, more important, thank you on behalf of the United States
*
of America, which, of course, is the real beneficiary.,
I am no prophet as to the duration of the war, but today we
are hopeful that unconditional surrender by Germany may not be far
awray . At such time all eyes will turn to the West. The eleven
states represented at this meeting will take on newr importance in
the war. The Pacific coast wall become the springboard for the
all-out offensive against Japan,
This should prompt you who* have the job of raising the neces
sary money to redouble your efforts,.
Our immediate task is to put-over the Sixth War loan to do
so just as decisively as our.fighting men are establishing their
positions in Europe and in the islands of the Pacific.

- 5-

I know you understand the importance of this absolutely
essential link in the war effort. But you must do more than
understand it^ you must make the people understand it^ the men
and the women in stores and offices^ in factories^ on the farms
and in their homes.
These people must understand^ as you do^ that the time has
not yet come to relax or celebrate^ that we must speed weapons and
supplies far across the Pacific to our armed forces who know full
well that a hard fight still lies ahead before they can bring us
victory over the Japanese — and these weapons and supplies must
be paid for. That is our task — ** I know America can count upon
youi

oOty

treasury department

WASHINGTON
201 m i A S l , MORNING NEWSPAPERS
October 17. 1144

Press Service
No.

_ _ «
| he^Fr* ^ ? Bsportaeat today announced tint the restrictions
^ ü n i îh M r&àt?fi
*** ••JV'
ae«i»«t commercial end Easiness
Î S T î î ^ â * 1« ^ liberated Italy hare been lifted, This significant
step toward the resumption ef normal business relations with Italy is
in accordance with the Joist statement of President Roosevelt and
1 *1 **
«Mit the application of the Trading with the
ïf*?? f f \ should
*©41fl«d se se te enable business contacts with
Italy to be resumed for the benefit of the Italian people.

fx^'-T-okr^
mi
fe* iaf0“ *U o “ fTO* «tate t r i t a i i« liberated Italy
doeuMnts such H birth, death aad marriage
certificates* wills and legal notices may Imi transmitted* % .
. . ' .P * 11— “ * telted States eeaeeraa ear exchange basine*«
m ^
u ÌÌ»!? *®*
«ita reepeet to the recaption ef bueine*«
relationship« without attaining a specific f r e eway liceaee.Since trade with Italy
now be ini carried, on Sniy tbraugb .go,ferniien-£§fe::
flgénei.fr , :.iA.cgnses will not be granted for ori
vn te trade transactions until arrangements for the resumption of -nrivate*trade have been mad
Treasury a m a t a l e stated that the
freezing regulations
*a
repeat to Italian property in the Gkited States,
d that Treasury licenses will continue to he required to effect any
financial or property transactions on behalf of or involving persons
im Italy. Accordingly, persons desiring to send powers of attorney,
proxies, payment orders and stallar documents to Italy should apply to

l ì hì l f J * * * ?* * 1 * * % * ^ * * m f®r *
^towTl^tiolI*

«»pwpriate license. It was emphasised
***®** la *h® ******* States is not affected

h«*»
lacllitles for s iding living expense remittances to liberated Italy
Sf*® previously been made available hy Treasury General license Mo. 82**
Treasury officials stated that these facilities remain the same, «od
, L the sea*ln£ *° Italy of current, socurities, money orders, checks,
drafts or other negotiable Instruments is still prohibited.

Under Public Circular No. 35, is sued by the Treasury today,
ebramunications of a business, financial or commercial nature, which
are not actual business or financial transactions', ra% ha transmitted
to and from liberated Italy without Treasury l i c e n s s J V S r example
banks and other financial institutions

0§#

IGAlkiRScotx:JEDuBoisigmb 10-9-44

i

TREASURY DEPARTMENT
WASHINGTON

FOR RELEASE, MORNING NEWSPAPERS
October 17, 1944

Press Service
No. ^ 3 * 7 ^

The Treasury Department today announced that the restrictions
under the Trading with the enemy Act against commercial and business
communication with liberated Italy have been lifted. This significant
step toward the resumption of normal business relations with Italy is
in accordance with the joint statement of President Roosevelt and
Prime Minister Churchill that the application of the Trading with the
enemy Act should be modified so as to enable business contacts with
Italy to be resumed for the benefit of the Italian people.
Under public Circular No, 25 , issued by the Treasury today,
communications of a business, financial or commercial nature, which
are not actual business or financial transactions, may be transmitted
to and from liberated Italy without Treasury license. For example,
banks and other financial institutions may reply to requests for
information from their depositors in liberated Italy without Treasury
license; documents stich as birth, death and marriage certificates,
wills and legal notices may be transmitted. Italian and United States
concerns may exchange business information and correspond with respect
to the resumption of business relationships without obtaining a specific
Treasury license. Since trade with Italy is now being carried on only
through governmental agencies, licenses will not be granted for private
trade transactions until arrangements for the resumption of private
trade have been made.
Treasury officials stated that the freezing regulations
remain in effect with respect to Italian property in the United States,
and that. Treasury licenses will continue to be required to effect any
financial or property transactions on behalf of or involving persons
in Italy. Accordingly, persons desiring to send powers of attorney,
proxies, payment orders and similar documents to Italy should apply to
their Federal Reserve Bank for an appropriate license. It was emphasized
that the status of Italian assets in the Uhited States is not affected
by today*s action.
Facilities for sending living expense remittances to liberated
Italy have previously been made available by Treasury General License
No. 32A. Treasury officials stated that these facilities remain the
same, and that the sending to Italy of currency, securities, money
orders, checks, drafts or other negotiable instruments is still prohibited.

oOo

TREASURY DEPARTMENT
W ashington
FOR RELEASE, MORNING NEWSPAPERS,
T uesday, O cto b er 17, 1944«

P re s s S e rv ic e
No. 43-76

The T re a su ry D epartm ent to d a y announced t h a t th e r e s t r i c 
t i o n s Under th e T rad in g w ith th e Enemy Act a g a in s t com m ercial
and b u s in e s s com m unication w ith l i b e r a t e d I t a l y have been
lifte d *
T his s i g n i f i c a n t s te p tow ard th e resu m p tio n o f norm al
b u s in e s s r e l a t i o n s w ith I t a l y i s in a c co rd an c e w ith th e j o i n t
s ta te m e n t of. P r e s id e n t R o o se v e lt and Prim e M in is te r C h u r c h ill
t h a t th e a p p l ic a tio n o f th e T rad in g w ith th e Enemy A ct sh o u ld be
m o d ifie d so as to ^ e n a b le b u s in e s s c o n ta c ts w ith I t a l y to be
resum ed f o r th e b e n e f i t o f th e I t a l i a n p e o p le .
Under P u b lic C ir c u la r No. 25, is s u e d by th e T re a su ry to d a y ,
com m unications o f a b u s in e s s , f i n a n c i a l o r com m ercial n a tu r e , which
a r e n o t a c t u a l b u s in e s s o r f i n a n c i a l t r a n s a c t i o n s , may be t r a n s 
m itted, to and from l i b e r a t e d I t a l y w ith o u t T re a su ry l i c e n s e . For
exam ple, banks, and o th e r f i n a n c i a l i n s t i t u t i o n s may r e p ly to r e - ,,
q u e s ts f o r in fo rm a tio n from t h e i r d e p o s ito r s in l i b e r a t e d I t a l y
w ith o u t T re a su ry li c e n s e ; documents such as b i r t h , d e a th and
m a rriag e c e r t i f i c a t e s , w i l l s and l e g a l n o tic e s may be t r a n s m i t t e d .
I t a l i a n and U n ite d S ta te s co n cern s may exchange b u s in e s s in fo rm a tio n
and c o rre sp o n d w ith r e s p e c t to th e resu m p tio n o f b u s in e s s r e l a t i o n 
s h ip s w ith o u t o b ta in in g a s p e c i f i c T re a su ry l i c e n s e . S in c e tr a d e
w ith I t a l y i s now b ein g c a r r i e d on o n ly th ro u g h g o v ern m en tal
a g e n c ie s , lic e n s e s w i l l n o t be g ra n te d f o r p r i v a t e tr a d e t r a n s 
a c tio n s u n t i l arran g em en ts f o r th e resu m p tio n o f p r i v a t e tr a d e
have been made.
T re a su ry o f f i c i a l s s t a t e d t h a t th e f r e e z in g r e g u la tio n s rem ain
in e f f e c t w ith . r e f l e c t ' to I t a l i a n p r o p e r ty in th e U n ite d S ta te s ,
and t h a t T re asu ry l ic e n s e s .w ill c o n tin u e to be r e q u ir e d to e f f e c t
any f i n a n c i a l o r p r o p e r ty t r a n s a c t i o n s on b e h a lf o f o r in v o lv in g
p e rso n s in I t a l y , A c c o rd in g ly , p e rso n s d e s ir in g to send powers-' of
a t to r n e y , p r o x ie s , payment o rd e rs and s i m i l a r documents to I t a l y
sh o u ld a p p ly to t h e i r F e d e ra l R eserve Bank f o r an a p p r o p r ia te
lic e n s e * I t was em phasized t h a t th e s t a t u s o f I t a l i a n a s s e t s in
th e U n ite d S ta te s i s n o t a f f e c t e d by to d a y !s a c t i o n .
F a c i l i t i e s f o r sen d in g l i v i n g expense r e m itta n c e s to l i b e r a t e d
I t a l y have p r e v io u s ly been made a v a i l a b l e by T re a su ry G en eral
L ic e n se No. 32A. T re a su ry o f f i c i a l s s t a t e d t h a t th e s e f a c i l i t i e s
rem ain th e same, and t h a t th e se n d in g to I t a l y o f c u rre n c y ,
s e c u r i t i e s , money o rd e rs, ch e ck s, d r a f t s o r o th e r n e g o tia b le
in s tru m e n ts * 'is s t i l l p r o h i b i t e d .
oOo

TREASURY DEPARTMENT
WASHINGTON

FOR RELEASE, MORNING NEWSPAPERS
October 17, 1944

Press Service
No. 43-76

The Treasury Department today announced that the restrictions
under the Trading with the enemy Act against commercial and business
communication with liberated Italy have been lifted. This significant
step toward the resumption of normal business relations with Italy is
in accordance with the joint statement of President Roosevelt and
Prime Minister Churchill that the application of the Trading with the
enemy Act should be modified so as to enable business contacts with
Italy to be resumed for the benefit of the Italian people.
Under Public Circular No. 25, issued by the Treasury today,
communications of a business, financial or commercial nature, which
are not actual business or financial tr ansactions, may be transmitted
to and from liberated Italy without Treasury license.
For examp 1©,
banks and other financial institutions may reply to requests for
information from their depositors in liberated Italy without Treasury
license; documents such as birth, death and marriage! certificates,
wills and legal notices may be transmitted. Italian and United States
concerns may exchange business information and correspond with respect
to the resumption of business relationships without obtaining a spe
cific Treasury license.
Since trade with Italy is now being carried
on only through governmental agencies, licenses will not be granted
for private trade transactions until arrangements for the resumption
of private trade have been made.
Treasury officials stated that the freezing regulations re
main in effect with respect to Italian property in the United States,
and that Treasury licenses will continue to be required to effect any
financial or property transactions on behalf of or involving persons
in Italy.
Accordingly, persons desiring to send powers of attorney,
proxies, payment orders and similar documents to Italy should apply
to their Federal Reserve Bank for an appropriate license.
It was
emphasized that the status of Italian assets in the United States is
not affected by today’s action.
Facilities for sending living expense remittances to libera
ted Italy have previously been made available by Treasury General Li
cense No. 32A.
Treasury officials stated that these facilities re
main the same, and that the sending to Italy of currency, securities,
money orders, checks, drafts or other negotiable instruments is still
prohibi ted.

Treasury Department
FOREIGN FUNDS CONTROL
October 17, 1944

PUBLIC CIRCULAR NO. 25
UNDER EXECUTIVE ORDER NO. 8389, AS AMENDED, EXECUTIVE ORDER NO. 9193,
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)

Exemption from General Ruling No.

11 of certain communi

cations with liberated Italy and certain acts and transactions.
are hereby exempted

(2)

There

from the provisions of General Ruling No.

11:

(a)

Any communication of a financial, commercial or busi
ness character with any person within any part of the
territory of Italy controlled or occupied by the armed
forces of any of the United Nations;

(b)

Any act or transaction involving any such communication;

(c)

Any act or transaction for the benefit or on behalf of
any such person.

Certain general licenses not applicable to Italy.

visions of General Licenses Nos.

The pro

32 and 33 shall not be deemed to

authorize any remittances to any person within the territory of Italy.

D. W. BELL

Acting Sec ret ar y of the Treasury

* Appendix B; • S e e . 3 ( e ) , 4 0 S t e t . 4 1 2 : S e e . 5 ( b ) , 4 0 S t e t . 415 end 966: S e c . 2 , 4 8 S t e t .
I ; 54 S t e t . 1 7 9 : 55 S t e t . 8 3 8 : E > . Order 8 3 8 9 , A p r i l 1 0 , 1 9 4 0 , e s e » e n d e d b y E x . Order
8 7 8 5 . June 1 4 , 1 9 4 1 , E x . Or*»r 8 8 3 2 . J u l y 2 6 , 1941 . E x . Order 8 9 6 3 . D e c . 9 , 1 9 4 1 . end
E x . Order 8 9 9 8 . D e c . 2 6 , 194 1 } E x . Order 9 1 9 3 . J u l y 6 , 1 9 4 2 : R e « u l e t i o n s , A p r i l 1 0 , 1 9 4 0 .
e s emended June 1 4 , 1 9 4 1 . end J u l y 2 6 , 1 9 4 1 .

44-

TREASURY DEPARTMENT
Washington
FOE RELEASE, MORNING NEWSPAPERS,
Tuesday» October 17» 1944*______

Prase Service
i / J — 7?

The Secretary of the Treasury announced last evening that the tenders for
$1,300,000,000, or thereabouts, of 91-day Treasury bills to be dated October 19, 1944,
and to nature January IS, 1945, which were offered on October 13, were opened at the
Federal Reserve Banks on October 16.
The details of this issue are as follows!
Total applied for - $2,183,869,000
Total accepted
~ 1,313,361,000
Average price

(includes #59,721,000 entered on a fixedprice basis at 99*905 and accepted in full)
- 99*905/ Equivalent rate of discount approx* 0*375$ per annum

Range of accepted competitive bids:
High
Low

- 99*909 Equivalent rate of discount 0*360# per annum
- 99*905
**
•
*
•
approx* 0*376$ per annum

(55 percent of the amount bid for at the lew price was accepted)

Federal Reserve
District

fötal
Applied for

Total
Accepted

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

$

#

27,160,000
1,450,315,000
49,550,000
27,471,000
31,868,000
29,735,000
316,900,000
38,327,000
10 ,560,000
41,618,000
19,235,000
u i . 130,000

TOTAL

#2,183,869,000

17 ,215,000
830,530,000
34,250,000
26 ,706,000
28,763,OC»
20,384,000
180,078,000
25,277,000
8,300,000
39,188,000
15,140,000
88.030.000

$1,313,861,000

T KE A S U KT D E P A R T M E N T
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 ,
T u e s d a y , O c t o b e r 17, 1 9 4 4 « .

The
tenders
to b e
w ere

Secretary

of the T r e a s u r y

f o r f>l,3 0 0 , 0 0 0 , 0 0 0 ,

d a t e d O c t o b e r 19,
offered

Press
No.

or

1 944,

o n O c t o b e r 13,

announced

thereabouts,
and

were

to m a t u r e
opened

at

last

Service
43-77

evening

that

the

of 91-day Treasury bills
J a n u a r y 18,
the

Federal

1945,

which

Reserve

Banks

on O c t o b e r 16,
The

details

of this

issue

are

as

follows:

Total a p p l i e d for - $2,183,869,000' '
Total accepted
- "1,313,861,000
(includes $59,721,000
e n t e r e d o n a f i x e d - p r i c e b a s i s at 9 9 . 9 0 5 a n d a c c e p t e d tin full)
Average

Range

price

99.905/ Equivalent
0,375/ per annum

of accepted

High

(55 p e r c e n t

of

the

of

discount

amount bid

for

at

t he

rate

of dis c o u n t

0.360/

rate

of d i s c o u n t

approx

low p rice was

accepted)

Fede r a l R e s e r v e
District

T o t a l J ./-X:
Applied for

Total
Accepted

Boston
New Y o r k
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St, L o u i s
Minneapolis
Kan s a s - C i t y
Dallas
San F r a n c i s c o

$

$

TOTAL

.

approx

competitive bids:
99,909 Equivalent
per annum
99.905 Equivalent
0,376/ per annum

Low

rate

27,160,000
1,450,315,000
49.550.000
27.471.000
31.868.000
29.735.000
316.900.000
38.327.000
10.560.000
41.618.000
19.235.000
141.130.000

I| 2 , 1 8 3 , 8 6 9 , 0 0 0
oOo

17,215,000
830.530.000
34.250.000
26.706.000
28.763.000
20.384.000
180.078.000
25.277.000
'8,30 0 , 0 0 0
39.188.000
15.140.000
88.030.000

$1,313,861,000

(COPY)

October 7, 1944

TO MR, D. V. BELL:

Daring the month of September, 1944, the following market
transactions took place in direct and guaranteed securities of
the Government:
S a l e s ....... .....................$28,100,000
Purchases ......................
Het sales ....................

(Sgd)

none
$28,100,000

Joseph Greenberg

Joseph Greenberg
Assistant Commissioner of Accounts

HNaud

TREASURY- DEPARTMENT
Bureau of Accounts

c^'fo jf

MR. GREENBERG

TREASURY DERARTLIEUT
W ashington
FOR IMMEDIATE RELEASE,
T uesday, O ctober 17» 1944.

P re s s S e rv ic e
Uo. 43-78

D uring th e month of S eptem ber, 1944,
m arket t r a n s a c t i o n s in d i r e c t and g u a ra n te e d
s e c u ritie s

p

f

th e Government f o r T re a su ry

in v e stm e n t and o th e r a c c o u n ts r e s u l t e d in n e t
s a le s o f

$28,100,000,

S e c r e ta r y M orgenthau

announced to d a y .

-oOo-

You are w e ll aware that problems of tax p o licy , of
elim inating hardships, and of plugging up loopholes are
responsible for many of the com plexities in our tax laws.
Your sense of values does not permit you to place sim p lic ity
above everything e ls e .
More than any other group faced with handling the tax law
and applying i t to the individual taxpayer, you are in
Iff

$

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|

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M il

a p o sitio n to know what sim p lific a tio n i s fe a sib le and p ossib le.
I know that you know because many of your recommendations have
' 11IIP

.

I

been h elp fu l in the p ast.

'

i'

’ '

IIIII

’\ * llll|

We in the Treasury, along with a ll

the other groups in terested in postwar tax r e v isio n , are
relyin g upon you to help resolve the com plexities in our
Federal corporate tax stru cture.

-1

The next few years promise to be an auspicious time to
promote sim p lific a tio n in the corporate tax stru ctu re.

As

revenue requirements recede, i t w i l l be p o ssib le to make
some tax reductions.

The task of reducing the number of taxes

and elim inating provisions which cause major d i f f i c u l t i e s w ill
be ea sier a fte r the war when reductions are being made than
during the war when revenue requirements are so high.
Tax sim p lific a tio n is a laudable goal for tax p olicy when
i t is placed in i t s proper perspective among other ob jectives,
Gains from sim p lific a tio n must always be balanced against
IssLerj^ices of equity o r ^ e sir able economic e f f e c t s .
^

As

/S

accountants, you are fam iliar with the d i f f i c u l t i e s encountered
under present tax laws.

You also know that sim p licity is

a d erivative problem — one that cannot be discussed in
is o la tio n .

3

Not a l l of the problems under consideration involve M
A

'

mie*

sim p lific a tio n but probably most of them do.

This work is

highly tech n ical and too much should not be expected too soon.
pris
¿3 .

Meantime, groups of taxpayers pressing Congress for
sp ecia l provisions to ease real or a lle g e d ly excessive burdens
in the tax structure present a constantly recurring problem.
A large proportion of the tech n ical com plications of the law
have stemmed f

4

>e groups in the p ast.

As long as pressures

for changes of th is sort p e r s is t, we can hope for l i t t l e more
progress toward sim p lific a tio n than two steps forward for every
one we s lip back.

Indeed, there i s the p o s s ib ilit y that our

progress in th is f i e l d may be in reverse, and that for every
step forward we may go two steps back.

i 7
.-

The Treasury Department sometime ago began an examination
of the problems of Federal tax re v isio n in the tra n sitio n and
postwar years.

Last June the Congressional Joint Committee

on Internal Revenue Taxation, co n sistin g of ranking members
r

: f*

'of the House Committee on Ways and Means and the Senate Finance
Commiittee^ askfed i t s s ta ff and the Treasury s t a f f to work
together on a study of postwar taxation and report to the
Joint Committee*

This study has been in progress since that

time and we hope that preliminary reports can be made to the
Joint Committee soon.

At the present stage le s s a tte n tio n is

being given to tech n ical matters than to the basic structure
of the system.
In the past few weeks an lUvra 01"7 ll¥gqftgrtiu.|i i
figA

ountants and lawyers, has »been

a s s is t the Treasury sta

7k
of the law.

A

ication s

3 6

;Tr f h r ni gr ni i nf ? n-g-

ri ~^n* 11v r m j m ' w

Congress sure

à

unwilling to

entertain such an idea until it is assured that it m i & not

lead to a substantial amount of tax avoidance.

The problem of simplification of corporate tax structure

is so many-faceted that I can only touch upon its Federal

aspects today. Corporations are subject to state and local as

well as Federal taxes.

Of great importance for ultimate

simplification is coordination of taxes levied by the various

political units within the country.

Conclusion

' Simplification of the corporate, tax structure is one of

the objectives of the studies of postwar taxation now going on

in Washington.

I f th^ proposal that the Government/hould accent the
accountant’ s

of income is intended merely to place

the r e s p o n s ib ility upon the accountant and not Upon the
Government, uncertainty would not be su b sta n tia lly reduced
The problems of measuring income for tax purposes would be the
same m one case as iti anatjier

But tax ru lin g s, instead of
M Ì WrvyQip

being issued by one body

iéj^be isèued by^wag^ccountant in
444lüw

the country*

n/

p ff]fu s io n ./b e
oii'aider^o/ w]aa4f

^■„iTOfcgd-ly do s4Wfr" ttr^wiel-d

The c lie n t s \o f reputable accounting
concerns and accoun ants themse

look with favor on

an unregulated acco mting profession when t i e stake s . ^ ^ a s
as they would be i f jthe resp o n sib .ility for de ermmin
were e n tir e ly upon tie accountants’ shoulders

income

JX

¿iiîtj)Ti tohad!»

^¿^rlirraire--

for tax purposes takes into consideration factors which would
he inappropriate in defining income for certain other purposes
'trf^i:TObme^ whTch'^a^c'dffiTO:

bs

during the year is

depend!* in part on the/
purpose for which the determination of income i s being made

m e a su r e d fo r lh

¿J[that the requirements of taxation
• i income, for
ordinary accounting purpose

- em

mi

PH

r.

.

The suggestion has been made in some quarters that the

3p-**

taxpayers’ task would be sim p lified i f the Government should
accept

the d e fin itio n for tax purpose’s *

Tarnation

■v* ***** —p***■
w n rL >

~3Sr *•

Although some people b eliev e that too much a tten tio n has been
émmê ta

paid to ti

we must recognize that the

w illin g n ess of taxpayers gen erally to comply with the ta x ’ law
r e sts on th eir b e lie f in i t s fa irn ess and eq u ity.

Attempts to

achieve a high degree of equity frequently have been misconstrued
as attempts to reform or penalize b u s in e s s ,/F o r example, Section
102 may appear to be unduly harsh to the few corporations caught
in i t s meshes, but without such a provision the great m ajority
of taxpayers would have a leg itim a te grievance against a tax law
»

which permitted a m inority to take advantage of the corporate form
of organization to avoid individual taxes.
D ifferences o f opiniopr'oh^ th e ^ f^ fs of ^sfe^if ic tran sacti ons
1

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.1

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|

I b eliev e that a basic source of uncertainty,

§111 :\i

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cannot be elim inated by sta tu te , regulations^ or

/

one which

M id i

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court
j

7

in terp reta tio n , is d ifferen ces of/op inion on questions bf
\ /

1

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.

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In some cases the law attempts to remedy the situ a tio n through
specific language reducing the fringes of uncertainty surrounding
the general ru le s .

The regulations fu rth er attempt to reduce

these areas of doubt in the taxpayer’s mind.

Both steps create

more certain ty , and therefore b asically sim plify the tax structure]
although they also complicate the language of the law and
reg u la tio n s.I But i f the law and regulations f a i l to remove
*#******"**+

doubt — and every possible transaction cannot be an ticip ated —
c ertain ty canYbe/only^reached by one or a series of ju d ic ia l
opinions*

I think you w ill agree th a t th is is g ettin g certainty

the hard way*
Attempts in the law or regulations to close up loopholes
may also create uncertainty in the minds of those engaged in bona
fide business transactions.

f t f c t

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o p e ra tio n ^ Although most of these u n certain ties'lS v ,

long been present in the law, they have become p a rtic u la rly
important in recent years because, with increased ra te s , taxes
exercise a greater influence on general business decisions.

I

with respect to a 10-percent tax l i a b i l i t y do not seriously
a ffe c t business decisions.

But i f tax rates are high, vagueness

in the law w ill expand the area of uncertainty within which
managerial decisions must be made.

The un certain ties of tax law a rise la rg e ly because
taxpayers are not sure how a given tran sactio n w ill be treated,,
in giveiMWLÿs.

-

necessity of valuing certain property as of t!

date the incoas tax first sent Into effect — «March 1» 1913^
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tlàr-problems are posed isrsegregating dividends paid, to shareholders
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Into taxable and non-taxable categories,

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Difference» of opinion on questions of accounting aro bonmd

to arla* in «any situations.

and a taxpayer*

«boy «re not limited to the Government

The^irii^Wfound among private accountants aa wall* Shay

cannot be eliminated by statute, regulations, or court interpretation*

But the consequences of these differences can be significantly reduced

through a satisfactory averaging device*

Ifaaiüisfi the lav

\W

ri A r

dealing vith the determination and TEWPsaafcStan of
f gain and loas from a ala

or other disposition of property^han-mampl*«^-

Under more or less fixed tax rates, the carry-overs would
achieve most of what could be achieved through complete
averaging.

The d if f ic u ltie s and, to a great extent, the complications of
these provisions would dissolve i f we had a re a l averaging
/

system which made the allo catio n of income and deductions to
specific years less important.

Of course, complete averaging,

of i t s e l f , would involve su b stan tial changes in the policy of
taxation, and would considerably complicate the law.

But i f

: X>"‘'-

some simple averaging technique could be developed, on balance
i t s adoption would make the tax stru ctu re le ss rath er than

The techniques fo r averaging income are not as simple as
they might seem; in fa c t, no re a lly sa tisfa c to ry method has
yet been found.

An extension of the carry-over of losses,

however, would not seriously complicate the law, and would
considerably reduce the importance of allo c a tin g certain items
to p a rtic u la r years.

.basic accounting problem is determ ination of income year
by year.

You are well aware of the d if f ic u ltie s of allo catio n

and of the weaknesses of an allo catio n which makes i t impossible
to ascertain what the income in a p a rtic u la r year may be.

Either

the taxpayer or the Government (which in the end means the other
taxpayers) may find i t s e l f discrim inated ag ain st^ if income is not
properly apportioned among the years.
The provisions in the tax law for allo c a tin g charges for
depreciation, depletion, changing inventory value, determination
of bad debts and so on, were introduced for the purpose' of
achieving as correct a statement of income as possible.

These forms of income continue to be computed as they were
before. Jthey cd& stitute minor components of individual income,
/

they are the bulk of corporation income.
§

rpipoj#ifiiijg■4mit oc fet em.l^'ïar g'ely V
from the problems surrounding the determination of business
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- 23 This Act reduced the deduction problem - - a major one because
most taxpayers keep inadequate records -- by perm itting
a presumptive deduction of 10 perce^t^with a lim it of $500.
I t sim plified tax computation by reducing the number of taxes
and extending the tables which tra n sla te income into income
tax l i a b i l i t y .

I t adopted a basic exemption of $500 per person

and eliminated the earned income c red it which had complicated
the task of f il lin g out the retu rn . Thus i t made possible a
simple tax table which retain ed two exemptions systems -- one
which recognized dependents and one which did
But before concluding th a t a l l of the complexities of the
individual income tax were removed by the Individual Income Tax
Act of 1944, we should note th at re la tiv e ly l i t t l e was done to
sim plify the returns o
income or cap ital gains and lo sses.

-

22

-

I t seems clear, therefore, that the net re s u lt of complete .
coordination of corporation and individual income taxes would
be a tax structure more complicated than the present law would
be a fte r the stream lining th a t is possible.
Difference between sim p lificatio n for individuals and corporations

x
d

W m

B

11

1■ 1 S

I

we could re Albe the corporation income tax structure

to a single income concept and to a single tax ra te , the task
of f ilin g a tax return would be simpler, esp ecially for small
corporations.^W hereas the basic requirement of sim olicity- for
^individual taxpayers could be met by simplifving the structure
x

and returns ¿re only
part Ari

S

'-‘
tin,
tffscatiaiiy

jp#MÌÌt

™

The difference between sim p lificatio n of individual and
.

f

A^e****'

($JiK

%

corporation ta x / rolMfmn|uui,i mu ìtitb mate \ c l'e a tly ^ i^ th e changes made
the Individual Income
C;
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/sj^dldï^ o - ^ A kîu > ^ S
Ìj u J '¿¿U u a J U

1

G & f M f & A U - X * « f

-

21

-

Other suggestions for the coordination of individual
¿Jbh

and corporate levies wmfe not go quite so fa r .

Some would

tr e a t a f la t - r a te corporation tax as.a source co llectio n on
dividends ultim ately to he credited against the personal taxes
of the dividend re c ip ie n ts.

Although to ta l income would not

need to be allocated currently as under the partnership method,
such a system would present the additional complication of
allo catin g to the individual shareholder the tax paid by the
corporation.

Other proposals would allow a c re d it for dividend

payments a t,th e corporation le v e l.

This method would not

n ecessitate allo catio n of eith er taxes or income to individual
shareholders, but i t would ra ise some, d if f ic u lt problems
re la te d to the d e fin itio n of d istrib u te d and retain ed earnings

20

-

TnOf “
KjflK

During recent months a number of
proposals have been advanceMl: mmr^g? e"ater ^“”C'oord 1na tT on of
r t

corporation and individual incane.taxes.
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' ^wecungloj-.i.t.;.jalaH»."^»wfti. a a g ^ ft4ftd<that we should give up
ytht

\S*\
"taxing

corporations as such and ;reat them as we now do

partnerships and p ro prietorships.

No tax would be levied on the

corporation, but the stockholder would include his allocable
portion of corporate income in his individual income tax return.
“^‘his method of taxing corporate income.

would not be

a step in the d irectio n of tax sim p lificatio n , 4
iXd ^^AlUut?

i
I,

iftAght "fre on other grounds^ llthough% e

s- i ±
_

I

complicaflcte^arTsing from the taxation of undue accumulations
of surplu^
jbejuyvv'Q--'/

+i+m&14^a4Üans .of -ter»—
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earpjhi.pt- «=f cnritrirao nnè- roTttTr'"puse^fao emapla;^fg»irtMju|o f incoi
allo catio n to individual shareholders.

To the corporate taxpayer the complication lie s in deciding
what investment and dividend p o licies to follow to avoid the
tax.

There can be no denying th at Section 102 is very d iffic u lt

to. adm inister, since no d e fin ite general nil - - ^n.rm- h n In ifr****^
to what is
of earnings.

what is not an unreasonable accumulation

This is one of the so-called ’’penalty" taxes;

yet i t s purpose is not to penalize, but rath er to encourage
corporations to adopt dividend p o licies that w ill re s u lt in
a fa ir d istrib u tio n of the tax burden.

Some proposals for the

postwar tax stru ctu re c a ll for strengthening th is tax; others
would re ta in i t as at present; few, i f any, would repeal i t .
From the preceding discussion i t seems clear th a t a good
deal of sim plification of the present corporation tax structure
could be accomplished by a few re la tiv e ly minor changes in the
tax law, but th a t most df these changes involve policy issues
far transcending sim p lificatio n .

Perhaps a method involving a single computation might be
worked out using, for example, bracket ra te s .
Some people have gone so fa r as to recommenc&the abolition

retu rn s.

Since these corporations reported an

average of $3

m illion net income, we may assume that making th is additional
computation did not appreciably add to the burden of making out
th e ir tax retu rn s.

Some of the 600 and others that do not f i l e

consolidated returns must, of course, consider the benefits of
consolidated retu rn s compared to the higher tax r a te .

But the

decision to re ta in , repeal, or modify th is tax w ill undoubtedly
be decided on grounds other than sim p lificatio n .
The tax on undue accumulations of surplus also contributes
to the stru c tu ra l complexity, of the tax law.

- 17 Elimination of graduated ra te s would

Hs-

'sim plifying*tax computation for .taxpayers with
incomes of under $25,000, comprising 86 percent of taxable
returns in 1942, and for taxpayers w ith incomes between $25,000
and $50,000, comprising 5 percent of taxable returns in the same
year,

i f l a t ra te tax on a l l taxable income would reduce the

mechanical operations for the la t t e r group of taxpayers from
five to one.

I t is unlikely, however, that Congress would

consider the removal of graduated ra te s solely from the
viewpoint of sim p lificatio n .

I t has long been a policy of

Congress th a t small corporate enterprise should bear a lowerthan-standard corporate tax load either through a sp ecific
exemption or through.rate graduation.

Most proposals for

permanent postwar taxation have indicated a desire to re ta in
graduated ra te s w ithin the present lim ited range.

- 16 The rig h t o f.p a rtia l tax exemption has

already

been denied

to Federal se c u ritie s issued since March 1, 1941, so except
for a few special classes of se c u ritie s such as shares in
Federal Savings and Loan A ssociations, p a r tia lly tax-exempt
se c u ritie s w ill a l l have been re tire d by 1965.

The Senate

voted to repeal the cap ital-sto ck and declared-value excesss

.

Ü

p ro fits taxes in 1942.
Senate a c tio n ^

p

The

coneur.ift^the

t

might act d iffe re n tly when

u

(%/tJ^

circumstances we^e such as to permit tax reduction rather than
to require tax increases.

fcgfa. Congress has not recently

expressed i t s e l f on the issue of the dividend-received c re d it,
i t may be noted in passing th at most of the

.y" trrwp*«***«-

posWar ta x p it) g r S ^ ^ a ll for the*^ f u l l exemption/

^

d

*

Even though the income concepts dealt 'with on the return
could be^reduced from five to one, ^the^complications surrounding
the computation of the tax would s t i l l remain.

- 15 These d ifferen t concepts of net income re s u lt from the special
tax treatment accorded p a r tia lly tax-exempt s e c u ritie s , the
85-percent cred it for dividends received, the special allowance
for dividends on certain preferred stock of public u t i l i t i e s ,
and the declared-value excess-profits tax.
These fiv e concepts of net income could be reduced to one
ki f the contractual exemption from normal tax were given in the
form of a tax c re d it, i f dividends received by corporations
were fu lly taxable or fu lly tax-exempt, and k f the declared•'
value excess-profits ta x ^ * ^ ^ ® p u b lic -u tility preferred

*******

K\

]

"'Tun•lni'i**

dividend deduction were repealed.

While a l l of these

p o s s ib ilitie s present issues broader than sim p lificatio n , i t is
not unlikely th at Congress in resolving those other issues wf
advance the cause of sim plification^^X
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Tri

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c a p ita l-

.irla^a— ¡
g.jja^g..,■ar\ulv^r^7 ^ha.Ti.^ Rimp^i ficati-

stock and declared-value excess-profits taxes e fìttici lad»-

JW

1

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urged. by the Treasury for some yeari

A

••«•»«li»,

namely, repeal.

1ék-s

The corporation income tax
AwCiS

The

taxes in the cor p or a t i on Tax'^str ilc ftf^ k r e

the corporation normal and surtax.

In the fis c a l year 1944,

476,000 corporation income tax returns were f ilè d .

Of th is

number 264.000
were subiect
to income tax tVuM"''T2i§!li,r UOO liTOTC1IIG-W
*
«
Probably the most conspicuous complication on the present
corporation income tax retu rn is the number of concepts of net
income employed:

net income, adjusted net income, surtax net

income, normal tax net income, and net income for declaredvalue excess-profits tax computation.

In addition, there are

ca p ita l gains, which stand in a category by themselves

- 13
Had the d e fic its been an ticip ated , i t would have been
unnecessary to declare any su b stan tial amount of cap ital-sto ck
value and, accordingly, the cap ital-sto ck tax would have been
nominal*

In practice the only d e fic it corporations which are

re a lly h it by the c a p ital-sto ck tax are those which could not
forecast the d eficit*
I iW e heard one in te re stin g argum/nt (how serious iti
proponent isNl have no way of knowing-made for 'these two taxes th at they provide a remarkable s t a t i s t i c on business expectations
in the middle of tne year, pirns a check on whether or not these
an ticip atio n s are la te k realized*

In other words, they f o rm

a basis for the eonstruplntam of the cycle of business hopes and
fears*

Which only gores to skow that taxes imposed for revenue

only may serve end/ which their\orthodox proponents never even
dreamed of.

Cl*AÂ. '

These complications and d if f ic u ltie s would be more
acceptable i f the declared-value cap ital-sto ck and declaredvalue excess-profits taxes achieved a ra tio n a l d is trib u tio n of

stable earnings and penalize those with flu ctu atin g income.
One of the arguments for a cap ital-sto ck tax is th a t
corporations which use the services of the Government should
pay taxes regardless of whether they are in the black or red .
Since, as we have already seen, only three fourths of the
cap ital-sto ck tax returns are taxable retu rn s, the capital-stock
tax in its 'p re s e n t form cle a rly f a i l s to achieve th is end.
True, there are some payments by corporations w ith d e fic its .
But these payments are from corporations which did not anticipate
d e fic its .

I

• -11
'.

-

r
|

_

Moreover, 'they impose the burden of preparing one additional
retu rn and, even more important, the torment of searching the
c ry sta l b a ll for figures th at can be defended to boards of
d irecto rs and stockholders.
I f income could be accurately fo recast, these taxes,
although superfluous, probably would give ris e to few complaints
Since the declared-value excess-profits tax is imposed on income
d a re d value of~the c a p ita l stock,
the to ta l of the two taxes is. minimi zed i f cap ital stock is
declared at a figure ten times expected income.

To achieve

th is minimum con sisten tly , calendar year corporations would have
to be able to estim ate in the middle of the year th e ir exact
income as of the end of the year.

I t is to the neces-sity for

guessing and the d iffic u lty of guessing accurately th at the
unpopularity of these taxes can be a ttrib u te d .

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10

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The capital-stock and declared-value excess-profits tax-

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Next on the list of corporation taxes are the capital-stock

tax and the declared-value excess-profits tax.

Some 510,000

capital stock tax returns were filed during the fiscal year

1944; of this number 377,000 showed a tax*

In addition, a separate

computation for the declared-value excess-profits tax is required

on the income tax return.

When profits can be forecast accurately, the capital-stock

and dedared-value excess-profits taxes represent

an

additional levy on profits of 1/4 of 1 percent on corporations

with excess-profits, and of 3/4 of 1 percent on corporations with

no excess profits.

Corporations with deficits may pay no tax.

forecast income, with a greater penalty for' undervaluation of

capital stock than for overvaluation.

The l i s t is by no means exhausted.

I merely want to point

out th a t these special adjustments a l l make fo r complication
and they have generally been inserted a t taxpayers1 urging.
Much could be said about sim p lificatio n of the excessp ro fits tax.
point.

But postwar tax planner¿Ife^^îriahïiaous on one

No p la n ^ ^ îîs~ -io r^ ^ te n tio n of the wartime excess-

pr of it's tax in our permanent peacetime tax stru c tu re .

It

appears th a t sim p lificatio n of the excess-profits tax w ill
come by erasure rather than by erosion.

Changes in the

in te re s t of sim p licity a t th is stage would probably augment
rath er than reduce the to ta l complications of a tax with
a short l i f e expectancy. i# > i[ittle would be gained from
a discussion of the p a rtic u la r featu res of the excess-profit
tax which could be a lte re d to reduce complexity.

-

8

-

Even i f a l l the data needed to make a return were easily
available, the mere computation of the tax is no small job.
f i r s t , the choice of cred it -- average-earnings and investedca p ita l — introduces a complication into the law.

Second, the

mathematical computations are numerous and appear involved to
many small taxpayers.

Third, fu rth er complications are

introduced by the host of r e li e f adjustments which were in sisted
upon ;by one group of taxpayers or another for reasons of equity
or incentive.

You are a l l fam iliar w ith the formula for

increased earnings in the la s t h alf of the base period, the 75percent ru le , the 80-percent lim it, the carry-overs and carry
backs, Section 722, abnormal deductions in the base period and
abnormal income in the current year, accelerated production of
natural resources, installm ent sales and long-term contracts,
the domes-tic corporation doing business abroad, capital-gains
treatment for timber operations, and special treatment of bonus
income for excess mining and timber output.
Spr

JET

- 7 How these proposals a ffe c t general public understanding of the
tax system is an ad d itio n al factor of significance.

Four major

Federal taxes are levied upon corporations a t the present time ~
the income tax (both normal tax and su rtax ), the cap ital-sto ck
tax, i t s companion tax the declared-value excess-profits tax,
■\

and the true excess-profits tax.

I t is w ithin th is framework

that we must approach the problem of corporate tax sim plification.
The excess-profits tax
Today I want to give Ifi r st/c o n sid eratio n /to the excess-profits
tax.

In the f is c a l year 1944, 140,000 corporations file d excess-

p ro fits tax re tu rn s, on 70,000 of which taxable excess p ro fits
were shown.
No one w ill deny th a t the excess-profits tax is complex;
in fa c t, the major complexities of corporation taxation at the
present time can be la id at i t s door.

i

- 6 -

In tru th , however,

tEeraetaile.d

provisions

which

the periodicals

waggishly quote reduce rath e r than increase tax complications.
They add precision and thereby reduce litig a tio n .
Any broad vievi of tax sim p lificatio n must distin g u ish
between the complications which a ffe c t the many and those which
a ffe c t the few.

Many of the specialized technical provisions of

the law which cause the loudest complaints apply to a lim ited
number of taxpayers.

Sim plification of our corporate tax structure

must take into account both those complexities which a ffe c t a l l
corporate taxpayers and those which a ffe c t the re la tiv e ly few.
Simplifying the mechanics of the structure
The importance of various sim p lificatio n proposals is
determined in p a rt by the number of taxpayers involved and in part
by the amount of b en efit w hicli^cc^uel to a given taxpayer.,

Then, too, what some people look upon as d iffic u lty with
the return is often in fa c t d iffic u lty with the accounting and
record-keeping which are necessary before the return can be
prepared.

In grappling w ith the problem of sim plifying the

individual income tax, the Treasury found th a t the recording and
lis tin g of deductions co n stitu ted the g re a te st com plication!
most taxpayers,
To other people sim p lificatio n means simpler language in the
law and regulations.

Newspapers and magazines rely on quotations

from the In tern al Revenue Code to supply th e ir publications with
humorous " f i l l e r . M Many of these quotations are highly amusing
and I should be the la s t to deny anyone any amusement he can get
/-aA

from taxation.

- 4 Both conditions have required complicating remedial provisions.
Moreover, public determination to permit no excessive war p ro fits
gave r is e to an excess p ro fits tax.

Such a tax is inevitably

complicated and when the tax is imposed a t high rate s -- as in
the case of our wartime excess p ro fits tax — careful and
complicated adjustment is required to prevent serious hardships
upon taxpayers and harm to our economic stru c tu re .
Sim plification is a broad concept.
things to d iffe re n t people.

I t means d ifferen t

For the great mass of taxpayers i t

means a retu rn which is easy to f i l l out.

Tax computations are

often troublesome for people who are out of p ractice in
arithm etic.

Moreover, a m u ltip lic ity of income concepts, credits

and deductions makes for confusion.

Returns under a given law

can often be sim plified but, for the most p a rt, the d iffic u lty
T)f the return stems from the policy la id down by the law.

~ 3 Many complications are unnecessary, to be sure, but others —
most of them — are the price we pay for equity
Concern with complexity has in te n sifie d in recent years
because of the great increase in revenue required to finance the
war.

On the one hand, expanding revenue requirements have

necessitated broadening the individual income tax base.

In 1940,

four m illion taxable individual income returns were f ile d ; in the
f is c a l year 1944 the fig u re had grown to fo rty million*

This

tenfold increase'has brought into contact with the income tax
many persons who faced the new task of f i l l i n g out returns with
l i t t l e experience or train in g in the concepts or computations
required.

They have demanded and they have received a simple

income tax.
On the other hand, ra te s have been g reatly increased and new
taxes have been added.

These facto rs have magnified hardships and

in te n s ifie d the search for loopholes.

- 2 -

This universally-professed desire for simple taxes has
been accompanied by a never-ending chorus of complaint a t tax
com plexities.

Much of the grumbling has served to l e t off

steam generated by resistan ce to the tax burden i t s e l f ; but
much of i t is soundly based.

Despite the complaints, however,

the tax system, generally speaking, has grown more rath er than
le ss complicated with the passing years.
B asically, most tax complexity derives from the necessity
of applying an equitable form of taxation to a complicated
s itu a tio n in which many sp ecific refinements are necessary to
meet charges of unfairness.

The fa c t th at the income tax law

of 1913 covered but 19 pages, while the Revenue l e t of 1942 added
157 pages of amendments to already lengthy sta tu te s applying to
income and p ro fits taxes, does not r e f le c t sadism on the p art of
Congress.

I t ^rather jindicated a prodigious e ffo rt to be f a ir .

SIMPLIFICATION OF CORPORATE TAX STRUCTURE
Introduction
Tax policy is a f ie ld where p riz e -fig h ts are more common
than lo v e -fea sts.

But in th is arena there is one goal --

sim plification — toward which we can a t le a s t s ta r t with
a united fro n t.'^ ¿ e are a l l for sim p lificatio n .
for sim p lificatio n .

Taxpayers are

They demand i t in the taxes with which they

personally come in contact.

And they want i t for the re s t of

the-system so they may understand what i t is a l l about.
adm inistrators are for sim p lificatio n .
order to ease th e ir task .

Tax

They seek simple laws in

Tax p ra c titio n e rs are for sim plification,

^flie mlrrifEd make th e ir liv in g s, or a t le a s t b e tte r liv in g s, because
of tax complications have formally resolved in favor of
sim p lificatio n and, from time to time, have presented many
constructive suggestions to sim plify
Full text of Press Releases of the United States Department of the Treasury : Volume 55

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