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L îB R A R Y
ROOM 5030

JÜN 141972
TREASURY DEPARTMENT

For release, morning papers
January 1, 1929

Treasury Department

o p e r B y f
U D u L Ih
i-

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i v : I
•! gTOrcfyBNb)
Washington, December 31, 1928*

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_____ ___________ —— New Year Statement by Secretary Mellon. . ’
During the la s t year the country has made steady progress.

Early

in the year the volume o f business began to show marked improvement over the
Closing months o f 1927, and this improvement has continued.

I t has

been evident in manufacturing, in s te e l production, carloading, automobile
production, building contracts and sales o f goods to consumers.

A ll

o f this is evidence also that buying power has been sustained and that, on
the whole, sa tis fa c to ry employment conditions have p reva iled .
P rices in basic industries have not been unduly high and have remained
f a i r l y stable, nor does there seem to be any immediate danger of excessive
demand sending prices to such high le v e ls as to make a slump in a c t iv it y
and consequently in prices in e v ita b le .

• In the in du strial world, condi­

tions seem to be on an even k e e l; and i t is much b e tte r to have them so, with
a s lig h t upward tendency, as at present*
In the fin a n cia l world, there is s u ffic ie n t money a va ila b le fob a l l
legitim a te undertakings.
ed during the past year.

A considerable amount of gold has been export­
But i t has not seriou sly impaired our c re d it re­

sources while, at the same time, i t has helped to establish the gold stand­
ard more firm ly in Europe and to s ta b iliz e fo reig n currencies with re su ltirg
b en efits to our import and export trade.
In so fa r as the Government is concerned, the finances are in a sound
condition*

The debt has been reduced to manageable proportions; the reve­

nues are ample fo r our needs; and during the past year there has been another
reduction o f taxes, the f u l l b en efit o f which w ill be more gen erally f e l t
during the coming year.
For a l l of these reasons, I look forward with confidence to continued
progress in the year ahead*

FOE IMMEDIATE RELEASE, j
Friday, January 4, 1929.

TREASURY DEPARTMENT

§¡¡¡1
i
M*
The Secretary o f the Treasury today issued the follow ing statement in
connection with the promulgation o f the Treasury Regulations re la tin g to
consolidated income tax returns of a f f i li a t e d corporations?
Section 141 o f the Revenue Act of 1928 imposes upon the Treasury the
duty to prescribe regulations, le g is la t iv e in character, fo r the f i l i n g of
consolidated returns by a f f i li a t e d corporations and the determination and
enforcement o f the tax l i a b i l i t y thereunder.

Early la s t summer I appointed

a Committee to undertake this work, conposed of Mr. Henry Herrick Bond,
Assistant Secretary of the Treasury, Mr# David H. B la ir , the Commissioner
o f Internal Revenue, Mr. Clarence M. Charest, the General Counsel o f the
Bureau of Internal Revenue, and Mr. Ellsworth C. Alvord, Special Assistant
to the Secretary o f the Treasury.

The Committee held hearings and various

organizations o f taxpayers and the public generally were invited to present

If

'pi||||11|,■|i§
The Regulations promulgated today represent the

th eir views and proposals.

judgment o f the Committee formed a fte r the hearings, a ft e r months o f study,
and a ft e r constant consultation with many o f the recognized experts and
students of the problems.
Many basic or fundamental theories were advanced, including the socalled Economic unity" and " le g a l" p rin c ip le s.

It was obvious, however,

that the Regulations must conform as clo sely as possible to the p o lic ie s
already adopted by the Congress and applicable to the determination o f tax
l i a b i l i t i e s o f separate corporations and o f corporate stockholders, pre­
serving the sound purposes fo r which the p riv ile g e o f f i l i n g consolidated
returns is properly granted and safeguarding against improper advantages
and the evasion or avoidance o f tax l i a b i l i t i e s *

Next in importance to the

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above seemed the necessity fo r certainty in the rules to be applied to the
more important or more common transactions.

It is hoped that under the

Begulations taxpayers w i l l be in a much better position to determine in
advance the tax l i a b i l i t i e s to resu lt from a contemplated transaction, a
very desirable substitute fo r the situation under p rio r laws in which tax
l i a b i l i t i e s of a f f i li a t e d corporations would ordin arily not be determinable
u n til long a ft e r the transactions involved took place*

Those who have been

devoting their time to the preparation o f the Begulations undoubtedly
recognize, f a r more than others, the re a l d if fic u lt ie s o f the undertaking.
Although i t is to be expected that there w i l l be differences o f opinion as
to some o f the p a rtic u la r rules adopted, the Treasury believes that the
Begulations w ill be much more satisfacto ry than the uncertainties of the
past and w ill prove by experiences over a period of years to be acceptable
and sound.
The more important provisions o f the Begulations may be summarized
b r ie f ly as follows?
(1)

Future Application only.
The Begulations apply only to the taxable year

1929 and subsequent taxable years.

They are not to be ap­

p lie d retroactively, although some o f the provisions
naturally are based upon the position taken under p rio r
laws.
(2 )

Administrative Provisions.
The parent corporation is the agent o f each corpo­

ration in the group and the Treasury w i l l deal only with the
parent, with the necessary provisions to apply in case the
parent is dissolved or a subsidiary leaves the group.

The

i
- 3 p riv ile g e to f i l e a consolidated return must be exercised at
the time the parent f i l e s it s return, and every member o f the
group must be included in the return#

Generally speaking,

a group which elects to f i l e a consolidated return fo r any
year Mist continue on the same basis fo r subsequent years#
( 3)

L ia b ilit y fo r Tax.
The parent corporation and each subsidiary remain

severally lia b le fo r the tax shown on the o rigin al return anfl
fo r any deficiency, with a provision that i f a subsidiary
ceases to be a member o f the group by reason of a sale of
stock p r io r to the assessment o f the deficiency its l i a b i l i t y
continues only fo r its share of the deficiency computed on the
basis o f it s share of the consolidated net income.
( 4)

Consolidated Het Income*
The net income o f the a f f i li a t e d group is , in e ffe c t,

the algebraic sum o f the net incomes o f the separate coi^)ora­
tions in the group, with necessary eliminations to prevent
recognition o f gain or lo ss upon purely intercompany trans­
actions#
(5 )

Sale o f Stock o f Subsidiary#
Gain or lo ss is recognized upon the sale o f stock

o f a subsidiary, whether or not the a f f i l i a t i o n is broken*
Inasmuch as under a consolidated return net losses o f one
member o f the group may be o ffse t against the gains o f other
members, it was necessary to prevent a second allowance
(that i s , also upon the sale o f the stock) o f the losses
which have been availed o f in the consolidated return but

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which could not have been availed o f i f separate returns had "been
file d #

There is much to he said fo r making an adjustment also fo r

the gains of the subsidiary which were taxed to i t when earned.
However, inasmuch as gains can he cared fo r hy the declaration of
dividends p r io r to the sale o f the stock (thus preventing the socalled “double taxation* fo r the r e l i e f of which the adjustment
was proposed), i t was not believed the advantages o f an increased
basis, which would resu lt i f a consolidated return were f i l e d but
which would be denied to a separate corporation, were ju stifie d #
Again, i f adjustments fo r gains were to be made corresponding ad­
justments fo r dividends would be required.

The admittedly compli­

cated provisions applicable to the adjustments fo r losses would
appear simple indeed as compared to the provisions which would be
necessary to provide properly fo r adjustments fo r gains and

p ill

dividends.
I t was rather singular that no one advocated the ru le ,
which has been adopted as to the past in decisions o f the lower
courts and o f the Board o f Tax Appeals, that gain or lo ss should
not be recognized upon the sale o f stock o f a subsidiary#

Such

a rule would, obviously, have the e ffe c t of removing the present
tax upon a re a liza tio n o f appreciation in value o f cap ital assets#
The Begulations also protect against “paper* losses re­
sulting from purely a r t i f i c a l or fic t it io u s transactions#
(6 )

D issolution of Subsidiary.
le ith e r gain nor lo ss is recognized upon the dissolution

o f a subsidiary.

Dissolutions may, in theory, be c la s s ifie d into

three general types t

(a ) A “purchasing* dissolution, where, in

order to obtain the assets, the stock is purchased and the eorpo-

-

ration then dissolved; (b )

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a "reorganization” dissolution , where

a subsidiary is dissolved in order to effe c t a purely internal
rearrangement or reorganization; and (c )

a "winding-up8 disso­

lu tion , where i t is decided to abandon the business and close out
the a ffia r s o f fhe subsidiary*

Obviously, no gain or lo ss should

be recognized, fo r none is actu ally realized , in the case of dis­
solutions o f the f i r s t two types, while any gain should be taxed
and any lo ss allowed as a deduction in the case o f a dissolution
o f the th ird type.

Generally speaking, however, dissolutions as

a p ractical matter cannot be read ily c la s s ifie d *

transactions

f a llin g into more than one o f the three types are very frequently
involved, and the purposes o f a d issolu tion do not alwways remain
constant and are not always apparent or ascertainable.

Inasmuch

as i t would be impossible to prescribe a rule which would
distinguiéh the types and which would be susceptible o f sound
administration, and in view of the fact that the benefit o f
losses which are properly allowable are not denied i f the loss
is realized before the dissolution or i f the subsidiary is not
a member o f the group at the time o f the dissolution, i t was
concluded that the rule adopted in the ^Regulations, treatin g
a l l dissolutions as intercompany transactions, was the safest
and best and would prove the most satisfactory*

Very sub­

stan tial benefits both to taxpayers and the Government w i l l
result in the certainty as to the rule which is to be applied.
(7 )

Basis o f Property*
The basis of property owned by a corporation is not

affected by intercoupany transactions or by the purchase or
sale of it s stock*

/

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(8)

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Net Losses*
Consolidated net losses fo r 1929 and subsequent years

can “be carried forward by the same a f f i li a t e d group*

I f the

group is broken up, the net lo ss follow s the parent and in
case is to be allowed to the subsidiary.

A corporation coming

into a group carries it s net lo ss with. i t , subject only to the
protective provision that i t cannot exceed the amount paid by
the group fo r it s stock i f the a f f i l i a t i o n is formed a ft e r
January 1 o f this year*

Provision is also made fo r the carry­

ing forward, subject to certain lim itation s, o f net losses sus­
tained fo r one or both of the taxable years p rio r to 1929 i f a
consolidated return is f i l e d under the new Hegulations*
(9 )

Credit fo r foreign Taxes.
The credit fo r foreign taxes is to be confuted as i f

the a f f ilia t e d group were the taxpayer*

FOE IMICEDIATE HELEASE,
Monday, January»- 14, 1929

TEEASUHT DEPARTMENT

Secretary Mellon today sent the fo llo w in g l e t t e r to the Chairman of
the Senate Committee on Appropriations•
Hon« Francis E. Warren,
Chairman,
Committee on Appropriations,
United States Senate.

January 12, 1929*

Ity dear Mr. Chairman:
In acknowledging receip t of your le t t e r of January 11th, in which you
state that the F ir s t D eficiency B i l l has been reported to the Senate with
the inclusion of an item o f $25,000,000 fo r the Bureau of Proh ib ition , fo r
p roh ib ition enforcement, and that i t is the wish of the Committee that the
Treasury Dejjartnent furnish a statement as to whether in the opinion o f the
Department such a sun could be ju diciou sly expended, and i f granted by
Congress how such an amount would be a llocated , permit me to give you a
b r ie f general statement on the subject o f p roh ib ition enforcement*
The problem of proh ib ition enforcement has many ram ification s and it s
successful solution depends not only op anple appropriations fo r the
Bureau of P roh ib ition but on the a c t iv it ie s and situ ation of other depart­
ments and bureaus of the Government.

The question, th erefore, of whether

an increase of $25,000,000 in the amount appropriated fo r the Bureau of
P roh ibition w i l l accomplish the resu lts desired by the Congress and this
Department, is not one that can be answered without a thorough-going survey
o f the en tire f i e l d , fo r I assume, of course, that i f any such large sum is
to be appropriated, the Congress w i l l desire i t to be used with the utmost
effectiven ess and in a way calcu lated to bring about the grea test resu lts.
For instance, one o f the major d i f f ic u lt i e s encountered in making the pro**
h ib itio n laws tru ly e ffe c t iv e is the congestion in the United States courts

«

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occasioned in la rge part by numerous pending p roh ib ition cases.

I t would

seen desirable, therefdro, i f the Congress deems i t advisable to appropriate
an ao.ditional sum of $25$ 000* 000 fo r th is general purpose, that some con­
sideration should be given to whether a part of th is Sum at le a s t should
not be a llocated to tne Department o f Ju stice.

As to the needs o f the De­

partment of ¿fustico I dm; of dolirso, not in a p o sitio n to express an opinion.
iO.10 problem of smuggling is an important ono.

It s prevention is la rg e­

ly dependent, in so fa r as our sea coast is concerned, on the adequacy o f
tho f l e e t maintained by the Coast Guard and in part on an adequate Customs
fo rce at our various ports; and in so fa r as our land borders are concerned,
on an e ffe c t iv e ipatrol of the borders.

On account of our fa ilu r e thus fa r to

socuro a sa tisfa cto ry agreement with Canada, which, in my opinion, would
m a terially reduce the liq u or t r a f f i c coming over the Canadian border, the
necessity of a thorough-going survey as to tho best means of increasing the
e ffectiven ess o f our border p a tro l is apparent.

This the Department has

recen tly undertaken.
In so fa r as the Coast Guard is concerned, some time ago I instructed.
Admiral B illa r d to submit a report as to the adequacy of the present Coast
Guard f l e e t , together with an estimate o f the Coast Guard bu ilding needs
over the period o f the next fiv e years.
The problem of securing the necessary personnel under the provision s of
e x is tin g law applying the C iv il Service to the Bureau of Proh ib ition and
Customs Border P a tro l must likew ise be taken into consideration.

Up to the

present tin e , i t has been possible to make permanent appointments fo r only a
portion of tne service and i t is anticipated that m/iny months w i l l elapse be­
fo re tne provisions of the C iv il Service Act can be f u l l y applied through- the
furnishing of adequate e lig ib le re g is te rs fo r the present p o sitio n s.

-3~

In so fa r as the Bureau of P roh ib ition i t s e l f is concerned, sone
additional funds could he advantageously used at the present tin e in
increased in vestiga tio n a l a c t iv it ie s and in a w ell-considered education­
al program*

Looking to the future, i t w ill no doubt be advantageous to

provide additional funds fo r increased border p a tro l o f the Customs Ser­
vice and an increased Customs fo rce at some of the p rin cip a l ports of
entry, and increased equipment fo r the Coast Guard.
The Department desires, o f course, to see every reasonable pro­
v is io n made fo r the adequate enforcement o f the law, but I do not b elie ve
that any such la rge sum as is provided fo r in the present D eficiency B ill
should be appropriated u n til the surveys above suggested have been com­
p leted and u n til i t can be determined how any increased amounts can be most
w isely and e f f e c t iv e ly expended.

In other words, I am not prepared to say

that p roh ib ition enforcement can not be made more e ffe c t iv e by the ex­
penditure of increased amounts fo r th is purpose, but I do fe e l that no
such appropriations should be made u n til they can be d e fin it e ly a llo ca ted
to certain s p e c ific purposes, and that any other method o f procedure 7/ ill
n ecessarily resu lt in the extravagant use o f the public funds»
Very tru ly yours,

A. W. MELLON
Secretary o f the Treasury.

POE RELEASE, MORNIH& PAPERS,
Monday, January 14, 1929*

uht

REFUNDS?

An in terview with

Honorable Henry Herrick Bond,

Assistant Secretary of the Treasury

tfhy Refunds?

In an interview- today, .Henry H errick Bond, Assistant Secretary o f the
Treasury, explained in d e ta il why refunds of taxes are made.

A summary of

h is statements fo llo w s.
Attention has "been focussed recen tly upon the refunding of fed era l
taxes*

During the fis c a l year ending June 30, 1928, there were about

168,000 refunds o f internal revenue taxes, p rin c ip a lly income taxes, which :
ranged in amounts from 1^ to $3,600„0C0.

The refunds to ta lle d $142,393,567.17

so i t w i l l he seen that the average amount was approximately $8,500.

For

the-current fis c a l year $130,000, <100 was o r ig in a lly appropriated fo r this
purpose and Congress has now been asked fo r an additional $75,000,000.
A very proper question is raised in the minds of the p u b lic.

The

public is e n title d to know why taxes which have once been paid are being
refunded or paid back.

The answer is simple.

The system prescribed by Congress fo r the c o lle c tio n of fed era l revenues
is based upon the proposition that the needs of the government demand and
ju s t ify an insistence upon immediate payment o f taxes.

Ary dispute over the

amount to be paid must not be permitted to postpone payment.
s e ttle d th e re a fte r.

I t can be

The soundness of th is long-established p o lic y is not

open to question (though i t has been relaxed considerably by the creation
o f the Board o f Tax Appeals).

The conveniences o f the individual oust be

subordinated to the public n ecessity.

An obvious c o ro lla ry requires a re­

fund o f any payment in excess o f the amount fin a lly determined to have been
due.
The p rin cip al steps in administering an income tax are not d i f f ic u lt
to understand.

A taxpayer makes h is return, computes the amount he thinks

is due, and pays.
ned*

His return is then audited and h is transactions exami­

One o f three resu lts fo llo w s: — ( l ) His return may be found correct,

or (2 ) he may owe an additional amount, or (3 ) he nay have paid too much«
I f the f i r s t , h is case is considered as closed, though of course i t may
subsequently he reopened i f necessary; i f the second, we proceed to c o l­
le c t a d eficien cy; and i f the th ird , we proceed to refund or c red it against
an amount owing fo r another year.

I t is rather s ig n ific a n t that our co l­

le c tio n s of additional taxes fa r exceed our refunds of overpayments#
fthy should a taxpayer ever overpay h is tax?
question —

Let me counter with a

Do you understand every provision of our income tax law«?or,

assuming you are a "super-expert», Does every one agree with your in te r­
pretation s and applications?
answer#

But you are e n title d to a more s p e c ific

A few o f the more important reasons are: — Mathematical error;

fa ilu r e to appreciate or present important fa c ts ; i^noranbe of the law;
in a b ility to determine the j>roper in terp reta tio n of the law, because of
com plexities, ambiguities, or omissions; payment in accordance with
Treasury regulations or in terp retation s subsequently reversed, e ith e r by
the Treasury i t s e l f or as a resu lt o f fin a l decisions of the Board o f T&x
Appeals or the courts; le g is la tio n which has r e tr o a c tiv e ly reduced the
tax l i a b i l i t y ; or a provision of the law is held to be u nconstitutional.
During the war years, the Government was under the necessity o f c o l­
le c tin g more than 4 b i l l i o n d o lla rs annually, under an e n tire ly new form
o f tax, from taxpayers having no- conception o f the meaning o f the law#
C ollections had to be made.

I t was at times necessary to be somewhat

arb itrary in the prelim inary determinations.

"Time was o f the essence",

as the lawyers would say, and so the public poured.into the national treasury
la rg e amounts, the le g a lit y o f which was in dispute.

In part these pay­

ments were made because of the "payment f i r s t " p rin c ip le which I have
described, and in part i t was due to patriotism .

There was always, how**

ever, the re a liz a tio n that u ltim ately these payments would be analyzed,

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/y

that correct in terpretation s would "be applied, and that a readjustment
would be nade and overpayments promptly refunded*
TJho should make the fin a l determination?

Should i t be made by the

Commissioner of Internal Revenue, a highly important and responsible
o f f i c i a l of the Treasury, upon the advice of a corps o f experts and
le g a l counsel, or should he shirk the re s p o n s ib ility and fo rce taxpayers
in to the courts, facin g the costs and interminable delays of lit ig a t io n ?
I am personally convinced that the determination and adjustment o f tax
l i a b i l i t i e s must be prim arily an adm inistrative function.

Our ju d ic ia l

system, sorely burdened even now with calendars crowded with cases in
which taxpayers have not agreed with the Government’ s determination,
could not xoossibly survive i f any other course were pursued*

The Board

of Tax Appeals is years behind and i t reviews only additional tax determ­
inations and not refunds.

I would be pleased indeed at an opportunity to

present th is issue more fu lly to the public*
But should the Commissioner h esita te and refuse to refund ju st be­
cause the amount is large?

Most o f the discussion has been occasioned,

I b e lie v e , by a refund of $15,000,000 to one taxpayer*

I t has been

frequently overlooked that th is taxpayer paid over $217,000,000 and that
the net amount o f i t s taxes fo r the year involved is in excess o f
$173,000,000*

Suppose we were ta lk in g in terms of thousands rather than

m illio n s, would anyone question or c r it ic iz e ?

Should we pay in te rest

upon an amount which a court would c le a r ly d irect us to refund?

I

would approve without fe a r any settlement c le a r ly in the best in terests
o f the Government.

Cases of th is kind are most c a re fu lly considered*

The Treasury is fu lly appreciative of it s duty, as trustee fo r a l l tax­
payers, to guard zealously the p u b lic ’ s in te re s ts .
amount is refunded pursuant to court decisions.

By fa r the greater

I am confident that tax—

- 4 -

payers who have obtained refunds w ill t e s t ify that i t is no simple under,
taking to convince the Treasury o f f i c i a l s that the refund was properly

i

allow able.
Re rust not overlook the size o f the job ca rried on by the Bureau of
Internal Revenue.

The Bureau has c o lle c te d since 1917 almost $39,000,000,000;

has assessed more than $4,000,000,000 of back taxes, and has refunded almost
$1,000,000,000.

The to ta l refunds made during the past 12 years and 3

months ($975,012,356.33) are only approximately 24 per cent o f the to ta l
amount of additional assessments and c o lle c tio n s resu ltin g from o ffic e
%
audits and f i e l d in vestiga tion s ($4,061,769,209.91) which have been made
during the sane period, and but 2.5 per cent, approximately, of the to ta l
internal-revenue receip ts during the period in question ($38,715,757,522.36).
I t should be remembered that most of these refunds have been with, respect
to the excess p r o fit s tax years 1917 to 1921, in clu sive, and therefore re­
funds in future years should stea d ily diminish.
TJhy refunds?
e n title d .

Simply because we fin d we have money to which we are not

Re may learn th is from the taxpayer him self, we m y learn i t

from our own examination o f h is return, or we may be to ld by the authorita­
t iv e voice o f the court.

To magnify th is fa c t and d is to rt i t is u n fair.

Emphasis rather should be la id upon the cred ita b le record o f the Bureau in
c o lle c tin g additional taxes fa r in excess of the amount of refunds in each
year, and upon the w illin gn ess of the Bureau to assume the res}3on sibility
o f closin g cases once and fo r a l l .

W i* i
STATEMENT BY UNDEiiSECHETABY 0? THE THEASIH? OGDEN L. MILLS •
For immediate relea se.

At the morning conference held, at Mr. Hoover* s home th is morn­
ing and attended “by Mr. H i l l , State Chairman Machold and myself,
the general s itu a tio n 1of the Republican Party in New York was d is­
cussed.

There was general agreement that Messrs, Machold, H ille s ,

and H ill could be r e lie d on to take a l l of the steps necessary to
insure cooperation and harmony among party leaders, with a view to
building up and strengthening party leadership and organization.

l ’or release morning papers,
Sunday, January 20, 1929»

THE ADMINISTRATION OF THE FEDERAL INCOME TAX
SPEECH TO BE DEL IVEKED BY tMEESECxlETABY OF THE TREASURY MILLS
BEFORE THE BAD ASSOCIATION OE THE STATE OF NEW YORK, ON
SATURDAY EVENING, JANUARY 19, 1929,
AT THE HOTEL ASTOR, NEW YORK CITY.

In recent weeks we have heard much discussion o f the refunds o f
Federal incops taxes, coupled with a suggestion, in sons quarters, that
they constitute a "basis fo r c r itic is m and suspicion o f the administra­
t iv e p ractices o f the Treasury Department#

The sound and wise adminis­

tra tio n o f our tax laws, and fa it h in the in te g rity and wisdom o f those
who administer them, are o f such vast importance to our people that I fe e l
that a discussion o f what the Treasury is seeking to accomplish in the way
o f reform w ill be o f in terest to a group o f profession al men such as this*
Let me say, however, that i t Is neither ny purpose nor desire to
XDromote or encourage the more a c tiv e in terest o f lawyers as a class in
income tax matters#

Quite the contrary.

From my standpoint, lawyers who

lik e lit ig a t io n — those representing the Government as w ell as those repre­
senting taxpayers—have had a ltog eth er too much to do with the income tax,
from the very outset#

What was fundamentally an adm inistrative problem

developed almost at once into an unlim ited and interminable series o f le g a l
battles#

The substitution o f administration fo r lit i g a t i o n is the essence

o f our present income tax problem*
Leaving aside the obvious p o lit ic a l aspects and motives, the most
in terestin g featu re o f the recent C riticism o f the Treasury in connection
with refunds is the insistence o f our c r i t i c s that, even though the Depart­
ment a ft e r carefu l consideration has- decided that the taxpayer has paid more

-

2

-

to the« G0verhnent than he should, under the law, nevertheless he must he com­
p e lle d to go to Court to obtain what i s r ig h t fu lly h is ,

Tflhat they would do,

in snort, is to substitute our FedSrsi Judges fo r the executive o ffic e r s o f
Government charged with the duty o f c o lle c tin g the revenue, and have the income
tax law administered by the ju d ic ia l rather than the executive branch of
Government,

Such a proposal v io la te s every sound rule o f taxation and o f good

government.

I t is the very bog from which the Treasury seeks to ex tric a te the

income tax.
How did the recent discussion arise?

The Commissioner o f Intofndl

Hevenue decided that the United States Steel Corporation was e n t itle d to a re fund o f $15,000,000, plus in te re s t.

To be sure, th is is a la rg e sum—which

seems to me to be u tte r ly beside the point, even lea vin g out o f consideration
tne fa c t that th is p a rticu la r taxpayer paid $173,000,000 in taxes fo r the year
in question and that i f we were dealing in thousands, rather than m illio n s,
and with some small corporation, rather than the Steel Corporation, the
question in a l l human p ro b a b ility would never have been raised,

T0 be sure,

the $975,000,000 o f back tax refunds paid during the course o f the la s t twelve
years is an immense sum, but the public is not to ld that during the same period
the Government assessed more than 4 b illio n d o lla rs in back'taxes, and that re­
funds constitu te but 3g- per cent, o f the to ta l amount o f 39 b i l l i o n d olla rs
c o lle c te d ,— a very good showing indeed i f you take into consideration the
enormous d i f f ic u lt i e s o f the war and ea rly post-war period.

Can i t f a i r l y bo

contended that i t is quite proper fo r the Government, a fte r audit and review,
to assess 4 b i llio n d o lla rs o f addition al taxes on the income taxpayers o f the
Country, but when, by the employement o f the same pcbka&s, , the very same
Government o f f i c i a l s determine that the taxpayers have paid more than they
should, the l a t t e r should not be repaid except by virtu e o f a Court decision?
Of course not.

And i f I am rig h t, the obvious, sound and proper course to

- 3 pursue

i s fo r the Commissioner of Internal Revenue to assume the resp on sibility

of making a decision, and when the decision is in favor of the taxpayer, to re­
fund the amount he determines to hare teen i l l e g a l l y collected.

This doesn*t

mean that.some cases, where re a lly doubtful points of law are involved, w ill
not nave to be lit ig a t e d , but they should bd the exception and not the ru le.
TJhat gives rise to refunds, and why should taxpayers ever overpay th eir
tax?

Under our income tax System, the taxpayer prepares h is return and pays

h is tax as he estimates i t to be.

Ih© Bureau o f Internal Revenue audits h is

return and examines the various elements involved.

I t then decides whether

the return is correct or whether the taxpayer has overestimated or underestimat­
ed h is tax.

I f underestimated, a deficiency is assessed; i f overestimated,

he is en titled to a refund.

The Bureau* s determination of a deficiency, of

course, is not and should not,be fin a l; so that, i f he pays, he is then en titled
to seek a Judicial determination and to claim a refund.

Perhaps the best way to

answer the second question, as to why any man should ever be g u ilty of the f o lly
of paying more in taxes than he actually owes, is to give some actual illu s t r a ­
tions.
Case Ro*

1.

Taxpayer A made h is return claiming a deduction of $600,000,

which was h is pro rata share of the Hew York Transfer Tax as a legatee of a de­
ceased re la tiv e .

Such a deduction was held improper by the Supreme Court in

the case of geith v . Johnson.

Thereafter the Revenue Act of 1928 was passed,

and under the provisions of Section 703 such a tax, i f claimed as a deduction
by the legatee and not by the estate, was made an allowable deduction to the
le g a te e .

Therefore a refund of $300,000 was made.

Case. Ho. 2.

Taxpayer B, on behalf of himself and the other stockholders,

sold a l l the capital stock of a certain company, of which he personally owned
two—thirds, fo r a net price of $20,000,000*
to the stockholders, including the taxpayer.

About $15,000,000 was distributed
Th© remaining $5,000,000 was set

aside to meet undetermined tax l i a b i l i t i e s of the coxporation.

Later when these

— 4 **
were determined the "balance o f th is $5,000,000 was d istribu ted to the stock­
holders«

The taxpayer rexDorted h is share of th is balance in the year when he

received i t .

The Bureau ruled that i t was taxable in the year o f the o rig in a l

sale o f the stock.

Therefore a d eficien cy was assessed fo r the year o f sale,

1925, and an overassessment c e r t i f i e d fo r the year 1926, which was credited
against the additional assessment fo r 1925.
Case. Ho. 3«

Taxpayer C, a ta x i corporation, o r ig in a lly claimed depre­

c ia tio n at the rate o f 1^ a m ile.

Subsequently the adtual records o f the

l i f e and to ta l mileage o f taxicabs showed that the correct rate o f depreciation
was 2^ a m ile.

These records were submitted and v e r ifie d and the result was

refunds o f $40,000 fo r 1924 and $50,000 fo r 1925.
Case« Ho. 4 .

Taxpayer D, a steamship corporation, fa ile d to claim

am ortization on i t s o rig in a l returns fo r 1918 and 1919.

L ater, w ithin the

tine as extended by Congress i t s e l f claims were duly f i l e d and a ft e r careful
audit were allowed, g iv in g deductions o f $700,000 fo r 1918 and $300,000 fo r
1919.

The resu lt was an overassessment o f $50,000 fo r 1918, which was

cred ited against taxes fo r other years, and a small balance refunded, and
$20,000 refunded fo r 1919.
I t is apparent from these illu s tr a tio n s which were selected at random
that neither the taxpayer nor the Government was to blame fo r the situ ation
creatin g the necessity fo r a refund.

In the f i r s t case, the, refund resu lted

from a change in the law; in the second, from a m isinterpretation o f the law
by the taxpayer; in thethird,£rom a more accurate ascertainment o f the fa c ts ,
which turned out to be more favorable to the taxpayer; in the fourth, to the
fa ilu r e o f the taxpayer tponrh is return to take advantage o f a provision of
law enacted by Congress fo r h is r e l i e f and la t e r extended to him.

ïïhat I

would emphasize is , that under a tax law which deals with such a great v a rie ty
o f circumstances, reaches so many people, and produces so much revenue, even
under the most favorable conditions, without any fa u lt on the part o f the

- 5 —
taxpayer or the actninistrato r s, cases must a rise where the taxpayer fin ds that
he has e ith e r overpaid or underpaid the Government•

I f the f i r s t , he is en­

t i t l e d to he repaid; i f the second* the Government is e n title d to an additional
tax#

In neither case is there any occasion fo r c r itic is m or f o r b e l i e f on the

part o f the public that i t is confronted with anything abnormal, unexpected or
alarming#

Quite to the contrary.

I f you were to examine our revenue laws,

you would r e a liz e at once the many constantly recurring situ ation s which can bo
met only by refunds, and the many provision s which can be administered, and must
have been intended by Congress to be administered* solelj- by refunds.

Further­

more, any system o f revenue c o lle c tio n under which payments are compelled p r io r
to fin a l determinations must n ecessarily be based upon the p rin c ip le o f refund-*
ing overpayments#

This is true fo r instance o f the English system, which is

frequ ently and properly pointed to as a model o f sound income tax administration,
under which th e ir c re d its , drawbacks, and refunds amount to about 15 per cent of
the collection s#
Refunds are but a part o f a much la rg e r problem#

The present discussion

w ill have served a very useful purpose i f i t presents to the Country in a
reasonably c le a r lig h t the very d e fin ite and simple issue:

Should the income tax

be treated as a l l other taxes, as an adm inistrative problem with re sp o n sib ility
d e fin it e ly lodged in the proper, executive o ffic e r s , or is i t to be singled out
and considered as not susceptible o f anything but ju d ic ia l in terp reta tio n and
decision !

I n so fa r as I know, no other country has ever considered the assess­

ment and. c o lle c tio n o f income taxes through the ju d icia ry as necessary or a d visab le,
nor do I know o f any case o f any one o f our States taking such a p o sition , though
many o f them have enacted and enforced some extremely complicated tax l§ws, par­
t ic u la r ly in the f i e l d o f corporate taxation.

Though in the State and City o f

New York we raise annually immense sums through taxes, I have never heard i t
suggested that we could not trust the decision and judgment o f our tax o f f i c i a l s ,
but must compel then to refer* a l l doubtful questions, whether o f law or fa c t, to

I

- 6 -

the Courts»

In the case o f the Federal Incone Tax, however, i t is undeniable

that u n til recen tly there has been a very d e fin ite tendency to lean h eavily on
the CotEfts.

Adm inistrative o f f ic e r s ha#e been unw illing to assume the re­

s p o n sib ility o f making fin a l decisions.

The Government has been in clin ed to

s e ttle a l l doubtful points in i t s own fa v c r and fo rce the taxpayer to appeal to
the Court fo r r e l i e f * while, on the othei* hand* the taxpayer, fin din g that the
Government was prepared to l i t i g a t e a l l doubtful questions, found i t very much
to h is advantage to do lik ew ise,

perhaps a l l th is was unavoidable, considering

the novelty o f the problems presented* the in tr ic a te fa c ts surrounding p r a c tic a lly
every transaction o f importance, and the staggering amount o f the sums involved.
In any event, the a ttitu d e o f both the taxpayer and the Government was in large
measure responsible fo r much of the delay in s e ttlin g cases which has occasioned
so much complaint, and fo r the protracted l i t i g a t i o n which we have come to associate
with the Income Tax Law, thus depriving th is very sound method o f ra isin g revenue
o f the two essen tial q u a litie s o f a sound tax, namely, certa in ty and promptness.
Moreover, there grew up the strange f ic t io n that questions which by th e ir
nature are not susceptible o f mathematical or lo g ic a l determination could be
s e ttle d with mathematical accuracy and pure lo g ic — lea vin g no room fo r the exercise
of judgment.

Attempts were made to determine such questions as the valuation

o f natural resources, the valuation o f intan gibles, the am ortization o f war
f a c i l i t i e s , and the computation o f depreciation by*-the use o f '.fomqjilao^and with
mathematical accuracy.

There p ers is te d and p e r s is ts to-day the b e lie f that the

determination o f a tax l i a b i l i t y can be determined in each case with precision
and exactness, and i f the Bureau has any doubt as to i t s a b ilit y to reach th is
id ea l, i t should l e t the B0ard o f Tax Appeals or the Courts attempt i t ,
How, the truth is that many questions cannot be solved with exact p r e c is io n
and sound p o lic y demands that they should be disposed o f by adm inistrative action
on the basis o f the best judgment o f competent o f f i c i a l s .

I t is true, o f course,

that important questions o f law must be l e f t to the Courts fo r determination, but.

?»

7

**

in so fa r as the great m ss o f problems that a rise are concerned, we cannot hope
to s e t t le then by a series o f le g a l decisions*

Experience has. shown that condi­

tion s are so varied, complex and chaagii^ t M t hardly a day goes by wif&ouf
developing some now problem only remotely re la te d to those already decided#
A fin a l court decision fiv e years from today is o f no help in reaching presentday determinatioxis#
But, lea vin g aside a l l argument and theory, here are some fa c ts which
in dicate c le a r ly enough the danger which threatens the income tax in th is country,
a danger which no true frien d o f the system can a ffo rd to minimize#

A ft e r a

strenuous and successful e ffo r t to bring the work o f the Bureau o f Internal Revenue
to a current basis, a fte r disposing o f an accumulation o f 3,000,000 cases, in ac­
cordance with the old s t r ic t method, we found ourselves faced with over 22,00C
cases, in volving over $700,000,000, pending before the Board o f Tax Appeals— f iv e
years work, without taking into consideration new cases.
was apparently not a l l that i t appeared to be.

The clean-up in the Burear

D iffic u lt cases were evid en tly be­

ing disposed of by d rivin g the taxpayer to the Board, there to wait in patience
and uncertainty,

fthat both the taxpayer and the Government want is to have the

case s e ttle d and closed, not 3inply transferred from the Bureau o f Internal
Revenue to the Board of Tax Appeals.

Obviously, li t i g a t i o n is not the key to

the successful administration o f a tax law, which each year reaches over 2,800,000
persons and produces annually over 2 b i l l i o n d o lla rs .

Moreover, we found that the

Government was successful in sustaining only about 50 per cent, o f the assessments
appealed to the Board.

What did th is show?

I t showed c le a r ly enough that the ad­

m inistrative. o ffic e r s were f a i l i n g to assume the re s p o n s ib ility which was th eirs*
The taxpayer was e n title d to many more decisions in h is favor than they were
making#

The trouble was not, as has been suggested, excessive use of d iscretion

on the part of adm inistrative o ffic e r s , but a fa ilu r e to exercise courageously
th e ir own judgment and to dispose of these cases without the n ecessity of Court
action.

J

~ 8 To allow such a condition to continue, and grow worse, was to subject the
income tax law to such a storm of ju st c r itic is m as would in evita b ly bring i t
in to disrepute.

Accordingly, with the war years p re tty w ell back o f us, with

every prospect that we had reached a period of s t a b ilit y where the law could be
considered as in more or le s s permanent form, we determined to return to sound
tax p rin cip les and to trea t the c o lle c tio n of an income tax as p rim arily an ad­
m in istrative rather than a le g a l problem.
cases closed f a i r l y , promptly and f i n a l ly .

The id ea l we are aiming at is to have
We want to get away from the old

s p ir it of claiming everything fo r the Government and le t t in g the taxpayer protect
him self by l it ig a t io n .

We want the taxpayer to meet us half-way in a sim ilar

s p ir it of fa irn ess and with an appreciation that lit ig a t io n , both fo r him self
and the Government, is the most u n sa tisfa cto iy and expensive method o f determine
h is tax l i a b i l i t y .

A l l we want o f him is what, under the law, he owes the

Government« As a p la in n atter o f common sense, in the long run, how is that
more
amount/likely to be determined accurately and equitably? By mutual fa irn ess,
frankness and f u l l disclosure at the sta rt, or by suspicion, secrecy, distru st
and arbitrarin ess, ending in lit ig a t io n ?

Always remember that, in the f i e l d

o f taxation, promptness and certa in ty are frequently in fin it e ly more important
than meticulous accuracy*
Our immediate problem was to r e lie v e the Board o f Tax Appeals, whidh
was in serious danger o f breaking down*

In the summer o f 1927, the so-called

Special Advisory Committee was created, to apply settlement methods not only
to pending appeals but to cases in which a 60-day l e t t e r had been sent out*

The

Committee consists o f fourteen members, and a number o f conferees both in Wash­
ington and the fie ld *

These conferees are c a re fu lly chosen and trained*

They

confer* with' the taxpayer and attempt prim arily to s e t t le cases where fa c ts are
in disputé*

The work accomplished during the course o f the la s t year has

demonstrated the soundness and value o f such a method*

In that p eriod the

Commjkfctee has considered 5,748 appealed cases and 2,777 cases about to be appealed*

** 9 *■»
Of the appeals# 3,288, and of the 60-*day le t t e r cases, 2,088, have been re-**
commended fo r settlement*

The combined Oases proposed fo r settlement resulted

in additional assessments totalin g almost $37,000,000*
Th© success of th is Committee was such that early la s t year plans were
perfected fo r the creation of a sim ilar agency in the General Counsel* s Office
to attempt sim ilar settlement work in cases involving prim arily questions of
law and mixed questions of law and fact#

*

Many cases involved a number of

issues, each of which is a f a i r ly close question of law without procedure, and
not of general importance*

On some of these questions the Bureau may p ro fita b ly

y ie ld in exchange fo r sim ilar concessions by the taxpayer*

It i s , in a word,

the introduction into the realm of tax administration of a businesslike method
fo r adjusting disputes*
unprofitable

L itig a tio n i s proving expensive and, on the average,

both, to the taxpayer mid to the government»

Settlement methods

serve to keep the tax problem on an administrative b a s is , where i t belongs, to
reach resu lts promptly, with benefit to the Government and the taxpayer, and in
the long run to produce more revenue*

These two agencies, no matter how of**

fective they may prove to be, are necessarily lim ited in the scope Of their
a c t iv it ie s , but the success of th eir e ffo r t s , the educational work which they
are s a tis fa c to rily contributing by bringing the conferees and auditors into
direct contact with them, the exchange of. auditors, meetings fo r general dis­
cussion and the reading of the Committee* s recommendations in sp e c ific cases,
are a l l contributing to the introduction of a new point of view and a new
method of approach to the solution of th eir problem in the Bureau i t s e l f *

If

lit ig a t io n i s to be avoided, i f tax cases are to be settled with promptness
and certainty, the ultimate re sp o n sib ility must d e fin ite ly
of Internal Revenue*

rest on the Bu.re«u

I t s employees must recognize that resp o n sib ility and be

w illin g to assume i t , and they must receive the wholehearted support and en­
couragement of- those at the top*

There need be no fe a r of la x it y , careless­

ness or fa ilu r e to protect the in terests o f the Government*

If© are" proceeding

Of the appeals, 3,288, and o f the 60-day l e t t e r cases, 2,088, have been re­
commended fo r settlement*

The combined cases proposed fo r settlement resulted

in additional assessments to ta lin g almost $37,000,000*
The success o f th is Committee was such that ea rly la s t year plans were
p erfected fo r the creation o f a sim ilar agency in the General Counsel* s O ffice
to atter.pt sim ilar settlement work in cases in volvin g prim arily questions of
law and nixed questions o f law and fa c t .
v

Many cases involved a number o f

issues, each o f which is a f a i r l y close question o f law without procedure, and
not o f general importance.

On some o f these questions the Bureau may p r o fita b ly

y ie ld in exchange fo r sim ilar concessions by the taxpayer.

I t is , in a word,

the introduction into the realm o f tax administration o f a businesslike method
fo r adjusting disputes*

L it ig a t io n is proving expensive and, on the average,

unprofitable * both to the taxpayer and to the government.

Settlement methods

serve to keep the tax problem on an adm inistrative basis, where i t belongs, to
reach resu lts promptly, with b en efit to the Government and the taxpayer, and in
the long run to produce more revenue.

These two agencies, no matter how e f­

fe c tiv e they may prove to be, are n ecessarily lim ite d in the scope o f th e ir
a c t iv it ie s , but the success o f th e ir e ffo r t s , the educational work which they
are s a tis fa c to r ily contributing by bringing the conferees and auditors into
d irect contact with them, the exchange o f auditors, meetings fo r general dis­
cussion and the reading o f the Committee*s recommendations in s p e c ific cases,
are a l l contributing to the introduction o f a new poin t o f view and a new
method o f approach to the solution o f th e ir problem in the Bureau i t s e l f *

If

lit ig a t io n i s to be avoided, i f tax cases are to be s e ttle d with promptness
and certa in ty , the ultim ate re s p o n s ib ility must d e fin it e ly
o f In tern al Revenue.

rest on the Bureau

I t s employees must recognize that re s p o n s ib ility and be

w illin g to assume i t , and they must re ceive the wholehearted support and en­
couragement of. those at the top.

There need be no fe a r o f la x it y , careless­

ness or fa ilu r e to p rotect the in te rests o f the Government*

We are proceeding

fimSuiar

FOE IIIMEDIATE HELEASE,
Monday, January 21, 1929.

Secretary?- Mellon to-day sent the fo llo w in g l e t t e r to Bishop Janes Cannon, J r ,,
of the Methodist Episcopal Church South.

THE SECHETAEF OF THE TKEASUHT
Washington, January 21, 1929.
dear Bishop Cannon;
I beg to acknowledge receip t o f your telegram of January 18th in which you
suggest that the appropriation o f $25 ,000,000 fo r the P roh ib ition Bureau as contam ed m the so -ca lled Harris amendment to the F ir s t D eficien cy B i l l be made
ava ila b le so as to be expended as the Secretary o f the Treasury nay determine,
and in which you also suggest that the zeal on the part o f the Secretary o f the
Treasury to secure adequate enforcement nay w ell be questioned i f he refuses the
opportunity o ffe re d by the Harris amendment.
As I pointed out in ny l e t t e r o f January 13th to Senator Warren, proh ib ition
enforcement does not rest s o le ly upon the Bureau.of P roh ib itio n , but i t s success
depends la rg e ly on the cooperation afforded by the Coast Guard, the Customs
Service, and the Border P a tro l, and, what is even o f more v i t a l importance, on
the p o s s ib ilit y o f bringing to t r i a l oases prepared by the P roh ib ition Bureau
and ready fo r t r i a l .

What I endeavored to point out in ny l e t t e r to Senator

Warren is that the Harris amendment makes the additional funds ava ila b le to the
P roh ibition Bureau only and r e s t r ic t s the uses by that Bureau, with no d iscretion
in the Secretary o f the Treasury.

There are now 31,000 liq u o r oases pending

m the Federal courts and causing congestion, with no r e l i e f in sight.

The

• ° mS ®erv^oe needs additional guards in the p rin cip a l ports and the Border
Patrol needs strengthening, while in so fa r as the Coast Guard is concerned,
Admiral B illa rd is at present undertaking a survey as to the ships needed to
replace a number o f destroyers whose usefulness has been p r e tty nearly exhausted,
804 iS prepare<i t0 necomnend an increase in the commissioned personnel o f the

Coast G-uard. . The H arris amendment would not make funds ava ila b le fo r any o f
these purposes, nor could the additional money provided fo r be used fo r the
educational purposes which you emphasize in your telegram.
Under these circumstances, can i t bo f a i r l y said that an appropriation o f
$25,000,000, made with these re s tric tio n s , would o f i t s e l f constitu te an i n t e l l i ­
gent and e ffe c t iv e means o f promoting proh ib ition enforcement?
I

note that in your telegram you suggest that the re s tric tio n s be removed and

that $25,000,000 be made a va ila b le to the Secretary o f the Treasury to spend aâ
.0

sees f i t .

This, o f course, is not the H arris amendment now pending in Coil-

gress, and aside from the fa c t that i t would make no provision whatsoever fo r
r e lie v in g the congestion in the courts, which to-day constitu tes one of the major
problems in the f i e l d o f p roh ib ition enforcement, I want to suggest whether you
consider i t good p ra ctice to place so vast a sun in the hands o f a public o f f i c i a l
v/ith unlim ited d iscretio n as to i t s use?

I t makes no d ifferen ce whether that

o f f i c i a l be the Secretary o f the Treasury or some other c h ie f o f an Executive
Department o f Government^ I do not b elieve that adequate p rotectio n of the public
in terests and the proper safeguards that should always surround the expenditures
of public funds can f a i r l y be said to have been provided fo r i f an appropriation
o f th is character is made.

Such a program would break down the safeguards o f the

Budget System, and the e ffe c t iv e and proper control which Congress exercises over
tne expenditure o f the public funds.

I think that upon second consideration you

w ill r e a liz e that th is is not a minor question but a fundamental one, and that
in the long run, whether in the proh ib ition f i e l d or in any other f i e l d o f governs
ment, in fin it e ly more is lo s t than gained i f fo r the sake o f accor.plishing im­
mediately a purpose, no matter how desirable, a fundamental
government and sound p ractice is vio la te d »
Bishop James Cannon, J r .,
Methodist Episcopal Church South,
B lis s Building,
Washington, D. C.

Sincerely yours,
A. W. MELLON
Secretary o f the Treasury.

Dod

treasury dèfarîmtt

FOR RELEASE MORNING FAPERS
Tuesdajr, Jan* 22, 1929*

Secretary Mellon to-day made public the fo llo w in g id en tica l le t t e r s a&dressed by him to the president o f the Senate and the Speaker o f the House o f
Repre sentat ive s*
THE SECRETARY OF THE TREASURY,
Washington, January 21, 1929#
Ity dear Mr.' President ( Speaker):
In my Annual Report fo r the fis c a l year 1928, submitted
to the Congress la s t December, re fe rrin g to the question o f whether the National
Bank notes now in circu la tio n should be re tire d , I said as fo llo w s;
"In a l l p ro b a b ility a conclusion as to the possible re­
tirement o f the national-bank c ircu la tio n , through exercise
o f the c a ll p r iv ile g e attaching to the 2 per cent consols
which a rise s a ft e r A p ril 1, 1930, w ill be reached before the
department can issue national-bank notes in the reduced size#
The Federal Reserve Act o r ig in a lly contemplated the r e t ir e ­
ment o f the national-bank currency. The problems was dis­
cussed f u l l y in the annual report fo r 1924* Considerable
tin e having elapsed, i t is f e l t advisable to submit the
matter to the Congress fo r decision at the present session#
In the event national-bank notes are continued in d e fin ite ly
as a part of the money circu la tio n o f the United States, the
Treasury w i l l be prepared to apply the new designs to such
notes and to make them a va ila b le in the reduced size within
a reasonable time a ft e r the issue of other kinds o f currency
in the reduced s iz e ."
The question has received the thorough study and consideration o f th is
department, and I have concluded that i t would be inadvisable to submit to Con­
gress at th is time a program looking to ea rly retirement of our National Bank
note c ircu la tio n .

Accordingly, when the new-size paper currency is issued, on or

about July 1, 1929, the Treasury Department w ill be prepared sh ortly th erea fter
to make a vailable National Bank notes in the reduced s iz e .
Sincerely yours,

A. W. MELLON,
Secretary o f the Treasury

TREASURY DEPARTMENT

FOR EEUSASB, MOKHIHG- PAPERS,
Wednesday, January 23, 1929.

Secretary o f the Treasury Mellon today made public h is l e t t e r to Honorable Reed
Smoot',. Chairman, Senate Finance Committee, regarding Senator McKellar*s b i l l fo r
the review o f tax refunds, c re d its , and abatements by the Board o f Tax Appeals.

"January 22, 1929.
My dear Mr# Chairman.;
%
There is pending in :th e Senate a b i l l o ffe re d by Senator McKellar, S*
5319, the substance of which has also been o ffe re d as an amendment to the
Treasury D eficiency B i l l .
The b i l l and amendment both provide that a l l
claims f o r refund, c red it or abatement o f an in tern al revenue tax involving
more than $10,000 sh all, before payment, be c e r t if ie d to the B0ard o f Tax
Appeals fo r review and determination and that upon the disallowance o f any
claim involving more than the said amount the taxpayer shall have the right
o f axopeal to said Board.
The said b i l l fu rth er provides that a l l claims
fo r not more than $10,000 shall only be refunded, cred ited or abated under
regulations prescribed by said Board.
This b i l l is o f such a revolutionary character and, in my judgment so
unwarranted, that I submit the fo llo w in g fa cts fo r your consideration, inas­
much as tho Committee on Judiciary, to which the b i l l was re ferred , reported
the matter favorably without asking th is Department fo r it s recommendations#
The prox>osal is so fundamentally unsound that i t should not require ex­
tended argument to demonstrate the fa c t .
In the f i r s t place, i t would in­
crease the volume of work of an important Board, already so overloaded that
two years ago i t s very existence was threatened, and, in the second place,
i t would u tte rly change the character o f th is Board by converting i t from a
quasi—ju d ic ia l body passing upon disunited issues in to a body with purely ad­
m in istra tive powers#
The Board of Tax Appeals has during i t s fou r years o f existen ce, been
unable to cope with the vast flo w o f appeals on asserted d e fic ie n c ie s . On
June 30, 1925 there were 3,494 appeals awaiting t r i a l ; on June 30, 1928,
21,639#
During the past eighteen months the Treasury Department has made
h eroic e ffo r t s to reduce the accumulation. The peak was reached on May 31,
1928, when 22,061 cases were ponding# These have been reduced to 20,079
on December 31, 1928# However, i t is apparent that at le a s t three years
o f most strenuous endeavor by a l l concerned are s t i l l required to mako the
Board current on i t s work.
This condition has arisen with th e ir ju ris d ic tio n lim ite d to d e fic ie n c ie s *
How i t is proposed to increase th e ir work by g iv in g them the review o f a l l
refunds, abatements and c red its over $10,000, and adm inistrative control
over a l l other refunds, abatements and c re d its .

-

2

-

How much would this increase th eir work?
In the fis c a l year 1926 the
Hoard disposed of 3*085 bases a fte r hearings on the merits.
This is a f a i r
measure of their output at the present time.
And yet there were 4,052 claims
fo r refunds in excess of $10,000 passed upon by the Bureau of Internal Revenue
in that year, of which, under Senator H cK ollar's b i l l , 1,636 which woro allowed
would have had to be reviewed by the Board, and the 2,416 rejected would have
had the right to appeal to the Board* In addition there webe numerous claims
fo r abatement and cred iti
It is therefore cle a r that this b i l l would more Ihah double the present
Work of the Boabdl
I t is useless to estimate whether th is would delay bring­
ing the ii* present wobk to a current bhsis* because i t is so c le a rly evident
that the Bo^rd would bo completely buried in a volume of work from which i t
could never emerge*
I f i t were to dispose of appeals now pending (without
reference to those f i l e d h ereafter) before considering refunds, these refunds,
amounting probably to at le a st $75,000,000 annually, would wait at le a st three
years fo r refund by the Board and fin a l payment*
This would mean that on such
an estimated amount additional interest to ta llin g $13,500,000 annually would
soon be accruing, - an en tirely needless expense, - to say nothing of the hard­
ship to the taxpayers of the country who would be deprived fo r over three years
of the use of th is money to which they would be c le a rly e n title d and would be
compelled to borrow i t elsewhere i f they could secure credit*
I f refunds
were to be given precedence over pending cases the Government would postpone
fo r years the collection of large amounts of back taxes to which i t is now
e n title d and the reduction in revenue would have to be made up from other
sources in the meantime*
P u lly as serious is the fa c t that the proposal would completely change
the character of the B0ard and the nature of it s work* The Board of Tax Ap­
peals is a q u a si-ju d ic ia l body* I t functions as a court, passing upon dis­
puted issues a fte r hearing witnesses and the arguments of counsel* This b i l l
would transfer to then purely administrative duties, - the review of matters
upon which the p a rtie s are in f u l l agreement, with respect to claims allowed
by the Commissioner* It would also give them administrative control of a l l
refunds, however small, through the power of issuing regulations* In a l l of
the recent discussion in the Congress and elsewhere there has been no suggestion
that refunds were being made dishonestly*
Why, then, should the administrative
duty now imposed in the Commissioner of Internal Revenue be v irtu a lly trans­
fe rre d to the Board of Tax Appeals?
What reason is there to believe that a
member of this Board is better f it t e d to pass upon these administrative pro­
blems than the Commissioner o f Internal Revenue*
A stable Government must rest upon the confidence of it s people* High
administrative o ffic e r s must be entrusted with resp o n sibility and on th eir
good fa it h , proven by the test of time, the people must rest*
Responsibility
must be placed somewhere under our taxation system*
Obviously i t should be
placed in those high administrative o ffic e rs whose positions were created fo r
the purpose of the enforcement of the law* Nothing is gained by superimposing
a sem i-judicial review of such administrative action in «ill cases*
On the
contrary it would be a mere tran sfer of resp o n sib ility , at a large interest
cost, increased administrative expense, and would in f lic t a serious blow to the
morale of the Bureau of Internal Revenue*
I f the Commissioner and h is experienced and trustworthy assistants cannot
be entrusted with this respon sibility they should not be trusted with any
resp on sibility whatever under an income tax law, because the resp o n sibility

- 3 -

fo r making refunds is no grea ter than the re s p o n s ib ility fo r c o lle c tin g ad­
d itio n a l taxes.
Their fa it h fu l devotion to the in terests o f the Government
has been proven during too long a period to require defense, I can, th erefore,
only suggest that the person who would propose tran sferrin g the re sp o n sib ility
fo r these refunds to other o ffic e r s would probably within a short period o f
tin e make a sim ilar attack upon the R0 a rd .of Tax .Appeals and, pointin g to the
la rg e anmmt being refunded by the hoard, demand that the power to refund be
tran sferred to some other person or g*oup,
ho proof has been o ffe re d to show any improper payments. There is no
evidence o f maladministration, corruption or improper practices'. There is
nothing to indicate that the present machine zy is not functioning smoothly
and with adequate p rotection to the in terests o f the Government, Why, then,
when i t has been determined that a taxpayer has paid more than he ought,
should he be compelled to wait three years in order to have h is case reviewed
by a semi—ju d ic ia l body?
The real issue is whether the income tax is to be administered by the
executive branch o f the Government in accordance with every precedent and
every sound p rin c ip le o f Government, or is to be turned over to the ju d ic ia l
branch,
I have no h esita tio n in prophesying that the la t t e r course spells
the complete breakdown o f the income tax.
Any tax that cannot be administer­
ed save by means o f l i t i g a t i o n and court decision cannot long survive,
Yery tru ly yours,

A. ÏÏ. MILLON
Secretary o f the Treasury.

Honorable Reed Smoot,
C-iairman, Senate Finance Committee.

11

TREASURY DEPARTMENT..
_
r
S^ r ° i n S °f th° Treasur5r Mollor. today made
January 24, 1929, to Chairman Anthony o f the House
Appropriations, as fo llo w s:

FOR immediate release ,
Wednesday, January 30 1929.
public his le t t e r of
Committee on

January 24, 1929.
My dear Mr. Chairman:
The Senate, on Tuesday of this week, adopted the fo llo w in g amendment
to the D eficiency Appropriation B i l l :
’’For increasing the enforcement fo rce, $24,000,000,
or such part tnereof as the President may deem useful* to
he a llocated by the President, as he may see f i t , to the
departments or bureaus charged with the enforcement of
the national p roh ibition act, and to remain a va ila b le un­
t i l June 30, 1930.”
ls

^¿©rstanding that in order to make p roh ibition enforcement

more e ffe c t iv e the Senate intended to provide additional funds fo r certain
purposes, such o,s;

the r e l i e f of the congestion in the courts; increasing

the f l e e t , equipment, and personnel of the Coast Guard; increasing the effe i
tiveness o f the Customs S ervice, including the Border P a tro l; and increasing
the personnel o f the Bureau o f Proh ib ition and the Department o f Justice;
and that inasmuch as i t was impossible d e fin it e ly to a llo c a te the sums to
be spent fo r certain s p e c ifie d purposes at this time, the addition al funds
provided were to be a llo ca ted as the President in his d iscretio n might decide,
I

f e e l that i t is my duty to point out to you that an examination of

the amendment reveals that i t w ill not accomplish the purposes intended.
The appropriation w ill not be a va ila b le fo r any of the purposes above
enumerated, except increasing personnel of the Bureau o f P roh ib ition and
the Department of Justice, nor w ill i t he a va ila b le fo r the conduct o f an
educational program which may have been contempla-ted-«
The amendment as adopted provides funds ,ffo r increasing the enforcement
fofcfc .

Granting that the language should be construed most lib e r a lly and

*Y
/
-

2

-

in the lig h t o f the desired ends which the Senate was seeking to accorri-*
p lis h , X fe a r that the appropriation would not he availab le fo r more than
an increased personnel*

Even such essen tial inciden tal expenses

n ecessarily accompanying an increased personnel, such as rent, o ffic e
equipment. and supplies, and tra v e lin g expenses could not he paid from i t *
•Again, the President may a llo c a te the appropriation, fo r thè above
purpose, only "to the departments o f bureaus charged with the enforcement
of the^ national p roh ibition a c t,"

Only the Department of Justice and

tne Bureau of P roh ioitio n of the Treasury Department q u a lify under this
language*

Neither the Judiciary, the Coast Guard, the Customs Service,

nor the C iv il Service Commission is included,
I bring this matter to your atten tion ip order that the true intent
of Congress may be accurately expressed before the b i l l is enacted into
law, i f i t is determined that addition al funds should be appropriated.
Very tru ly yours,

A. W, MELLON
Secretary of the Treasury,
Hon, D, R, Anthony,
Chairman, Committee on Appropriations,
House o f Representatives,

2K

^
TREASURY DEPARTMENT

EOR IMMEDIATE RELEASE
Thursday, February 7,1929

Secretary o f the Treasury Mellon today made public his le t t e r to
Honorable Francis E. Warren, Chairman, Senate Committee on Appropriations,
regarding a Senate amendment dealin g with hearings on tax refunds in excess
o f $1 0 , 0 0 0 .
"January 29, 1929*
My dear Mr* Chairman:
I
submit the fo llo w in g fo r your consideration in connection
with the Senate amendment to the F ir s t D eficien cy Appropriation
B i l l providing as fo llo w s :
*That no part of the fundus herein appropriated
fo r tax refunds where the claim is in excess o f $10,000
sh all he paid out except upon hearings before any com­
m ittee or o ffic e r in the Department conducting the same,
which hearings sh a ll be open to the public, and the
decision sh all be a public document*$
The portion of the amendment which provides fo r public
hearings is open to serious objection . In the judgment o f the
responsible o f f i c i a l s o f this Department, this proposal is not
consistent with sound adm inistrative practice#
In order that the e ffe c t o f the proposal may be c le a r ly
seen and the n ecessity fo r i t c o rre c tly estimated, l e t me review
b r ie fly the usual procedure on a claim fo r refund.
A fte r a claim fo r refund is f i l e d by a taxpayer, i t regu larly
goes to the o ffic e o f the Revenue Agent in Charge in the taxpayer^
d is t r ic t and is assigned to an agent fo r examination.
Conferences
are held with the taxpayer or his representative, the necessary
examinations of the taxpayer»s books and papers made, and a report
prepared. This report is then reviewed in the o ffic e o f the
Revenue Agent in Charge and is fi n a l ly submitted to the Revenue
Agent in Charge.
Further conferences in his o ffic e may be held*
It he approves, the papers are forwarded to the Income Tax Unit in
Washington and assigned to an auditor fo r complete review and con­
sideration .
The auditor*s conclusions must then be reviewd and
approved by his superiors before a fin a l decision is reached.
Frequently fu rther conferences with the taxpayer or his representat iv e are necessary. I f the claim is in excess o f $50,000, the en­
t ir e f i l e is sent to the General Counsel*s O ffic e and there assigned
to a special group fo r another complete review and again conferences
may be held with the taxpayer at this stage.
The work o f the
attorney or attorneys who make th is review is then submitted to
the head o f the d iv is io n and, i f approved, then to the General
counsel or one o f his assistants fo r fin a l approval. In every

-

2

~

important case the f i l e and recommendations go to the Commissioner^
o ffic e where the Commissioner or one o f his assistants reviews
the case. In addition, i f the amount allowed is in excess of
$75,000, the General Counsel, before transm itting the f i l e to the
Commissioner, prepares a complete statement o f the case which is
submitted to the Joint Congressional Committee on In tern al Revenue
Taxation and the matter held in abeyance fo r the th irty-d a y period
provided by law. During that time the s t a ff of the Joint Con­
gressional Committee examines the claim and i f they have any
doubt as to the p rop riety o f it s allowance present th e ir views,
eith er by l e t t e r or conference, to the General Counsels O ffic e
fo r reconsideration.
I t w i l l thus be seen that no claim is allowed as a resu lt o f
the action of one or two individuals but that on the contrary
every ¿lain? has to run the gauntlet of thorough and complete
audits, examinations, and le g a l review by a s t a ff of competent
men, certain of them e s p e c ia lly chosen and trained fo r th is work#
I t is my opinion that this sytem completely end adequately protects
the Government*s interests#
Wj tn th is pictu re of the procedure in mind i t is d i f f ic u lt
to see the exact point at which a public hearing could properly be
in jected .
Surely the Congress would not contemplate a requirement
that a l l these proceedings be open to the public, including the
i n i t i a l conference o f the revenue agent in the taxp ayer^ o ffic e in
his examination of the books.
Each of the subsequent proceedings
are steps in the Departments e ffo r ts to reach a correct conclusion
by ordinary adm inistrative p ra ctices.
There is no point in the
procedure fo r formal arguments and the presentation of evidence as
in a court of law or before the Board o f Tax Appeals.
The record
consists of evidence submitted from time to time by the taxpayer,
frequ ently in a ffid a v it form with his claim and sometimes furnished
at a la te r point in the form o f fu rth er a ffid a v it s and documentary
proof; of fa cts obtained by the revenue agent from examinations
of the taxpayer*s books and papers; at times of reports o f agents
o f the In te llig e n c e U nit; and frequently o f reports o f engineers
sent to make examinations o f the condition or value o f tangible
property. The conferences consist o f informal discussions o f the
fa cts thus established and the application of the law thereto.
The record in each case is n ecessarily an accumulation of work ex­
tending frequ en tly over a long period of time.
I t is misleading to speak o f the present procedure as a
secret one. Conferences between the only persons who have any re a l
in te re s t in the matter should not be ca lle d secret simply because
the id ly curious are not p r iv ile g e d to be present, or because the
procedure does not permit the divulgence o f fa cts of in terest only
to the taxpayer and the Government, or because i t does not authorize
the presence of tax experts seeking information o f in te rest to
possible prospective c lie n ts , or to competitors o f the taxpayer.
There is a read purpose accomplished by the provisions o f the act
forbidding such discle.sures*
While certain large corporations may
publish from time to time th e ir balance sheets, there are many
smaller taxpayers, p a rtic u la rly new and stru gglin g corporations,
whose business could be ruined, fo r the disclosure o f th e ir fin a n cia l
p o sition would frequ en tly encourage u nfair business practices

- 3 -

designed to elim inate them from the f i e l d and possibly permit
competitors to take advantage of perhaps a temporarily weak con­
d itio n . In addition, i t would reveal secret formulae, secret
trade processes, a n d 'v ita l s t a t is t ic s , such as costs o f production,'
Furthermore, i t must be borne in mind that taxable net income is
an a rb itra ry fig u re often having but s lig h t re la tio n to the true
business income of the concern, and seldom any re la tio n to the
fin a n c ia l condition or standing of the taxpayer. Taxable net
income may be g r e a tly in excess o f, or much less than, true in­
come.
The publication, therefore, of taxable net income would
n ecessarily be m isleading. I t might destroy public confidence
in a w ell managed business, or might unfortunately establish
an u n ju s tifie d confidence in the minds o f cred itors or in vestors.
P a rtic u la rly would th is be probable since the pu blication of
the figu res would n ecessarily be incomplete and fragmentary.
Taxpayers should be permitted to contribute to the revenues
o f the Government and adjust th e ir tax l i a b i l i t i e s without
being forced to d isclose th e ir business a ffa ir s and p o lic ie s , of
in te rest only to competitors and the curious, and without being
subjected to the ris k o f improper and unwarranted deductions.
Furthermore, in cases in volvin g the so -ca lled special assess­
ment provisions, the decision rests upon the data secured from
com petitors 1 returns, and these companies could r ig h t ly object
to publication o f th e ir fig u res when they have no pending claim.
For the above reasons I re s p e c tfu lly urge that the provision
fo r a public hearing on these matters be elim inated.
Whether the fin a l decision of the Department should be made
a public document or record presents a somewhat d iffe r e n t problem
though i t would seem such action is open to most of the objections
above enumerated.
At the present time a l l the la rg er cases are
form ally presented to the Joint Congressional Committee and a l l
the records of the Department re la tin g to refunds are at a l l times
open to the scrutiny of the members o f that committee and th eir
agents. What more e ffe c t iv e safeguard can be provided?
I
am sending sim ilar le t t e r s to Senator Smoot, Chairman
of the Committee on Finance, Congressman Anthony, Chairman of
the House Committee on Appropriations, Congressman Wood o f the
House Committee on Appropriations, and Congressman Hawley,
Chairman o f the Committee on Ways and Means and the Joint
Committee on In tern al Revenue Taxation.
Very tru ly yours,

A. W. MELLON
Secretary of the Treasury
Honorable Francis E. Warren,
Chairman, Senate Committee on Appropriations,
United States Senate.“

Tor release, mornijjg pagers,
February 26, 1929.

Treasury pernrtnent.

The G-overment and Architecture

Speech o f
Honorable Ogden L. M ills
Undersecretary of the Treasury
at the Annual Dinner of the
Hew York Chapter
of the American In s titu te of A rchitects
Hew York
February 25, 1929

,

p 0

The Government and. Architecture

I am v e iy glad indeed to have an opportunity to address the
New York Chapter of the American In s titu te o f A rch itects, fo r the
Treasury is under a debt o f gratitu de to you and to your national
organization fo r the devoted and p a tr io tic service which you have ren­
dered in a great work on which we are now engaged in Washington.
I re fe r to the beau tifyin g o f the n ation's c a p ita l and the part which
the In stitu te has taken not merely in re vivin g in terest in that work
but in helping to determine the lin es along which i t should be carried
out.
More than a quarter of a century ago, when the Centennial o f the
establishment of the seat o f Government in the D is tr ic t o f Columbia
was being celebrated, the American In s titu te o f A rch itects, then
meeting in Washington, went on record in opposition to the p reva ilin g
practice o f constructing public buildings without regard to the o rigin a l
plan o f the City o f Washington or o f any established order or design. A
great meeting was held in the White House on the in v ita tio n o f President
McKinley, attended by the highest o f f i c i a l s of the Government and by
the members o f the American In s titu te o f A rch itects.

The D'Enfant

plan was rescued from the o b livio n in which i t had reposed fo r nearly
a hundred years and in terest in the whole subject was revived.

As a

resu lt of the meeting, the In s titu te , with the e ff ic ie n t cooperation
o f Senator McMillan, secured the appointment o f an expert Commission,
which should make an intensive study o f the needs and p o s s ib ilit ie s o f
Washington and recommend a method fo r carrying th eir plans into e ffe c t .

-

2

-

That Commission, comprising such illu s trio u s names as McKira* Burnham,
St. G-audens and Olmsted, subsequently made a report known as the Plan o f
1901, in which they recommended a return to the o rig in a l plan o f Washington
and L 'In fa n t, with certain m odifications, p a rtic u la rly as regards the Mall
and the development o f a system of outlying parks and boulevards.
This was only the «beginning o f a long fig h t to carry these plans to
execution.

They were attacked with great b ittern ess in Congress as ex­

travagant and excessive.

A fte r Senator McMillan*s death the movement was

l e f t without a.leader in Congress; and i t remained fo r the In stitu te to make
another e ffo r t at c r y s ta liz in g public sentiment in favor o f the Flan.
it s meeting in Washington in

19<j 5 ,

At

a dinner was held at which notable

speeches were made bv Fresident Roosevelt, by Speaker Cannon and others who
gave o f f i c i a l approval to the idea that the national capital should be en­
larged and b ea u tified and that public buildings were to be erected there­
a fte r only in accordance with an orderly and systematic plan.
I t was a great service which the In s titu te rendered.

There were many

resu lts, o f which I sh all mention only the removal o f the unsightly railroad
tracks from the Mall and the erection o f a b eau tifu l Union Station in accord­
ance with the Plans o f the Commission.

Later on the Lincoln Memorial was

b u ilt and other p rojects were being planned when the Great W-r intervened
and a l l progress stopped.
Temporary buildings sprang up overnight along the Mall and around the
Union Station to house the grea tly increased a c t iv it ie s o f the Federal Govern­
ment, which were made so v i t a l l y necessary by the war. Construction o f beauti—

- 3 fu l and. permanent buildings was a t a s ta n d s till; and there the situ ation
continued u n til recen tly, when the Secretary o f the Treasury and the Post­
master tenoral, in accordance with a provision in the Public Buildings Act
o f May

25,

1926, made a report to Congress regarding the need fo r the con­

stru ction o f public buildings throughout the country.

Subsequently Con­

gress authorized a bu ildin g program o f $2 0 0 , 0 0 0 , 0 0 0 ; and in addition
$US,000,000 W ill be re a lize d through the sale o f old buildings and sites
and w ill unquestionably be made a va ila b le.

More w i l l be needed, and

very shortly the Department w ill submit a complete survey to Congress.
Of the buildings to be erected outside the D is tr ic t o f Columbia,
nearly

300

buildings.

are fo r post o ffic e buildings at places now without

Federal

Others are to replace old and inadequate Federal buildings,

a n d s till others are fo r new buildings and extensions to present buildings
and fo r hospitals and buildings fo r the Customs and Ijffnigration Services.
The needs o f New York City have been recognized by the two Depart­
ments o f the Treasury and the Post O ffice , whose duty i t is to a llo c a te
the a vailable funds.

The greater New York p rojects which are now being

considered fo r inclusion in this a llo c a tio n w i l l require an estimated
t o ta l expenditure o f over $Ul,000,000.
expenditure

This amount is in addition to an

recen tly made fo r a s it e and bu ilding fo r the A ppraiser’ s

Stores at a to ta l cost o f approximately $7,600,000.
In the case o f the Stapleton-Marine Hospital, i t is proposed to ac­
quire additional land and enlarge the present plant to provide a capacity
of

600

beds with a view toward an ultim ate capacity o f

estimated cost o f $2,500,000.
s p e c ific authorization.

1 ,0 0 0

beds, at an

This p roject is now before Congress fo r

- 4 ?or the Annex Building to the general Post O ffic e , i t is proposed to
acquire the "balance of the "block "bounded "by

8 th

and 9th Avenues, 31st

and 33d Streets and erect thereon an annex to the present general post
o ffic e , at an estimated cost fo r s ite end "building o f $8,250,000.
The Parcel Post Building is required fo r the addition al needs of the
postal service and o ffic e quarters fo r a number of a c t iv it ie s now renting
space.

The G-overnnent has already contracted fo r the purchase of a block

of land approximately 200 x 800 fe e t , located at 9th and 10th Avenues, 29th
and 30th Streets, at a cost of $2,000,000.

There is now before Congress

an estimate of cost and request fo r the appropriation to commence con­
struction of a building on this s ite , the lim it of cost of the building
being $9,000,000, which makes a to ta l outlay fo r this p roject of
$11,000,000.

This building and the Annex Building w ill provide the Post

O ffic e with approximately 33 acres of additional flo o r space required
fo r the proper handling of the mails in that part of Hew York*
The Old Appraisers * Stores Building has been vacated and the
a c t iv it ie s of the Appraisers

transferred to the recen tly acquired

buildings at Hudson, Varick, King and West Houston Streets, the to ta l
cost of the new s it e and bu ildin g being approximately $7,600,000.
The old Appraisers’ Stores Building is to be remodeled at a cost
of approximately $500,000 and made ava ila b le fo r o ffic e and storage
space fo r governmental a c t i v i t i e s .

S p ecific le g is la tio n to

carry out this p roject is now before Congress.
L e g isla tio n has already been enacted providing fo r the addition to the
Brooklyn P0st O ffic e and Court House, at an estimated cost of $2,700,000;
and... $190,000 has been a lloca ted fo r the construction o f a post o ffic e on
Staten Island.
There is a very re a l need in Hew York C ity fo r proper accommodations '
fo r our Federal Courts.

At the same time, the people o f Hew York City

are anxious to have the Federal Government move the present Post O ffic e so
as to make that s ite a va ila b le fo r park purposes in the neighborhood of
City H a ll.

Both the C ity a u th orities and the Federal o f f i c i a l s are

earnestly endeavoring to work out a solution which w ill be acceptable both
to the C ity and to the Federal Government.

Just at present we are working

on a plan which contemplates the erection of a Federal bu ildin g on
the block bounded by Vesey, 3arclay, West Broadway, and Church S treets,
in which would be housed the Post O ffic e , the Federal Courts and other
Federal a c t iv it ie s now occupying rented space.

Whether i t w i l l be

possible to reach an agreement as to what compensation the C ity
should allow the Federal Government fo r vacating the present
Post O ffic e s ite , I am unable to say, but i t does seem as i f with
a l i t t l e good w ill on both sides, an agreement could be reached*
The Treasury Department also has under consideration the a d v is a b ility
of tran sferrin g the Assay O ffic e to another s it e .

The present s ite is

rather too valuable to be held fo r Assay O ffic e purposes, and, moreoyer,
there is some complaint o f the fumes.

Our plans are,by no means perfected

and a d e fin ite decision has not been reached, but in the meanwhile the

-

6

-

necessary authority is being requested of Congress so that the Treasury
w ill he in a p o sitio n to proceed with such a program should i t appear to
be desirable a fte r fin a l study.
The carrying out o f this huge program requires a large and w e llorganized Jfiirce of arch itects and engineers.

The force now employed by the

o ffic e o f the Supervising A rch itect o f the Treasury Department is engaged
in the preparation o f plans and sp ecifica tion s fo r projects not only in
the D is tric t o f Columbia but throughout the country.

Owing to the urgent

needs fo r r e l i e f and the number o f major p ro je c ts , i t has been found
advisable to acquire the services o f outside arch itects fo r several o f
these important p rojects and i t is our b e lie f that additional help w ill
have to be secured from lo c a l arch itectu ral firms in the la rg e r c it ie s
where conditions appear to make this desirable.

I t is in this work that

we must re ly on help from you and from your fe llo w a rc h ite c ts lin other
c itie s .
Turning now to the great bu ilding program fo r the City of Washington,
which I know is o f deep in te rest to you; Congress has authorized an expendi­
ture o f $75,000,000 and has d irected the Secretary o f the Treasury to
acquire land and erect such public buildings as w i l l meet the Governments
most pressing needs in housing various departments'-and governmental
a c t iv it ie s .
Several o f these buildings are now under way.

A new and la rger

bu ilding is being erected fo r the Department o f Commerce;-construction
has begun on a building fo r the Department o f Agriculture and one fo r
the Bureau of Internal Revenue.

A building w i l l be erected fo r the

Supreme Court on Caoitol H ill; and, as rapidly as possible, other buildings
w ill be started to house the Departments of Justice and Labor, to provide
a suitable bu ilding fo r the Government's archives, and buildings fo r

-

7

-

tlie In tersta te Commerce Commission and other independent establishments
o f the Government.
Most o f these buildings, with the exception o f those fo r the
Supreme Court and the Department o f Agriculture,- w i l l be grouped to­
gether in the area known as the Pennsylvania Avenue Triangle, extending
from

6 th

Street to the Treasury at

1 5 th

thereon to B S treet, bordering the Mall.

S treet, -and .extending aoutl
Tq secure a comprehensive

treatment o f this area as regards the grouping and also the design o f
the various bu ildin gsi .Secretary Mellon has appointed a Board o f
Architectu ral Consultants composed o f fiv e p riv a te arch itects and one
from the Supervising A rc h ite c t’ s O ffic e .

This Board includes the

distinguished president o f your Dew York chapter.

The buildings

o f the Triangle area, while being given in d iv id u a lity in th eir arch itec­
tural treatment, are to be harmonious in design and w ill be in keeping
with the tra d itio n o f the best of our older Government buildings in
Washington.

The composition o f the new group w i l l include two large

open spaces, one rectangulap in shape and re fe rre d to as the Great '
Plaza, the other circu la r, resembling in extent the Place Vendome in
Paris.
Such an arrangement w i l l add much to the beauty and d ig n ity o f
Washington, and p a rtic u la rly o f Pennsylvania Avenue.

At the same time

i t w ill contribute to the convenience o f the Government and of those
who must do business with i t without o b ligin g them, as at present, to
tra vel from one end o f the c it y to the other in search o f the various
bureaus o f a sin gle Department o f the Government.

-

7i -

By grouping these departmental buildings in the Pennsylvania Triangle,
i t w ill be possible to carry out the o rig in a l conception o f Washington and
L'Pnfant, that the Mall should be kept as a b ea u tifu l Park, interspersed
occasionally with art g a lle r ie s and museums and adorned with drives and
walks, r e fle c tin g pools and trees, a l l arranged in such a way that long
vista s w ill be opened up fo r views o f the Capitol on it s commanding h i l l
at one end, and o f the Washington Monument and the Lincoln Memorial
on the banks o f the Potomac at the other.
I t is a magnificent conception.

For it s design we are indebted to

Washington^a.nd L ’Snfant; fo r it s preservation w© are under o b liga tion to
Senator McMillan and the American In s titu te of A rch itects; and now fo r
it s execution we owe a debt o f gratitu de to Secretary Mellon who has
in sisted that the o rig in a l plan fo r the Mall be adhered to and that depart­
mental buildings must not be placed there, as was about to happen, but
must be grouped along Pennsylvania Avenue in accordance with the o rig in a l
design fo r the c it y .
In carrying out these plans, Secretary Mellon and the Treasury have
had the b en efit not only o f your advice as an organization but also of
many individual members who are consulted from time to time.

In th is,

at le a s t, we are revertin g to the practice o f an e a r lie r and b e tte r day,
and are fo llow in g the example o f Washington, who, as you know, consulted
L'Unfant and Thornton and Hoban fo r the Capitol and the White House and
took pains to see that the ideas of these expert advisers were carried out.
I t is in terestin g to know that the great men who founded the Republic
attached so much importance to beauty in public bu ildings. I have already
re ferred to Washington and the concern which he f e l t as regards the smallest

d e ta ils of the designs fo r the c a p ita l c it y and it s p rin cip al buildings*
But le s t I be accused of

partisanship in the a rts , e,s I so often am

in p o lit ic s , l e t me quote fo r my Democratic brethren what Thomas Jefferson
had to soy of the n ecessity fo r investing our public buildings with beauty
and d ig n ity .
Being in Paris in 1785, he was asked by the State of V irg in ia to
secure a plan fo r a State House, which he did with great promptness, only
to be informed that an impatient le g is la tu re had not waited fo r his design
out had begun the erection o f a bu ilding less suited ifor it s purposes and
fa r more expensive*

In w ritin g to his frien d , Janes Madison, to enter his

protest, Jefferson said: "How is a taste in this b eau tifu l art to be formed
in our countrymen unless we a v a il ourselves of every occasion when build­
ings are to be erected of presenting to them models fo r th e ir study and
im itation . . . .

You see I am an enthusiast on the subject of the a rts, but

i t is an entnusiasn of which I am not ashamed, as it s object is to improve
the taste of my countrymen, to increase th e ir reputation, to recon cile to them
the respect of the world and procure them it s p ra is 9 « ,,
There is Jeffersonian sim p lic ity fo r you.
of true greatness and true a r t.

. But i t is the sim p licity

May I add that, while at the Treasury we

do not profess to fo llo w Jefferson in everything, at lea st in this respect
we are tryin g to walk in his fo otstep s.

In the plans which are being made

fo r public buildings in Washington and throughout the country, Secretary
Mellon has in sisted that in so fa r as i t may be possible, subject to the
lim itation s of cost and le g a l re s tric tio n s in selectin g arch itectu ra l assis­
tance, we sh all give the country buildings in good taste and of the best design
and arrangement that can be achieved under the circumstances*

c?
And now lo s t the too practically-m inded among you should he misled
into thinking that the Treasury has fo r one moment lo s t sight of the
p ra c tic a l in

i t s championship of the esth etic side of any question, le t

me hasten to

say that we have found that "beauty of

design has a concrete

value that is beginning to he recognized even by a nation so eminently
p ra c tic a l as our own.

In fa c t, i t is a had investment to build anything

t-iat is not b eau tifu l, or at lea st in good ta s te .

Otherwise, in time, as

taste improves, one can be sure that the ugly thing w ill be torn down to
make-way fo r something b e tte r.
C ertainly no one so w e ll as the Government i t s e l f can set a standard
of good taste in

architectu re and firm ly establish

ings must of n ecessity add to
w-iich they are erected.

it.

Our public build­

or detract from the beauty o f any c it y in

Furthermore, i t is in evita b le that they should

influence to some extent the architecture of buildings erected by the c it y
or by p rivate enterprise*

I t is of the greatest importance, therefore,

that these buildings which, the Federal Government is erectin g should be
simple and d ig n ifie d in design and suited to the uses to which they are to be
put.
But when i t comes to the building of a national ca p ita l, an even greater
o b liga tion is imposed upon us.

We have in herited from the founders of the

Republic a great tra d itio n below which we dare not f a l l .

And as the country

has grown in greatness and in influence, it s ca p ita l c it y has become increasing­
ly

important.

More and more i t is being v is it e d by those who come from every

part of this country tj^d the world*.

We owe i t to them and to the generations

yet to come, to ^see that they sh all fin d there a great and beau tifu l c it y — a
c it y not made with hands only but into which have been builded the beauty and
hopes and aspirations of America#

FOR RELEASE UFON AFFEARANCE OF THE
UNDERSECRETARY BEFORE THE COMMITTEE
OH WAYS AND MEANS, WHICH WILL BE ABOUT
3 JAM., Wednesday, Febru-.ry 27» 1929*
STATEMENT BY UNDERSECRETARY.OF THE TREASURY MILLS BEFORE THE
COMMITTEE ON WAYS AND MEANS, Wednesday, February 27, 1929Taken as a whole, the adm inistrative sections o f the T a r iff Act of
1922

have presented r e la t iv e ly few d i f f ic u lt i e s in in terp reta tio n .and

enforcement.

I t is in e v ita b le , however, in the administration o f a law

o f such broad application as the T a r i f f Act fo r a period o f several years,
that some d i f f ic u lt i e s should develop and in addition that some amendments
s u r e s t themselves due to changing conditions.
As a resu lt o f experience with the T a r if f Act o f 1922 and it s study
of the adm inistrative provisions, the Treasury' Department b elieves that
a considerable number o f amendments to the adm inistrative provisions could
w ell be made at this time.

For the most part, the amendments which the

Department would recommend are of minor importance and involve l i t t l e
the way o f p o lic y Qv change in procedure.

in

To aid the Committee in it s

consideration o f amendments suggested, those considered to be o f major
importance have been segregated from those which may w ell be considered
as noncontroversial.
Value
As many of the t a r i f f rates are based on value, the d e fin itio n o f
value is o f fundamental importance.
U02 become major considerations.

Therefore, any amendments to Section

Accuracy in the determination o f value

is essen tial to the p rotection o f the revenue-.

I t is also important that

value be defined so that i t may be re a d ily ascertained.

Otherwise, an

u n ju s tifie d burden would be p3mced on commerce and upon the administration
o f the law.

2

• The accurate determination o f fo reig n value requires in vestigation s
abroad and such in vestigation s cannot in a ll instances be conducted without
opposition and objection d i f f ic u lt to overcome.

The abandonment of

fo re ig n value as a basis o f assessment of ad valorem duties is now the
subject o f considerable discussion.

This, however, is considered by the

Department as a broad question o f p o lic y fo r the Congress to determine.
In the absence of information as to the desire or intention o f the
Committee to adopt some other basis o f value, the Department is confining
it s suggested amendments to the improvement o f the present basis rather
than the substitution o f some a lte rn a tiv e .
Section 500 o f the T a r iff Act imposes on the appraiser the duty
o f appraising the merchandise "in the unit o f quantity in which the
merchandise is usually bought and sold by ascertaining or estim ating
the value thereof by a l l reasonable ways and means in his power, any
statement o f cost or cost o f production in any in voice, a ffid a v it ,
declaration, or other document to the contrary notwithstanding." The
mandate o f Congress that the appraising o ffic e r sh all a ffirm a tiv e ly
determine a value and not re ly on u n verified statements or statements
not susceptible o f v e r ific a t io n is p lain .
Section U02 o f the T a r iff Act provides in part that, " i f neither
fo reig n nor export value can be ascertained to the sa tis fa c tio n of the
Appraising O ffic e r ", duties shall be assessed on United States value.
Under the present procedure with regard to reappraisement, although
the Appraiser might not ascertain foreign value to his s a tis fa c tio n ,
the court, on appeal, might decide that a fo re ig n value did e x is t with
the resu lt that the duties fin a lly determined and paid would be based
on a fo reign value proved to the court by the submission o f a ffid a v it s
which Treasury agents were unable to v e r ify , or by évidence undisclosed

r?

- 3 at the tin e the Appraiser made his decision and which cannot be subject
to check.

The weakness o f the present system, i t therefore ar pears,

is not in Section ^02 which d irects appraisement on United States value
where fo reign value cannot be s a t is fa c t o r ily ascertained, but in the
reappraisement proceedings w.iich nay resu lt in appraisement on a value
which cannot be properly v e r ifie d by Treasury o f f i c i a l s .
I t is b elieved that the method or oasis determined upon by the
Arp ra isin g O ffic e r as proper should, subject to review by the Secretary
o f the Treasury, be applicable throughout a l l the proceedings. • Thus the
Court would be lim ited to the question whether the value on the basis
used by the Appraiser had been properly determined, and, i f not, to a
redetem in ation o f the value on that basis only. The Department b elieves
that the existin g law is susceptible o f being so construed and that the
resu lt to be accomplished by the proposed amendment was intended in the
1922 Act.

As a further safeguard i t is suggested that the appraiser’ s

valuation be made prina fa c ie correct on reappraisement.
The present d e fin itio n o f United States value is not e n tire ly
S atisfactory, as sucn value cannot be found i f ’’ such or sim ilar inroorted
merchandise” is not ’’ fr e e ly o ffe re d fo r sale in the p rin cip a l market o f
the United States. ”

The word ’’ sim ila r” has been very s t r ic t ly construed.

I t is thought that the d e fin itio n should be amended to allow the value
to be arrived at from the value o f a comparable a r t ic le , whether domestic
or imported, so o ffe re d fo r sale in the United States, with proper
adjustment fo r d ifferen ces in q u ality and in other respects. The Department
b elieves that this accords with the intention o f the present d e fin itio n ,
and would make possible the determination o f United States value in many
cases in which i t cannot now be determined.

The provisions o f Section

placing an embargo upon the

goods o f exporters who refuse to allow access to th e ir books fo r the
purpose o f determining value, have been productive of much i l l fe e lin g *
which has sometimes approached international importance.

I t is the

opinion o f the Treasury that, with the amendments above suggested,
section

510

may be repealed.
Bonds

There are many provisions throughout tlx._lct re oui rin g or authorizing
the taking o f bonds in certain cases to secure the payment o f duties,
or compliance with adm inistrative requirements.
g re a tly .

These provisions vary

The Act requires bonds in some cases in which experience has

shown them to be unnecessary, and omits the requirement in others where
i t has been found that a bond is necessary fo r the protection o f the
revenue.

The department recommends, in order to provide more e la s t ic it y

in this respect, that in lie u o f these s p e c ific requirements the Secretary
o f the Treasury be given general authority to require by regulation
sucn bonds or otner secu rity as he may deem necessary to protect the
revenues and assure compliance with the provisions o f the law. The 4ct
already gives the Secretary (or, in some cases, the Commissioner or the
C o lle c to r) power to f i x the amount, to approve the sureties, and, sometimes,
to prescribe the conditions o f the bonds required. The adm inistrative
o ffic e r s thus have f u l l power over bonds, except in determining in what
cases .they shall be required.

..

'|

Marking
The several t a r i f f acts p rio r to 1922 have required that a l l imported
a r t ic le s should be marked to in dicate the country o f o rigin , when such
marking could be done without in ju ry. No penalty was prescribed other

'

~ 5 than that the a r t ic le s imported not marked should not be d elivered u n til
marked in conformity with the law.

Under these provisions the Customs

o ffic e r s and the Treasury Department determined the question o f what
a r t ic le s were subject to marking under the Act.
The Act o f 1922, however, introduced two new elements:
o f additional duty o f

10$

A penalty

was imposed upon a l l a r t ic le s not marked at the

time o f importation unless they were exported, and the domestic
manufacturers were given the rig h t to protest against the rate o f duty
assessed by the C o llecto r.

In certa in instances the Department held

the unit o f sale to be the a r t ic le rather than the individual piece in
such unit, as, fo r example, a bundle o f shingles was held to be the a r t ic le
o f commerce rather than the individual shingle, or the book o f c ig a re tte
papers rather than the individual le a f.

The Customs Court, however,

has in terpreted the Act very s t r ic t ly , in dicating that the individual
paper o f the c ig a re tte book or the individual shingle should be marked
instead o f the book or the bundle.
A s t r ic t in terp retatio n of the language o f the marking provision
has led to absurdities, not only in requiring the marking of a r t ic le s
where marking seems i l l o g i c a l , but in re lie v in g certain a rtic le s from
the marking requirements where marking appears e n tir e ly reasonable. I t is
b elieved that i f the p o lic y which requires the marking o f country o f
o rig in is to be carried out adequately, greater f l e x i b i l i t y must be given
to the statutory rule and power placed in the Secretary o f the Treasury

to meet changing condition? and circumstance s.

The amendment recommended

to Section ¿Ok w i l l in no.wise a ffe c t the marking o f a r tic le s where
Congress has seen f i t to prescribe a special form o f marking.
Amendments to Entry
Though the appraised value be lower than the entered value, duty
cannot, under the law, be assessed on an amount less than the entered
value (except in certain very lim ited classes o f cases).

On the other

hand, i f the appraised value be higher than the entered value, the
importer is subject to substantial additional d u tie s

I t is , therefore,

g r e a tly to the im porter's in te rest to enter at a value which w i l l
correspond as c lo s e ly as possible to the appraised value. The e x is tin g law
allows an entry to be amended at any time before the invoice or the
merchandise comes under the observation o f the appraiser.

This has

been construed by the court to mean the appraiser him self and not an
assistant appraiser or examiner, although the la t t e r o ffic e r s value
the merchandise, subject to the appraiser's approval.
To carry out the evident intent o f Congress, i t is recommended
that no amendment o f an entry be allowed a fte r the merchandise or
in voice has come under the observation o f an examiner, assistant appraiser,
or any other o f f i c e r fo r the purpose' o f ascertaining value.
Drawback
Section

313

o f the Act provides fo r the drawback of duties

previou sly paid on imported merchandise upon the exportation o f a r tic le s
manufactured or produced in the United States with the use o f such
imported merchandise.

Section

provides that no drawback o f duty

sh all be allowed ¿n the exportation o f any merchandise a fte r it s release
from customs custody, except in the case o f a r t ic le s manufactured or
produced, with the use of imported merchandise.

J
- 7 The word ’’ produced” in Section 313 has been broadly construed
so that imported a r tic le s which have been subjected to some simple
process, such ns dyeing, blenching, waterproofing, e tc ., have, on
exportation, been e n title d to drawba.ck.

Humorous cases have come to

the atten tion of the Department in which individuals Irv c purchased im­
ported a r t ic le s which had been in this country fo r a considerable period
and fo r which no market had been found, .and had subjected them to some
such simple process and then exported them,obtaining drawback of duties
in amounts exceeding the price maid fo r the a r t ic le s .
There is another d i f f ic u lt y with the operation o f the two sections.
.in importer may order a large shipment of goods from- -a fo reig n country.
Upon the ordinary entry, he is not allowed to inspect then u n til they leave
customs custody.

He may then fin d they are not up to sample or

s p e c ific a tio n s , but as they have been released from customs custody and do
not f a l l within the drawback provisions, the duty paid cannot be refunded,
even though the goods are so fa r from sp ecifica tion s as to make them
useless to the importer.

The American importer is thus to some extent a j

th e,mercy of fo reig n exporters.

Moreover, he is at once placed under the

necessity of applying to the merchandise some one of the minor processes,
above re fe rred to, so that he may obtain the b en efit of the drawback
provisions of the Act.
In order to remedy these two principe.l e v ils growing out of the
drawback p ro visions, the Department recommends t t r t Section 313 be emended,
fir s t,

so as to allow drawback only in case the nanufe.cture or production

to which the imported merchandise has been subjected in the United Ste.tes
nas enhanced it s value and, second, to provide that drawbe.ck should not in
any ca.se oe allowed in respect o f merchandise not exported within f i v e years
from the date o f importation.

These amendments would, i t is believed,

-

8

-

provide a very e ffe c t iv e check upon the business o f c o lle c tin g drawback L
on merchandise fo r p r o fit .
I t is fu rther recommended that Section 558 be broadened so as to a l­
low a refund in the case of goods found not up to sample or s p e c ific a tio n
and exported within ten days a ft e r release from customs custody, questions
o f id e n tify and conformity to s p e c ific a tio n to be determined under regu­
la tio n s prescribed by the Secretary.

Such amendment, i t is b elieved , w ill

a ffo rd r e l i e f to the importer who finds that he has not received what he
ordered, and w i l l correct the present tendency of the law to d rive him
to resort to questionable p ra ctices.
B ills of Lading
Section 483 of the Act provides that " A ll merchandise imported into
the United States sh a ll, fo r the purposes of this t i t l e , be held to be
the property of the person to whom the same is consigned; and the holder
of a b i l l of lading duly indorsed by the consignee therein named, or,
i f consigned to order, by the consignor, shall be deemed the consignee
th e re o f".

Section 484 (c ) provides that RThe consignee shall produce the

b i l l of lading at the time of making en try".

The Federal and State courts

have held in several cases that under these provisions c o lle c to rs of
customs are personally lia b le fo r any damage resu ltin g from the d e liv e ry
or release of merchandise without the production by the party making
entry of the o rig in a l b i l l of lading.

For th eir own protection, therefore,

most c o lle c to rs require the o rig in a l b i l l of lading to be f i l e d with the
entry and retained in th eir custody.

Importers and ca rriers object, and

probably with reason, to this requirement.

The importers contend that

the o rig in a l b i l l of lading is needed to obta.in‘ possession of the goods

s
from tne c a rrie r, and the ca rriers contend that they must have the o r ig i­
ne,! h i l l ox lading fo r th eir own protection in the event a claim is f i l e d
against them fo r wrongful d e liv e ry .
Provision fo r protection of the c o lle c to r nacenting entry u'oon a
duplicate h i l l of lading involves the d i f f ic u lt y of protectin g the
shipper's rig h ts .

The o rig in a l h i l l may have gone to a hank, with a

d raft attached, against payment of which the h i l l is hold.

Thus, to

a-llow d e liv e ry by the c o lle c to r upon a duplicate h i l l would he to
jeopardize the shipper’ s c o lle c tio n .
The Treasury recommends as a solution of these d i f f ic u lt i e s that
en tiy oe o.llowed upon eith er the o rig in a l h i l l or a, prooerlv c e r t ifie d
duplicate, with a requirement that where entry is made upon a, duplicato,
.and tne c o lle c to r has possession of the goods, he must eith er d e liv e r
to the ca rrie r or to the holder of the o rig in a l h i l l .

Where the

c a rrie r obtains possession of tho goods, i t is of course responsible
fo r d eliv ery , end the customs treatment does not a ffe c t tho situ ation
in any respect.
The amendments h eretofore discussed, i t is believed, are the only
proposals which the Treasury desires to present which involve f a i r l y
important questions of p o lic y .

The ra,ther large number of other amend­

ments are of a minor, technical, or c le r ic a l naturo.

I t is suggested

that d rafts of these amendments he submitted to the Committee at a
la te r date.
I t is unnecessary to a„dd. that the Treasury w ill he very rla d of
every opportunity to a,ssist the Committee in it s preparation of the
proposed le g is la tio n .

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,.
Thursday, March 7, 1939*
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STATEMENT BY SECRETARY MELLON

The Treasury is today o ffe r in g fo r subscription, at par and
accrued in te rest, through the Federal Reserve Banks, an issue o f nine
months 4-f per cent Treasury c e r t ific a t e s o f indebtedness o f Series
TD2-1929, dated and bearing in te rest from March 15, 1929, and maturing
December 15, 1929.

The amount o f the o ffe r in g is $475,000,000, or

thereabouts.
Applications w i l l be received at the Federal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a te s , at par,
Treasury c e r t ific a te s of indebtedness of Series TM-1929'and TM2-1929,
both maturing March 15, 1929.

Subscriptions fo r which payment is to

be tendered in c e r t ific a te s of indebtedness maturing March 15, 1929,
w ill be a llo tte d in f u l l up to the amount o f the o ffe r in g .
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have two

in terest coupons attached payable September 15 and December 15, 1929.
About $560,000,000 o f Treasury c e r t ific a t e s o f indebtedness,
and about $60,000,000 in in te rest payments on the public debt, become
due and payable on March 15, 1929.
The present o ffe r in g , with tax and other receip ts, is expected
to cover the Treasury’ s cash requirements u n til June.
The text o f the o f f i c i a l circu la r follow s:

-

2-

The Secretary o f the Treasury, under the authority o f the
Act approved September 24, 1917, as amended* o ffe r s fo r subscription,
at par and accrued in te re s t, through the Federal Reserve Banks, Treasury
c e r t ific a te s o f indebtedness o f Series TD2-1929, dated and bearing
in terest from March 15, 1929, payable December 15j 1929, w ith in terest
at the rate o f four and three-quarters per cent per annum, payable on
a semiannual basis.
Applications w i l l be received a t the Federal Reserve Banks.
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have

two in terest coupons attached, payable September 15, 1929, and December
15, 1929.
The c e r t ific a te s o f said series sh all be exempt, both as to
p rin cip a l and in te rest, from a l l taxation now or h erea fter imposed by
the United States, any State, or any o f the possessions o f the United
States, or by any lo ca l taxing authority, except (a) estate or inheri­
tance taxes, and (b) graduated additional income taxes, commonly known
as surtaxes, and excess-p rofits and w ar-profits taxes, now or h ereafter
imposed by the United States, upon the income or p r o fits o f individuals,
partnerships, associations, or corporations.

The in terest on an amount

o f bonds and c e r t ific a te s authorized by said Act approved September
24, 1917, and amendments thereto, the p rin cip a l of which d«es not ex­
ceed in the aggregate $5,000, owned by any in dividu al, partnership,
association, or corporation, sh all be exempt from the taxes provided
fo r in clause (b) above.

-3 -

The c e r t ific a te s o f this series w i l l he accepted a t par
during such time and under such rules and regulations as sh all he pre­
scribed or approved by the Secretary o f the Treasury, in payment o f
income and p r o fit s taxes payable at the maturity o f the c e r t ific a t e s .
The c e r t ific a te s o f this series w i l l be acceptable to secure deposits
o f public moneys, but w i l l not bear the c irc u la tio n p r iv ile g e .
The rig h t is reserved to re je c t any subscription and to a llo t
less than the amount o f c e r t ific a te s applied fo r and to close the sub­
scription s at any time without notice.

The Secretary of the Treasury

also reserves the righ t to make allotment in f u l l upon applications
fo r smaller amounts, to make reduced allotments upon, or to re je c t,
applications fo r la rger amounts, and to make c la s s ifie d allotments and
allotments upon a graduated scale; and his action in these respects w ill
be fin a l.

Allotment notices w i l l be sent out promptly upon allotment,

and the basis of the allotm ent w i l l be p u b licly announced.
Payment at par and accrued in terest fo r c e r t ific a te s a llo tte d
must be made on or before March 15, 1929, or on la te r allotm ent.

A fte r

allotment and upon payment, Federal Reserve Banks may issue interim
receipts pending d eliv ery o f the d e fin it iv e c e r t ific a te s .

Any q u a lifie d

depositary w i l l be permitted to make payment by cred it fo r c e r t ific a te s
a llo t t e d to i t fo r i t s e l f and it s customers up to any amount fo r which
i t sh all be q u a lifie d in excess o f ex istin g deposits, when so n o tifie d
by the Federal Reserve Bank o f it s d is t r ic t .

Treasury c e r t ific a te s

o f indebtedness o f Series TM-1929 and TM2-1929, both maturing March 15,
1929, w ill be accepted at par, in payment fo r any c e r t ific a te s o f the

-4~

series now o ffe re d which sh all he subscribed fo r and a llo t t e d , with
an adjustment o f the in terest accrued, i f any, on the c e r t ific a t e s
o f the series so paid fo r.
As fis c a l agents o f the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make
Allotments on the basis and up to the amounts indicated by the Secretary
o f the Treasury to the Federal Reserve Banks o f the respective d is tr ic ts .

TEEASUET BEP-OTMEET

POE RELEASE, MOMip&jEiVPEESj
Tuesday,' March IS , 1929. ?

Secretary Mellon announced that subscriptions fo r the issue
of 4—3/4 per cent Treasury C e rtific a te s o f Indebtedness, Series
TD2*-1929, dated March 15, 1929, maturing December 15, 1929, w i l l
close at the close o f business today, Tuesday, March 12, 1929.
Subscriptions which f a i l to reach a Federal Reserve Bank or
branch, or the Treasury Department, before the close o f business
today w ill not be accepted*

The p ractice o f accepting mail, sub«*

scription s received on the morning fo llow in g the closin g o f 'th©
books w ill not be observed with regard

to the current

off^M n gt

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Wednesday, March 13, 1929.

Secretary Mellon announced that subscriptions fo r the issue of
Treasury c e r t ific a te s of indebtedness, Series TD2-1929* 4^- per cent,
dated March 15, 1929, maturing December 15, 1929, closed at the close
o f business' on March 12, 1929.
Reports received from the twelve Eederal Reserve Banks show that
fo r the o ffe r in g , which was fo r $475,000,000, or thereabouts, to ta l sub­
scriptions aggregate some $523,000,000.

As previously announced, sub­

scription s in payment of which Treasury c e r t ific a te s o f indebtedness of
Series TM-1929 and Series TMS-i929, maturing March 15, 1929, Were
tendered, were a llo tte d in f u l l .

Upon these exchange subscriptions

about $33,000,000 have been a llo tte d .

Allotments on the cash sub­

scription s were made as fo llo w s : A ll subscriptions in amounts not
exceeding $100,000 fo r any one subscriber were a llo tte d in f u l l .

Sub­

scriptions in amounts over $1 0 0 , 0 0 0 but not exceeding $1 , 0 0 0 , 0 0 0 fo r
any one subscriber were a llo tte d 90 per cent, but not less than
$1 0 0 ,0 0 0 fc? any one subscriber;

.and subscriptions in amounts over

$1,000,000 fo r any one subscriber were a llo tte d 85 per cent, but not
less than $900,000 fo r any one subscriber.
Further d e ta ils as to subscriptions and allotments by Federal
Reserve D is tric ts w ill be announced when fin a l reports are received
from the Federal Reserve B-^nks,

POR IMMEDIATE RELEASE,
Thursday, March 14, 1929.

TREASURY DEPARTMENT

Secretary Mellon today announced that the to ta l amount o f subscriptions
received fo r the issue of Treasury c e r t ific a te s o f indebtedness, Series-TD21929, 4§ per cent, dated March 15, 1929, maturing December 15, 1929, was
$524,109,000.

The to ta l amount o f subscriptions a llo tte d was $475,999,500,

o f which $32,796,500 represents allotments on subscriptions fo r which
Treasury c e r t ific a t e s o f indebtedness of Series TM-1929 and TM2-1929, matur­
ing March 15, 1929, were tendered in payment.

A ll of such exchange sub—

scription s were a llo t t e d in f u l l , while allotm ents on other subscriptions
were made on a graduated scale.
The subscriptions and allotm ents were divided among the several Pederal
Reserve D is tric ts and the Treasury as fo llo w s:
Pederal Reserve
D is t r ic t :

Total Subscription s Received:

Total Subscription s A llo tte d :

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

$ 24,715,000
202,996,000
31,613,500
33,366,500
30,022,000
27,544,000
63,670,500
16,121,500
8,889,000
17,499,500
30,009,000
37,289,000
373.500

$ 24,130,000
177,734,500
28,656,000
31,122,000
27,952,000
26,136,000
58,271,500
15,279^000
8,494,000
16,892,000
28,222,000
32,737,000
373,500

$524,109,000

$475,999,500

Total

TREASURE DEPARTMENT

fQ f IMMEDIATE RELEASE
Thursday, March 14, 1929.

The Secretary o f the Treasury issued the fo llo w in g statement today:
The president has today signed an Executive Order, and has approved Regula tio n s prescribed by me, re la tin g to the pu blication o f refund decisions o f the
Commissioner o f Internal Revenue.

B r ie fly , the e ffe c t o f the Order and the Regu

la tio n s is that the Commissioner o f Internal Revenue w ill prepare a decision in
every case in which an overassessment (whether resu ltin g in a refund, c r e d it,
or abatement) o f income, w a r-p ro fits, ex cess-p ro fits, estate, or g i f t taxes,
in excess o f $20,000, is allowed.

This decision w ill be accor.panied by a

b r ie f summary o f the relevant fa c ts and a c ita tio n o f the applicable statutory
and ju d ic ia l a u th o rities, and w i l l be open to inspection in the o ffic e o f the
Commissioner»
I t has been the consistent p o lic y o f the. Treasury, a p o lic y determined
upon only a ft e r carefu l consideration and as to which ample opportunities
have been o ffe re d repeatedly fo r reconsideration, that tax returns, and the
information thereon, should under no circumstances be open to public in­
spection.

This p o lic y is based upon the p rin c ip le that taxpayers should be

permitted to contribute th e ir share o f the revenue n ecess itie s o f the Govern­
ment without subjecting th e ir business a ffa ir s and transactions to the
scrutiny o f th e ir competitors, the idl^T, curious, s o lic it o r s o f contributions,
and unscrupulous tax p ra c titio n e rs seeking out possible, future c lie n ts »
p o lic y is not a ffe c te d by the Executive Order.

This

The Regulations s p e c ific a lly

provide that n either the return, nor any part th ereof, shall be open to in ­
spection, and in addition the pu blication o f the source o f any income, gains,
or p r o fit s , or transactions resu ltin g in losses or expenditures, is specif­
ic a lly proh ibited»
The Congress adopted, as an amendment to the F ir s t D eficiency Appro­
p ria tio n Act, a provision which, as a matter o f le g a l in terp retation , would
probably require no m aterial change in the procedure or p ra c tic e o f the Bureau

7
'■■w

—

o f Internal lie venue.

2

—

Furthernore, whatever e ffe c t night have "been intended

was, o f course, lim ite d to the s p e c ific appropriations made by that Act,
and would not he applicable to any o f the other appropriations available
fo r making refunds©
The Treasury has entered serious objections to a l l so -ca lled
’’p u b lic ity 1* proposals.

The soundness of th is p o sitio n is re ite ra te d .

How­

ever, in an e ffo r t to dispel any misunderstanding that might have arisen in
the minds o f the public because of the recent discussions of the matter, the
Treasury has undertaken to go much fu rth er than the amendment requires*

It

is b elieved that the pu blication o f the decisions in the manner outlined
above w i l l , in a very short period o f time, show conclusively that the
Treasury has nothing to hide in the matter o f tax refunds; that there is
nothing mysterious about tax refunds; that p r a c tic a lly a l l refunds, cred its,
and abatements, which are allowed, are attrib u tab le d ir e c tly to such causes
as decisions o f the courts or o f the Hoard o f Tax Appeals, overturning the
Treasury p o sitio n or holding a provision of the statute unconstitutional,
to re tro a c tiv e le g is la tio n , to u n certain ties, ambiguities or omissions in
the statute, to mathematical erro r, to fa cto rs which could not have been
determined at the time the tax was paid, or to the p u b lic -s p irite d attitu de
o f taxpayers in deciding doubtful questions against themselves at the time
\
\
the tax is paid, re ly in g upon a proper adm inistrative p o lic y in reaching
\

a fin a l determination o f the amount properly due; and that, the refunding o f
overpayments o f taxes is merely a necessary part o f the &dnittistr©r*
tion o f our tax laws t - in fa c t, an essen tial c o ro lla ry o f any tax system
founded upon the ’’payment f i r s t ” p rin cip le so frequently discussed*

It

must not be fo rgotten that our fe d e ra l tax c o lle c tio n system is founded
upon the doctrine that taxpayers may be compelled to pay the amount govern­
ment o f f i c i a l s determine to be due, with no opportunity u n til a ft e r payment
fo r a review of that determination*

I t is v i t a l , and the in te re s ts o f tax—

7
~ 3 ~

payers and the public gen erally properly demand as a necessary protection,
that when that review is afforded, whether i t he adm inistrative or
ju d ic ia l, the decision be ca rried out without undue delay*
The Executive Order and the Regulations are as fo llo w s:

EXECUTIVE ORDER
pu blication o f In tern al Revenue Tax Refund Decisions

Pursuant to the provisions o f section 55 o f the Revenue Act o f
1928 and section 257 o f the Revenue «Act of 1926, i t is hereby ordered
that decisions o f the Commissioner o f Internal Revenue allow ing a refund,
c re d it, or abatement o f income, w a r-p rofits, ex cess-p ro fits, esta te, or
g i f t taxes, in excess o f $2 0 , 0 0 0 , shall be open to inspection in accord­
ance, and upon compliance, with the regulations prescribed by the Secretary
o f the Treasury and approved by me, bearing even date herewith*

HERBERT HOOVER
The White House
March 14, 1929.

( I . D. _________ )
Amending T. D* 3856 - Pu blication o f In tern al Revenue Tax
Refund Decisions

TREASURY DEPARTMENT,
Washington, D. C.
TO COLLECTORS OP INTERNAL REVENUE AND OTHERS CONCERNED:
T*D* 3856, as amended, (being regulations prescribed by the Secretary
and approved by the president and applicable to the inspection o f returns
under the Revenue Act o f 1928 and p r io r Revenue A cts) is amended by adding

«M ^

«M

at the end thereof the fo llo w in g new paragraph:
n20*

The Commissioner o f Internal Revenue sh a ll cause to "be prepared

a w ritten decision in every case in which an overassessment (whether resu ltin g
in a refund, c r e d it, or abatement) o f an income, w a r-p rofits, ex cess-p ro fits,
esta te, or g i f t tax is allowed, in excess o f $20,000, and such decision sh&ll
he considered a public record and shall be open to inspection, during regular
hours o f business, in the o f f ic e o f the Commissioner o f In tern al Revenue or
such o ffic e as he may designate*

Such decision shall givo the amount o f the

overassessment and shall be accompanied by a b r ie f summary o f the relevant
fa c ts and a c ita tio n o f the a u th o rities applicable thereto, or, in a case in
which a decision o f a court or o f the Board o f Tax Appeals
by a c ita tio n o f the court oaf Board decision*

has become fin a l,

Under no circumstances shall

the provisions o f th is paragraph be construed as making any return, or any
part thereof, open to inspection, or as authorizing the source o f ary income,
gains, or p r o fit s , or the s p e c ific transactions resu ltin g in lo s s e s 'o r ex­
penditures, to be made p u b lic; nor shall any o f the information contained in
any return or re la tin g thereto bo made public except in accordance with, and
to the extent necessary in carrying out, these regu lation s*11

A. W* MELLON
Secretary o f the Treasury*
Approved:
March 14, 1929*
HERBERT HOOVER
The Rhite House*

Treasury Department

For release, morning papers
March 31, 1929, or when
d elivered .

TREASURY POLICIES

Speech of
Honorable A* W. Mellon
Secretary of the Treasury
from Station W IS. A L,

Washington,

as part of the National Radio Forum
arranged by the Washington Star and
sponsored by the Columbia Broadcasting System.
March 30, 1929

Treasury P o lic ie s

In this country tra d itio n plays -an important part in government.
In the conduct o f business, on the other hand, we are singularly fre e as
a people from being hamnered by precedent.

I f a bridge must be b u ilt

or a new process developed or an industry established, we fin d the best
and quickest way to do i t and are not concerned because i t was never done
that way before.

I t is th is in it ia t iv e in blazing new t r a ils , this

enterprise in overcoming d i f f ic u lt i e s , that have made America great.
But in the conduct of government we have been slow, and r ig h tly so,
in introducing innovations.

We have changed somewhat and can s t i l l

improve the structure o f government,al machinery, e s p ecia lly in the coordi­
nation of related or overlapping a c t iv it ie s .

In so fa r, however, as

fundamental p o lic ie s are concerned, they have been based, and are based
today, on certain guiding p rin cip les which, with the passage o f time, have
assumed the force of great tra d itio n s.
This is p a rtic u la rly true as regards our fin a n cia l p o lic ie s .
p o lic ie s are few in number and may be ea s ily enumerated.
keeping of expenditures always within the revenues.
payment o f the public Debt.

These

One is the
Another is the

A th ird is the levy of the lowest taxes

consistent with the Government’ s needsj

and s t i l l another is the support

o f the Public Credit so that the fin a n cia l in te g r ity o f the Government •
shall be a rock amidst the flu ctu ation s of internal and world finance.
I t is of these p o lic ie s that I wish to speak.

They are o f general

in terest because the business of Government has become so vast in extent and
is so far-reaching in it s influence that the manner in which i t i s conducted
is of v it a l concern to every man, woman and ch ild in the country.

-

2

-

In so fa r as keening down expenditures is concerned, we have always
"believed that they should "be kept within our revenues, and that the p ilin g
up of debts, fo r current expenses, except in time o f war, is .stru ctly to "be
avoided.

But before the establishment of the Budget System eight years

ago, there was no way of knowing what our expenditures would be.

Each

Department went to Congress and secured whatever i t could in the way of
appropriations.

Since the Budget S3*stem was established, however,

Congress has recognized the importance of a balanced budget and has adhered
strictly to the policy of keeping appropriations well within the Budget
e stimates.

Turning now to the question of debt payment;

no other part o f our

fin a n cia l p o lic y has been more consistently maintained than that providing
fo r the prompt payment o f the public debt.

Even in the ea rly days,

a fte r the Revolutionary War, when a debt of 50 m illio n d o lla rs with an
in te re s t charge of less than 5 m illio n d ollars a year constituted a problem
o f the f i r s t magnitude, the newly formed government, with it s slender
resources and inadequate fin a n cia l machinery, set about paying i t s debts.
The same thing was true a fte r the C iv il War.

A fte r the World War this

p o lic y was continued and has been responsible fo r much of the progress
made in paying o f f the debt.
Today that debt has been reduced to manageable proportions and about
three hundred m illio n d ollars a year saved in in terest charges.

Eventually,

as the debt is paid o ff e n tir e ly , th is drain on our revenues w ill be re ­
moved and we can look forward then to a very great reduction in taxes.
Already taxes have been restored to a peace-time le v e l.

Over two

m illio n individuals, in the lowest brackets, have been r e lie v e d o f a ll
l i a b i l i t y fo r Federal income taxes, and the substitution o f moderate rates

- 3 fo r excessive ores has ben efited a l l along the lin e .

Productive

business, by being re lieved of oppressive rates, has found i t possible to
expand in an orderly manner.

As a resu lt, prosperity has become more

general; the national income has increased; and, during the year 1928 which
set a new record fo r p ro sp erity, the Government received revenues adequate
fo r it s needs, even with lower rates and fewer tax payers.
This is progress in the righ t d irectio n .

There is s t i l l much that

can be done and should be done when revenues show s u ffic ie n t permanent
increase.

At present there is a growing demand fo r fu rther reductions

in taxes on earned income.

I t is a p o sition with which I have always

been in sympathy, as - is evidenced by the recommendations which the. Treasury
made to Congress as long ago as November, 1923.

At that time the

Treasury said:
"The fairn ess of taxing more lig h t ly income from
wages, salaries and professional services than the income from
a business or from investment is beyond question.
In
the f i r s t case, the income is uncertain and lim ited in
duration; sickness or death destroys i t and old age dimin­
ishes i t .
In the other the source o f income continues;
i t may be disposed of during a man* s l i f e and i t descends
to h is h e ir s ."
The Treasury is s t i l l of th is ouinion and w ill be glad to see these prin­
c ip le s s t i l l fu rther carried into law whenever revenues ju s t ify such action.
Another place where progress can be made is in the administration of
the tax laws.

As a business man, I re a liz e how the average man and

woman throughout the country view these laws.

I know with what im­

patience you face the long and tedious business of making out your income
tax return each year.

The form which you must f i l l out doubtless

seems unduly long and complicated; and i t is not unreasonable that you
should ask, f i r s t , why the law can not be sim p lified , and secondly, why
the return can not be reduced to a few short, simple questions and answers.

t

♦
- 4 B elieve me when I say that the Treasury appreciates and sympathizes
with that 'point of view.

But there is an answer to each of these

questions and the f i r s t one is that, i f the tax laws are to cover a ll the
in tric a c ie s of modern "business, then these laws must, of necessity, "be
technical in th e ir provision s.

Suppose, fo r example, that fo r the

present law we should substitute the simple statement that " a l l income
shall he taxable" at given rates, without any attempt to define the word
"income" and ignoring a ll such complicated and unpleasant matters as
exemptions, cred its and deductions.

'That would happen?

neither

the Treasury nor the taxpayer would know, fo r example, whether business
expenses were deductible or whether a p a rticu la r transaction gave ris e to
taxable gain.

The result would be that they would be obliged to go

into the Courts to determine tax l i a b i l i t i e s .
attained not by omitting

True sim p licity can be

v i t a l l y necessary statements and

d e fin itio n s, but by making them as clea r and b r ie f as p ossible.

If

such statements are omitted in the name o f sim p licity, we may perhaps
secure b revity, but -it w ill not be true sim p licity .
How fo r the second question.

An attempt is made each year to

s in p lify the tax return; and i t might be possible to shorten i t s t i l l
fu rther and to make i t seem le s s formidable i f i t were not necessary fo r
one form to cover such a v a rie ty of cases.

The real opportunity fo r

improvement l i e s in sim plifyin g the administration of the tax laws; and
th is the Treasury is making a determined e ff o r t to do.

The Government

is trying to s e ttle each tax case promptly and fin a lly and with due regard
to the in terests of both the Government and the taxpayer.
which has been made in this d irection is encouraging.

i

The progress

¡IJ I

- 5 -

I t was the general rule in “both State and Federal taxation that, i f a
dispute arose over the amount to "be paid, the dispute was not allowed to
postpone payments.

This rule has been relaxed by the creation of the

Board o f Tax Appeals, where the taxpayer can l i t i g a t e a l l claims fo r addition­
al taxes before payment is required in the ordinary case.

I f , however,

the taxpayer p refers to have recourse to the Federal Courts, then he must pay
before bringing su it.
But this does not mean that the G-overnment should keep money to which i t
is not e n title d .

I f the taxpayer is d is s a tis fie d with the amount he has

paid, e ith e r upon his o rig in a l return or as determined by the Commissioner of
Internal Revenue, a. responsible and conscientious o f f i c i a l of the Treasury,
who has the assistance o f expert technical and le g a l advice, then the taxpayer
may claim a refund and eventually go to the Courts, i f necessary*

I t is

worthy o f note, however, in administering this d i f f ic u lt law, and p a rticu la rly
the excess p r o fits taxes le v ie d during the war period, that so small a part of
the taxes paid have had to be refunded.
Since 1917 the Bureau o f Internal Revenue has co lle c te d almost 39
b illio n d olla rs and has assessed more than 4 b i llio n d o lla rs o f back taxes.
During th is time i t has refunded le s s than one b illio n d ollars or approximately
Per cent o f the amount c o llected , notwithstanding the large amounts re­
funded under in te rp reta tive Court decisions or because of re tro a ctive le g is ­
la tio n or under provisions of the law which can be administered only through
refunds.

Even the cred its and abatements allowed since 1922 have amounted

to less than 2 b illio n d o lla rs .
hard to equal.

I t is a record o f e ffic ie n c y that would be

And yet responsible public o f f i c i a l s , while not charging

dishonesty, have attempted to d iscred it th is record because occasionally a re ­
fund o f several m illio n d ollars has been made to a single taxpayer.

They

neglect to state that the taxes paid by such individuals or corporations often
run into the hundreds o f m illion s, of which only *a small part is ever refunded.

-

6

-

Honest c ritic is m , of course, is desirable and makes fo r e ffic ie n c y in
government.

But i t should be constructive c riticis m and not made in such

a way as to increase the d i f f ic u lt i e s of administering a law as to which
la rge re s p o n s ib ilitie s fo r administration must be vested in and assumed by
the o f f i c i a l s charged with i t s enforcement.
somewhere.

R esp on sib ility must be placed

I am convinced that the enforcement o f the tax laws must, of

necessity, remain an adm inistrative problem, not a le g a lis t ic one, and that
any p o lic y o f administration, which shuns such re sp o n sib ility by tran sferrin g
the problem to the Courts fo r solution, endangers not only the law but the
very existence o f the income tax.
The Treasury has not and w ill not evade i t s r e s p o n s ib ilitie s in th is
respect*

I t is in furtherance of i t s p o licy never to endanger the in teg­

r it y o f the Income Tax that i t has maintained a consistent attitu de with re­
spect to the so-ca lled "tax p u b lic ity " question.

The Treasury p o licy

has always been that tax returns, and the information disclosed therein,
should under no circumstances be open to public inspection.

This p o lic y

is based upon the p rin cip le that taxpayers should be permitted to contribute
th e ir share of the revenue n ecessities of the Government without subjecting
th e ir business a ffa ir s to the scrutiny of th eir competitors, the id ly curious,
the s o lic it o r s of contributions, and unscrupulous p ra c titio n e rs seeking out
possible future c lie n ts .
This p o lic y is not a ffected by the Regulations recently issued by the
Treasury providing fo r the publication of refund decisions.

What w ill be

published w ill be a b r ie f summary of the relevant fa c ts and a c ita tio n o f the
statutory and applicable ju d ic ia l a u th o rities.

I t is b elieved that the

publication of such decisions w ill remove any possible grounds fo r misunder­
standing or fo r loose and unfounded charges that the decisions o f the Com­
missioner o f Internal Revenue are not made in accordance with law*

yé
Wow as regards the Public C redit:

i t has been the aim of tho Govern­

ment to carry on it s own fin a n c ia l operations with the lea st possible dis­
turbance eith er to business or to the individuals of the country.
in recent years, we have evolved the machinery to do th is .

Portunatelyj

And yet there

was a tine not so very long ago, during the Spanish-American War, when, in
àrder to flo a t a bond issue o f only

200

m illio n d o lla rs, the market had to

be prepared and the operation carried through with the greatest care.
Compare tne d i f f ic u lt y of that r e la t iv e ly small undertaking with the
ease with which the Government's vast fin a n c ia l operations can be carried
on today.

Last year these operations involved more than 10 b illio n d o lla rs .

Witnin a twelve month period the Government c o llected over
c h ie fly from customs duties and income taxes.

4

b i l l i o n d o lla rs,

£lt paid out a lik e amount;

and, m addition to th is, made provision fo r the Third L ib erty Loan which
came due in September and amounted, at the time refunding operations com­
menced, to over 2 b illio n d o lla rs .

The Treasury was obliged to produce

funds with which to pay o f f th is loan, or else exchange part of i t fo r other
obligation s bearing lower rates of in terest and coming due at some convenient
time in the fu tu re.
I t would have been d i f f i c u l t to do th is, or even to carry on the Govern­
ment's usual quarterly financing, without some such machinery as that provided by the' fe d e ra l Reserve System.

This may be seen by reviewing b r i e f l y

now such quarterly financing Is done.

The p rin cip al source o f Government

funds is from tax payments, made on quarterly tax payment dates on the 15th
o f March, June, September andTDecember and deposited to the c re d it o f the
Government with the fed era l Reserve Banks.

I f these payments were permitted

to remain in the fe d e ra l Reserve Banks, outside the ordinary channels of trade
u n til needed fo r Government expenditures, there would be a stringency in the
money market every quarter u n til the money was distribu ted to the commercial
banks o f the country.

So what the Government does to avoid this situ ation , is to s e l l short­
term notes or c e r t ific a te s timed to mature on quarterly tax-payment dates;
cud tile proceeds, generally speaking, are l e f t on deposit at in te rest with
the subscribing banks to be withdrawn into the Federal Reserve Banks from
time to time as needed during the succeeding quarter fo r the Government*s
current expenditures.

When the tax payments are received, they are used

to pay o ff in whole or in part these c e r t ific a te s o f notes manuring on the
same date; and,

in this way, transactions often in volvin g

h a lf a b illio n

d o lla rs or more

on each side, are cleared through the banks in the course

of a few days without in volvin g the withdrawal of these vast sums from
general circu la tio n even fo r a sin gle day.

I f the tax payments and

other receipts should exceed the amounts needed fo r expenditures fo r any
three months’ period, this surplus can always be p ro fita b ly applied in
reduction of the public debt.
just described,

By the use of the method which I have

the Government is enabled to carry on it#

tions with the lea st possible disturbance

to the busifipfes

fin a n c ia l opera­
l i f e of the

country*
Such, in b r ie f outline, are the Government’ s fin a n c ia l p o lic ie s .
They s t i l l conform, as you see, to the tra d ition s established when the
Government was f i r s t founded.

We can not do b etter than to fo llo w

those tra d ition s and to make sure that, in fundamental matters, our actions
square with those great, immutable p rin cip les ’which bur fo refa th ers,w ith
such consummate wisdom, made a part of the very structure of our Government.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Monday, A p ril 15, 1929.

The Treasury has received so many inqu iries regarding the plans fo r the
erection o f Government "buildings here and also fo r the development o f the Mall
and other parts o f Washiigton, that i t has seemed desirable to report progress.
In order to accomplish th is a meeting w ill be held on Thursday evening, A pril
25th, in the Council Chamber o f the United States Chamber of Commerce, which has
been tendered fo r use on this occasion.

I t w ill be in the nature of an o f f i c i a l

meeting, to which in vita tio n s w ill be sent to the President, the Vice President,
the Cabinet, the United States Supreme Court, the Senate and House o f Represen­
ta tiv e s , the pine Arts Commission and the national Capital Park and Planning
Commission.

The wife of each o f f i c i a l w ill also be in v ite d .

Owing to the

lim ited capacity of the h a ll, cards can be issued only to the above o f f i c i a l s .
The only additional guests w ill be the members of the American In s titu te of
Architects, then holding i t s annual meeting in Washington.
The new model, which has ju st been completed, of the Government buildings
to be erected in the Pennsylvania Avenue Triangle from F ifteenth Street to
the Canitol, w ill be exhibited fo r the f i r s t time, and a motion picture film
of nThe City o f Washington," which has been sp ecia lly made fo r the occasion,
w ill be shown.
Secretary Mellon w ill act as presiding o ffic e r .

Speeches w ill be made on

subjects re la tin g to the development o f Washington by President Hoover, Senator
Smoot, Congressman Richard N. E l l i o t t , and Mr. Milton B. Medary o f Philadelphia,
who is a member of the national Capital Park and Planning Commission.

Hie en­

t ir e proceedings w ill be broadcast over a nation-wide radio chain, and during
the evening the Marine Band Orchestra w ill play.

TREASURY DEPARTIEITT

FOR IMMEDIATE mEASE, MONDAY, APRIL 22,1929*

In connection with the h i l l s to-day introduced "by Senator Smoot and
Representative Hawley authorizing the Treasury Department to s e ll Treasury
h i l l s on a discount basis, secretary Mellon made the fo llo w in g statement:
The present method o f financing the requirements o f the United States
Government was developed as a war measure, and not only served admirably in f i ­
nancing war-time expenditures hut has continued to function s a t is fa c t o r ily up to
the present time.

The Treasury Department b elie ves, however, that in so fa r as

short-term financing is concerned, certain m odifications are desirable in the in­
terest of greater econony and o f clo ser adjustment o f current borrowings to the
immediate needs o f the Government*
Generally speaking, short-term financing o f the Government is ca rried on by
means o f Treasury c e r t ific a t e s , with m aturities o f from three to twelve months,
issued quarterly on tax-payment dates and maturing on tax-payment dates*
c e r t ific a t e s serve a th re e -fo ld purpose:

These

They maintain a part of the outstanding

war debt in the form of short-term s e c u ritie s , which, on the whole, has been ad­
vantageous from the standpointof in te rest charges*

They provide the necessary

funds to meet the current obligation s of the Government*

Since th e ir maturities

coincide with the period during which very heavy tax payments are received, they
furnish an e ffe c t iv e instrument fo r preventing heavy withdrawal o f funds from the
market, with a consequent serious disturbance every quarter date.
I t is not the purpose o f the Treasury Department to dispense with this
system, to which our people have become accustomed and which has functioned
smoothly and e ff ic ie n t ly , but rather to correct certa in defects which have de­
veloped and to supplement i t in such a way as w ill decrease the cost of finaneing and adjust i t more clo s e ly to the needs o f the Government*
The defects may be b r ie fly described as follow s*
1.

Since the Government borrows only four times a year, the funds are

borrowed in advance of the actual requirements, and the in terest cost on such
borrowings has exceeded the in te rest received on id le Government deposits*
Thus, fo r instance, the Government borrows on the 15th o f March the funds

2
necessary to meet certain d e fin ite obligation s on the 15th of A p ril and there
is n ecessarily a thirty-day in te re s t lo ss on the funds borrowed.

I f , however,

the freasairy sold b i l l s on the 15th o f A pril rather than c e r t ific a te # on a de­
posit cred it basis on the 15th o f March, the saving would be immediate and sub­
stan tial •
2.

While the maturing of secu rities today synchronizes in a general way

with the c o lle c tio n of income taxes^ in practice the redemption o f these se­
cu ritie s proceeds more rapidly than income tax checks can be c o lle c te d .

Con­

sequently at every tax period there is a temporary excess o f Treasury disburse­
ments, which necessitate# temporary c e r t ific a te s o f indebtedness issued to
cover over-d rafts at the Federal Reserve Banks, on which the Treasury Departnent pays in terest in addition to the in terest paid on the newly issued securi­
tie s .
3.

Under the present system where c e r t ific a te s are issued bearing a fix e d

coupon rate, the Treasury Department is confronted with the d i f f i c u l t task of
accurately adjusting the in terest rate to current market conditions, and while
the Department has been successful in doing this with great accuracy, never­
theless i t would be more desirable to have the market i t s e l f f i x the rate by
competitive bidding.
The Treasury Department, th erefore, suggests that the necessary le g is la ­
tive authority be obtained to permit the Treasury to s e ll short-term b i l l s , with
a maturity not grea ter than a year, on a discount basis, thus furnishing the
Government with a new and more fle x ib le type of secu rity.

Such Treasury b i l l s

would be sold from time to time in the market whenever funds were needed fo r
cash on a discount basis at the lowest rates bid by prospective purchasers.

It

is not the purpose o f the Treasury Department, however, to discontinue the
present depositary method or system o f short-term financing, but rather to sup­
plement i t with the new system, using both as may prove to be most advantageous
to the in terests o f the Government.

Vt'

'

s*

- 3 Several important advantages may be expected to fo llo w the adoption of
this new form of Treasury ob liga tion :
1* .Competitive bidding fo r these b i l l s should enable the Treasury to get
the lowest discount rates consistent with current market conditions.
2.

The sale of these secu rities could be timed to coincide almost exact­

ly with the need fo r funds, thus saving the in te rest on money borrowed ahead o f
requirements.
3 . ‘ M aturities could be timed to correspond c lo s e ly to the actual c o lle c ­
tion o f income taxes and not a l l made to f a l l on the nominal date of tax pay­
ments, as at present.'' .
4. • They would enable the Treasury to take advantage o f periods of
seasonal ease fo r the sale of Treasury b i l l s rather than, as sometimes occurs,
compel the Treasury to o ffe r a large issue o f secu rities during a p eriod o f
temporary stringency and high money rates.
5 .. The banks and the in vestin g public would be furnished with a new in­
strument fo r the investing o f terrporary surplus funds, with frequent and
convenient m aturities

For release, afternoon papers,
Wednesday, A p ril 24, 1929.

Treasury Department

Owing to in a b ility , on account of the size of the h a ll, to supply
extra tick ets fo r the meeting to be held on Thursday, A p ril 25th, at
the United States Chamber o f Commerce, and also because of the fa c t that
some persons can not be present at that meeting, Secretary Mellon has
arranged a second meeting to be held on the fo llo w in g evening, Friday,
at the Chamber of Commerce Building at 8:30 o ’ clock.

At this meeting

Honorable Charles Moore, Chairman of the Fine Arts Commission, w i l l preside, and the speakers w ill be Hon. Louis C. Cramton and Hon. A. J# Montague
o f the House of Representatives, Mr. Edward H*. Bennett, Chairman of the
Board of A rch itectu ral Consultants, Treasury Department, and Major L, E.
Atkins, of the D is tr ic t of Columbia Government.

The Marine Band Orchestra

w ill play, and fo llow in g the program of speeches the moving picture film
of ” The City of Washington” w ill be shown.

This film has been sp e cia lly

made fo r the occasion under the d irectio n of the Treasury Department.
I t is the story of the C ity of Washington from the time when i t was founded
up to the present and i t also deals with the future developments that are
now or soon w i l l be under way.

I t is the f i r s t time that a complete story

of the C ity has ever been to ld with moving p ictu res.

The photography was

done by Lawrence Kroger and in the making of the picture various Government
departments had a p art.

The Signal Corps laboratories of the War Depart­

ment assisted; the motion picture section of the Department of Agriculture
furnished it s f a c i l i t i e s ; and the Wavy Department has also contributed help.
I t is expected that the film w ill be shown in other places fo llo w in g it s
f i r s t presentation here on Thursday and Friday evenings.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS
THURSDAY, APRIL 25, 1929.

SPEECH TO BE DELIVERED BY HON. OGDEN L. MILLS,
UNDERSECRETARY OF THE TREASURY,
-b e fo re THE FORUM OF WASHINGTON CHAPTER, AMERICAN INSTITUTE OF BANKING,
AT THE RALEIGH HOTEL, WASHINGTON,
ON THE EVENING OF APRIL 24, I 929.

Note:
For f u l l text of speech see Subject F ile : U.3. Sec.— Treasury B i l l s

HOUSE OF REPRESENTATIVES

FOR RELEASE, MORNING PAPERS
A p ril 26, 1929, or when
delivered*

ADDRESS OP
Honorable Richard N* E l l i o t t ,
Chairman, Committee on Public Buildings and Grounds
o f the House o f Representatives
At the meeting on the development o f Washington
held at the United States Chamber of Commerce Building,
Washington
A p ril 25, 1929.

*

Washington, the ca p ita l of the United States, .is the only c it y in the
country that is purely fed eral in i t s character.

I t is governed by the p re s i­

dent and the Congress, the c itiz e n s having no voice in it s government.

I t is

what our fo refath ers intended i t to be, the home o f our fed eral government, and
Congress should make i t a model c it y , the greatest can ital in the world*
Congress meeting in Philadelphia in 1790 passed an act removing the capital
from that c ity to the D is tric t o f Columbia, a tra ct o f land containing one
hundred square miles o f te r r ito r y which was ceded to the fed eral government by
the States o f Maryland and V irg in ia .

I t was located at the head of tidewater

on the Potomac River, as a compromise between the representatives o f the thirteen
origin a l states.

This was the f i r s t act o f Congress re la tin g to the capital in

it s present lo ca tio n .

The c it y was la id out by Major P ierre Charles L TEnfant,

a French army engineer, in accordance with the act o f Congress and under the
supervision and d irection o f President G-eorge Washington,

The p la t o f the c ity

could w ell be used by any great c i t 3-r planner o f today and r e fle c t s great cred it
upon it s authors.

It was planned to f a c i l i t a t e the movement o f troops through

the c it y and it s broad avenues extend in every d irection , making a l l parts o f
the c it y ea^r o f access from any given point.
While in 1790 the greed o f man had not ye t been f e l t in the destruction of
naturels great fo re s ts and natural parks, which G-od designed and created fo r
the w elfare, pleasure and happiness of the people, the planners o f the capital
rea lized that some day there would be great need in th is c it y fo r parks and
breathing places fo r it s inhabitants.

They provided the Mall and other parks

which form the nucleus o f the beau tifu l park system in the national ca p ita l of
Which we a l l are ju s tly proud.
The f i r s t buildings authorized by Congress were the Canitol, White House
and Land O ffic e .

A fte r the p a rtia l destruction o f the Capitol and the White

House by the B ritish Arny in 1814 these buildings were rebu ilt and the Capitol

-

2

*

TMs law was quickly follow ed "by the Triangle h i l l which authorized the purchase
of a l l the laud "bounded "by Pennsylvania Avenue, Third S treet, îîisscu ri Avenue,
B Street and Fifteenth S treet, N»W*

The land is to "be cleared of "buildings

and used fo r the s ite s fo r the magnificent public buildings shewn on the model
exnibioed here tonight*

They w ill be easy o f access to the people who have

business to contract with the government, a matter that w ill be high ly aTonreciated by a ll who have experienced the d iff ic u lt y we have had to contend with, in
the widely scattered bureaus ^nd departments as they are now located.

For in ­

stance the Department o f Agriculture has been occupying snace in fo r t 3r~seven
d iffe re n t and widely scattered rented buildings in the D is tric t o f Columbia;
the Bureau of Internal Revenue has occupied space in nineteen buildings; and
a ll departments of the government have been likew ise congested.

In addition

to this the archives o f the government, many of them p ric e le s s , many o f them
records on which our gloriou s h istory rests, containing the records of the
World -Jar so ld iers, have o f necessity been kept in non fir c o r c c f buildings
where they have been under grave danger o f destruction fo r many 3^ears.

Some

of the buildings authorized under the terms of the public building law o f 1926
are fo r the Departments cf Commerce, Agricu ltu re, Labor, Justice, Bureau of
Internal Revenue, Archives Building, and additions to the G-rverrment P rin tin g
O ffice and the Bureau o f Engraving and Prin tin g.

The nassage of this act

marked an epoch in the h istory o f the oublic buildings of our country fo r the
reason that i t was the beginning o f the f i r s t comorehersive building program
adopted by cur government.

I t net only took into consideration the need fo r

public buildings in the D is tr ic t o f Columbia but provided fo r much needed public
buildings throughout continental United States and i t s dependencies.

The

sixty-ninth and seventieth Congresses w ill go down in h istory as doing more in
a constructive way fo r the remaking o f the national ca p ita l and the providing
of adequate public buildings throughout the country than a ll c f the preceding
Congresses had done in th is behalf*

inents, the le g is la t iv e , executive and ju d ic ia l.
had a sa tisfa cto ry or adequate home.

The Supreme court

A fter the Senate wing of the ca p ito l was

\ b u ilt ju st before the C iv il War the old Senate Chamber was turned over to this
^Nl h

,

great court fo r a court room and i t has held it s sessions in that chamber since
that time.

I t is without doubt the greatest court in the world.

I t s de­

cision s are f e l t and respected by a ll our people, most o f whom w ill be surprised
to know that the average county seat court in the United States is b e tte r housed
than is the Supreme, Court.

Under the terms of the public building act a new

Supreme Court House w i l l be erected on the block o f ground north c f the Con-

gressional Library which w ill be in keeping with i t s dign ity and importance.
Another important act passed by Congress was the authorization o f the
A rlington Memorial Bridge which was .the dream o f Andrew Jackson, President of
the United States, who in sisted that there should be a bridge of enduring
granite spanning the broad bosom o f the Potomac as a symbol o f the union o f the
ilorth and the South.

Within a short time that dream w ill be re a liz e d in the

completion o f the great bridge now under construction; and i t is a coincidence
that tne construction work o f this great bridge has been done under the super­
visio n of L ieu t. Col. U.S. Grant, 3d, a grandson o f the la te General U*S* Grant
A magnificent boulevard has been authorized connecting the west end o f the
Arlington Bridge with Mt. Vernon, the home o f Washington.

B Street is to be

widened to the width of one hundred and.twenty fe e t from the Senate O ffic e Buil
ing to the Potomac R iver.

Twenty-third Street, R.W. w ill be widened as fa r

north as Washington C irc le .

B Street between the government buildings and the

Mall w ill he the great thoroughfare over which processions going from the
Rational Capitol to A rlington Cemetery w ill tra v e l.
Last but not lea st is the act o f March 4th, 1923, a b i l l fo r the enlarging
of the ca o ito l grounds.

i t authorizes the opening o f a boulevard from the

Columbus Monument, in fron t of the Union Station, to a point where i t w ill in ­
tersect with Pennsylvania Avenue at Second Street, and i t provides fo r the ex­
tension o f the Capitol Park to the Union Station and removes a l l o f the old
buildings therefrom.

I t is said that the signing o f th is b i l l was the la s t

o f f i c i a l act of President Calvin Codlidge who was a great frien d o f a ll the
le g is la tio n seeking to improve and rebuild the national c a p ita l.

His adminis­

tration w ill go down in h istory as marking the beginning of the great recon­
stru ctive period in the national c a p ita l.

The work o f constructing these great

buildings is placed by law in the hands o f the Secretary o f the Treasury.

Sec­

retary Mellon and h is able corps o f assistants have been working hard to carry
on th is great work and complete i t at the e a rlie s t possible time, and they deand oxer?ij;. f o r . tha <=tfo-rt. t-^ev have

mandate' o f Congress.

mifr frha

I t is w ell to note that in th is time o f reconstruction

o f the national ca p ita l we are fortunate in having as ch ief executive o f the
nation a man who is a trained engineer and bu ilder, one whose l i f e has been de
voted to the handling o f large affairs.

president Hoover by reason of his

nstructive achievements to his
great a b ilit y and industry w ill have many con

cred it at thè\end of his administration, and he w i l l no doubt go down in
h istory as the great bu ilder and the monument to h is administration w ill be
Washington, the fin eb t cap ita l in the world*

FOR RELEASE, MORNING- PARE
APRIL 26, 1929, or when
delivered*

"Making a Capital City"

Address of
Milton B. Meda ry
Member of the National Capital Park and Planning Ceram: ssion
at a Meeting on the
Development o f the City of Washington
held at the
United States Chamber o f Commerce Building
Washington
A p ril 25, 1929.

The physical plan of a c ity should hear the same re la tio n to the development
of it s separate elements that a constitu tion or charter hears to the development
of the social and p o lit ic a l l i f e o f i t s people.

Washington and his advisers

recognized this fa c t and gave us a physical plan with our Constitution.

Had

they anticipated the chaos and anarchy associated with the physical development
of many American c it ie s during the period which follow ed the early Republic, I
am in clin ed to think they would have provided a Government agency as guardian of
the physical plan o f Washington in much the same manner as the Su-oreme Court is
called upon to measure the development o f social and p o lit ic a l in stitu tio n s in
terms o f the Constitution.
Such a plan must n ecessarily he basic and fle x ib le enough to permit the
fre e s t development in accordance with the varying conditions o f a constantly
changing social order, in sistin g only that a ll individual elements o f a c ity *s
growth shall be in harmony with each other and with the whole.
The value of large and farseein g planning is by no means confined to the
aesth etic.

In considering each p ro jec t in the development of a c it y as a part

of a grand purpose, great economies resu lt from the avoidance of overlapping
in terests and the consequent destruction o f previous development by the encroach­
ment o f newer work, and through the conveniences of use resu ltin g from orderly
arrangement of related in te rests.

Each step in such a program gradually but

consistently leads in the d irection o f that true sim p licity in the arrangement of
the c it y as a whole which can result only from a singleness o f purpose behind
<=V

a ll of it s physical works.
Without such purpose physical chaos w ill eventually deprive a c it y o f much
of it s usefulness as w ell as it s d ig n ity.

The period o f a r t is t ic

i l lit e r a c y

which governed the development o f Washington during the neriod between the

2
influence o f the L rEnfant Plan and the Plan of 1901 w ell illu s tr a te s th is point,
a notable example being the introduction o f ra ilroa d tracks and station s in the
great park designed by L*Enfant and known as the M all.

The cost and manner of

correcting this mistake illu s t r a t e both the lack of economy resu ltin g from un­
guided development and the value to a c it y of the orderly d isp ositio n o f it s
u t i l i t i e s in th e ir true re la tio n to a great basic plan.

The great industries

of the country never h esita te to scrap en tire plants, i f badly planned, not fo r
aesthetic reasons but as a necessary measure of economy of production and main­
tenance, and our u n iv e rs itie s , h ospitals and other la rge in stitu tio n s are fr e ­
quently under the same necessity.
Huge as our country has become and accustomed as we are to large figu res,
we are often staggered by large plans because of the ultimate cost o f th eir
re a liza tio n .

The size and cost o f the ultimate re a liz a tio n of the City of

Washington as planned by Id Enfant did not seem extravagant to Washington and the
group o f his advisers who dictated that plan.

The infant Republic was in no

position to think of i t s immediate re a liz a tio n , but nevertheless i t was planned
to be the cap ita l o f what Washington believed would be a great nation and in
discussing such d e ta ils o f the plan as the size of the White House he stated
that the plans were being made fo r a fa r-d ista n t future.
The McMillan plan, made in 1900, is a fte r nearly th irty years, only p a rtly
rea lized .

I t would seem reasonable, therefore, to an ticip ate a neriod of

tw enty-five to f i f t y years in any comprehensive plans fo r the future and in
doing so they should represent the normal annual development m u ltiplied by 25
or 50 without implying any increase in normal average expenditure.
This much fa rsigh t at le a s t would be required to insure against the destruc­
tion in one decade of what had been b u ilt in an e a r lie r one while at the same
time paving the way to ultimate resu lts not possible in individual p ro je c ts .
The cost of public works is la rg e ly a state o f mind, and, while we are accustomed

3

7

to the costs of naval vessels and great reclamation works, we are not accustomed
to compare the cost o f the Capitol on the h i l l , symbolizing the whole Nation, with
the cost of single u nits in a naval program, or to the thought that a dozen navies
have been b u ilt and scraoped while the Capiiol has been serving the Nation, and
that i t stands today, as through i t s whole h istory, one o f the notable buildings
of the world,
Turning fo r a moment to the model of the departmental buildings as exhibited
here tonight - the lin e of buildings fa cin g on B .Street and continued west beyond
the Monument toward the r iv e r would cost much less than a lin e o f warships o f the
same length and would o u tlive them by more than a century.

Or, as another

example, the cost of the two aeroplane ca rriers recen tly constructed would more
than bu ild and equip a ll of the buildings in the T rian gle.
A National Capital or a Federal C ity has stood as a challenge to the American
people ever since provision was made fo r i t in the Constitution and since L ’ Enfant
c ry s ta llize d in a d e fin ite form the visio n of Washington and his associates o f a
c ity belonging to and ty p ify in g the whole Nation, independent of any o f the
States, a plan so farseein g that the early structures, which were planned in
harmony with i t s s p ir it , although surrounded fo r years with thoughtless develop­
ment, maintain th eir places as dominating elements in the o rigin a l plan or in
any worthy plan conception of today, and a ffirm the judgment of L fEnfant in
f it t in g the proposed c it y to the topography o f the s ite .
An era of rapid development is the usual explanation of the lack o f visio n
which characterized the development o f Washington a ft e r the period of the early
Republic.

The renewed in te rest in the National Capital which has follow ed the

Plan of 1901 indicates however that rapid development o ffe r s no excuse but rather
demands greater v isio n .

The Plan of 1901 made i t clea r that what was envisioned

and ph ysically begun by the Founders of the Nation was the only basis upon which
it can consistently develop into a great and beau tifu l c a p ita l.

- 4 Perhaps i t was because there was no complicated group of lo c a l c it y in­
terests to confuse the visio n of it s Pounders, and because in th e ir minds there
mast have been a firm intention that such in terests when they came should always
be

secondary and kept in th eir true re la tio n to the national character o f the

City, that the construction o f a l l the ea rly uublic works was begun with the
plans of L lEnfant taken fo r granted and apparently without the suspicion that the
would be forgotten and ignored.

I t would seem wise fo r us to think of the

Washington of the future as i t was thought of by i t s Pounders and in a l l public
works or le g is la tio n a ffe c tin g the City to have in mind the d ig n it 3r and d is­
tinction o f it s ultim ate character as a national c it y distinguished from the
great commercial c i t ie s which ju s tly and f i t t i n g l y express th e ir raison d’ etre,
each in it s own way.

There should be no c o n flic tin g national and lo c a l in­

terests; as the Capitol on the h i l l is the nation*s Canitol so the City must
always be the nation*s C ity.

I t was founded fo r this nurpose, and i t s con­

struction nobly begun and i t s future l e f t in fa ith and trust to the successors
of the Pounders.

Washington is the place where it seems to me more than

anywhere else a ll the men who have loved this Country and planned great things
for i t and had vision s o f it s greatness and power li v e today in the l i f e they
have put into i t .
The costs of building and maintaining a Nation’ s Capital have been the sub­
ject o f much controversy and i t is not my purpose to discuss the m erits o f the
many suggestions which have been o ffered , but I b e lie v e the e ffe c t upon the
character of the Capital o f the application o f certain p rin cip les demands care­
ful consideration.

Washington should not only be the seat of the National

Government, but should also in v ite as it s guests the national organizations
having to do with the arts and sciences and the cu ltu ral and s p iritu a l elements
of l i f e .

i f the Capital is to become the cultural center o f the Nation, the

ousing of such in terests requires the creation and maintenance o f streets and

- 5 u t i l i t i e s , p o lic e and f i r e protection, and many other obligation s o f a c it y goverr.
mentí, and i t would seem as i f a plan could reasonably be devised by which the
national and lo c a l in te rests could be d e fin it e ly segregated perm itting the Capital
to be b u ilt as generously as i t may wish o f the love of a whole Nation, without
complication with the finances of the D is tr ic t, reaffirm in g the o rig in a l hope that
Washington should never become a competitor o f the commercial and in du strial
centers of the country.
Frequent reference has been made to the L 1Enfant Plan, and so much has been
said concerning i t that i t seems important to discuss those elements which make it
applicable to the present time and not merely an in terestin g h is to r ic document.
Its greatness l i e s in it s sim p licity and in i t s development to the utmost of the
topography of the D is t r ic t .
With the Canitol placed upon the h i l l a great park extends westward to the
riv e r, thus giv in g the Capitol major importance fo r a ll time.

The center of

this park was planned as an open Mall dominated by the dome of the C apitol.
From the center of the dome great a r t e r ia l avenues radiated in a ll direction s
each o f which led up to and in turn was dominated by the dome, thus radiating
the influence of the Capitol to a l l parts of the C ity, and in turn leading a ll
parts o f the City up to the Capitol.

The same arrangement focused upon the

Presidentas Eou.se which also had it s own great park, though of le s s e r importance
in the plan, leading southward to the M all.

The in tersectio n o f the great

diagonal avenues o ffe re d minor fo ca l points as ideal location s fo r memorials of
the Nat ion 1 s h isto ry .

Lying between these .-great thoroughfares a network of

smaller streets o ffe re d access to individual properties not exposed to the con­
fusion o f the heavier t r a f f i c on the main a rte rie s .

This is a co n tro llin g

p rin cip le sought today in a ll modern planning aud zoning regulations.
The f l e x i b i l i t y o f the L lEnfant Plan is best illu s tra te d by the fa c t that
many developments of the present day, undreamed of in L ’ Enfant’ s time, fin d their

"best expression "by conformity with the grea ter elements o f h is plan.

As a

sp ecific illu s tr a tio n , the Department of Commerce, now "building, houses one of
the greatest a c t iv it ie s o f the Federal Government and is a structure o f such
great size that i t would he a dominating element in any large c i t y .

Every

apartment within th is building has been designed to meet the requirements of the
particu lar work which w ill be housed in i t .

These apartments have been as­

sembled into a great building and take th e ir r e la tiv e places within i t .

The

building i t s e l f , however, becomes merely a unit in a greater p roject known as
the Triangle Development.

The name "Triangle" is merely an acknowledgment of

the L !Snfant Plan and represents the triangu lar space ly in g between Pennsylvania
Avenue, radiating from the C&pitol toward the northwest, and the boundaries o f
the Mall, running d ir e c tly west from the Capitol grounds.

This la rg e r unit

in i t s e l f recognizes the greater plan and has been designed to create a monu­
mental and e ffe c t iv e separation of B Street and Pennsylvania Avenue at the apex
of the Triangle and to make a f i t t i n g closure of the cross v is ta from the Mall
to the Department o f Justice bu ildin g.

I t gives a facade to Pennsylvania

Avenue worthy o f the importance o f that thoroughfare, and creates on B Street
a part o f the great frame o f the Mall envisioned by L TEnfant, holding the City
back from the great central m otif in which the nation’ s tribu tes to Washington
and Lincoln are enshrined as no other loca tion , however commanding, could en­
shrine them#

Imagine these same two monuments erected anywhere in the built-up

part of the City and deprived of th e ir reverent is o la tio n !
By the application o f the p rin cip le that, no matter how important the p ro jec t,
it must take it s place in the treatment o f the whole, i t has been possible to make
every o ffic e in the proposed group o f departmental buildings not only serve it s
own purpose in the most e ffic ie n t way but do it s part in paying homage to the
great central m otif of the City and to the majestic sim p licity of the L*Enfapt
Plan

This treatment points the way fo r the loca tion and design of such

* ? «
"buildings ©s w ill "be needed in the future to the west o f the Monument, and fo r
the fii^ U it io n of the frame on the &outh side o f the Mall*
At the present time the Mall la
during the War,

by the temporary "buildings erected

The Munitions and Bavy "buildings should "be removed and th eir

functions housed on the north side of B S treet.

They now occupy a s ite

o rig in a lly planted with tree s, and during the ten years since the War the "balanc­
ing trees on the south side have grown to such size that i t w ill be many years
before a new planting on the north side, on the s ite of these buildings, can re­

establish the balance necessary to the settin g o f the Lincoln Memorial,

president

Lincoln*s action in completing the dome o f the Capitol during the stress o f the
C iv il War is a sig n ific a n t challenge to the continued obstruction of the park
leading up to the Capitol by these war structures.
The Smithsonian Group should be studied in order that i t s future construc­
tions from time to time w ill u ltim a tely give i t i t s true re la tio n to the L*Enfant
Plan, one of i t s u n its, the Preer G allery, having already been so placed.
Another in terestin g illu s t r a t io n o f the m u ltiplied values resu ltin g from
good planning is the proposed development of a municipal group at John Marshall
Place.

There is no more beautiful example of ea rly republican architecture in

the country than the D is tric t Court House now somewhat lo s t in Judiciary Square
and seen by the casual v is it o r only by accident..

By the wise choice o f a site

and the understanding manner of the planning and designing o f the proposed
structures, this group, without adding anything to the bulk or cost o f i t s bu ild­
ings, w ill frame a portion of the north side of Pennsylvania Avenue, w ill open
a splendid v is ta through to the Court House bringing th is ancient building
d ir e c tly into the main plan o f the City, and create a monumental frontage fo r
the south side o f Judiciary Square, while in turn the old Court House w ill add
it s d is tin c tio n to the municipal group by occupying the end of it s p rin cip al
court, much as the Madeleine is seen when looking from the Place de l a Concopde.

I t was fo r these reasons that the MacMillan Commission, a fte r an exhaustive
study o f the problems confronting the City- in 1900, determined that no plan of
the C ity could be devised which would ensure a nobler future than that prepared
by Major L ’ Enfant in collaboration with Washington and Jefferson*

’This Com­

mission reaffirm ed that plan and extended i t to meet the many new conditions
which had asserted themselves and. modified i t only where o rigin a l opportunities
had been permanently lo s t .
Many of the proposals o f the plan of 1901 fo r park extensions and. building;
locations have not been re a lized and some of them are no longer a vailable*

Other

great assets of the Capital pointed out in that plan are s t i l l ava ila b le but may
not long remain so.

I have in mind the development of the great scenic region

extending from Potomac Park un t© and including the'.‘(Jreat Falls o f the Potomac.
The lower portion of the r iv e r is now happily made a vailable by the le g is la tio n
creating Mount Vernon Boulevard.

With a park development extending from this

boulevard up to and including the F a lls , Washington would have a r iv e r park un­
riv a lle d by any of the world* s c a p ita ls .

The p ro jec t o f the Fort Drive con­

necting the ring of C iv il War fo rts occupying the heights around the C ity is
rapidly becoming almost impossible of re a liz a tio n .
On the other hand much that was proposed by the report and Plan of 1901 has
been re a lized , some of i t , notably the ra ilro a d situ ation , in spite of what might
have been regarded as insurmountable obstacles.

The greatness o f the plan fo r

the Mall, in it s ultim ate simple d ign ity, appealed to the imagination of the then
president of the Pennsylvania Failroad and resulted, in clearing the way fo r a
rea liza tio n of the Plan not only in the development of the Mall but in the
creation of a great gateway to the City in the form of the Union Station and
plaza as now constructed, and the development of the land from the station to
the Capitol as now authorized.

9
The extension cf the Mall and the lo ca tio n of the Lincoln Memorial represent
additions to the o rig in a l plan c f elements unknown at the time of i t s creation,
while- the Memorial Bridge, connecting th# heart of the City with the memories of
the Nation* s dead at Arlington, completes the greater central not i f o f the Plan
of 1901 now approaching re a liza tio n *

The Grant and Meade memorials in Union

Plaza ensure thé development o f the head of the Mall as planned and the removal
of the temporary war "buildings w ill make possible the opening of the Mall from
the Capitol to the Monument*

From the Mohunient to the Lincoln Memorial, the

plan has been re a lized and the Arlington Bridge is w ell under construction.

The

Washington Monument Gardens remain to he treated as a part of the.Mall scheme and
of the in tersectio n o f the White House axis with that c f the Mall*

I t had been

hoped tnat tn is might be a p roject inaugurated in connection with Washington* s
200th Birthday*
B Street North was planned as a great ceremonial s tre e t, over which
corteges might pass, from the dome of the Capitol to the Arlington National
Cemetery.

[This also has been provided fo r and should be re a liz e d in the near

future •
The proposal that the gardens o f the Mall should include buildings o f the
museum type has been p a rtly re a liz e d by the location o f the National Museum and
the Freer Gallery*
Tne proposal that a le g is la t iv e group should be created around Capitol
Square and an executive group about Lafayette Square has been p a rtly re a lize d in
the creation of the Senate and House O ffic e Buildings and the proposed additional
House O ffic e Building*
tion proposed*

The Supreme Court has also been authorized in the lo ca ­

Hock Greek Park has been enlarged and extended, Potomac Park

la rg e ly rea lized , and work on the Anacostia Park begun.

A ll of these p rojects

have taken th e ir places as elements o f one great plan and would have lo s t much
of th e ir significan ce i f treated as unrelated units lik e the In te r io r Department
Building*

io The buildings of the early Republic were models of good taste, sound design,
and "beauty o f mass, proportion and d e t a il.

These buildings represented a

standard unsurpassed in any of the p riva te or semi-public work throughout the
country*

J efferso n 1s in terest in architecture is h is to r ic and h is doctrine of

the ob ligation o f. the Government to set an example in the arts of design governed
the ea rly development o f the national C&pital and should fin d expression today in
a ll the works of the Federal Government.
In addition to the ob liga tion of the Federal and D is tric t governments, the
obligation to maintain an appropriate character of the City extends to owners of
private property.

In this connection we learn of another of the many examples

of President Washington*s wisdom and v isio n .

In the o rigin a l terms governing

the building of the Capital he made the design and m aterials of construction of
private structures subject to such regulations as might be thought necessary to
ensure th e ir appropriateness.

Unhappily th is control has long since been re­

linquished but i t is a matter fo r congratulation that the le g is la tio n recently
proposed fo r re-establishment of such control has received the almost unanimous
approval o f the Citizens of Washington and i t is to be hoped that before long
such le g is la tio n may be enacted into law.
Our National fo re s ts and parks witness our fa it h that the beauty o f woodland
and meadow are as necessary to a wholesome national l i f e as th eir material
products.

The building of our national Capital should witness the same fa ith .

In closin g, l e t me again repeat and leave with you the statement that no c it y
can have d ign ity, beauty and d istin ctio n , or be a great c it y in the best sense
of the word unless i t s every element is an appropriate part of a greater whole.
The Plan of 1901 has never been o f f i c i a l l y adopted; i t s in tr in s ic merit has
given i t force and carried conviction.

Since 1901 the Ustionai Commission of

-

11

-

Fine Arts has been created and mere recen tly the National Capital Park and
Planning Commission.

These two agencies have "been governed in th e ir a6.vice

and decisions on a ll in dividu al p ro jec ts by the relatio n such p ro jec ts bear to
the City as one great u n it.

/c

UNITED STATES SENATE

FOR RELEASE, MORNING- PAPERS,
APRIL 26, 1929, or when
delivcrdd*

’'Appropriations fo r Public B u ildin gs.»

Address o f
Honorable Reed Smoot,
Chairman of the Public Buildings Commission,
at a Meeting on the
Development of the City of Washington
held at the
United States Chamber of Commerce Building
Washington
. A pril 25, 1929.

»

/ó/

£he president hos to ld you o f the great importance o f the work on which we
are engaged in "building a "beautiful c a p ita l c ity *

Now, I want, in a very few

words, to t e l l you o f the ways and means "by which we hope to accomolish i t .
Por a quarter of a century I have had a desire arid u n fa ilin g fa it h that I
would see Washington, America’ s Cenital City, the most beau tifu l c it y in the
world.

The re a liz a tio n o f this desire and fa ith is near at hand.

I c a ll to

mind that the la te Senator Heyburn and myself, twenty-one years ago, thought the
time had arrived to purchase the p riv a te ly owned land in the tria n gle and had in
mind the beginning o f the erection o f buildings to supply the needs o f the Govern­
ment, thus making i t the center o f the nations a c t iv it ie s .

Senator Heyburn

exhibited dravdngs o f a type o f building he thought ought to be approved.
appropriation of $10,000,000 was asked fo r the purchase o f the land.
This vast sum asked fo r at that time was the death kn ell of the plan.

Por one

I am thankful i t fa ile d fo r i f it' had succeeded we would never have had anything
to compare with the plans now f u lly under way.

A Twenty M illio n appropriation

in 1908 is f a i r l y comparable with 200 M illio n s today, the amount that w ill be
required to complete the present tria n gle building program.
Congress has already authorized $75,000,000 fo r public buildings in the
D is tric t o f Columbia.

Of th is amount $50,000,000 is to be used fo r construction

of buildings and $25,000,000 fo r the acqu isition o f land on which these buildings
are to be erected.

Most of this la t t e r sum w ill be spent in acquiring land in

the so -ca lled Triangle Area, extending along Pennsylvania Avenue from F ifteen th
Street to the Capitol and bounded on the south side by the M all.

The former

sum o f $50,000,000 w ill include a s ite which has already been purchased fo r the
Supreme Court Building, facin g the Capitol and extending along East Capitol
Street, covering an area approximating that o f the Congressional Library on the
soutn side o f the s tr e e t.

A commissionj of which the Chief Justice is Chairman,

is now securing a design fo r the building.

-

2

-

A.s regards acquiring s ite s , there are twenty-three c ity blocks involved
and o f th is number four have been purchased, nine are now in process o f con­
demnation, and condemnation proceedings w ill be started fo r six within the next
month*

This leaves only four blocks yet to be appropriated fo r, and i t is ex­

pected that, shortly a fte r the next regular session o f Congress convenes, an
appropriation w ill be made to complete the purchase o f the land in question*
How fo r the buildings;

Under the $50,000,000 authorization, $43,500,000

w ill be expended fo r construction, the balance to be expended fo r s ites fo r
certain o f these p ro jec ts .

Some of th is work is now under way.

An Admin­

is tra tio n Building connecting the two ex istin g wings o f the Department of A gri­
culture is being b u ilt at a cost of $2,000,000.

The A gricultural Department

w ill also have another building to be constructed shortly on the south side of
the Administration Building, containing a number o f lab oratories and housing
many a c t iv it ie s now ) scattered in other buildings.
An extension to the G-overnment F rin tin g O ffic e w ill be made at a cost of
$1,250,000.

A beau tifu l building fo r the Bureau o f Internal Revenue is being

bu ilt at a cost o f $10,000,000.

This building w ill be a part of the Triangle

Development and w ill cover the area bounded by Tenth, Twelfth, B and C Streets
.

Htrth West.
over two years.

I t is expected that th is building w ill be completed in a l i t t l e
I t w ill house a ll the a c t iv it ie s o f the Internal Revenue

Bureau now so widely scattered throughout the C ity.
A building fo r the Department o f Commerce is being erected at a cost of
$17,500,000.

I t is the la rg est building that w ill be constructed in the

Triangle Area and w ill be over one thousand fe e t in length along F ifteen th
Street, and w ill extend from the Mall to Pennsylvania Avenue and Fourteenth
Street.

.

.

An Archives Building has been authorized at a lim it of cost o f $8,750,000.
This w ill be one o f the most important buildings in the Triangle group.

It

3
w ill house the archives and valuable records o f the Government which are now
scattered in many buildings, some of which are not fir e - p r o o f.
Designs are being made fo r other buildings in the Triangle group, fo r the
Departments o f Justice and Labor and the In terstate Commerce Commission and other
independent establishments, as you w ill see by a model o f these buildings on
view in the adjoining room.

When fin a lly completed, the Triangle Area w ill

contain a most magnificent group of bu ildings.

These buildings, by grouping

together rela ted governmental a c t iv it ie s , w ill g rea tly add. to the convenience
of those doing business with the Government.

They w i l l also make i t possible

to operate the Government mere e f f ic i e n t l y and, in the end, more economically by
putting an end to the large rent b i l l which the Government is now paying fo r
o ffic e s to house the Departments of Ju stice, Labor, Commerce, and others.
In addition to the Triangle p ro jec t, i t is expected that additional accom­
modations w ill be provided fo r the L e g is la tiv e Branch of the Government by con­
structing an addition to the House O ffic e Building cn the south side o f thè
the C apitol, at an estimated cost o f $7,500,000; and by enlarging the Senate
O ffice Building, thus completing the quadrangle of which the present building
forms three sides, -„th e cost of which is not established but w ill probably be
somewhat over $2,000,000.
Ah appropriation o f $4,912,414 has been authorized fo r completing the park
between the Capitol and the Union Station and also carrying out the long delayed
plans fo r the development of the M all.

At the western end o f the Mall the

Arlington Memorial Bridge is new under way, and when fin a lly compieted. w i l l
represent a to ta l cost of $14,750,000.

This w ill include, besides the bridge,

the construction o f a plaza west o f the Lincoln Memorial, the imorovement of
Columbia Island in the Potomac, a formal terraced avenue on the V irg in ia side
leading to Arlington Cemetery, and the widening o f several streets in Washington
to give suitable approach to the Bridge.

- 4 A ll o f these plans, when carried out, w ill add g re a tly to the convenience
and “beauty o f the c i t y .

They w ill not involve a very great outlay each year*

por the great Triangle Development, i t has "been estimated that only $11,000,000
w ill "be expended this year, and next year only $24,000,000*
The plans have "been c a re fu lly made and w ill, I "believe, meet general ap­
proval.

I am a strong "believer'in the necessity o f carrying forward th is great

work in an orderly and S3rstematic manner and am confident that, in so doing, we
w ill merit the thanks and approbation o f future generations who w ill come here to
view the work which we have done.

REASURY DEPARTMENT

FOR RELEASE, HORNING PAPERS
APRIL 26, 1929, or when
delivered.»

SPEECH OP
HONORABLE A. W. MELLÔN
SECRETART OP THE TREASURY
AT THE MEETING ON THE
DEVELOPMENT OF THE CITY OF WASHINGTON
HELD AT THE
UNITED STATES CHAMBER OP COMMERCE BUILDING
WASHINGTON
APRIL 25, 1929

Tonight H istory repeats i t s e l f *

We are met under circumstances almost

id en tica l with those under which a meeting was held tw enty-five years ago in
the old Arlington H otel, only a short distance from th is place.

Then, as

now, i t was a meeting of those representing the G-overnment, and i t was held fo r
the purpose of considering plans to make more beau tifu l the City o f Washington.
The prin cip al sneaker on that occasion was President Roosevelt.

Tne

Congress of the United States was represented by the speeches of Speaker Cannon
and others; and Hr. Root, with h is great eloquence, championed the cause which
he had so much at heart and which he, him self, had done so much to advance*
On that h is to r ic occasion, the host was the American In stitu te of Architect
I t is most f it t i n g , therefore, that tonight we should have .as our guests the
representatives o f that great and in flu e n tia l organization, to whose foresigh t
and u n tirin g e ffo r t s we owe not only the reviva l but the preservation and.
advancement o f a plan fo r the orderly and systematic development of the nation’ s
ca p ital*
The meeting held in 1905 centered attention on the needs of Washington*
At the same time i t made certain that the future development of the c it y should
conform to a balanced and comprehensive plan, based upon the spacious and
d ig n ifie d ideas of President Washington and Major L fEnfant, with such
m odifications as might be required to meed modern conditions and the c i t y ’ s
growth*
How we are engaged in tryin g to carry out those ideas.

Conditions have

reached a stage where econorxy demands that the G-overnment1s a c t iv it ie s should be
adequately housed in buildings owned by the G-oveftiment i t s e l f ; and, in order to
meet th is need, Congress has mode the necessary appropriations to begin this
work and to proceed with certain other plans fo r the orderly development of

2
the city*

The responsibility for the condemnation and purchase of sites and

the erection of most of these buildings has been placed by Congress on the
Treasury Department and has become, therefore, an integral part of Treasury
activities*
The placing of these buildings involves a great responsibility, for the
proper determination of this question will largely influence the future develop­
ment of Washington.

Before coming to a decision, the Treasury obtained the

advice of Mr. Edward H. Bennett of Chicago, a well-known architect, whose efforts
have had so much to do with bringing to completion the plans for beautifying his
native city.

Mr. Bennett was appointed Consulting Architect of the Treasury;

and, with a small group of other eminent architects from different parts of the
country, has given 'unstintedly of his services in arriving at a solution of this
problem*
These men have come to Washington at frequent intervals and have served
without adequate remuneration in helping to work out a plan under which the new
buildings shall be grouped and designed in such a way as to contribute in the
greatest measure possible to the beauty of Washington.

In evolving these

plans the Treasury has had the cooperation of the Pine Arts Commission ana its
able and devoted Chairman, Mr. Moore; with the Capital Park and Planning Com­
mission; the Office of Public Buildings and Parks; and especially with those
members of the Senate and House of Representatives who are most directly

"... I 1 ;iffl '

If : ¡1 ' ' ■■■/■;- ' I . I |■■

concerned! in this work and who have been so largely responsible for the
developments now under way.
All of these developments have been embodied in a comprehensive Plan;
and it is this Plan which will be presented to you tonight.

We want also

to have you view the Model which has been made of public buildings to be
erected along ^Pennsylvania Avenue.

This Model is on view tonight in a

mm

sis

room adjoining the one in which we are now, and w ill "be taken la t e r to the
Treasury where i t w ill be l e f t permanently on exh ib ition fo r a ll who care to
view it *
I t was to place these plans before you and also to make something in the
nature of a visual presentation through motion pictu res that have been prepared,
that we have asked th is distinguished audience to come together tonight*

I

hope that the plans w ill meet with your approval, so that we can proceed with
carrying them out, f o r t i f i e d in the knowledge that we have your sanction and
support.

I am sure in advance o f your deep in te re s t, fo r i t is a work

which makes a strong appeal to every one and gives us a l l an opportunity to do
something of permanent value fo r the country.
No one has taken a deeper in te re s t in this great -undertaking than has
President -Hoover.

In a l l the things that have been done and are now under

way, he has given h is counsel and supuort, and behind the plans which have been
made fo r the future he has placed the f u l l force o f h is Administration.

It

is a great p r iv ile g e to have him here tonight, and to have the honor of. announc­
ing the President o f the United States who w ill now address you.

TREASURY DEPART?'ENT

FOR RELEASE, ?'CRNING PAPERS,
APRIL 27, 1929, or when delivered

SPEECH QP
EDWARD H. BENNETT,
CHAIRSIN, ARCHITECTURAL CONSULTANTS, TREASURY DEPART?HINT,
AT A MEETING ON THE
DEVELOPMENT OE THE CITY OP WASHINGTON
HELD AT THE
UNITED STATES CHAMBER OP COMMERCE BUILDING
WASHINGTON
APRIL 26, 1929. ,

I am to speak about the development of Washington, with special reference
to the areas in which the new departmental and other Government buildings w ill
i■
be placed*

This area, roughly speaking, l i e s between Pennsylvania Avenue and

Maryland Avenue, the Capitol and the Monument.

I shall r e fe r most s p e c ific a lly

in my remarks to the area now known as the "T ria n gle", between Pennsylvania
Avenue and B Street, and,

since th is whole subject has been so splendidly covered

in the speech of the Secretary of the Treasury recently at Pittsburgh, I shall
quote in places from his statement.
I t is obvious at the

start that th is, although an element in the plan of

Washington, is a very important

one in the composition o f it s plan, and p a rtic ­

u larly o f the plan of the future Washington.

I should lik e to emphasize at

the start the orderly relationship o f the plan o f th is great section of land to
that of the ?/hole M all.
"Congress has made the necessary appropriation to in it ia t e this
work and to carry out the most important features of that long neg~
le c te d plan of Washington and L*Enfant fo r the development o f the
c it y .
The re sp o n sib ility fo r carrying out this plan, by the pur­
chase o f s ites and the erection' of buildings, was placed by Congress
on the Secretary of the Treasury and has become, therefore, an in ­
teg ra l part of Treasury a c t i v i t i e s . "
The present gathering meets in a sense to pay a tribu te to order, as I see
it , a human order, the product of centuries of c iv iliz a t io n as expressed in the
thoughts o f men and the works o f th e ir hands.
so fa r as one can see.

I t is not the order o f nature

That we may r e a liz e by taking a trro out into the

Cosmos under the guidance o f a great s c ie n tis t lik e Jeans, Eddington, or our
own M illik en .

We encounter nebulae, g a la c tic clu sters, solar systems, myriad

masses o f suns and so-called cosmic dust, into the in fin it e .
whorls, everywhere!

But sp irals,

No tangible arrangement as recognized by the cu ltivated

in te llig en ce o f the human being.

_

p

_

One returns with a sense of r e l i e f to considerations of order as related to
the human mind, expressed in i t s arch itectu ral works, and with joy i f we can see
the beauty o f this order and it s rhythm.

I t is an order more nearly related

to that natural to the smaller expressions of the creation as evidenced by the
structures of crysta ls, plant l i f e and animal l i f e ,

the compositions o f which a ll

relate to a simple plan in which there are dominant and subordinate elements.
We are this evening to get a glimpse of the beauty o f Washington in it s past,
present and future.

To do that.we must f i r s t see and appreciate the underlying

system or order of i t s great plan.
An architectu ral planJ
made.

We may w ell re jo ic e that the o rigin a l plan was

Suppose fo r example there had been no plan of L ’ Enfant and General

Washington.

I t might e a s ily have been the case as has been the fa te of most

other great ca p ita ls ea rly founded, whose plans have been la t e r r e c t ifie d , and
as in the case o f P a ris, made superb'.

Most c it ie s have grown from a congerie

of huts, evolved more or less according to the n ecessities of the situ ation as
con trolled by the growing in te llig e n c e o f the inhabitants. .

But in the case of

Washington enough great precedent had been established - a conscious idea of
c ity planning existed in Europe and very d is tin c tly in the ea rly days of the
United States* The orderly mind o f the great Washington saw the necessity of planning ahead
of the actual needs and he must have seen the possible beauty of a c it y planned
on formal lin e s - formal or perhaps more co rrectly , regular lin e s . ,•
e s s e n tia lly a formal age. .

I t was

Uo doubt l i f e pulsated ju st as keenly in humanity as

today, but i t seemed more d iscip lin ed and in it s social contacts, ordered.

Hence

the ordered and rhythmic expression o f the architecture of the day, and hence,
added to the great new outlook in l i f e on a vast continent, the p o te n tia lity of
which was becoming apparent, the in s tin c tiv e , - i f not conscious aim to la y founda­
tions in an orderly and comprehensive manner. • Honce the Washington of the past.

The Washington o f the present is the expression of the early nlan o f 1790,
stin fla te d and corrected hy the great plan o f the Park Commission o f 1301 "out as
yet incomplete in it s execution.
The Washington of the future, "based on that which has gone "before, must "be
the result of our e ffo r t s of today.

Let alone, i t would end in chaos, as has

been demonstrated by some of the attempts ignorantly proposed in v io la tio n of
the o rig in a l plan.

Given meager support, the fin a l resu lt w ill be no b etter

than i t is today, but given great and concentrated attention and enthusiastic
support by the nation through it s representatives and that c o lle c tio n o f splendid
men who are givin g th e ir time fr e e ly in it s in te rest, o f f i c i a l l y and u n o ffic ia lly f
it w ill become superbi
That is why tonight we are looking at the plan of Washington, and I hope,
with the keenest appreciation of the fa c t that there was the o rig in a l plan of the
C&pital•

The perspective we have, the past experience of c iv iliz a t io n centering

on the o rig in a l plan, it s renewal in the plan o f 1901, and today substantial ex­
pansion of that plan, an expansion which is also a consolidation.
Through a ll th is development there have been great p erso n a lities involved.
Most of them are known to you in h is to ry .

I t is my personal desire to acknowl­

edge our good fortune in that the work o f today has received not only the support
of our leading Executive, but an important nart of i t has been under the direction
of the man who, having had the power to help the re a liz a tio n , had also the visio n
and desire to do so.

I allude, o f course, to our great Secretary Mellon.

I hope what I have said ?/ill not seem too fa r a fie ld , because I think i t is
so important that we should r e a liz e that this great group of departmental bu ild­
ings to which I re fe r in general outline, is so strongly related to the general
composition of the plan of Washington.

The main axis of the Trian gle group is

p a ra llel to the Mall, not yet comoleted, stretching from the Capitol to the

Lincoln Memorial.

The L rEnfant plan did not have compositions la t e r a l to the

Mall, alt^ougn they might w ell have been incorporated even in that day, as that
would have resembled an arrangement o f the great eighteenth century French plans
from which the plan o f Washington was re a lly evolved, the main axis o f the
Triangle plan has this further ju s t ific a t io n in precedent.
a series of great axes in extension o f ex istin g stre ets.

i t is traversed by
A ll th is can be seen

on the plans and diagrams in the moving pictu res.
Important

as is th is group o f the Triangle, i t must bo remembered that

sim ilar developments, though not so extensive, are proposed fo r the south side
of the Mall, and in order to complete the picture of th is great composition,
which w ill slowly be rea lized , one must include the planning of the Capitol ap­
proach from the Union Station, including the new park area to the north of the
Capitol and the magnificent approach from the gateway o f the c ity by the Union
Station to the head o f the M all.

These plans, i f ca rried out, founded as they

are on a great and substantial id ea l, should measure up to the requirements of
tne Capital of this great country.
HI t is intended to carry through, as rapidly as possible, the
most pressing needs as regards housing of government departments
and a c t iv it ie s .
These w ill include a new and la rg e r building fo r
the increased a c t iv it ie s o f the Department of Commerce; a Supreme
Court building; a building fo r the Bureau of Internal Revenue; an .
Archives Building; a building fo r.th e Department o f A gricu ltu re;
s t i l l another fo r the Department of Labor, and several others besides.
One o f these buildings, that fo r the Supreme Court, w ill be placed
on Capitol K i l l ; but, as regards the others, advantage w ill be taken
ox^this opportunity to group them together in such a way as to con­
trib u te in the greatest measure possible to the beauty o f Washington.
"The general p rin cip le has been established that no large de­
partmental buildings are to be placed in the M all, as was at f i r s t
proposed, but that the Mall is to be reserved fo r nark purposes and
as a s ite fo r buildings of a rmiseum-like character.
Departmental buildings are to be placed along the south side
o f Pennsylvania Avenue from the Treasury to the' C apitol.
In ad­
d itio n to facing on Pennsylvania Avenue, these buildings w ill face
also on a grand boulevard, which is to be cut through the c it y ,
bordering the Mall and stretching from the Capitol to the new

Memorial Bridge on the Potomac near the base o f the Lincoln Memorial.
It is intended the buildings, while having each a separate and dis­
tinctive architectural treatment, shall he of harmonious design and
grouped around two large interior courts or plazas somewhat after the
arrangement of the Lsuvro in Paris.”
A uniform corner height has been observed, although the architecture is
varied.

The ground contains seventy acres, and i t is upwards o f 3,000 fe e t

in length on B S treet.
Commerce Building alone.

There are upwards o f one m illio n square fe e t in the
The plazas are actu ally three in number; that on

12th S treet, the circu la r one, being in a sense the p ivot of the composition.
In i t we have proposed a great commemorative column.

The vista s w ill extend

from this circu la r plaza through into the other plazas, and esp ecia lly into
the Great Plaza, which, in turn, opens through an arched way on to Pennsylvania
Avenue and toward the Mall, where i t has been suggested shall be placed the
National Museum of A rt.

The v it a l element binding the en tire group is the

connection between the two la rg er plazas.

A happy solution adjusted to the

scale of botn has been found, crowned by a pavilion., g iv in g v a rie ty to the
silhouette o f the group.
" I t is easy to see what the e ffe c t w ill be.
As one proceeds down
Pennsylvania Avenue towards the C apitol, on the south s id e .w ill be
a succession of beautiful and harmonious buildings, a ll of a design in
keeping with the sem i-classical tra d itio n so w ell established in Wash­
ington.
On the north side vis ta s w ill be opened up, so that groups of
buildings, such as the beau tifu l D is tric t o f Columbia Court House on
John Marshall Place, shall be brought into the general plan of Pennsyl­
vania Avenue.
At the same time the Mall w ill present the spectacle
of a great park bordered on one side by the new boulevard lin e d with
beautnul buildings, a wide park-way o f greensward with it s four rows
o f trees, it s drives and walks, statues and r e fle c tin g pools, a ll
arranged in such a way that long vista s w ill be ouened up fo r views of
the Capitol in one d irection and o f the Washington Monument and Lincoln
Memorial in the other. M
To re a liz e the force o f th is a xia l arrangement one must see i t a ft e r dusk.
Sounds o f the a c t iv it ie s o f the c ity are heard in the distance, but the Mall,
with it s three great structures, the Capitol, the Monument, and the Lincoln
3glow and re fle c te d in the pools, is s ile n t and conveys a sense o f strength;
the strength and confidence of a nation.

TREASURY DEPARTMENT

POE RELEASE, MORNING PAPERS
APRIL 26, 1929, or when
delivered.

SPEECH OP
HONORABLE A. W. MELLON
SECRETARY OP THE TREASURY
AT THE MEETING- ON THE
DEVELOPMENT OP THE CITY OP WASHINGTON
HELD AT THE
UNITED STATES CHAMBER OP COMMERCE BUILDING
WASHINGTON
APRIL 25, 1929.

Tonight History repeats i t s e l f .

We are met under circumstances almost

identical with those under which a meeting was held twenty—fiv e years ago in
the old Arlington Hotel, only a short distance from th is p lace.

Then, as

now, it was a meeting o f those representing the Government, and i t was held fo r
the purpose o f considering plans to make more beautiful the City o f Washington.
The prin cip al speaker on that occasion was President Roosevelt.

The

Congress of the United States was represented "by the speeches o f Speaker Cannon
and others; and Mr. Root, with his great eloquence, chanpioned the cause which
he had so much at heart and which he, him self, had done so much to advance.
On that h isto ric occasion, the host was the American Institute o f Architects
It is most fit t in g , therefore, that tonight we should have as our guests the
representatives o f that great and in flu e n tia l organization, to whose foresight
and untirin g e ffo rts we owe not only the rev iv al hut the preservation and
advancement o f a plan fo r the orderly and systematic development o f the nation1s
cap ital.
The meeting held in 1905 centered attention on the needs o f Washington.
At the same time it made certain that the future development of the city should
conform to a “balanced and comprehensive plan, based upon the spacious and
d ign ified ideas o f President Washington and Major L 1Enfant, with such
modifications as might he -required to meed modern conditions and the city*s
growth.
How we are engaged in trying to carry out those ideas.

Conditions have

reached a stage where econoa$r demands that the Government^ a c tiv itie s should he
adequately housed in “buildings owned hy the Government i t s e l f ; and, in order to

$
meet this need, Congress has made the necessary appropriations to begin this
work and to proceed with certain other plans fo r the orderly development of

-

the city*

2

-

The re sp o n sib ility fo r the condemnation and purchase of sites and

the erection o f most of these buildings has been placed by Congress on the
Treasury Department and has become, therefore, and in tegral part o f Treasury
a c tiv itie s *
The placing of these buildings involves a great re sp o n sib ility , fo r the
proper determination of this question w i ll la r g e ly influence the future develop­
ment o f Washington.

Before coming to a decision, the Treasury obtained the

advice o f Mr* Edward H. Bennett o f Chicago, a well-known arch itect, whose e ffo rts
have had so much to do with bringing to completion the plans fo r beautifying his
native city .

Mr. Bennett was appointed Consulting Architect o f the Treasury;

and, with a small groi^) o f other eminent architects from d iffe re n t parts o f the
countiy, has given unstintedly o f his services in a rriv in g at a solution o f th is
problem.
These men have come to Washington at frequent intervals and have served
without adequate remuneration in helping to work out a plan under which the new
buildings sh all be grouped and designed in such a way as to contributed in the
greatest measure possible to the beauty o f Washington.

In evolving these

plans the Treasury has had the cooperation of the 2*ine Arts Commission and it s
able and devoted Chairman, Mr. Moore; with the Capital Park and Planning Com­
mission; the O ffice of Public Buildings and Parks; and esp e c ia lly with those
members o f the Senate and House of Eepresentatives who are most d ire c tly
concerned in this work and who have been so la rg e ly responsible fo r the
developments now under way.
A ll of these developments have been embodied in a comprehensive Plan;
and i t is this Plan which w i ll be presented to you tonight.

We want also

to have you view the Model which has been made to public buildings to be
erected along Pennsylvania Avenue.

This Model is on view tonight in a

room adjoinging the one in. which we are now, and w ill he taken la t e r to the
Treasury where i t w ill he l e f t permanently on exhibition fo r a l l who care to
view i t .
I t was to place these plans before you and also to make something in the
nature o f a visu al presentation through motion pictures that have been prepared,
that we have asked this distinguished audience to come together tonight,

I

hope that the plans w i ll meet with your approval, so that we can proceed with
carrying them out, fo r t ifie d in the knowledge that we have your sanction and
support.

I am sure in advance o f your deep in terest, fo r it is a work

which makes a strong appeal to eveiy one and gives us a l l an opportunity to do
something o f permanent value fo r the country.
Ho one has taken a deeper interest in this great undertaking than has
President Hoover.

In a l l the things that have been done and are now under

way, he has given his counsel and support, and behind the plans which have been
made fo r the future he has placed the f u l l force of his Administration.

It

is a great p riv ile g e to have him here tonight, and to have the honor of announcing the President o f the United States who w ill now address you.

TREASURY DEPARTMENT

POE EBLEIA.SE, MORNING PAPERS,
APRIL 27, 1929, or when delivered,

SPEECH OF
EDWARD H. BENNETT,
CHAIRMAN, ARCHITECTURAL CONSULTANTS, TREASURY DEPARTMENT,
AT A MEETING ON THE
DEVELOPMENT OP THE CITY OP WASHINGTON
HELD AT THE
UNITED STATES CHAMBER OP COMMERCE BUILDING
WASHINGTON
APRIL 26, 1929.

I

am to speak about the development o f Washington, with special reference

to the areas in which the new departmental and other G-ovemment "buildings w ill
"be placed,

fh is area, roughly speaking, l i e s "between Pennsylvania Avenue and

Maryland Avenue, the Capitol and the Monument.

I sh all r e fe r most s p e c ific a lly

in my remarks to the area now known as the ^Triangle**, "between Pennsylvania
Avenue and B Street, and, since this whole subject has been so splendidly covered
in the speech o f the Secretary of the Treasury recently at Pittsburgh, I sh all
quote in places from his statement.
It is obvious at the start that th is, although an element in the plan o f
Washington, is a very important one in the composition o f it s plan, and p artic­
u la r ly of the plan o f the future Washington.

I should lik e to emphasize at

the start the orderly relationship o f the plan o f this great section o f land to
that o f the whole M all.
^Congress has made the necessary appropriation to in itia te this
work and to carry out the most important features of that long neg­
lected plan o f Washington and L ’Enfant fo r the development o f the
c ity . The resp o n sib ility fo r carrying out this plan, by the pur­
chase o f site s and the erection o f buildings, was placed by Congress
on the Secretary o f the Treasury and has become, therefore, an in­
tegral part o f Treasury a c tiv itie s .^
The present gathering meets in a sense to pay a tribute to order, as I see
i t , a human order, the product o f centuries o f c iv iliz a t io n as expressed in the
thoughts of men and the works o f th eir hands.
so fa r as one can see.

I t is not the order o f nature

That we may re a lize by taking a trip out into the

cosmos under the guidance o f a great sc ie n tist lik e Jeans, Eddington, or our
own M illiken .

We encounter nebulae, galactic clusters, so la r systems, myriad

masses o f suns aud so-called cosmic dust, into the in fin it e .
whorls, everywhere!

But s p ira ls ,

Ho tangible arrangement as recognized by the cultivated

intelligence o f the human being.

-

2

-

One returns with, a sense o f r e l i e f to considerations of order as related to
the Vmfflfl.n mind, expressed in it s architectural works, and with joy i f we can see
the beauty o f this order and it s rhythm#

I t is an order more nearly related

to that natural to the smaller expressions of the creation as evidenced by the
structures o f c ry stals, plant l i f e and animal l i f e , the compositions of which a l l
relate to a simple plan in which there are dominant and subordinate elements.
We are this evening to get a glimpse of the beauty of Washington in it s past,
present and future*

To do that we must f i r s t see and appreciate the underlying

system or order of it s great plan*

An architectural plan I
made*

We may w ell rejo ice that the o rig in a l plan was

Suppose fo r example there had been no plan o f L 1Enfant and General

Washington*

I t might e a sily have been the case as has been the fate of most

other great capitals early founded, whose plans have been la t e r r e c tifie d , and
as in the case o f P a ris, made superb.

Most c itie s have grown from a congerie

of huts, evolved more or le s s according to the necessities of the situation as
controlled by the growing in telligen ce of the inhabitants*

But in the case of

Washington enough great precedent had been established — a conscious idea of
city planning existed in Europe and very d is tin c tly in the e a rly days of the
United States.
The orderly mind of the great Washington saw the necessity of planning ahead
of the actual needs and he must have seen the possible beauty o f a c ity planned
on formal lin e s - formal or perhaps more correctly, regular lin e s*
essen tially a formal age.

It was

Wo doubt l i f e pulsated just as keenly in humanity as

today, but i t seemed more disciplin ed and in it s social contacts, ordered.

Hence

the ordered and rhythmic expression o f the architecture of the day, and hence,
added to the great new outlook in l i f e on a vast continent, the p o te n tia lity of
which was becoming apparent, the in stin ctive, i f not conscious aim to la y founda­
tions in an orderly and comprehensive manner*

Hence the Washington o f the past*

/£<*
- 3 She Washington o f the present is the expression of the early plan o f 1790,
stimulated and corrected by the great plan o f the Park Commission of 1901 but as
yet incomplete in it s execution*
3?he Washington o f the future, "based on that which has gone before, must he
the result o f our e ffo rts o f today*

Let alone, it would end in chaos, as has

been demonstrated by some o f the attempts ignorantly proposed in v io la tio n of
the o rigin al p lan .

Given meager support, the fin a l resu lt w i ll be no better

than i t is today, but given great and concentrated attention and enthusiastic
support by the nation through it s representatives and that collection o f splended
men who are giving th e ir time fre e ly in it s interest, o f f i c i a l l y and u n o ffic ia lly ,
it w ill become superb i
That is why tonight we are looking at the plan o f Washington, and I hope,
with the keenest appreciation o f the fact that there was the o rig in a l plan o f the
Capital*

The perspective we have, the past experience o f c iv iliz a t io n centering

on the o rigin al plan, it s renewal in the plan o f 1901, and today substantial ex­
pansion of that plan, and expansion which is also a consolidation*
Through a l l this development there have been great p erso n alities involved*
Most o f them are known to you in history*

I t is my personal desire to acknowl­

edge our good fortune in that the work o f today has received not only the support
1

of our leading Executive, but an important part o f it has been under the direction
of the man who, having had the power to help the re a liza tio n , had also the vision
and desire to do so*

I allude, of course, to our great Secretary Mellon*

I hope what I have said w ill not seem too f a r a f ie ld , because I think i t is
so important that we should re a liz e that this great group o f departmental build­
ings to which I re fe r in general outline, is so strongly related to the general
composition o f the plan o f Washington.

The main axis o f the Triangle group is

p a r a lle l to the M all, not yet coupleted, stretching from the Capitol to the

/
-

Lincoln Memorial*

4 -

The L*Enfant plan did not have compositions la t e r a l to the

Mall, although they mi^ht w ell have "been incorporated even in that day, as that
would have resembled an arrangement o f the great eighteenth century French plans
from which the plan of Washington was r e a lly evolved, the main axis o f the
Triangle plan has this further ju s tific a tio n in precedent.
a series of great axes in extension o f existin g streets*

I t is traversed by
A ll this can he seen

on the plans and diagrams in the moving pictu res.
Important as is this group of the Triangle, it must he remembered that
sim ilar developments, though not so extensive, are proposed fo r the south side
of the M all, and in order to couplets the picture o f this great composition,
which w ill slowly he realized , one must include the planning of the Capitol ap­
proach from the Union Station, including the new park area to the north of the
Capitol and the magnificent approach from the gateway o f the c ity by the Union
Station to the head of the M all.

These plans, i f carried out, founded as they

are on a great and substantial id eal, should measure up to the requirements of
the Capital o f this great country.
" I t is intended to carry through, as rapidly as p o ssib le, the
most pressing needs as regards housing o f government departments
and a c t iv it ie s . These w i ll include a new and la rg e r building fo r
the increased a c tiv itie s o f the Department of Commerce; a Supreme
Court buildin g; a buildin g fo r the Bureau o f Internal Revenue; an
Archives Building; a building fo r the Department of Agriculture;
s t i l l another fo r the Department of Labor, and several others besides.
One of these buildings, that fo r the Supreme Court, w i l l be placed
on Capitol H ill; but, as regards the others, advantage w i l l be taken
o f this opportunity to group them together in such a way as to con­
tribute in the greatest measure possible to the beauty of Washington.
"The general p rin cip le has been established that no large de­
partmental buildings are to be placed in the M all, as was at f i r s t
proposed, but that the Mall is to be reserved fo r park purposes and
as a site fo r buildings o f a museum-like character.
"Departmental buildings are to be placed along the south side
o f Pennsylvania Avenue from the Treasury to the Capitol. In ad­
dition to facing on Pennsylvania Avenue, these buildings w ill face
also on a grand boulevard, which is to be cut through the city,
bordering the Mall and stretching from the Capitol to the new

Memorial Bridge on the Potomac near the Base of the Lincoln Memorial.
It is intended the "buildings, while having each a separate and dis­
tin ctive architectural treatment, sh all he of harmonious design and
grouped around two large in te rio r courts or plazas somewhat a ft e r the
arrangement o f the Louvre in P a r is .”
A uniform corner height has "been observed, although the architecture is
varied.

The ground contains seventy acres, and i t is upwards o f 3,000 feet

in length on B Street.
Commerce Building alone*

There are upwards o f one m illion square feet in the
The plazas are actu ally three in number; that on

12th Street, the c irc u la r one, being in a sense the pivot o f the composition.
In it we have proposed a great commemorative column.

The vistas w ill extend

from this c irc u la r plaza through into the other plazas, and esp ecially into
the Great Plaza, which, in turn, opens through an arched way on to Pennsylvania
Avenue and toward the M all, where it has been suggested sh a ll be placed the
Hational Museum o f A rt.

The v it a l element binding the entire group is the

connection between the two la r g e r p lazas.

A happy solution adjusted to the

scale of both has been found, crowned by a p av ilio n giving variety to the
silhouette o f the group.
BIt is easy to see what the effe c t w i l l be. As one proceeds down
Pennsylvania Avenue towards the Capitol, on the south side w ill be
a succession of beautiful and harmonious buildings, a l l o f a design in
keeping with the sem i-classical trad itio n so w ell established in Wash­
ington. On the north side vistas w ill be opened up, so that groups of
buildings, such as the beau tifu l D is tric t of Columbia Court House on
John Marshall Place, sh all be brought into the general plan o f Pennsyl­
vania Avenue. At the same time the Mall w i l l present the spectacle
o f a great park bordered on one side by the new boulevard lined with
beau tifu l buildings, a wide park-way of greensward with its four rows
o f trees, it s drives and walks, statues and re fle c tin g pools, a l l
arranged in such a way that long vistas w ill be opened up fo r views o f
the Capitol in one d irection and of the Washington Monument and Lincoln
Memorial in the: other.w
To realize the force of th is a x ia l arrangement one must see i t a ft e r dusk.
Sounds o f the a c t iv it ie s of the city are heard in the distance, but the Mali,
with it s three great structures, the Capitol, the Monument, and the Lincoln
aglow and reflected in the pools, is silen t and conveys a sense of strength;
the strength and confidence o f a nation.

i

y®|

On ‘behalf of the Treasury Department» i t gives me great pleasure to
accept th is beau tifu l ta b let which the Kiwanis club of Washington has placed
on th is h is to r ic spot.

This ta b let does more than merely indicate the place

where a famous treaty was signed.

I t marks also the beginning of that firm

and la s tin g friendship which ex ists today between Canada and the United States-a friendship which, I am convinced, w ill grow stronger with the years because
it is grounded on mutual respect and a determination always to work together
in solving the problems that confront us.
The Webster-Ashburton Treaty is the corner-stone on which that friendship
rests.

I t settled one of those d i f f ic u lt questions involving boundary lin es

and disputed righ ts, which might so e a s ily have poisoned our re la tio n s in the
beginning and are usually such a fr u it fu l source of ir r it a t io n and even enmity
between nations.
At the time the treaty was negotiated, such a state of international
ir r it a t io n had indeed arisen and the tension was very great when Lord Ashburton
on behalf o f Canada and Great B rita in , and Daniel Webster fo r the United States,
determined to a rrive at a solution which would be f a i r to both nations and
would end th is controversy fo r a l l time.

They succeeded in th e ir task; ana the

measure o f th eir success, no le s s than the methods which they employed in
bringing i t about, is f u l l of lessons fo r us today.
Both negotiators were firm in th e ir determination to protect th e ir
country's righ ts.

At the same time they recognized the necessity always fo r

proceeding in a fr ie n d ly s p ir it and fo r meeting the requirements of the oth er's
p o sition .

In time they found that a settlement of the disputed questions

could be reached: and so, I am confident, by the use of the same methods we

Lk

V
~

2

-

shall fin d i t possible always to a rrive at a f a i r and sa tisfa cto ry solution
of any problems that may arise between us and our Canadian frien d s, e ith e r
now or in the future.
The long, unbroken friendship between the two countries is one of the
outstanding

achievements of modern times.

I t was a source o f frequent

comment on the occasion of Canada's Diamond ju b ile e in 1927; and in closing
I can not do b etter than to quote the words which Secretary Mellon used in
pointing out the sign ifican ce which that h is to r ic occasion had fo r the
United States as w ell as fo r our frien d s in Canada.
" I t marks" said Mr. Mellon, "nbt only an era of great national development
on the part of Canada, but also an unbroken period o f frie n d ly relation s
between Canada and the United States.

I t proves that

friendship can be

maintained between nations, no le s s than between individuals, where nations
neither envy nor hate th e ir neighbors and are w illin g to in s is t, as Canada
and the United States have always done, that the same rules of decency and
fa ir dealing should be observed between nations as between in dividu als.

The

result has been a fe e lin g of friendship and good w ill and a re a liz a tio n on
both sides of the border that each nation w ill b en efit by the oth er’ s
continued growth and p ro sp erity ."

TREASURT DEPARTMENT

FOR IMMEDIATE RELEASE,
THURSDAY, HAY 2, 1929.

Secretary Mellon today made public the fo llow in g correspondence
with reference to the resignation o f Hon. Eugene Meyer as Federal
Farm Loan Commissioner:

FEDERAL FARM LOAN BUREAU
Washington
A p ril 3, 1929.
The President,
The 'White House.
Dear Mr. President;
Nearly two years ago I accepted appointment as a Member of the Federal Farm
Loan Board and was designated as Farm Loan Commissioner.
I undertook the work,
as you know, at the request of President Coolidge and Secretary Mellon in con­
nection with the reorganization of the Farm Loan Board to meet the situ ation
which then confronted the Farm Loan System.
One o f the la rg est jo in t stock
land banks had ju st been placed in the hands of a re ceiver, and receiverships fo r
two other jo in t stock land banks were impending; a number of Federal and jo in t
stock land banks were faced with d i f f i c u l t situ ation s; public confidence was im­
paired; and the Farm Loan Bureau had not been adequately organized to meet it s
problems.
Since that time the various units o f the Farm Loan Bureau, including the ap­
p ra is a l, examining, and le g a l d ivis io n s, have been v ir tu a lly reconstructed, and
a trained and competent organization has been developed to enable the Board
properly to discharge the re s p o n s ib ilitie s devolving upon i t .
Examinations of
the banks and national farm loan associations are being conducted in a thorough
and e ff ic ie n t manner; improper and irre g u la r p ractices that had grown up in some
of the banks have been eliminated; sound accounting methods are being follow ed,
and. the published statements of the condition of the banks are more accurate than
ever before; the management of banks faced with d i f f ic u lt i e s has been strengthened
and reorganized in cooperation with th e ir boards o f d irectors and they are now
in a p o sition to deal e ff e c t iv e ly with th e ir problems; and the Farm Loan Board's
supervision o f the System has been made a v it a l and e ffe c t iv e fo rce .
The progress that has been made in these direction s is outlined in d e ta il
in the annual report o f the Board fo r 1928, which was submitted to Congress on
March 2, 1929.
While, o f course, much remains to be done, as always w ill be the
case in a system o f this magnitude, I think I am e n tire ly correct in saying that
the task of reconstruction has been accomplished or is a c tiv e ly under way, public

-

2

•*

confidence has g re a tly improved, and the situ ation in a ll i t s d e ta ils is well
in hand*
The reorganized Board has worked harmoniously and assiduously to
bring about these resu lts, and i t has had the cooperation not only o f the banks
of the System gen erally but also of a large number of public s p ir ite d men in
various sections of the country.
I hope and b elieve that what has been done
during the past two years has m aterially strengthened the System and w ill prove
to be o f permanent value to the a gricu ltu ral in terests which i t was created by
the Congress to serve.
I have f e l t i t incumbent upon me to continue with the work u n til the^es­
sen tial requirements of the situ ation had beeh e f f e c t iv e ly met.
That point now
having been reached, I fe e l that I am ju s t ifie d in asking that you re lie v e me of
iry duties as a Member of the Boabd and Barm Loan Commissioner in the near future,
and I therefore tender my resignation to take e ffe c t on May 10, 1929, ,when I
shall have completed two years of service in th is capacity.
With a ll good wishes fob the success of your administration, I remain
S incerely yours,
EUGENE MEYER
Earn Loan Commissioner.

THE WHITE HOUSE
Washington
A p ril 29, 1929*

Hon. Eugene Meyer
Earn Loan Commissioner
Federal Ea^1Loan Board
Washington, D. C*
My dear Meyer:
I received your l e t t e r of A p ril 3rd in which you tender your resignation as
Federal Barm Loan Commissioner and as a Member of the Federal Farm Loan Board.
I intensely regret .that your decision is irrevocable and that, in the c i r ­
cumstances, the duty devolves upon me to accept your resignation.
I p a rtic u la rly wish to take th is opportunity to express the appreciation
which a l l o f us hold fo r the work you have accomplished as Farm Loan Commissioner
during the past two years.
I know that you undertook the d i f f ic u lt task of
reconstruction at a time when the Farm Loan System was confronted with a c r it ic a l
situ ation and public confidence had been impaired.
Under your leadersm p the

v .r W f,

V.'

:

;' g : ■

-3 administration and supervision of the System has "been g re a tly strengthened this
great in s titu tio n o f service to the farmers has been placed on a sounder "bas* s
and public confidence has been m aterially improved, and w ill be of la s tin g bene­
f i t to the a gricu ltu ral in te résts o f the country.
I am aware that a fte r ten years o f public service you u n w illin gly undertook
this additional two years of service, and I can r e a liz e your desire ’to b e ’
relieved*
I earnestly wish, however, that you could remain in public service
where your high q u a lific a tio n s and sense of service so respond to public in terest.
Yours fa it h fu lly ,
(Signed)

Herbert Hoover.

IKE SECRETARY OE THE TREASURY
Washington
May 1, 1929.

Honorable Eugene Meyer,
Farm Loan Commissioner,
Treasury Department,
Washington •
Dear Mr. Meye rj.
I t is with great regret that I learn that you are to leave the Treasury.
For more than eight years I have been associated with you, f i r s t in the work of
the War Finance Corporation and afterwards during your administration of the
Federal Farm Loan Bureau.
During th is time I have learned to re ly upon your
judgment and to fe e l a sense o f security in your handling o f a ll the varied and
d iff ic u lt problems connected with furnishing adequate cred it fo r a gricu ltu re.
Under your d irectio n the War Finance Corporation was conducted in such a
way that i t not only helped to re lie v e a serious cred it stringency which then
existed in the agricu ltu ral community but i t also had a far-reaching e ffe c t i n ‘
helping the farmer to avoid the necessity of enforced liq u id a tio n of his .products,
on a demoralized market.
Later, when the necessity arose fo r reconstructing the Farm Loan Board and
reorganizing the operation of the Farm Loan System, you again gave the Government
the b en efit o f your experience and judgment.
I know with what reluctance and.
at what personal s a c r ific e you agreed to undertake this formidable task; and i t
should be a source of the greatest sa tisfa ctio n to you to know that as a result
of your e ffo r t s the System has been made to function in a more useful manner and
has been m aterially strengthened in the confidence of the country.

- 4 A ll o f those duties you have discharged in a way to merit the highest ap­
p rova l.
I wish to take this opportunity not only to thank you fo r the services
you have rendered hut to express also the pleasure which I have had during the
years in which we have been associated together in the work o f the Treasury.
With kind regards, I am
Sincerely yours,
(Signed)

A. W. MELLON

Secretary of the Treasury

' TREASURY DEPARTMENT
For immediate release,
May 10, 1929«

The Secretary of the Treasury announced that fin a l steps were taken
today fo r the settlement of the debt owed "by Greece to the United States
and the d ifferen ces existin g between the two Governments a risin g out of
the T r ip a rtite Loan Agreement o f February 10, 1918.
Under the T r ip a rtite Loan Agreement the Secretary of the Treasury,
with the approval o f President Wilson, established on the books of the
Treasury credits in fa vor o f Greece in the aggregate amount of
$48,236,629, fo r which amount the United States held the obligation s
o f Greece.

Against these cred its the United States made cash advances

of $15,000,000, leavin g a balance o f $33,236,629, which Greece has. •
claimed the United States owed i t .

The United States took the position

that events which transpired subsequent to 1920 re lieved i t from making
any fu rth er advances.

This d ifferen ce of. opinion has h eretofore pre­

vented the reaching of an agreement fo r the settlement of the indebted­
ness of Greece to the United States.
At it s la s t session, the Congress authorized the Secretary of the
Treasury to make an agreement with Greece providing fo r the settlement
o f Greece’ s indebtedness to the United States and fo r adjusting out­
standing differen ces as to the T rip a rtite Loan Agreement.

This author­

iza tio n provided that Greece should fund i t s outstanding o b ligation s to
the United States over a period of years and that the United States
should make an additional loan to Greece in an amount which would make
the to ta l of the sums advanced equal to the sums advanced by Great B rita in
under the terms of the T rip a rtite Loan Agreement to which the United State
Great B rita in and France were p a rties »

OXhe terms o f the Agreement signed today on "behalf o f Greece by
Charalambos Simopoulos, Envoy Extraordinary and M inister Plen ipoten tiary
o f Greece, and on "behalf o f the United States b3r the Secretary of the
Treasury, and approved by president Hoover, include the fo llo w in g:
!•

The amount owed by Greece to the United States as a resu lt

o f the cash advances of $15,000,000 is to be refunded over a period o f
S3 years.

There are lis t e d below the payments to be made b>y the Greek

Government to the United States under th is settlement:
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July
Jan.
July

1,
1,
I,
1,
1,
1,
1,
1,
1,
1,
1,

..........
........
............................................
........................................................................
.........................................................................
.................................................
..........................................................................
..................................................................... .
.................................................................'........
.........................................................................
and semiannually th erea fter to
Jan. 1, 1938, 10 payments each of
July 1, 1938, and semiannually th erea fter to
Jan. 1, 1990, 104 payments each of
2.

1928
1929
1929
1930
1930
1931
1931
1932
1932
1933
1933,

$20,000
20,000
25,000
25,000
30,000
30,000
110, 000
110,000
130,000
130,000
150,000
175,000

Greece is to forego a ll claims fo r fu rther advances under

the T rip a rtite Loan Agreement o f February 10, 1918, which Agreement, so
fa r as the United States and Greece are concerned, is to be regarded
as terminated.
3.

The United States w ill advance to Greece $12,157,000 at

4 per cent per annum with provisions fo r a sinking fund to r e t ir e the
loan in twenty years.

The service of this loan is to be administered

by the International Financial Commission.
4.

This newr loan by the United States to Greece is to be turned

over in it s en tire ty to the Refugee Settlement Commission.

The funda­

mental a r tic le s under which th is Commission functions provide that it s

3
Chairman shall always "be an American.

This ilew loah by the United

States will enable the Commission to continue its great humanitarian

.

l

work of establishing in economically productive work in G-reece, approx*
imately one million and a half Greek refugees driven from Asia Minor.

In addition to the signing o f the Agreement, the Secretary o f the
Treasury delivered to the Greek M inister canceled bonds of the Greek
Government in the amount of $48,236,629*05 which had been d elivered
to the United States under the T r ip a rtite Loan Agreement of February
10, 1918, and the Greek M inister d elivered to the Secretary o f the
Troasurjr 124 bonds of the Greek Government in the aggregate amount o f
$20,330,000, dated January 1, 1928, and maturing semiannually over a
period o f 62 years, together with 40 bonds of the Greek Government in
the aggregate amount o f $12,167,000 dated May 10, 1929, and maturing
semiannually during the next 20 years and bearing in terest at the rate
o f 4 per cent per annum to May 10, 1949*

In addition the Greek Gove in

ment paid in cash to the. United States the sum of $2,922.67 in order
that the amount to be refunded should be an even number o f d o lla rs,
together with $20,000 in payment of the bond issued under the Agreement
and maturing July 1, 1928, and an additional $20,000 in payment of the
bond maturing under the Agreement January 1, 1929«

The Secretary of

the Treasury d elivered to the Greek M inister a check on the Treasurer
o f the United States fo r $12,167,000*
The conclusion o f th is Agreement was authorized on the part of the
United States by the Act of Congress approved February 14 , 1929, and on
the part o f Greece by the Law o f January 27, 1928*.
Of the debts owed the United States by fo reig n governments s e t t le ­
ments remain to be concluded with Armenia, Austria, and Bussia.
has already authorized the settlement of the Austrian debt#

Congress

J/

TREASURY1 DEPARTMENT

FOR AFTERNOON PAPERS
FRIDAY, MAY 17, 1929

Address of
Honorable Henry Herrick Bond,
Assistant Secretary of the Treasury,
at the meeting of the
Missouri Bankers Association,
Excelsior Springs, Missouri.

May 17, 1929

f

TH5 USïï QUWmCÏ ISSUE *

®ie P r iv ile g e of meeting with you at this convention of the Missouri
Bankers

Association is one that I assure you I deenly appreciate, as i t

gives me the opportunity of presenting to you some of the p rin cip al
pro ole ms connected with the issue of the reduced size currency.

I ap­

precia te that with many of these problems you are, hy reason of your long
experience as bankers, more fa m ilia r than I can pretend to have become
in my limitent connection with the Treasury Department.

However, i t is

my hope that by presenting these problems from the viewpoint o f that De­
partment you w ill perhaps see them from a somewhat d iffe r e n t angle, and
by showing you the d i f f ic u lt i e s that we have already faced and overcome,
and the remaining d i f f ic u lt i e s that s t i l l confbont us, we may have your
fu ll cooperation in the tra n sition a l period ?/hich we are now ranidly
approaching.
The i n i t i a l problem, was that 6f design.

Pol* many shears the

matter of revisin g the designs of the outstanding currency issues o f the
Unitea States had been before the Department, but circumstances seemed
always to preclude any general revision and the correction of the
ex istin g confusion.

Generally speaking, there was a d iffe re n t design

fo r the face and back of each denomination of each kind.

The m u ltip lic ity

and duplication of ch a ra cteristic features was indescribable.

For example,

I have discovered eight or nine d iffe r e n t p o rtra its on the $5 b i l l s o f
d iffe r e n t types or issues, and c erta in ly as many p o rtra its on currency
o f tne $10 denomination.

Of course, I do not mean to say that a ll these

were found on the current issues, but the current issues were s u ffic ie n tly

confusing.

You w ill appreciate how th is situ ation favored cou n terfeiters

and handicapped the Secret S ervice.

The conclusion to reduce the size

of the "bills made i t necessary to execute wholly new engraved stock fo r
prin tin g the new currency, and th is gave the f i r s t re a lly favorable
opportunity ever presented fo r the Department to make a complete revision
of designs.

Many months were devoted to the study, and fin a lly certain

p rin cip les were arrived at and adopted, with the resu lt that the new
designs are on a denominational basis, with emphasis on the d o lla r value
rather than kind, and with the outstanding features inherently affo rd in g
greater security.

An e ff o r t has been made to keep the designs as simple

as possible without unnecessary and confusing ornamentation.

Dor the

new designs every back of a given denomination w ill be absolutely id en tica l
For example, take a fiv e d o lla r b i l l .

The back w ill always bear an

engraving of the Lincoln Memorial as a predominating featu re.

The fiv e

d o lla r backs w ill accordingly be printed in quantity and used fo r any
kind o f currency issued in th is denomination.

Accordingly there w ill

be only one fiv e d o lla r back, instead o f several, fo r the Government to
p rin t and p rotect, and fo r the public to become fa m ilia r with.

For the

faces, although necessary to show the kind of currency, uniform denomina­
tion al ch a ra cteristics have been fix e d , the outstanding feature of each
denomination being a p o rtra it.

Again taking our f iv e d o lla r b i l l , on

the face side the p o rtra it of Lincoln w ill always appear in the center.
As this feature is so prominent i t w ill take a somewhat careful examina­
tion to distinguish between the d iffe r e n t types u n til one is in itia te d
into the points of d ifferen ce.

There are d iffe re n t t i t l e s and

- 3 ~

va ria tion s in texts, and as a fu rth er mark of d ifferen ce to catch the eye,
the Treasury seals and s e ria l numbers w ill he printed in color, on United
States notes in red, in blue fo r s ilv e r c e r t ific a t e s , in yellow fo r gold
c e r t ific a te s , in green fo r Federal reserve notes, and in brown fo r national
bank notes.-

On United States currency the seal w ill be on the l e f t ,

balancing a large 11 F-I-V-E "

at the righ t of the p o rtra it.

On the

Federal Reserve currency the seal w ill be superimposed on this y/ord
F-I-V-E 11 at the righ t of the p o r tr a it, but w ill be balanced by the
Federal Reserve D is tr ic t numeral at the l e f t *

The seal w ill have the

same place at the righ t on the Uation al bank currency, and at the l e f t of
tne p o rtra it the name of the issuing bank w ill be prominently printed.
These d ifferen ces of color and the p o sitio n of the seal are, we are con­
fid e n t, aiuj.lj s u ffic ie n t to f a c i l i t a t e the ready sortin g of currency by
banking in s titu tio n s .

G-old c e r t ific a t e s w ill no longer have the yellow

back o f the past, but w ill be printed with a green back lik e other currency ana w ill nave the numbers and seal in yellow on the face.

You

w ill see, therefore, that we have succeeded in accomplishing a great sim­
p lific a t io n of currency designs, and we are confident that both by design
and general plan we have made co u n terfeitin g and the raisin g o f the b i l l s
from one denomination to another more d i f f ic u lt in the future.

The

denomination henceforth can always be to ld read ily by the p o r tr a it, which
is the most d if f ic u lt thing to cou n terfeit successfully,and i f the nublic
w ill learn the p o rtra its of the lower denominations they w ill be protected
from tne raisin g o f currency, and from co u n terfcitin g in general, to a
degree not possible in the past.

4

Having thus determined the problem o f design, which in i t s e l f was
in some respects exceedingly d i f f i c u l t to work out, and having given
d e fin ite approval to the models, the next step was the execution of the
engraved stock.
turn.

F irs t the engraved dies had to be made and approved in

From these, master r o lls were prepared and then in turn a s u ffic ie n t

number of plates to supply hundreds of presses each with four -elates fo r
p rin tin g.

Our next problem was that of production.

I t was necessary

to prin t fo r a complete turnover of United States and Federal Reserve
currency approximately 76,000,000 sheets of 12-subjects each, or 912,000,000
individual pieces*

These have to go through the various operations of

wetting* back p rin tin g, examining, a second wetting, face p rin tin g, examin­
ing, trimming, numbering and sealing, and the fin a l cutting in to individual
notes.

A fte r th is they are assembled into packages of 4000 pieces fo r

d eliv ery to the Treasury.

Vast as is the capacity of the Bureau to ac­

complish enormous tasks of this character, the production of th is new cur­
rency, ,in part ca rried on during a period of substantial production of the
o ld -size currency to meet the needs of the past months, has strained the
Bureau*s capacity to the utmost.

However, th is work has progressed to

a point where I can assure you that the currency w ill be ready fo r dis­
trib u tion upon the date contemplated in the Treasury announcements of
la s t year, namely, in the early part of July of th is year.

The exact

date w ill be announced d e fin it e ly within the next few weeks.
In order that this new currency might have a longer l i f e than that
of the o ld -size currency, extensive research work was undertaken with the
cooperation o f the Bureau o f Standards, the Bureau of E ffic ie n c y , and the

- 5 -

manufacturers of the paper, to develop a type of paP6r which would have
a greater endurance and fo ld in g strength and which would at the same time
meet the manufacturing requirements of the Bureau of Engraving and p rin t­
ing.

I t is not every paper of high strength that w ill stand.the wetting

and drying operations incident to the manufacture of currency.

Our

currency is printed by the in ta g lio process on dampened paper.

Paper

when moistened expands, hut does not always contract uniformly as i t
dries. A second wetting is
and the faces.

necessary between the p rin tin g of the hacks

We require th erefore a paper that w ill expand and con­

tract uniformly puder these conditions, in order that the faces on eachsheet o f twelve notes may re g is te r with reasonable accuracy against the
backs previously printed.

This is a somewhat severe requirement, when

combined with a stipulated thickness, structure and fo ld in g strength.
We have, however, developed a paper believed to be sa tisfa cto ry in a l l
these respects and with such an increased strength that we are confident
that the currency w ill have a longer l i f e .

Further research w ill be

undertaken to make th is paper i f p ossible more resistan t to d ir t and
grease.
contains

Thenew paper has no prominent s ilk fib r e .

Such fib r e

as i t

is somacerated and interwoven in the texture of the paper that

it is not read ily observed.

I t has long been f e l t that the prominent

s ilk fib r e was an encouragement to the co u n terfeiter, since i t was so
ea sily im itated.
The determination of even an approximate issue date was in i t s e l f
a d i f f ic u lt problem.

I t had to be te n ta tiv e ly fixed before the engraving

had been completed and at a time when certain new and essential machinery

6

was being designed and manufactured.

I t had to be fix e d with due regard

to the exhaustion of the ther.-existing stocks of the several kinds of
currency, to avoid waste thereof, and the p rin tin g of o ld -size currency
planned accordingly.

In accordance with this plan the Bureau has de­

liv e r e d no new old-si'ze currency since the f i r s t of A p ril, and probably
by th is date the e x is tin g stocks of new o ld -s ize currency in the Treasurer1s
vaults and the Federal Reserve Banks, other than certain stocks of
Rational bank currency and, I b e lie v e , Federal reserve notes, are p retty
completely exhausted.

This means that during the next few weeks the

average standard of fitn e s s of currency in circu la tio n w ill be lowered,
due to the absence of any considerable issues of new b i l l s .

There is no

way to avoid this unless we were to produce more o ld -size currency and this
would mean an accumulation that might in part be not required, thus causing
such unused stock to be s a c rific e d .

In addition i t would require the re­

demption o f much' o ld -size currency while s t i l l in a f i t condition.
The problem of d istrib u tio n is planned as fo llo w s :

P r io r to the

issue date, stocks of the new-size currency w ill be placed in reserve
custody in the twelve Federal Reserve Banks and in certain o f th e ir
branches.

The i n i t i a l issue w ill be on a date not yet determined, but

simultaneously to a ll banks.

At th is time a ll established denomina­

tions from $1 to $20, in clu sive, o f a ll kinds of currency except Rational
bank notes w ill be issued.

The higher denominations of United States

and Federal reserve currency and the established denominations o f Rational
bank notes w ill fo llo w as soon as p ossib le.

A ll issues w ill be through

the Federal Reserve Brinks to member and other banks, and a ll banks w ill
be placed on an equal fo o tin g .

There are about 900,000,000 pieces o f

paper currency outstanding.

During the last fiscal year about 930,000,000

pieces of currency were redeemed and about 925,000,000 pieces of new cur­
rency were issued.

Roughly speaking, the replacement of the old-size

currency with the new small-size currency is .the equivalent of about one
yearls ordinary redemptions and issues.

Of course,

it would not be

possible to undertake the replacement of all outstanding old-size currency
at one time, or in a fixed limited period.

Nor would it be possible to

undertake the replacement of all outstanding old-size currency on and
after a given date as rapidly as it might, by chance, be presented.
Essential safeguards are necessary in handling this retirement of the old
which, in effect, is the basis for the issue of the new.

Redemption is

involved with certain legal and accounting restrictions and, of course,
there are physical limitations both at the Eederal Reserve Banks and the
Treasury.

Therefore, instead of an immediate redemption of all out­

standing old-size currency it will be necessary for the issue to be made
over a certain period of time.

The Treasury and the Federal Reserve

Banks will do everything to make this period as short as possible.

This

means that at the very outset all banks applying for currency will be
rationed, as it were, and each will be required to take a certain
percentage of old-size currency assorted from that most fit for circula­
tion.

This percentage of old currency vail be gradually decreased until

after a period of a few months it is anticipated that all old-size currency
presented at Federal Reserve Banks will be replaced in full with the
reduced-size currency.

I am referring now particularly to the United

States currency and the Federal Reserve currency.

(The issue of

National "bank currency in reduced size I w ill r e fe r to s h o rtly .)

Thus

you w ill see that fo r a period of perhaps three or four months, at le a s t,
both sizes of currenc3r w ill be in circu la tio n , but with the o ld -size
currency gradually disappearing, and i t is estimated thht a ft e r several
months the o ld -size currency w ill be rather a r a r ity and w ill only be in
circu lation because i t has not reached a bank fo r a period of severa.l
months.

While i t w ill always be a v a lid ob ligation i t is safe to say

that by the f i r s t of the year i t w ill not be in general c ircu la tio n and
w ill be very ra rely seen.
The problem of National bank currency in reduced size is a d is tin c t one
and in certain ways more d i f f ic u lt o f solution than that o f United States
or Federal reserve currency.

When the Secretary of the Treasury determined,

as was announced on January 22, 1929, that the bonds uoon which the National
bank currency rests would not be ca lled fo r redemption in 1930, he simul­
taneously announced that th is currency would be issued in reduced size
snortly a fte r tne other currency»

Work was at once undertaken to prepare

designs which would approximate as clo sely as possible in th eir essential
features the designs fo r the other types of currency.
completed, and the engraving is now almost accomolished.

These have been
The exact

time and manner of d istrib u tio n are s t i l l under consideration.

There

are approximately 6300 issuing banks, and th e ir currency represents ap­
proximately 15 per cent of a ll outstanding currency in d o lla r value.
pieces th is currency numbers about 70,000,000.

In

The p rin tin g o f this

large amount, with the appropriate names o f the various banks on d iffe re n t
denominations, is in i t s e l f an enormous task.

I t has required, f i r s t

- 9 -

o f a l l , a careful v e r ific a t io n of the charter names, and the securing of
fa csim ile signatures of the o ffic e r s who have in the past signed by pen
or through overprinting with lo c a l prin ters*

These signatures w ill now

he printed on the h i l l at the same time that the t i t l e of the hank is
printed.

I t is our aim to plan a method of d istrib u tio n which w ill,

as nearly as possible, give a ll national hanks a certa in amount of re­
duced-size currency fo r issue simultaneously, or as nearly simultaneously
as p ossib le.

There are problems connected with th is issue, and esp ecia lly

in connection with the size of the 5 per cent redemption fund and the
redemption procedure, which are very d i f f ic u lt of solution, hut I can
assure you that i t is our aim to show no favoritism , e ith e r sectional
or otherwise, in this d istrib u tio n , hut to accomplish the replacement as
gen era lly and as rapidly as conditions w ill permit.

However, i t is

quite evident that th is kind of currency w ill require a longer period
fo r it s complete replacement than the other types of currency requ ire,
due to the problem of sorting and redemption, the size of the redemption
fund, and other related matters, and therefore i t w ill he found in circu ­
la tio n fo r a somewhat longer period than the other currency.

I t is

probable that i t w ill take at le a s t six or seven months to complete the
turn-over of National bank currency, even under the most favorable conditions.
We recognize that there w ill be at the beginning of the turn-over
period a certain abnormal demand fo r the new currency, due to the natural
c u rio s ity of the public to see the new designs in the reduced-size currency.
We b e lie ve that the stocks which w ill be available and which can be issued

>rA

^
-

10

-

m ®|i

w ill be s u ffic ie n t to meet this demand*

I t should he noted, however, that

there w ill he no d istrib u tio n of new currency in en tire sheets to the
general public.
You w ill see from the above that you, as bankers, have an inportant
part in the program*

I t is only through your cooperation that we can

hope to accomplish this turn-over with a minimum of annoyance and disturbance
in the currency.

With your cooperation the p u b lic 's requirements fo r the

new currency can be held within the lim its of our immediate a b ilit y to
meet them* and the process of the turn-over thus

made successful.

Hot

only must each bank be patien t in it s demands but we ask you to preach
the doctrine o f patience to your customers.
Sim ilarly the problem of the Federal Reserve Banks is one of coopera­
tion on the one hand with member banks and other banking in stitu tio n s, so
as to meet th eir demands fo r currency as fu lly and rapidly as f a c i l i t i e s
w ill permit, and on the other hand to cooperate with the Treasury so that
these demands may be kept within the necessary lim ita tio n s which the
Treasury must iirpose.

I bespeak fo r them your syngpathetic cooperation

in this d i f f ic u lt period.
The national banking in s titu tio n presents a special problem, in
tnat a ll banks are asked to keep in circu la tio n o ld -size National bank cur­
rency over a somewhat prolonged period of a number o f months, thus meeting
fu lly the public requirement fo r currency.

In return fo r th is coopera­

tion, on which we confiden tly re ly , I can assure the banks that the
Treasury w ill make every endeavor not only to hasten production and issue
of national bank currency in reduced size at the e a r lie s t possible date,
hut also in s u ffic ie n t volume to accomplish i t s complete substitution

fo r the o ld -size currency ju st as rapidly as the redemption f a c i l i t i e s
w ill permit.
In order that a l l of these problems may be successfully solved,
the Treasury is planning certain p u b lic ity featu res.

We regard i t as

important that at the very outset of this turn-over period, - a period
without precedent in the h istory of the country, - the public should be
thoroughly acquainted with the essen tia l features o f the new currency, so
that the passing o f cou n terfeits w i l l be impossible.

To this end i t is

planned to place on exh ib ition in a l l banking in s titu tio n s which desihe to
p a rticip a te, specimen sets of the lower denominations, supplied at the
face value purely fo r exh ib ition purposes in advance of the actual issue
date.

This advance d istrib u tio n of specimens w ill be s t r ic t ly lim ite d

to banking in s titu tio n s .

Fu ll d é ta ils as to th is d istrib u tio n of specimen

sets w ill in due course be furnished by the Federal Reserve Barks in the
respective d is t r ic ts through whom alone such d istrib u tio n w ill be made.
This is one of several features of th is kind which the Department is planning
to

in a u g u ra te

fo r the purpose of acquainting the public in advance with the

essential features o f the new currency.
In conclusion I appeal to the public fo r a sympathetic appreciation
of the gig a n tic problems which have confronted the Treasury in this pro­
gram and fo r th eir cooperation during the turn-over period.

I t is a

period of great d iff ic u lt y such as has never before been faced in
currency matters.

I f the public w ill but re a liz e that the Treasury is

making every endeavor to accomplish a complete tum -over as rapid ly as
possible they w ill be content fo r a certain period oefore the actual

-

12

-

issue to accept the o ld -s ize currency in a condition of wear which would
ord in a rily require it s redemption, knowing that th is is a. necessary
incident of the program, and secondly, they w ill ch eerfu lly acquiesce to
the necessity of using two sizes o f currency fo r a lim ited period, knowing
that th ereafter the country w ill go forward with the reduced-size h i l l s

y

which w ill he fa r superior in heauty of design, sim p licity, p ro te c tiv e
features, wearing q u a litie s , and general convenience.

In addition there

w ill he a very la rg e annual saving in cost of production, as roughly, we
w ill p rin t twelve small notes fo r the cost of eight o ld -s iz e ; and at the
same time avoid a large expansion of plant at the Bureau of Engraving and
Printin g within the next few years which would otherwise have heen
necessary*

These ends are so high ly desirable that the temporal/ in­

convenience should not, and I am sure w ill not, he magnified and are
certain in the end to he speedily fo rgotten .

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE,
FRIDAY, MAY 17, 1929.

The corner stone fo r the new building of the Bureau of Internal
Revenue at Twelfth and B Streets, Northwest, w ill be la id on Monday
afternoon, May 20th, at 4*30 o’ clock.

The exercises w ill be opened

with an invocation by the Reverend Jason Noble Pierce, D*D., which
w ill be follow ed by a few introductory remarks by the presiding o f­
fic e r , Honorable A. W. Mellon, Secretary of the Treasury'.

A short

address w ill be made by Honorable David H. B la ir, Commissioner o f
Internal Revenue, which w ill be follow ed ~by the layin g of the com er
stone by Secretary Mellon and Commissioner B la ir.

The benediction

w ill be pronounced by the Right Reverend C* F» Thomas.

The United

States Marine Band w ill play during the ceremony and o ffic e r s and
men representing the United States Coast Guard w ill be present.

a 7

FOE RELEASE, MORNING PAPERS,
TUESDAY, 10S3T 21, 1929, or
when d elivered .

TREASURY DEPARTMENT

SPEECH OE
HONORABLE A. W. MELLON*
SECRETARY OF THE TREASURY,
AT THE LAY I EG- OF THE COREER STORE
OF THE BUREAU OF INTERNAL REVENUE BUILDING,
TREASURY DEPARTMENT
WASHINGTON
MAY 20, 1923.

/ ïâ? ^

We have met th is afternoon to la y the corner stone of the new ouilding
fo r the Bureau of Internal Revenue.

I t is a sig n ific a n t occasion,

fo r i t means that th is Bureau, with it s varied a c t iv it ie s and re s p o n s ib ilitie s
fo r c o lle c tin g the vast revenues o f the Government,, w ill no longer he
scattered in buildings throughout the c it y hut w ill he housed in a building
adequate fo r it s needs*

I t also means that the plans which have been

made fo r the orderly development o f Washington, p a rtic u la rly as regards the
so -ca lled Triangle Area, are at la s t under way.
The present building is the f i r s t to be commenced in that grea^ group of
Government buildings to be erected along Pennsylvania Avenue and the h all*
i t w ill constitute an in tegra l part of that group; and i t has been designed
in such a way that i t w ill contribute, in .the grea test measure p ossib le, to
the beauty and d ig n it y o f the c it y and the convenience of a l l who must
transact business with the Government.
I t is a matter of special pride to us that the plans fo r this building
have been made e n tir e ly within the Treasury i t s e l f .

These plans have

been drawn in the O ffic e of the Supervising A rch itect, which has been
entrusted with such la rg e r e s p o n s ib ilitie s in working out the plans fo r the
public building program in Washington*
I t is a .p a rticu la r sa tis fa c tio n that th is long delayed bu ildin g fo r the
Bureau of Internal Revenue has been started during the administration of
the present Commissioner, Mr. B la ir.

For more than eight years ne

has carried on the d i f f i c u l t and responsible work of administering the
in tern al revenue laws*

Often i t has been under the greatest

handicaps, such as inadequate housing o f the various units o f h is organization

V
- p. -

and also constant changes in personnel.

But he has worked always to

g iv e the taxpayers and the Government an honest and e ffic ie n t administration
o f the tax laws; and he has succeeded in making a record o f which the country
can well he proud.
I t is with great regret that we see him leave the Treasury organization;
and I wish him to know that, in lea vin g, he ca rries with him the admiration
o f a ll those who have been associated with him in the inportar.t work o f the
la s t eight years.

I take pleasure in introducing to you the

Commissioner o f Internal Revenue, Honorable David H. B la ir, who w ill now
address you.

R

E RELEASE

JOR RELEASE
MORNING PAPERS
TREASURY $EFARTMENi

0

(nJVm-3,

R?

£

Û fTE

Secretary Mellon today announced that July 10, 1929, has been sot
fo r beginning the issue o f the new sm all-size currencjr.

The issue w ill

"be made through the Federal Reserve Ranks and Branches.

For the in i t i a l

issue, Federal Reserve Banks have been authorized to make a va ila b le, to
the commercial banking in stitu tio n s o f th eir respective d is t r ic t s ,

1

ted

amounts o f new sm all-size currency, on an equitable basis established by
them*

Federal Reserve Banks w ill communicate with a ll banks and trust

companies in th e ir respective d is t r ic ts giv in g f u l l instructions fo r
•participation in the i n i t i a l d istrib u tio n o f the new currency.

A fte r

the in i t i a l issue of new sm all-size currency the procedure now in e f ­
fe c t fo r supplying the paper currency requirements o f the country w ill,
in general, be follow ed, and in making payments o f currency, the Treas­
urer o f the United States and the Federal Reserve Banks and Branches
w ill pay out o ld -s iz e currency f i t fo r fu rther c ircu la tio n concurrently
with new sm all-size currency.

Replacement of the outstanding o ld -s iz e

currency with the sm all-size currency accordingly w ill be a gradual
process and, except fo r the i n i t i a l issue, w ill la r g e ly be governed .
by the redemption o f o ld -s ize currency u n fit fo r fu rth er circ u la tio n .
The f i r s t issues o f the new sm all-size currency w ill include a ll
kinds except National bank notes, and a ll denominations from

$1

to $2 0 .

Sm all-size gold c e r t ific a t e s and Federal reserve notes in denominations
.above $20 w ill be issued at a la t e r date.

Sm all-size National bank

notes w ill be printed and issued in order o f charter numbers beginning
about July 15, 1929

)X 2

-

2

-

For the reduced-size currency wholly new designs on a denominational
basis have been adouted.

The revision of designs w ill elim inate e x is t­

ing confusion, and w ill furnish a new and more e ffe c t iv e protection to
the currency issues of the United States against co u n terfeitin g and

fraudulent a lte ra tio n s .

G-enerally speaking, the designs have been

sim p lified , and, as ju st indicated, there is a c h a ra cteris tic design
fo r each denomination.
Treasury Department Circular UP. 415, dated June 3, 1929, w ill
govern the issue o f the sm all-size currency.

Ho issues o f the new

currency w ill be made to the public before July 10, 1929.

Specimens

o f the new currency in unseparated sheets w ill not be a va ila b le.

Any

outstanding o ld -s iz e paper currency, h eretofore or h erea fter issued,
w ill not be re ca lled ; i t w ill be r e tir e d gradually in regular course
o f business, and in the meantime i t s v a lid it y w i l l not be a ffec te d by
the issue o f the new sm all-size currency.
The Treasury appreciates that during the period when the two sizes
o f currency are in circu la tio n th is w ill be a matter of some inconven­
ience to the general pu blic.

However, i t is b elieved that the Department

may confiden tly ask fo r th e ir indulgence and cooperation in view o f the
ultim ate advantages to be gained.

Accompanying th is statement w ill be found:
1.

A description o f the essen tial c h a ra cteris tic s of the designs
o f the sm all-size currency.

2.

A copy o f Treasury Department Circular Ho. 415, dated June 3,
1929, governing the issue of the sm all-size currency.

HEDUCED-SIZE CURRENCY
Description

The new size fo r the paper currency is 5-5/16 x 2-11/1S inches.

The

p rin c ip le o f denominational designs has "been s t r ic t ly follow ed.

The hack

designs are uniform fo r each denomination irre s p e c tiv e of kind.

The face

designs, lik ew ise, are ch a ra cteris tic fo r each denomination as regards
the important p ro tective featu res, with only s u ffic ie n t va ria tio n in de­
t a i l to indicate the kind.

Five kinds o f paper currency are now issued -

United States notes, s ilv e r c e r t ific a t e s , gold c e r t ific a t e s , Federal re ­
serve notes, and National hank notes.

The new designs w ill he applied

to a ll issuahle denominations of a l l these kinds.
The p o rtra its assigned to the faces, and the embellishments provided
fo r the hacks, o f the several denominations, are as fo llo w s:
Denomination

$1
$2

$5
$10
$20

$50
$100

$500
$ 1 , 000
$5 , 0 0 0

$1 0 , 0 0 0

P o rtra it
on face

Emhell i shment
on hack

Washington
J efferson
Lincoln
Hamilton
Jackson
Grant
Franklin
McKinley
Cleveland
Madison
Chase

Ornate ONE
M onticello
Lincoln Memorial
U*S.Treasury
White House
U. S.Capitol
Independence H all
Ornate FIVE HUNDRED
Ornate QNE THOUSAND
Ornate FIVE THOUSAND
Ornate TEN THOUSAND

The backs o f the new currency w ill he printed uniformly in green;
the faces w ill he printed in black, and the Treasury seals and the
s e ria l numbers w ill be imprinted in the fo llow in g colors;
S ilv e r c e r t ific a t e s .................Blue
United States n otes........... ....B e d
Gold c e r t ific a t e s ......................Yellow
Federal reserve notes...............Green
National bank notes......... .....B row n
For the reduced-size currency a new type o f d is tin c tiv e paper has
been adopted.

The paper b a s ic a lly is o f the type developed during the

past few years with a higher fo ld in g endurance, p a rtic u la rly in the
cross d irectio n , than the paper form erly in use.

The use o f small seg­

ments o f s ilk fib e r as a d is tin c tiv e feature has been retained, but the
segments are scattered throughout the sheet and not lo c a liz e d in rows
as form erly.

The reason fo r the change is that, as a te s t o f genuniness,

dependence may not be placed on an outstanding ch a ra c te ris tic , which, in
i t s e l f , inherently a fford s no protection .

I SSUE OF NEW SMALL-SIZE CURRENCY

1929
Department Circular. No. 415,
.Supplementing Department Circular No. 55,
as revised January 26, 1927.

TREASURY DEPARTMENT,
Washington, June 3, 1929.

Treasurer o f the United States

The Secretary o f the Treasury has h eretofore announced the adop­
tio n o f a reduced size, and wholly new designs, fo r the paper currency
issues of the United States.
The date July 10, 1929, is now set fo r the i n i t i a l issue of new
sm all-size currency, and th erea fter o ld -s ize currency, redeemed as
u n fit fo r further circu la tio n , w i l l be replaced with new sm all-size
currency*

The issue w ill be made through the Federal Reserve Banks

and Branches.

For the i n i t i a l issue, the Federal Reserve Banks have

been authorized to make a va ila b le, to the commercial banking in s titu ­
tions o f th e ir respective d is t r ic t s , lim ited amounts o f new smallsize currency, on an equitable basis established by them.

A fte r such

i n i t i a l issue, in making payments o f currency, the Treasurer, o f the
United States and the Federal Reserve Banks and Branches w ill fo llo w
the usual procedure, and w i l l pay out ava ila b le o ld -s iz e currency f i t
fo r fu rth er circ u la tio n concurrently with new sm all-size currency, in
such proportion of each as may from time to time be determined.
The i n i t i a l issue w ill include a l l kinds of currency except
National bank notes, and a l l denominations from $1 to $20,

Small-

size gold c e r t ific a te s and Federal reserve notes in denominations

~ f -

above $20 w ill be issued when ava ila b le without further n otice.

Small-

size National bank notes w ill be prin ted fo r issuing banks in order of
charter numbers, and, commencing about July 15, 1929, w ill be issued
accordingly, as a va ila b le, against redemptions of o ld -size bank notes.
Any outstanding o ld -s iz e paper currency, h eretofore or h erea fter
issued, w ill not be re c a lle d .

I t w ill be r e tir e d gradually in regular

course o f business, and in the meantime it s v a lid it y w ill not be a f ­
fe c te d by the issue o f the new sm all-size currency.

A. W. MELLON
Secretary o f the Treasury.

E R RELEASE, M' RUING PAPERS,
Friday, June 7, 1929,

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MELLON

The Treasury is today o ffe rin g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks, an issue o f nine
month 5-l/8 per cent Treasury c e r t ific a te s o f indebtedness o f Series
TM-1930, dated and hearing in te re s t from June 1.5, 1929, and maturing
March 15, 1930.

The amount o f the o ffe r in g is $400,000,000, or there­

abouts.
Applications w i l l be received at the Federal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a t e s , at par,
Treasury c e r t ific a t e s o f indebtedness of Series TJ-1929, maturing June
15, 1929.

Subscriptions fo r which payment is to be tendered in c e r t i­

fic a te s of indebtedness maturing June 15, 1929, w i l l be a llo t t e d in fu ll
up to the amount o f the o ffe r in g .
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have two

in te re s t coupons attached payable September 15, 1929, and March 15, 1930.
About $500,000,000 o f Treasury c e r t ific a te s o f indebtedness
and nearly $1 0 0 , 0 0 0 ,0 0 0 in in te rest payments on the public debt, become
due and payable on June 15, 1929.
The present o ffe r in g , with tax and other receip ts, is expected
to cover the Treasury’ s cash requirements u n til September.
The text of the o f f i c i a l circu la r follows?

~2~

The Secretary o f the Treasury, under the authority o f the
Act approved September 24, 1917, as amended, o ffe r s fo r subscription,
at par and accrued in te rest, through the Federal Reserve Banks, Treasury
c e r t ific a te s o f indebtedness o f Series TM-1930, dated and bearing in­
tere st from June 15, 1929, payable March 15, 1930, with in te re s t at
the rate of f i v e and one-eighth per cent per annuo, payable on a semi­
annual basis,

.

Applications w i l l be received at the Federal Reserve Banks,
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a t e s w i l l have two

in te rest coupons attached, payable September 15, 1929, and March 15,
1930.
The c e r t ific a t e s o f said series sh all be exempt, both as to
p rin cip a l and in te re s t, from a l l taxation now or h erea fter imposed by
the United States, any State, or any o f the possessions o f the United
States, or by any lo c a l taxing au th ority, except (a ) estate or inheri­
tance taxes, and (b) graduated additional income taxes, commonly known
as surtaxes, and excess-p rofits and w a r-p rofits taxes, now or h ereafter
imposed by the United States, upon the income or p r o fit s of individuals,
partnerships, association s, or corporations*

The in terest on an

amount o f bonds and c e r t ific a t e s authorized by said Act approved Sep­
tember 24, 1917, and amendments thereto, the p rin cip a l o f which does
not exceed in the aggregate $5 , 0 0 0 , owned by any in dividu al, partnership,

-3 -

association , or corporation, sh all he exempt from the taxes provided
fo r in clause (b ) above.
The c e r t ific a t e s o f th is series w i l l he accepted a t par during
such time and under such rules and regulations as shall he prescribed
or approved by the Secretary of the Treasury, in payment o f income and
p r o fit s taxes payable at the maturity of the c e r t ific a t e s .

The c e r t i­

fic a te s o f th is series w i l l be acceptable to secure deposits o f public
’l
'
l
■
'
*'
J ■■■:
moneys, but w i l l not bear the circu la tio n p r iv ile g e .
The rig h t is reserved to r e je c t any subscription and to a l l o t
le s s than the amount o f c e r t ific a t e s applied fo r and to close the sub­
scription s at any time without n otice.

The Secretary o f the Treasury

also reserves the right to make allotment in f u l l upon applications fo r
smaller amounts, to make reduced allotments upon, or to r e je c t, appli­
cations fo r la rg e r amounts, and to make c la s s ifie d allotm ents and a llo t ­
ments upon a graduated scale; and his action in these respects w i l l be
fin a l.

Allotment notices w i l l be sent out promptly upon allotm ent,

and the basis o f the allotment w i l l be p u b licly announced.
Payment at par and accrued in te re s t fo r c e r t ific a t e s a llo tte d
must be made on or before June 15, 1929, or on la te r allotm ent.

A fte r

allotm ent and upon payment, Federal Reserve Banks may issue interim re­
ceip ts pending d eliv ery of the d e fin it iv e c e r t ific a t e s .

Any q u a lifie d

depositary w i l l be permitted to make payment by cred it fo r c e r t ific a t e s
a llo t t e d to i t fo r i t s e l f and i t s customers up to any amount fo r which
i t shall be q u a lifie d in excess of e x is tin g deposits, when so n o tifie d

/*/

- ¿Ir­

by the Federal Reserve Bank o f i t s d is t r ic t .

Treasury c e r t ific a t e s

o f indebtedness of Series TJ-1929, maturing June 15, 1929, w i l l be
accepted at par, in payment fo r any c e r t ific a t e s of the series now
o ffe re d which sh all be subscribed fo r and a llo t t e d , with an adjustment
o f the in te rest accrued, i f any, on the c e r t ific a t e s o f the series so
paid fo r.
As f is c a l agents of the. United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make a l l o t ­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks o f the respective d is t r ic ts .

TlSASUlir DEPADTHSFT

JOS, IM?*3DIAT3 rJULHASE,
Monday, June 10,. 1929,

Secretary Mellon announced that subscriptions fo r the issue of
5-1/8 per cent Treasury C e rtific a te s c f Indebtedness, Series T iM ^ O ,
dated June 15, 1929, maturing March 15, 1930, fr ill close at the c l dee
of business today, Monday, June 10, 1929*
Subscriptions which f a i l to reach a Federal tie serve Bank or branch*
or the Treasury Department, before the close o f business today f r i ll not
be accepted*

The p ractice of accepting mail subscriptions received on

the morning fo llo w in g the clo sin g o f the bocks w ill not be observed frith
regard tc the current offering-.

TirsAstczr uepabt'^ ft

POP TSLEASJ3, ,TOhFIFG PAFEBS,

Wednesday, June 12, 192$.

Secretary Mellon announced that subscriptions fo r the issue of
Treasury c e r t ific a te s o f indebtedness^ dated June 15, 192S, Series TM-1930,
51/8 per cent, maturing March 15, 1930, closed at the close of business on
June 10, 1929.
The re-norts received from the twelve Federal Reserve Banks show that
fo r the o ffe rin g , which was fo r $400,000,000, or thereabouts, to ta l sub­
scription s aggregate some $1,118,000,000.

As previously announced, sub­

scription s in payment o f which Treasury c e r t ific a t e s of Indebtedness of
Series TJ-1S29, maturing June 15, 1929, were tendered, were a llo t t e d in
fu ll.

Upon these exchange subscriptions about $87,000,000 have been

a llo tte d *

Allotments on cash subscriptions were made as fo llow s:

Subscriptions in amounts not exceeding $1,000 were a llo tte d in f u l l ;

sub­

scription s in amounts over $1 , 0 0 0 but not exceeding $1 0 , 0 0 0 were a llo tte d
70 per cent, but not less than $1,000 on any pne subscription; subscriptions
in amounts over $1 0 , 0 0 0 but not exceeding $1 0 0 , 0 0 0 were a llo tte d 50 per cent,
but not less than $7,000 on any one subscription; subscriptions in amounts
over $1 0 0 , 0 0 0 but not exceeding $1 , 0 0 0 , 0 0 0 were a llo tte d 30 per cent, but not
le s s than $50,000 on any one subscription; and subscriptions in amounts over
$1 , 0 0 0 , 0 0 0 were a llo tte d
subscription.

20

per cent, but not le s s than $300,000 on any one

1

Further d e ta ils as to subscriptions and allotments w ill be announced
when fin a l reports are received from the Federal Be serve Banks.

FOP IMMEDIATE DELEASE,
Friday, June 14, 1329•

TREASURY DEPARTMENT

Secretary Mellon today announced that the to ta l amount o f sub­
scription s received fo r the issue o f Treasury c e r t ific a t e s of indebted­
ness, Series TM-1930, 5 l / 8 per cent, dated June 15, 1929, maturing
March 15, 1930, was $1,118,862,000.

The to ta l amount of subscriptions

a llo t t e d was $404,212,000, of which $86,985,500 represents allotm ents
on subscriptions fo r which Treasury c e r t ific a t e s o f indebtedness o f
Series TJ-1929, were tendered in payment.

A ll o f such exchange sub­

scription s wore a llo tte d in f u l l , while allotments on other subscriptions
wore made on a graduated scale.
The subscriptions and allotm ents were divided among the several
Federal Deserve D is tr ic ts and the Treasury as fo llo w s:

Federal Deserve
D is tr ic t :

Total Subscriptions Deceived:

Total Subscriptions A llo t t e d :

Boston
Dew York
Ph iladelph ia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

$ 53", 86'9‘, 500
346,166,000
110.681.500
75.331.500
38.964.000
57.236.500
114.819.500
39.054.500
18.121.000
30.659.500
49.849.500
182.469.500
1,639,500

$ 22,643,000
90.289.000
37.300.000
33.110.500
19,232-, 000
23.056.000
62.201.000
19.641.500
10.441.000
18.097.000
20.464.000
46.243.000
1.494,000

$1,118,862,000

$404,212,000

Total

J

T3SASUSY - nEBATiTî.ÎEïïT

EO?l IMMEDIATS RELEASE.«

June 15, 1929.

The Treasury today received payments amounting to $80,109,385*95
from the fo llow in g fo re ig n governments on account of th e ir indebtedness to
the United States, of which $78,567,000 was in United States 3

Treasury

notes, accrued in terest thereon o f $683,509.76, and $858,876.19 in cash*
UHEAT

3 PJTAIU:

The thirteen th semi-annual payment o f in terest on the funded

indebtedness o f Great B rita in to the United States under the terns o f the
debt settlement approved by the Act of. February 28, 1923.

The to ta l payment

amounted to $ 6 6 , 7 9 5 , 0 0 0 , and as authorized by the terms of the settlement,
was made in obligation s o f the United States which were accepted at par and
accrued in terest with a small cash adjustment.

The o b ligation s were

$66,215,600 face amount o f 3Itfo Treasury notes, Series "A” 1930-32, the ac­
crued in terest being $579,386.50, and the cash adjustment $13.50.
ITALY:

The fourth annual installm ent of p rin cip al on the funded indebtedness

o f It a ly to the United States under the terms o f the debt settlement ap­
proved by the Act o f A p ril 28, 1926.

The to ta l payment amounted to $5,000,000,

and as authorized by the terms o f the settlement was made in ob liga tion s o f
the United' States which wore accepted at par and accrued in te re s t.
lig a tio n s were $1,500,000 face amount of

The ob­

Treasury notes, Series uArt

1930-32, $3,456,600 face amount o f 3|$ Treasury notes, Series «B" 1930-32,
the accrued in terest being $43,370.25 and the cash adjustment $29.75.

-

BELGIUM:

2

-

The eighth semi-annual payment c f in te rest and the fourth in s t a ll­

ment of p rin cip al on the funded indebtedness of the Government of Belgium to
the United States under the terms o f the debt settlement approved by the Act
of A p ril 30, 1926.

The to ta l payment amounted to $4,200,000, and, as author­

ized by the terms cf the settlement, was made in obligation s o f the United
States, which were accepted at oar and accrued in terest with a small cash
adjustment.

The obligation s were $500,000 face amount o f 3 | T r e a s u ry notes,

Series "A” 1930-32, $1,970,000 face amount of 3-|$ Treasury notes, Series "B11
1930-32, and $1,679,000 face amount o f 3|$ Treasury notes, Scries ,,C*t 1930-32,
the accrued in terest being $50,995 and the cash adjustment $5.00.

$1,250,000

was fo r in terest and $1 , 2 0 0 ,0 0 0 fo r prin cip al on the post-arm istice debt, and
$1,750,000 fo r p rin cip al on the pre-arm istice debt.
CZECHOSLOVAKIA:

The eighth semi-annual installm ent o f prin cip al on the

funded indebtedness o f the Government of Czechoslovakia to the United States
under the terms o f the debt settlement approved by the Act o f May 3, 1926.
The payment amounted to $1,500,000, and, as authorized by the terms c f the
settlement was made in obliga tion s o f the United States, which were accepted
at par. and accrued in te rest with a small cash adjustment.
were $495,650 face amount o f 3
$1,000,000 face amount of 3

The obligation s

Treasury notes, Series "B” 1930-32,

Treasury notes, Series UC", 1930-32, the ac­

crued in terest being $4,336.94 and the cash adjustment, $13.06.
BSTOrTIA:

The seventh semi-annual payment on account of the funded indebted­

ness o f the Government of> Estonia to the United States under the terms of
the debt settlement approved by the Act of A p ril 30, 1926.

The payment

3
amounted te $125,000, and, as authorized by the terms o f the settlement,
wg.s made in obligation s of the United States, which were accented at par
and accrued in te re s t.

The obliga tion s were $123,900 face amount o f 3-r$

Treasury notes, Series "B", 1930-32, the accrued in terest being $1,084,13
and the cash adjustment $15.87,

The balance w ill be funded in accordance

with the option given the Government o f Estonia in the debt settlement
agreement.
FBILAUD:

The thirteenth semi-annual payment o f in terest on the funded in ­

debtedness o f the Government o f Finland to the United States under tnc terms
of the debt settlement approved by the Act o f March 12, 1924.

The to ta l

payment amounted to $130,680, and, as authorized by the terms o f the s e t t le ­
ment, was made in obligation s o f the United States which were accepted at
par.

.The obligation s were $130,600 face amount o f 3^$ Treasury notes, ,

Series "Cu, 1930-32, the cash adjustment being $80.
HUITGAliY:

The eleventh semi-annual payment o f in te re s t on the funded indebted­

ness o f the Government of Hungary to the United States under the terms of
the debt settlement approved by the Act o f May 23, 1924.

The to ta l payment

amounted to $28,973.40, which was made in cash.
LATVIA;

The seventh semi-annual payment on account of the funded indebted­

ness o f the Government o f L a tvia to the United States under the terms o f the
debt settlement approved by the Act of A p ril 30, 1926.
to $45,000, and was made in cash.

The payment amounted

The balance w ill be funded in accordance

with the option given the Government of L a tvia in the debt settlement agree­
ment.

- 4 -

LITHUANIA:

The tenth send-annual payment of in te re s t, except that part to

'

he funded, and the f i f t h annual installment o f p rin cip a l on the funded in ­
debtedness o f the Government o f Lithuania to the United States under the
terms o f the debt settlement approved by the Act o f December 22, 1924.

The

to ta l payment amounted to $84,732.55, o f which $49,634.55 was fo r in terest
and $35,098 fo r p rin cip a l.

The payment was made, in cash.

The balance of

the in terest amounting to $44,302.50 w ill be funded in accordance with the
option given the Government o f Lithuania in the debt settlement agreement.
POLAND:

The ninth semi-annual -oaymont on account o f the funded indebtedness

o f the Government o f Poland to the United States under the terms o f the debt
settlement approved by the Act o f December 22, 1924.

The payment amounted to

$1,500,000 and as authorized by the terms o f the settlement, was made in ob­
lig a tio n s o f the United States which were accepted at par and accrued in te re s t.
The obligation s were $495,650 face amount o f

Treasury notes, Series "B",

1930-32, $1,000,000 face amount o f 3j$ Treasury notes, Series "C \ 1930-32,
the accrued in te re s t being $4,336.94, and the cash ao.justroent $13*06.

The

balance due w ill be funded in accordance with the option given the Government
o f Poland in the debt settlement agreement.
RUMANIA:

The fourth annual installm ent o f p rin cip a l on the funa.ed indebted­

ness o f the Government o f Rumania to the United States under the terms of
the debt settlement approved by the Act of May 3, 1926.
ing to $500,000 was made in cash*

The payment amount­

5

YUGOSLAVIA:

The fourth annual installm ent of prin cip al on the funded in ­

debtedness of the Government of Yugoslavia (Serbs, Croats and Slovenes) to
the United States under the terms o f the debt settlement approved by the
Act of llarch 30, IS 28.

The payment amounting to $200,000 7/as made in cash.
- oOo -

The bbligation s of the United States accepted in connection with
the payments have been cancelled and re tire d and the public debt reduced ac
cordingly.

TREASURY DEPARTMENT

POE IMMEDIATE RELEASE,
June 27, 1929,

The fo llow in g le t t e r s were made public today:

THE WHITE HOUSE
Washington
June

8

, 1929*

Hon. Carl T. Schuneman,
Assistant Secretary o f the Treasury,
Washington, D. C.
My dear Mr. Schuneman»
I have before me your renewed resignation as Assistant Secretary of
the Treasury.
I regret that you fe e l i t necessary to terminate your service with
the Government, but in accepting your resignation I ¥/ish to express to
you ny appreciation fo r the high degree of public service you have given.
Yours fa it h fu lly ,
HERBERT HOOVER

ASSISTANT SECRETARY OF THE TREASURY
Washington
June 26, 1929.
My dear Mr. Mellon:

I t is with deep regret that I fin d i t necessary to resign my position
as one of your assistan ts. The opportunity to serve and be associated with
you in the great work that you have accomplished in the Treasury Department
has been a rare p r iv ile g e , fo r which I w ill always be duly g r a te fu l.
With ny deep appreciation o f your thoughtfulness toward me, I an,
Yours sin cerely,
CARL T. SCHUUEMAU
Hon. A. W. Mellon,
Secretary o f the Treasury,
Washington, D. C.

TSE SECKETAIiY OF THE TH3ASU2X

Washington
June 26, 1929*
Dear Hr. Schuneman:
I have received your l e t t e r of June 26th tendering your resignation
as Assistant Secretary of the Treasury, and i t is with great regret that
I accept i t .
Several months ago, v/hen you made known your desire to return to
p riva te l i f e , I asked you to continue in your present p o s itio n u n til
certa in matters with which you had been s p e c ia lly charged in connection
with the public building program should be completed. You agreed to do
so; and now, as I know, these matters are in such shape that you fe e l
fre e to lea ve. The en tire public building program has b en efited by the
care and thought which you have devoted to i t , and i t should always be
a sa tis fa c tio n to you to know that you have played such an important
loart in the i n i t i a l stages of an undertaking o f great and permanent
value to the country.
In addition to th is , you have been e ff ic ie n t and lo y a l in discharging
a ll the duties entrusted to you, and i t is with a fe e lin g of personal re­
gret that I see you leave the Treasury organization.
With best wishes, I am
S incerely yours,
A. W. MELLON
Secretary of the Treasury.
Hon. Carl T. Schuneman,
Assistant Secretary o f the Treasury.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
MONDAT, JULY 1, 1929.

Secretary Mellon made the fo llow in g announcement in connection
with the close of the fis c a l year o f the Government on June 30th;
The Government closed the f i s c a l year with i t s finances in a
h igh ly sa tisfa cto ry sta te.

Receipts again exceeded expenditures hy

a substantial amount-, while our national debt shows a reduction over
the 12 months period ju st closed o f approximately $673,000,000 as
compared with one of $907,000,000 in 1928.

For the f i r s t time since

the war, our national debt is now „below $17,000,000,000.
The to ta l ordinary receipts amounted to $4,033,000,000 as com­
pared with $4,042,000,000 in the fis c a l year 1928.

The expenditures

chargeable against such receip ts were $3,848,000,000 as compared
with $3,644,000,000 in 1928.

The surplus amounted to $185,000,000

as compared with a surplus o f $398,000,000 in 1928.

RECEIPTS
The aggregate o f tax receip ts, that is , customs, income tax,
and miscellaneous internal revenue receip ts, was $3,540,000,000
or $176,000,000 more than receip ts from these sources in 1928.

/

-

2

-

Income tax receip ts aggregated $2,33^*000,000 as against
$2,17^,000,000 in 192S, or an increase o f $156,000,000- The receip ts
from the current corporation income tax were somewhat lower than during
the previous fis c a l year owing to a reduction in the corporation income
tax rate from

13^

to 12$, hut p r a c tic a lly a l l o f the loss occasioned

by the reduced rate was made up by increased income reported by
corporations, due to increased prosperity*

Back tax c o llectio n s lik e ­

wise showed a f a llin g o f f , somewhat greater than

was anticipated.

On the other hand, there was a remarkable increase amounting to about
$220,000,000 in receip ts from the current individu al income tax.

U ntil

the returns have been analyzed, i t is impossible to assign d e fin ite reasons
fo r th is abnormal increase, but, gen era lly speaking, i t was unquestionably
due to wide-spread p rosp erity, the cumulative resu lts o f the reduction
o f surtax rates to a more reasonable point, and more s p e c ific a lly to
increased income re a liz e d on the sale o f c a p ita l assets due, in the main,
to an exceedingly a c tiv e and constantly ris in g security market.
The Treasury *s estimates o f receip ts from the corporation tax and
from back taxes were reasonably accurate.

Owing to the unprecedented

conditions above described, which i t was impossible to forecast with
\

certa in ty, the receip ts from in dividu al income taxes were considerably
under-estimated.
Customs duties, including the tonnage tax, y ie ld ed $602,000,000
as compared with $569,000,000 in 192S, and the Treasury estimate o f
$522,000,000.

The increase is accounted fo r, in large measure^ by the

impending change in our t a r i f f ra tes, experience having shown that imports
tend to increase p r io r to t a r i f f le g is la tio n .

J7i

- 3 Miscellaneous in tern al revenue receip ts were $607*000,000 a
fa llin g o f f o f $14,000,000 from the

192S

$29,000,000 over the Treasury estimates.

fig u re s , hut an increase o f
The f a llin g o f f in revenue

is due, in the main, *to a loss o f about $45,000,000 resu ltin g from the
repeal o f the excise tax on the sale o f automobiles and o f about
$1 2 , 0 0 0 ,0 0 0 owing to increased exemptions applicable to the so -ca lled
loss
amusement tax, a to ta l/ o f some .$5 7 * 0 0 0 , 0 0 0 , which, however, was almost
e n tire ly made up by increases o f about $40,000,000 from the tobacco t a x ,'
and about $lb,000,000 from stamp taxes.

The estate tax y ie ld e d about

the same amount as the previous year, namely $60,000,000. The d ifferen ce
between the actual miscellaneous Internal Revenue receipts and the
receip ts as estimated by the Treasury is accounted fo r p r in c ip a lly by
!IJ”
two items - $1 0 , 0 0 0 , 0 0 0 increase o f estate tax receip ts over estimates,
and $14,000,000 increase in stamp tax c o lle c tio n s , due o f course to the
unforeseeable and unusual a c t iv it y in secu rity markets.

,

The most s ig n ific a n t changes to be noted in 1929 aw compared with
192S

in so fa r as receip ts are concerned is the almost complete d is­

appearance o f the large revenue derived up to the present time from the
sale o f government-owned ca p ita l assets, continued downward trend in
back tax co lle c tio n s , the loss in revenue occasioned by the repeal o f
the automobile tax, the m odification o f the admissions tax, and the
reduction of the corporation tax rate; and, on the other hand, the
unusual increase in receipts from the in dividu al income tax, the record
breaking receip ts from the tobacco tax, and the unusually la rge y ie ld
o f the stamp tax*

4
EXPENDITURES.

Total expenditures chargeable against ordinary receipts amounted
to $3,848,000,000 as compared with $3,644,000,000 in 1928, or an in­
crease -of $204,000,000, the p rin cip a l items o f increase consisting o f
increased postal expenditures o f $105,000,000 payable from the Treasury,
t

of which $52,000,000 were fo r compensation to railroads fo r mail trans­
portation as a resu lt of a recent Supreme Court decision, o f increased
internal revenue refunds of $42,600,000, o f increased naval expendi­
tures o f $30,000,000, of flo o d control and other expenditures connected
with flo o d r e l i e f o f $30,000,000, o f the f i r s t governmental c o n tr i­
butions to the C iv il Service Retirement Fund of $20,000,000, of $16,000,.000
increased Veterans Bureau expenditures,of increased public bu ilding
expenditures and o f increased compensation to government employees. The
p rin cip al items o ffs e ttin g these increases are $50,000,000 fo r war claims
paid in 1928, and a decrease in in te rest paid o f $54,000,000.
Expenditures as compared with the Budget estimate show an in­
crease of $54,000,000.

Though there are a number o f decreases and in­

creases in the expenditures o f the various departments which to a
large extent o ffs e t each other, th is is accounted fo r p r in c ip a lly by
three items - $52,000,000 paid to the ra ilroad s on account of back
mail pay as the resu lt o f the decision o f the Supreme Court, an in ­
crease of some $39,000,000 in internal revenue refunds, and a $12,000,000
loan to the Greek Government, or a to ta l of $103,000,000. This increased
amount was p a r t ia lly o ffs e t by reduced expenditures of some $49,000,000.

- 5 -

SURPLUS
The surplus amounted to $185,000,OCX), as compared with the surplus
as estimated in the Budget of $37,000,000«

$124,000,000 o f th is surplus

has already “been applied to the retirement of public debt ob liga tion s,
and the balance, which has temporarily been ca rried as an increase in
the net balance in the general fund at the close o f the year over the
balance at the beginning, w ill be applied to debt retirement e a rly in
the fis c a l year 1930«

THE FUELIC DEBT
The to ta l gross debt at the close of the fis c a l year amounted to
$15,931,000,000 as compared with $17,604,000,000 at the close o f the
fis c a l year 1928, or a decrease o f $673,000,000«

Of the amount re tire d ,

$549,000,000 is to be a ttribu ted to the sinking fund and other debt re­
tirements chargeable against ordinary receip ts, and $124,000,000 to debt
retirement from the surplus of receip ts over expenditures.
The annual rate o f in te rest on the in terest-bearin g debt on June 30,
1929, was 3,94$, as compared with 3,87$ at the close o f the fis c a l year
1928«

This slig h t increase is due to the high coupon rate ca rried by

short-term secu rities issued during the course of the la s t s ix months,
in which period tightening c red it conditions compelled the G-overaiment,
as w ell as other borrowers,- to pay higher rates fo r money,

■

Total in terest payments in the fis c a l year 1929 were $678,000,000,
as compared with $732,000,000 in 1928, or a saving in in terest charges
o f $54,000,000.

TREASURY DEPARTMENT.

POR IMMEDIATE RELEASE,
MONDAY, July 1, .1929.

STATEMENT BY SECRETARY MELLON
My atten tion has "been c a lle d to various statements appearing
in the public press to the e ffe c t that Assistant Secretary o f the
Treasury Lowman and Commissioner Doran contemplate resign ing at an
ea rly date.

There is no truth in these reports, and there are no

fa c ts to ju s t ify the circ u la tio n o f rumors o f this character, which
do an in ju s tic e to two gentlemen who are performing a d i f f i c u l t task
with a high degree o f a b ilit y and devotion, and who have in f u l l measure
my confidence and support.

/?

u n
TREASURY DEPARTMENT

imM-"

nE l EAS
EOJi flELEAbE, M0JHTI1TG- PAPEBS,
Sunday, July 7, 1929.

"THE NEW SMALL-SIZE CURRENCY"

Speech
to he
d eliv ered over the radio
by
Hon. Ogden L. M ills ,
Undersecretary o f the Treasury,
through
Station WABC, New York C ity,
and a chain o f stations of the
Columbia Broadcasting Company
on
Saturday evening,
July

6

, 1929,

at 9:00 p.m., Eastern Standard Time
(10:00 p.m*, Eastern D aylight Saving Time)

On July 10th, that is , next Wednesday, the United States Government
w ill begin the issue o f new paper currency o f reduced size and improved
design*

Our paper currency nas been issued in i t s present size since

1861 and this step, therefore, is an important one which is bound to
arouse widespread in te rest*

For a few days we w i l l look with surprise

at these new, to ns, strange looking b i l l s and then, in the course o f a
few weeks, we w ill wonder why, fo r so many years, we accommodated our­
selves so re a d ily to th eir la rg e r and more unwieldy brothers.
You w i l l ask ,cf course, what were the reasons which led the Govern­
ment a ft e r so many years, to make th is change*

A fte r an exhaustive study

and in vestiga tio n covering a number o f years the Treasury concluded that
i t was possible to give the public paper money o f more convenient size,
o f longer l i f e and b e tte r q u ality, and o f improved design with greater
p rotection against co u n terfeitin g .

The Treasury Department decided that

the convenience of the public warranted this reform, while from the
standpoint o f the Government the proposed reduction in s ize w ill create
substantial savings in the expense o f manufacturing as w ell as in the
cost o f handling the currency*
From the time the paper is d elivered by the m ill u n til the notes are
put into c ircu la tio n an estimated gross saving amounting to almost
$1,500,000 a year w i l l be derived from the change in size*

Each note

w ill require one-third less paper and ink; it s shipping weight w i l l be
reduced by one-third, and 50 per cent more notes w i l l be produced by the
same operation.

An addition al saving, the amount of which cannot be

d e fin it e ly estimated, w i l l undoubtedly be accomplished as a resu lt o f
the expected increase in the l i f e o f the smaller note as compared with

I

-

2

~

that r f tho la rg e r one, due to the fa c t that they w ill be subjected to
less creasing and fo ld in g .
The normal increase in the population and wealth o f th is country
n ecessarily resu lts in a constantly increasing demand fo r currency.
This is w ell illu s tr a te d by the fo llo w in g fig u re s :

In 1917 the Bureau

of Engraving and P rin tin g d eliv ered 128,672,045 sheets of currency; in
1920, 163,860,748 sheets; in 1923, 171,955.335 sheets; in 1926, 227,566,949
sheets, and, in 1928, 236,565,232 sheets.

The bu ildin g now occupied by the

Bureau o f Engraving and P rin tin g was completed in 1914, and at the time of
it s erection i t was contemplated that th is bu ildin g would be adequate to
meet the Bureaurs requirements fo r an extended period.

I t appears, how­

ever, that within a comparatively shosrt time the normal increase in the
demand fo r currency would, were i t not fo r the contemplated change, fo rce
the Bureau to obtain additional manufacturing equipment and b u ild a large
extension to the present p la n t.

The introduction of the new s ize currency

w ill solve the production d i f f i c u l t i e s o f the Bureau fo r the reason that
the reduced size w i l l permit the production o f twelve subjects to the
sheet instead o f eigh t, resu ltin g in an increased production of 50 per
cent more notes fo r each p rin tin g operation.

The reduced s iz e w i l l also

have an important e ffe c t upon the a va ila b le vault space, both in the
Treasury and the Eederal Reserve Banks.
The present s ize of the currency is 7 7/16 by 3 1/8 inches.
s iz e is

6

5/16 by 2 11/16 inches.

The new

I r e a liz e , o f course, that a description

o f size given in terms o f 1/16 o f an inch does not convey very much over
the radio, but I think you w i l l be pleasan tly surprised next Wednesday
when you see the new b i l l s and r e a liz e how great is the improvement in ap­
pearance and in convenience from the standpoint o f handling.

- s I have mentioned improved appearance*

For many years the matter o f

re visin g the designs of the outstanding currency issues o f the United
States has been before the Department, hut there was never an opportunity
to undertake a general re visio n u n til the decision to revise the size of
the h i l l s made i t necessary to execute wholly new engraved stock fo r
p rin tin g the new currency*

Generally speaking, there is today a d iffe r e n t

design fo r the face and hack o f each denomination of each kind o f paper
currency, and there are f i v e kinds — United States notes, s ilv e r c e r t i f i ­
cates, gold c e r t ific a t e s , Federal Deserve notes and National Bank notes
accompanied hy a m u ltip lic ity and duplication o f ch a ra cteris tic features*
In so fa r as the new notes are concerned, the p rin cip le of denominational
designs has been s t r i c t l y follow ed*

That is to say, the emphasis has been

placed on the d o lla r value o f the note rather than the kind*

Thus, instead

o f having d iffe r e n t backsvarying with the kinds of currency, — that is ,
United States currency or Federal Reserve notes, l e t us say — fo r the
new desighs every back o f a given denomination w i l l be absolu tely id en tica l*
For example, take a $5*00 b i l l *

The back w i l l always bear an engraving of

the Lincoln Memorial as a predominating featu re*

'Accordingly, there w ill

be only one $5*00 back instead of several fo r the Government to p rin t and
protect and fo r the public to become fa m ilia r with*

Of course, in so fa r

as the faces are concerned, s u ffic ie n t va ria tio n in d e ta il is necessc?.,ry to
in dicate the kind fo r purposes of sortin g by barking in s titu tio n s ; that is
to say, whether the b i l l is a United States note, a s ilv e r c e r t ific a t e , a
gold c e r t ific a t e , a Federal Reserve note, or a National bank note.

But

here again uniform denominational ch a ra cteristics have been fix e d , the
outstanding featu re o f each denomination being a p o rtra it*

Thus, in the

case of our $5*00 b i l l , on the face side, the p o rtra it of Lincoln w ill

- 4 -

always appear in the center.
a $5.00 h i l l ,

As a Lincoln p o rtra it w ill always indicate

so the p o rtrait of Washington w ill always he found on the

1 !s; of Jefferson on the 2*s; of Hamilton on the HHsJ, of Jackson on the
20*s; of Grant on the 50* s; of Franklin on the 100*s; of McKinley on the
500ls; of Cleveland on the 1,000*8; of Madison on the 5,000’ s; and of
Chase on the 10,000*s.

We b e lie v e that we have succeeded in accomplishing a great s im p lifi­
cation o f currency designs and we are confident that we have made counter­
f e it in g and the ra isin g o f the h i l l s from one denomination to another more
d i f f ic u lt in the futu re.

The denomination henceforth can always he to ld

re a d ily hy the p o rtra it, which is the most d i f f i c u l t thing to cou n terfeit
.successfully, and as the public gradually becomes accustomed to associate
a given p o rtra it with a given denomination they w ill he in creasin gly pro­
tected against raised h i l l s and from cou n terfeitin g in general.
In connection with co u n terfeitin g I think I should c a ll your attention
to another fea tu re.

Up to the present time the use o f small segments of

s ilk fib r e , lo c a liz e d in rows, have formed part of the d is tin c tiv e features
o f our currency.

I t has long been f e l t that the prominent s ilk fib r e ,

lo c a liz e d in rows, was an encouragement to the co u n terfeiter since the
public was in clin ed to r e ly on this featu re, which, as a matter o f fa c t,
was very e a s ily im itated.

In the new currency the small segments o f s ilk

fib r e have been retained, but they are scattered throughout the sheet and
not lo ca lize d as form erly.
The l i f e o f paper currency is in tim ately connected with i t s fitn e s s
and we a l l know how desirable i t is to have clean, f i t b i l l s , though not
n ecessarily brand-new ones.

In order that th is new currency might have a

longer l i f e than that o f the old, extensive research work was undertaken

r 5 .-

with the cooperation of the Bureau of Standards, the Bureau o f E ffic ie n c y ,
and the manufacturers o f the paper, to develop a type of paper which would
have greater endurance and fo ld in g strength and which would, at the same
time, meet the manufacturing requirements o f the Bureau o f Engraving and
P rin tin g,

I t is not every paper o f high strength that w i l l stand the wetting

and drying operations incident to the manufacture o f currency.
is printed on dampened paper.

Our currency

Paper when moistened expands hut does not

always contract uniformly as i t d rie s ,

A second w etting is necessary be­

tween the p rin tin g of the hacks and fa ces,

We require, th erefore, a paper

that w ill expand and contract uniformly under there conditions in order that
the faces on each sheet o f twelve notes may r e g is te r with reasonable ac­
curacy against the hacks previou sly printed.

This is a somewhat severe re­

quirement

when combined with a stipu lated thickness, structure

and fo ld in g

strength.

We have, however, developed a paper b elieved to be sa tisfa cto ry

in a l l these respects and with.such an increased strength that we are con­
fid e n t that the currency w i l l have a longer l i f e .

Moreover, in th e ir

smaller sizes the notes w i l l gen era lly f i t into pocketbooks without being
folded, which is not possible with currency in it s present s iz e , and i t s
frequent fo ld in g and creasing eventually breaks the fib r e o f the paper and
hastens i t s d e te rio ra tio n .
There are at present outstanding some f i v e b i l l i o n d o lla rs worth o f
paper currency, or nine hundred m illio n p ieces.

These fig u res w i l l , I

think, indicate the magnitude o f the task under taken by the Treasury when
i t determined to replace th is huge volume o f currency with currency o f a
completely new design,

P ir s t the engraved dies had to be made and approved

in turn. . Prom these master r o lls were prepared and then in turn a s u ffic ie n t
number of plates to supply hundreds of presses, each with four plates fo r

-

p rin tin g .

6

-

Our noxt problem was that r f production.

I t was necessary to

p rin t fo r a complete turnover o f United States and Federal Reserve currency
approximately seventy-six m illio n sheets o f twelve subjects each, or nine
hundred and twelve m illio n individu al pieces.

These have had to go through

the various operations o f w etting; hack p rin tin g; examining; a second
w etting; face p rin tin g; examining; trimming; numbering and sealin g, and
the fin a l cu ttin g into individu al notes.

A fte r th is they have to be as­

sembled into packages o f fou r thousand pieces fo r d e liv e ry to the Treasury.
Vast as is the capacity o f the Bureau of Engraving and P rin tin g to accom­
p lish enormous tasks of th is character, the production o f th is new currency,
in part carried on during a period o f substantial production of the o ld -s ize
currency to meet the needs o f the past months, has strained the Bureau*s
capacity to the utmost.

The task has been completed on schedule time, but

th is is due e n tir e ly to the s k i l l and ingenuity o f the personnel in overcoming a l l manner o f mechanical and technical d i f f ic u lt i e s , and to the
devotion o f the employees gen era lly in th e ir endeavor to maintain the
schedule of production that had been determined in advance.
The work o f production has, in large measure, been completed except
in sc fa r as Rational bank notes are concerned, which involved a special
problem, but they, too, are now being produced rapid ly and w i l l be a va ila b le
fo r d istrib u tio n at an ea rly date.

The problem o f production is behind us.

There remains the problem o f d istrib u tio n .

As I have stated, there are at

present outstanding about nine hundred m illio n pieces o f paper currency.
Last year about nine hundred and th ir ty m illio n pieces o f currency were
redeemed and about nine hundred and tw en ty-five m illio n pieces o f new cur­
rency were issued.

Roughly speaking, th erefore, the replacement o f the

o ld -s iz e currency with the new sm all-size currency is the equivalent o f

- 7 -

about one year*s ordinary redemptions and issues.

This makes i t e n tire ly

clea r that i t would not "be possible to undertake the replacing o f a l l
outstanding o ld -s iz e currency at one time.

I emphasize th is so that you

w i ll be prepared to be patien t and must not expect to see the new currency,
when issued, almost immediately substituted fo r the old .
gradually and c a re fu lly .

We must proceed

E ssential safeguards are necessary in handling

the retirement o f the old which, in e ffe c t , is the basis fo r the issue o f
the new.

The redemption of currency n ecessarily involves d e fin it e le g a l

and, accounting re s tric tio n s and, o f course, there are p h ysic a l.lim ita tio n s
both at the Federal Reserve Banks and the Treasury«

Therefore, instead of

an immediate redemption o f a l l outstanding currency i t w ill be necessary
fo r the issue o f the new to be made over a certa in period o f time.

The

Treasury and the Federal Reserve Banks w ill do everything to make this
period as short as p ossib le.

This means that at the very outset a l l banks

applying fo r currency w i l l be rationed, as i t were, and each w i l l be re­
quired to take a certain percentage o f o ld -s iz e currency assorted from that
most f i t fo r circ u la tio n .

This percentage o f old currency w i l l be gradually

decreased u n til a fte r a period o f a few months i t is an ticipated that a l l
old—size currency presented at Federal Reserve Banks w i l l be replaced in
f u l l with the reduced-size currency.
The f i r s t issue of the new small—size currency w i l l include a l l kinds,
except National bank notes, and a l l denominations from $1 . 0 0 to $2 0 * 0 0 .
Sm all-size gold c e r t ific a t e s and Federal Reserve notes in denominations
above $20.00 w i l l be issued at a la t e r date*

The small—s iz e National bank

notes w ill be printed and issued in order o f charter numbers, beginning
about July 15th.
The issue o f the new small—s iz e currency w ill be made through the Federal
Reserve Banks and branches.

Stocks o f the new—s ize currency have already been

placed in Federal Reserve custody in the twelve Federal Reserve Banks and
in certain of their branches.

The Federal Reserve Banks have been authorized

to make available on July 10th to the commercial banking institution s of their
respective d is t r ic t s lim ited amounts of new sm all-size currency.

But le t me

emphasize that the amounts a v a ila b le fo r issue on July 10th w ill be s t r ic t ly
lim ited.

We anticipate, of course, a curiosity demand which, fo r a comparative'

ly short period of time, w ill increase the demand fo r currency, and we are pre­
pared to meet that curiosity demand, but only to a lim ited extent.

A fter, what

I may c a ll, the period of i n i t i a l , novelty interest is over, the public must
expect the new currency to be issued but gradually and as the old currency is
retired as u n fit fo r further circu latio n .

This w ill require, as I have already

said, a period of least three or four months, during which time both sizes of
currency w ill be in circulation , but with the old size gradually disappearing.
In so fa r as the Rational bank notes are concerned, it w ill probably take at
least six or seven months to complete the turnover.

A ll this necessarily w ill

involve a certain amount of inconvenience on the part of the public, an

in­

convenience wholly temporary in character and which I think the public w ill
appreciate is f u lly ju s t ifie d and is very much outweighed by the advantages
to be derived from the substitution of the new currency fo r the old.

You can

rest assured that the Treasury w ill make every endeavor to accomplish a com­
plete turnover as rapidly as possible, but in the meanwhile we ask you to be
patient; to be s a tis fie d fo r the time being with the currency which has given
you reasonable satisfactio n fo r more than sixty years, and no.t to consider i t
necessary to carry nothing but the new b i l l s in your pocket.

With your

cooperation and good w ill i t is probable that a year from now the o ld -size
currency b i l l w i ll be a r a rity and in a short time thereafter w ill arouse as
much cu riosity as our new b i l l s w ill on Wednesday, next.

TREASURY IEFARTî.tEUT

ÎÔS IMMEDIATE RELEASE,
Monday, July 8, 1929*

Acting Secretary M ills today announced that Secretary Mellon had
appointed Captain Frank X» A. Eble o f Salt Lake City, Utah, to he
Commissioner of Customs, to f i l l the vacancy caused hy the resignation
o f Mr* E. W> Camp.

The aooointment w ill he e ffe c t iv e today.

Captain Ehle was horn in M iln e s v ille , Luzerne County, Pennsylvania
A fte r extended experience in the commercial f i e l d , he served in the Arny
during the World War.

Upon his re turn from France he "became a member

o f the ïïar Loan S ta ff o f the Secretary o f the Treasury, in which capacity
he assisted the Treasury in the in s ta lla tio n o f improved methods o f pro­
cedure.

Subsequently he became a f f i l i a t e d with the In s titu te o f Govern­

ment Research in Washington.

In 1922, Captain Ehle was appointed a

Treasury Agent, with headquarters at B erlin, Germany, fo r duties in con­
nection with United States customs lav/s.

In 1923 he was made Chief of

the Service in the B erlin d is t r ic t*
In 1924 he was assigned hy the Secretary o f the Treasury to the
Finance Committee of the Senate, in which p o sition he assisted the Com­
mittee in i t s consideration o f the revenue h i l l .

He rejoin ed the

Customs Service in August 1924, resuming h is B erlin post, and in 1926
accepted the in v ita tio n o f Professor Keramcrer to become a member of the
Kemmerer Mission to Poland, fin a n c ia l advisers to that Government.
Captain Ehle had charge of the customs administration work o f th is com­
mission.

Returning from Poland in November, 1923, he resumed h is o f-,

f i c i a l duties at B erlin , where he has continued up to the present time.

FUTURE
TREASURY DEPARTMENT

RELEASE

EOR RELEASE MORNING' PAPERS
fTOTTRsSU A Y

.T n l v

11

IQ O q ,

\ I u

J

Acting Secretary M ills today announced that he has authorized
the Federal Reserve Banks to purchase, at the option of holders,
fp r account of the sinking fund, up to $75,000,000, or thereabouts,
aggregate face amount of 3|- per cent Treasury Notes of Series A-193032, at 98 and accrued in terest*

This o ffe r w i ll remain open u n til

the close of business on Tuesday, July 16, 1929, and without further
notice w ill then terminate, or at such e a r lie r date as the f u l l amount
sh a ll have been tendered«
Tenders w i ll be accepted in the order in which received, and those
making tenders w ill be noti/ied of acceptance or re je c tio n .

Any notes

tendered fo r purchase must be forwarded at the owner*s own expense
and risk , and such note« may accompany the teader, or may be forwarded
upon receipt of n o tificatio n from Federal Reserve Bank of? acceptance
of o ffe r .

In any event the notes accepted must be received at the

Federal Reserve Bank on or before Thursday, July 18, and the Federal
Reserve Bank on that date w i l l make payment fo r such notes at 98 and
accrued interest from March 15 to July 18, 1929,

Any Treasury Notes,

Series A-1930-32, preserved fo r purchase under this o ffe r, should have
attached the coupon bearing date September 15, 1929, and a l l subsequent
dates (Nos, 5 to 10 in c lu s iv e )•

FOR IMMEDIATE RELEASE,
WEDNESDAY, July 17, 1929

TREASURY DEPARTMENT

Secretary Mellon today in referring to the offer made on Juljr 11,
1929, to purchase $75,000,000, or thereabouts, aggregate face amount
of

per cent Treasury Notes of Series A-1930-32, at the option of

holders, for account of the cumulative sinking fund, which offer closed
last; evening, announced that tenders aggregating $75,869,450 had "been
received at Federal Reserve Banks, all of which have been accepted by
the Treasury.

In
te n d e re d

*

a c c o rd a n c e

w i l l .b e

from March 15.

w ith

m ade

on

th e

te rm s

Ju ly

o f

th e

18, 1989,

o ffe r

a t

98

paym ent

and

fo r

a c c ru e d

th e

n o te s

in te r e s t

TH3ASUIV I DEFART!

pop b a d i a t e

release

,

July 19, 1929.

The Secretary of the Treasury announces the acceptance today
of the Did of the 40 Wall Street Corporation in the amount of $5,o01,000
for the purchase of the United States Assay Office property, New York
City, in accordance with the terms specified in the Department's advertisement, dated May 20, 1929.
Bids were opened on June 34, 1923.
ranging in amounts from $5,120,000 to $6,501,000.

Six bids were received
The.initial

payment of $5 0 0 ,000'has been deposited by the highest bidder.

Undei

the terns of the contract of sale the Department does not guarantee a
definite tine when possession may be given to the purchaser, but it is
estimated that a new site and new assay office will be readj foi ocuU
pancy in approximately four years.

TREASURY- DEPARTMENT

POR IM! SEDIATE RELEASE,
Friday, July 26, 1929*

Commenting on the statement of W» D« Euler, Canadian
M inister o f National Revenue, that the United States has no
e ffe c t iv e check on th e ir own boats and are not required to
obtain clearance, Dr* J. M* Doran, Commissioner o f Proh ib ition ,
said:
"No one is in a p o sitio n to know whether the
boats engaged in the i l l i c i t liq u or t r a f f i c are
Canadian owned or .American owned because nearly
a ll vessels which Canada has reported under the
trea ty as clearin g fo r the United States with
liq u or cargoes are not recorded in the United
S ta tes."

POR RELEASE MORNING- PAPERS,
SUNDAY, JULY 23, 1929.
TREASURY DEPARTMENT

Statement by the Secretary o f the Treasury.

I am g re a tly pleased at the action of Prance in r a tify in g the agree­
ment fo r the settlement o f the debt owed by her to the United States.

Under

th is agreement Prance undertakes to meet her obligation s and, by so doing,
g iv e s evidence o f that fin a n cia l in te g r ity which has always characterized her
conduct.
As one 'who helped to negotiate the agreement fo r the settlement, I fe e l
tnat much cred it is due to the frankness shown by those representing Prance
in disclosin g a l l the fa cto rs involved in a rrivin g at an estimate o f th eir
country»s capacity to pay.

The American Commission approached the situa­

tion witn equal frankness and good w i l l ; and the settlement subsequently
arrived at is one which we b elieve is eminently f a i r to both nations.
I t involved, o f course, some s a c r ific e on the part of both Prance and
the United States.

But the amount which i t was agreed that Prance could

pay♦. was determined without taking into consideration any payments from
reparations or other such outside sources; and the astonishing fin a n cia l
and economic recovery which Prance has made, even in the short period
intervening since the agreement was negotiated, is convincing evidence that
great hardship w ill not be imposed on Prance in meeting the payments to
America.

Furthermore, I am convinced, as I was three years ago when the

settlement was made, that the burden which i t involves as regards the
French people w ill grow lig h te r , r e la t iv e ly speaking, as time goes on.
By r a tify in g th is agreement Prance has now elim inated in the relatio n s
o f the two countries a matter which was disturbing so long as i t remained
u n settled.

At the same time th is action, by disposing o f one o f the la s t

- 2 -

fin a n cia l problems in h erited from the war, w ill make fo r world s t a b ilit y
and w ill prove a powerful fa c to r in promoting general economic progress*
In so fa r as th is country is concerned, i t brings to â successful
conclusion the task entrusted to the World War Foreign Debt Commission to
negotiate settlements with the various nations fo r the debts incurred during
and a fte r the war.

Agreements have been reached with Great B rita in ,

Finland, Hungary, Lithuania, Poland, Belgium, Czechoslovakia, L a tvia , Estonia,
It a ly , Yugoslavia, Rumania, Greece and France, bringing the to ta l amount
which has been funded to date to $11,554,851,000«

A ll o f these nations

are punctually meeting th e ir engagements; and the payments, as they are
received, are being applied on the debt owed by th is Government to i t s
bondholders

POR RELEASE MORNING- PAPERS,
UEUNESDAY, JULY 31, 1S29.

TREASURY DEPARTMENT

The Secretary of the Treasury today released fo r publication the text
o f the notes exchanged between him and the French Ambassador con stitu tin g
the Agreement between France and the'United States providing fo r the post­
ponement o f the date o f the maturity o f the p rin cip al of the indebtedness
o f France in respect o f it s purchase o f surplus war supplies maturing
August 1, 1929.

"July 29, 1929.
My dear Mr. Ambassador:
The agreement between the French Republic and the United
States, known as the Mellon-Berenger Agreement, providing fo r
the funding of the payment o f the indebtedness o f the French
Republic to the United States, has been r a t ifie d in France in
accordance with the terms thereof but has not as yet received
the approval o f the Congress of the United States.

The said

agreement having been r a t ifie d by the Government o f the French
Republic, the Secretary o f the Treasury, with the approval of
the president, hereby agrees with the French Republic to the
postponement o f the date of the maturity o f the p rin cip al of
it s indebtedness in respect of i t s purchase o f surplus war
supplies maturing August 1, 1929, u n til the Mellon-Berenger
Agreement has been approved or disapproved by the Congress o f
the United States, but in no event shall such date be postponed
beyond May l v 1930r

The Congress wi3.1 reconvene shortly, and i t

is my expectation that the Mellon-Berenger Agreement w ill receive
consideration at an early date

-

2

-

I t is -understood that the French Republic agrees to continue
to pay in terest on the said obliga tion s maturing August 1, 192.9,
in accordance with the terms thereof., u n til payment, provided,
however, that i f the Mellon-Berenger Agreement is approved by the
Congress o f the United States p r io r to May 1, 1930, such amounts
paid as in terest p rio r to that date w ill be cre d ite d .to the f i r s t
annuities sp e cified in the Mellon-Berenger Agreement*

I t is

fu rth er understood that in the event o f the approval o f the M ellonBerenger Agreement by the Congress o f the United States the French
Republic, within a reasonable time th erea fter, w ill pay to the
United States such additional amount as may be necessary to bring
to a current basis the payments due up to that time under the terms
o f the Mellon-Berenger Agreement..
I shall appreciate i t i f you w ill transmit th is communication
to your Government with the suggestion that your Government authorize
you to s ig n ify in w ritin g i t s acceptance o f th is agreement and that
th is exchange o f le t t e r s constitu tes a d e fin ite and binding agreement
between the two Governments.
With assurance o f my esteem, I am,
Sincerely yours,

A. HT* MELLON
Secretary o f the Treasury.
His Excellency,
The Ambassador o f France,
*- French Embassy,
Washington, "D* C.
Approved:
HERBERT HOOVER
P resid en t."
v-

.

Washington, July 29, 1929.

My dear Mr. Secretary:
I have the honor to acknowledge receip t o f your
l e t t e r of July 29 concerning the report o f the date
of payment of the o b liga tio n s contracted by France
towards the United States fo r the purchase o f war
stocks and coming to maturity on August 1, 1929.
I take pleasure in informing you, a fte r having
consulted ray Government, that the la t t e r has ju st in­
v ite d me to n o tify you o f th e ir acceptation o f the
conditions-expressed in your communication.
Please accept, My dear Mr. Secretary, the re­
newed assurances o f my high consideration.

( Signe d)

Hon. Andrew W. Mellon
Secretary o f the Treasury,
Washington, D. C*

PAUL CLAUDEL.

TREASURE DEPARTMENT

FCE IIEtEDIATE RELEASE,
AITSUST 7 , 1929*

I t was announced to-day that Assistant Secretary Henry H errick
Bond is tendering h is resignation e ffe c t iv e September 1, 1929»,

Mr.

Bond is from Massachusetts and was appointed "by President Cooli&ge
on November 7, 1927, and during h is en tire period of service in the
Treasury he has had adm inistrative supervision over the Internal
Revenue Service, the o ffic e of the Comptroller of the Currency, the
Bureau of Engraving and P rin tin g, the Hint Bureau, the Secret Service
D ivision, and the o ffic e of the Disbursing Clerk.

During h is term

o f o ffic e Hr. Bond has devoted him self p a rtic u la rly to Internal Revenue
matters with a view to sim p lific a tio n , settlement o f pending cases and
grea ter cooperation between the Department and the taxpayer.

Much

has been accomplished in these direction s and with the p ra c tic a l com­
p le tio n of the currency program in connection with the replacement of
the old la rg e -s iz e by new sm all-size notes at the Bureau of Engraving
and P rin tin g* Hr. Bond has f e l t that the time has arrived when he
must return, to p riva te l i f e *
p ra ctice of law*

I t is h is intention to resume the

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS,
Friday, September 6, 1929.

STATEMENT BY SECRETARY MELLON

To meet a maturity o f about $510,000,000 o f Treasury c e r t i­
fic a te s , the Treasury is today o ffe r in g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks., an issue o f nine
month 4-7/8 per cent Treasury c e r t ific a te s o f indebtedness o f Series
TJ-1930, dated and bearing in te rest from September 16, 1929, and
maturing June 16, 1930.

The amount o f the o ffe r in g is $500,000,000,

or thereabouts.
%
Applications fo r the new c e r t ific a t e s w i l l be received a t
the Federal Reserve Banks.

The Treasury w i l l accept in payment fo r

these c e r t ific a t e s , at par, Treasury c e r t ific a t e s o f indebtedness
o f Series TS-1929 and TS2-1929, both maturing September 15, 1929,
Subscriptions fo r which payment is t> be tendered in c e r t ific a te s
o f indebtedness maturing September 15, 1929, w i l l b* a llo t t e d in
f u l l up to the amount of the o ffe r in g .

In addition, 3|- Treasury

notes o f Series AA193Q-32, B-1930-32 and C-1930^32 w i l l be accepted
a t a p rice o f $98 fo r each $100 face amount, with an adjustment o f
in te re s t accrued to September 16, 1929, in part payment fo r any c e r t i­
fic a te s o f the series now o ffe re d , up to $100,000,000 face amount o f
notes; the d ifferen ce between the p ric e o f $98 fo r the notes and the
$100 face amount o f the new c e r t ific a t e s to be paid in cash on
or before September 16, 1929.

Payment by Treasury notes w i l l be

treated, as cash subscriptions and w i l l be given preferred allotm ent in
the order received.
•purposes.

These notes are being purchased fo r sinking fund

.
On subscriptions fo r which Treasury notes are tendered in

p a r tia l payment, the face amount o f the Treasury notes tendered
must equal the face amount o f the new c e r t ific a t e s subscribed fo r,
and such subscriptions must be in m ultiples o f $500.
Bearer c e r t ific a t e s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.-

The c e r t ific a t e s w i l l have two

in te rest coupons attached, payable December 16, 1929, and June 16, 1930.
P a rtic u la r atten tion is in vited to the new tax exemption pro­
visio n ,

In accordance w ith the Act o f Congress approved June 17, 1929,

the new c e r t ific a te s w i l l be exempt, both as to p rin cip al and in te rest,
from a l l taxation, except estate and inheritance taxes.

The in terest

on c e r t ific a t e s h eretofore issued under the Second L ib erty Bond Act,
as amended, has been exempt from the normal income tax Lut from surtaxes
only to a lim ited extent.

These c e r t ific a t e s , however, w ill be fu lly

exempt as to in te re s t from surtaxes, as w ell as normri income taxes, and,
accordingly, 3hould be more a ttr a c tiv e to the individu al in vestor.
In addition to $510,000,000 o f Treasury c e r t ific a te s o f indebtedness
due and payable on September 15, 1929, over $65,000,000 in in te rest payment
on the public debt w i l l become due and payable in September, 1929, and over
$149,000,000 in October, 1929.
The tex t o f the o f f i c i a l c irc u la r fo llow s:

The Secretary o f the"Treasury, under the authority o f the
Act approved September 24, 1917, as amended, o ffe r s xor subscription,
at par and accrued in te re s t, through the Federal Reserve Banks,
Treasury c e r t ific a te s o f indebtedness o f Series TJ-1930, dated and
bearing in te rest from September 16, 1929, payable June 16, 19o0, with
in te rest at the rate o f four and seven-eighths per cent per annum,
payable on a semiannual basis.
Apulications w ill be received at the Federal Reserve Banks.
Bearer c e r tific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have

twfv in te rest coupons attached, payable December IS, 1929, and June 16,
1930.
The c e r t ific a te s o f said series sh a ll be exempt, Doth as
to prin cip al and in te rest, from a l l taxation (except estate and in­
heritance taxes) n*w or h erea fter imposed by the United States, any
State, or any o f the possessions o f the United States, or by any lo ca l
ac '

|g||||ox*

taxing authority.

•••f.* • £

_

;,

ipfigll•~i-; •*-1

w

|

|| «'|ip| p ? |

'|v **

:

The c e r t ific a t e s o f this series w i l l be accepted at par
during such time and under such rules and regulations as sh a ll be
proscribed or approved by the Secretary o f the Treasury, in payment
o f income and p r o fit s taxes payable at the maturity o f the c e r t ific a te s .
The c e r t ific a t e s of this series w i l l be acceptable to secure deposits
o f public moneys, but w i l l not be^r the circu la tio n p r iv ile g e .

-4-

The rig h t is reserved to r e je c t any subscription and to
a l l e t less than the amount o f c e r t ific a te s applied fo r and to close
the subscriptions at any time without notice.

The Secretary o f the

Treasury also reserves the rig h t to make allotm ent in f u l l upon ap­
p lic a tio n s fo r smaller amounts, to make reduced allotments upon, or
to re je c t, applications fo r la rg e r amounts, and to make c la s s ifie d
allotments and allotments upon a graduated scale; and his action in
these respects w i l l be fin a l.

Allotment notices w i l l be sent out

promptly upon allotm ent, and the basis o f the allotm ent w i l l be p u b licly
announced.
Payment at par and accrued in te rest fo r c e r t ific a t e s a llo tte d
must be made on or before September 16, 1929, or on la t e r allotm ent.
A fte r allotment and upon payment, Federal Reserve Banks may issue in­
terim receipts pending d e liv e ry o f the d e fin it iv e c e r t ific a t e s .

Any

q u a lifie d depositary w i l l be perm itted to make payment by c re d it fo r
c e r t ific a te s a llo t t e d to i t fe r i t s e l f and it s customers up to any
amount fo r which i t sh all be q u a lifie d in excess o f e x is tin g deposits,
when so n o tifie d by the 'Federal Reserve Bank o f it s d is t r ic t .

Treasury

c e r t ific a te s o f indebtedness o f Series TS-1929 and TS2-1929, both
maturing September 15, 1929, w i l l bo accexjted at par, in payment fo r
any c e r t ific a t e s o f the series now o ffe re d which sh all be subscribed
fo r and a llo tte d , with an adjustment o f the in te rest accrued, i f any,
on the c e r t ific a t e s o f the series so paid fo r .

In addition, throe

-5-

and one-half per cent Treasury notes o f Series A-1930-32, B-1930-32
and C-1930-32 w i l l Be adcepted at a p rice of $98 fo r each $100 face
amount, with an adjustment o f in te rest accrued to September 16, 1929,
in part payment fo r any c e r t ific a t e s o f the series now o ffe re d , up
to $100,000,000 face amount o f notes; the d ifferen ce between the p rice
o f $98 fo r the notes and the $100 face amount o f the new c e r t ific a te s
to be paid in cash on or before September 16, 1929.

The exchange o f

notes fo r c e r t ific a t e s w ill.b e treated as cash sub scrijjt ions and w i l l
be given p referred allotm ent in the order received.

A l l coupons

maturing a ft e r September 15, 1929, must be attached to the notes when
surrendered, and p rio r coupons should be detached.

These notes are

being purchased fo r sinking fund purposes.
As fis c a l agents o f the United States, Federal Reserve Banks
are authorized and requested to re ceive subscriptions and to make a llo t ­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks o f the respective d is tr ic ts .

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE»
Saturday, September 7, 1929

Acting Secretary M ills announced that subscriptions fo r the issue
o f 4*7/8 per cent Treasury C e rtific a te s o f Indebtedness, dated September
16, 1929, Series TJ-1930, maturing June 15, 1930, w i l l close at the
close of business on Monday, September 9, 1929,

Subscriptions which

f a i l to reach a Federal Reserve Bank or branch, or the Treasury
Department, before the close o f business on Monday w i l l not be accepted*
The practice of accepting mail subscriptions received on the morning
fo llo w in g the closin g of the books w i l l not be observed with respect
to the current o ffe r in g .

TREA8DRT DEPARTMENT

POR IMMEDIATE RELEASE,
Wednesday, September 11, 1929.

Secretary Mellon announced that subscriptions fo r the issue of Treasury
c e r t ific a te s of indebtedness, dated September 16, 1929, Series TJ-1930, 4-7/8
per cent, maturing June 16, 1930, closed at the close of business on September
9, 1929*

The reports received from the twelve Federal Reserve Banks show

that fo r the o ffe rin g , to ta l subscriptions aggregate some $1,486,000,000.

Of

these subscriptions, $104,249,000 represent subscriptions fo r which Treasury
c e r t ific a t e s of indebtedness of Series TS-1929 and Series TS2-1929, both
maturing September 15, 1929, were tendered in payment, a l l o f which were a l­
lo tte d in f u l l , and $105.795,500 represent subscriptions fo r which 3^-$
Treasury ITotes were tendered in p a r tia l payment, of which only $100*000,000
were accepted, in accordance with the terms o f the Treasury’ s o rig in a l an­
nouncement.
Allotments on other subscriptions were made as fo llo w s :

A l l cash sub­

scription s in amounts not exceeding $1,000 fo r any one subscriber were a llo tte d
in f u l l *

Cash, subscriptions in amounts over $1,000 but not exceeding

$50,000 were a llo tte d 70 per cent, but not less than $1,000 on any one sub­
scrip tio n ;

cash subscriptions in amounts over $50,000 but not exceeding

$100,000 were a llo tte d 40 per cent, but not less than $35,000 on any one sub­
scrip tio n ;

cash subscriptions in amounts over $100,000 but not exceeding

$1,000,000 were a llo t t e d 30 per cent, but not less than $40,000 on any one
subscription;

and cash subscriptions in amounts over $1,000,000 were a l­

lo tte d 15 per cent, but not less than $300,000 on any one subscription.
Further d e ta ils as to subscriptions and allotments w i l l be announced
when fin a l reports are received from the Federal Reserve Banks*

TREASURY DEPARTMENT

POR IMMEDIATE RELEASE,
Friday, September 13, 1929*

Secretary Mellon today announced that the t o t a l amount of sub­
scription s received fo r the issue of Treasury c e r t ific a te s o f indebted­
ness, Series TJ-1930, 4 7/8 per cent, dated September 16, 1929, maturing
June 16, 1930, was $1,486,492,000*
a llo tte d was $549,707,500*

The to ta l amount of subscriptions

Of th is amount, $104,274,000 represents a llo t ­

ments on subscriptions fo r which Treasury c e r t ific a te s of indebtedness
o f Series TS-1929 and TS2-1929, maturing September 15th, were tendered
in payment, which subscriptions were a llo tte d in f u l l ;

The to ta l also

includes $100,000,000 a llo tte d on subscriptions fo r which 3^- per cent
Treasury notes were tendered in p a r tia l payment*

Allotments on other

subscriptions were made on a graduated scale*
The subscriptions and allotments were divided among the several
Federal Reserve D is tric ts and the Treasury as fo llo w s :

Federal Reserve
D is t r ic t :
Boston
New York
Ph iladelph ia
Cleveland
Richmond
Atlanta
Chicago
St* Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
Total

Total Subscriptions Received:
$

Total Subscriptions A llo tte d :

74,250,000
653,602,500
143,740,500
97,375,000
37,651,500
58,635,000
116,734,500
27,517,000
16,805,500
28,024,500
62,721,000
168,684,500
750,500

$ 27,218.000
217,362,500
51,105,000
44,753,000
20,001,500
25,650,000
53,914,000
14,167,500
10,186,500
17,320,500
27,814,000
39,523,000
692,000

$1,486,492,000

$549,707,500

TREASURY D3PA93MFT.

FOR IMMEDIATE RELEASE,
Saturday, September 28, 1929.

The Secretary o f the Treasury has accepted the o ffe r
o f the Potomac E le c tr ic Power Company to d ell to the Government
fo r a consideration o f $3,600,000, Squares 259 and 260, together
witn the buildings and a l l equipment thereon, except certain
cables and sub-station equipment which the contract provides is to
be salvaged by the Potomac E le c tr ic Power Company.

The contract

also provides that the power company ma:^ remain in possession of
all. or any part of the land and buildings fo r a period o f eighteen
months, rental at the rate o f 5jo per annum o f the contract p rice
to be paid to the C-overnment a fte r t i t l e to the property is vested
in the United States, and u n til the property is vacated.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
THURSDAY, NOVEMBER 14, 1929.

Statement by Secretary Mellon.

While the fin a l d eta iled estimates o f revenues and expenditures fo r the
fis c a l years 1930 and 1931 have not heen completed, the Secretary o f the
Treasury considers the estimates have reached the point where tax reduction
should he recommended to the Congress at the coming session.
The in dication s are that business p r o fit s , dividends, in te re s t and wage
payments in 1929 w i l l considerably exceed those o f the year 1928.

Our e s t i­

mates in dicate that the Government should close both the f is c a l years 1930
and 1931 with a surplus.

Taking a l l fa c to rs into consideration, the Secre­

tary o f the Treasury, with the approval o f the President, w i l l recommend tax
reduction to the Congress.

The form o f r e l i e f to the taxpayers which the

Treasury* s recommendations w i l l probably take w i l l be a one per cent reduction
of the normal tax on the incomes o f in dividu als and corporations applicable to
1929 incomes and payable in the calendar year 1930.

That is to say, on the

f i r s t $4,000 o f taxable income the rate w i l l be reduced from one and one-half
per cent to one-half o f one per cent;
cent to two per cent;

on the second $4,000, from three per

and on the balance, the present f i v e per cent rate w i ll

be reduced to four per cent.

The corporation tax rate w i l l be reduced from

twelve per cent to eleven per cent.

The t o ta l reduction o f taxes to be

c o llected during the calendar year 1930 w i l l amount, i t is estimated, to
approximately $160,000,000.
The reduction, i t is hoped, w ill take the form o f a Joint Resolution of
Congress, thus perm itting prompt action by both Houses by avoiding a general
revisio n o f the revenue law.
The proposal has been discussed with the Republican and Democratic leaders
o f both Houses of Congress, who have te n ta tiv e ly approved the proposed
recommendation.

Treasury Department

For release, morning papers,
November 27, 1929.

Remarks of
Honorable A. W. Mellon
Secretary of the Treasury
on the Occasion of the Presentation
of a Medal to Honorable Elihu Root
by the National Academy of Design
in the Pine Arts Building
New York

November 26, 1929*

Note:
For f u l l text of speech see Subject F ile :

Secretary's Speeches

TREASURY DEPARTMENT;

IMMEDIATE PLEASE,
NOVEMBER ?~[t 1929-

, The Secretary o f the Treasury announces the selection o f a
s it e fo r the new Assay O ffic e in New York C ity located on the east
side o f Old S lip and extending from-Front Street to South S treet.
The s it e consists o f 7 parcels, 5 o f which\are being acquired
by voluntary conveyance*

I t has been necessary to in s titu te con­

demnation proceedings fo r the acqu isition o f the other 2 parcels,
because o f fexcdssive prices demanded by the owners..-

I t is estimated

that the en tire s ite w i l l cost approximately $1 , 5 0 0 * 0 0 0 .

TREASURY DEPARTMENT

ECR RELEASE WHEN DELIVERED
(Probably 10:30 A.M.Wednesday,
December 4, 1929)

Statement of Undersecretary of the Treasury
M ills before the Ways end Means Committee
Wednesday morning, December 4th.

The revenue b i l l introduced by Chairman Hawley and now before th is
Committee fo r consideration has the approval o f the Treasury Department.
I t s terms are so simple as to require no explanation.«

I t provides

that the normal tax on the taxable incomes of individu als fo r the
calendar year 1929 shall be reduced from \\ per cent to one-half o f 1
per cent on the f i r s t $4,000 o f taxable income; from 3 per cent to 2 per
cent on the second $4,000 o f taxable income; and from 5 per cent to 4 per
cent on the balance of taxable income; and that the tax on the taxable
incomes of corporations fo r the calendar year 1929 shall be reduced from
12 per cent to 11 per cent,
The outstanding featu res of th is measure are, f i r s t , that i t lim its
the new rates to the calendar year in question, which is a novelty in the
h isto ry of income tax le g is la tio n in th is country; and in the second
place, that i t gives some measure o f r e l i e f to the maximum number o f
income taxpayers, with r e la t iv e ly la rger b en efits to those with the
smaller incomes.
The reasons fo r the lim ited re v is io n are not fa r to seek:

The es­

timated surplus fo r the fis c a l year 1930 is approximately $226,000,000,
and the estimated surplus fo r the fis c a l year 1931 approximately
$123,000,000.

These fig u re s , to be sure, do not in dicate a very large

o

margin o f safety7- in "budgets of over $4,000,000,000, but the tax reduc­
tion of 2150,000,000 which w i l l resu lt from the enactment o f th is b i l l
is divided approximate!y equally between the two fis c a l years.

Looked

at from th is standpoint, the margin of sa fety is reasonably adequate.
The Treasury Department fe e ls , therefore, that the taxpayers should re ­
ceive the b en efit of these prospective surpluses in the form of tax re ­
duction.

This is a l l the more desirable since both budgets make ample

provision fo r retirement o f our national debt in accordance with our
w ell-esta b lish ed p o lic y .

The estimated expenditures fo r 1930 and 1931

include, re s p e c tiv e ly , $630,000,000 and $635,000,000 fo r debt retirement
chargeable against ordinary re ceip ts.
A surplus may be recurring or temporary.

In the one case, eith er

through expanding revenue or reduced expenditures,, assured receipts may
have reached the point where they so exceed normal expenditures as to
create recurring surpluses.

Such a situ ation ju s t ifie s a more or less

permanent revisio n o f our tax laws with a view to modifying tax rates
downward.
In the second case, the surplus may be o f temporary character,
a risin g from an unusual increase in re ceip ts or decrease in expenditures,
or from conditions not extraordinary which may not have existed fo r a
s u ffic ie n t period o f time to permit a d e fin ite conclusion as to th eir
permanency.

Such surpluses obviously c a ll fo r d iffe re n t treatment.

This is p a rtic u la rly true o f a revenue system which places i t s ch ief
relia n ce on one form o f taxation, as we now do on the income tax, which

3
is subject to sweeping va ria tion s depending on a v a rie ty o f circum­
stances "but p rin c ip a lly on the upward and downward flu ctu ation s of
"business.

Under these circumstances, while a surplus ju s t if ie s some

measure o f tax r e l i e f and while the taxpayer should re ceive the fu lle s t
possible "benefits from the prosperous condition of the Treasury during
the given fis c a l, year, i t is impossible to assure the permanency of the
reduced ra les .
The estimated surpluses fo r the f is c a l yearis 1930 arid 1931 seem to
f a l l into the second class.
Moreover, the problem of estimating future revenue is attended by
extraordinary d i f f ic u lt i e s at the present time due to the existence of
a number of fa cto rs the e ffe c t o f which i t is almost impossible to
foresee.

The surplus o f the fis c a l year ending June 30 la s t and the

current y e a r’ s probable surplus was and w i l l be due, to a very large
extent, to the unusual increase in taxable incomes reported by in dividu als,
although corporations enjoyed a very prosperous year in 1938, and a l l
reports in dicate that th e ir 1929 income w i l l exceed that of 1928,

The

income tax returned by individu als fo r the calendar year 1927 was
$830,000,000, and fo r the calendar year 1928 approximately $1,150,000,000.
While wages, sa la ries , dividends, e t c ., showed a substantial increase,
the outstanding item in the increased income returned was a gain of
approximately $2,000,000,000 in p r o fit s from the sale o f capital assets,
both within and without the 2-year period.

I t is the unusual increase

in th is one item and the im p o ss ib ility o f determining under existin g c i r ­
cumstances what income w i l l be returned from th is source fo r the calendar

- 4 -

years 1929 and 1930, that make estimating at th is time^ so uncertain
a proposition.
'VJe are not only faced with the usual problem o f determining
the business trend during the current calendar year and of fo reca st­
ing the business trend during the coming calendar year, but we are
confronted with the d i f f ic u lt problem o f determining what e ffe c t the
precipitou s decline of secu rity values re cen tly witnessed w i l l have
on the p r o fit s from secu rity transactions, which unquestionably
yield ed a very large income in 1923 and fo r the f i r s t eight months
o f the calendar year 1929,
The pending measure solves the problem of g iv in g to the tax­
payer the b en efit of the surplus which seems reasonably certain in
the fis c a l year 1930 without running too great a ris k o f incurring a
d e f ic it during the fis c a l year 1931,
I t is estimated that the reduced rates w i l l resu lt in reducing
income taxes to be c o lle c te d during the calendar year 1930 by
$160,000,000, of which approximately $90,000,000 represents the re­
duction in corporation taxes, and approximately $70,000,000 the re­
duction in in dividu al income taxes.
Since a l l individu al income taxpayers pay the normal tax, with
the exception o f those whose en tire taxable income is derived from
dividends, and since m illio n s of stockholders in our corporations
in d ir e c tly contribute to the corporation tax, a reduction in the nor­
mal rate applicable to individu al incomes and a reduction o f the

- 5 -

corporate tax rate are the means of g iv in g r e l i e f to the maximum num­
ber o f income taxbearers.

In th is connection, i t should be noted

that in- the fis c a l year 1929 out o f a to ta l tax revenue of
$3,540,000,000, including customs duties, income taxpayers contributed
no less than $2,331,000,000.
I have stated that the second outstanding feature o f the proposed
measure is the r e la t iv e ly la rg er b en efits which i t brings to the
people with small, or r e la t iv e ly small, taxable incomes.

This must,

o f course, be so under a system o f graduated surtaxes when the r e l i e f
is lim ited to a f l a t reduction o f the normal ra te.

And since incomes

in the lower brackets are in the main earned income derived from
wages or s a la rie s , i t is a f a i r conclusion that the c h ief b e n e fic ia rie s
o f this measure w ill be the wage-earning and salaried taxpayers.
The fo llow in g table

illu s tra te s the reduction in taxes to be

accorded the taxpayers f a l l i n g in d iffe re n t income classes:

Comparison o f th e t o t a l ta x p a y a b le u nder th e p r e s e n t law,, and u nder th e r a t e s s u g g e s te d f o r ijS S t, upon a s i n g l e p e rs o n , ana upon a
“ a r r i^

e x c e ss o i $ 1 0 ,0 0 0 i s

? r a s s u ^ e f ° t t e t da ? r t a c o m ; n o t i n
S 2 S r

5 l0 ' ° ^

r

i t t ^

d

T

earned in com e, and in a d d it io n th a t o n e - fo u r t h o f th e incom e in e x c e s s o f

S

* o e s n o t in c lu d e income i n P a r t c o n s is t in g o f
on th e f i r s t

$U,000

$H,.000,

taxable , 2$ on th e n e x t

and

H-> oa

r

r1 es sussested are

M a rrie d roan,, no dep en d en ts

Single persoii

normal,
normal
.tax, pres- tax, pro­
. ent law posed fo r
1Q29 9 «58
2S.-13 4
4,000 $
13.13
5.000
39.3s
22.50
6.000
56.25

Total
net
income
3

7,000
8,000
9,000
1
iO
I

10,000
15.000
20.000
25,000
30,000
40,000
50,000
jpO, 000
- 70,000
80,000
90,000
-2100,000

Total tax Total tax
' proposed
present
law
fo r 1929

Sur­
tax

Reduction
in tax
Amount

p osed f o r

e n t law

1223____
1.88
5 -6 3
l6.88
5.63
9.32
28.13

I8.75 66,66: $
26.25 66.66:.
33.75 60.00:

.. r

78.75
IOI.25
123.75

37.50
52.50
67.50

U1.25 52.38:
US. 75 4a. 15:
56.25 45.45:

78.75

56.88
2X3*75

153*75
445.OO
836.25

90.00
33H.3S
678.75

63.75 41.46:
n o . 62 24.86:
157.50 18.83:

101.25
31ÙI
5U7.50

652.50
840.00
1,215.00

5OO.63
865.OO
1,768*75

1,357.50
1,956.25
3,328.75

1,.153*13
1,705.00
2,983.-75

20U.37 1^.05:
251.25 12.84:
3U5.00 IO..36:.

781*88
1,016*25
1,1*85.00

2,028.75 1.590.00
2^497.50 . 1,965.00
2,966.25 2.340.00

2,925.00
4.312.50
5.932.50

H,953.75
6 ,s io ,o o
8 ,8 9 s .75

4,515.00
6.277.50
8.272.50

U38..75
532.. 50
626.25

8.8 6:
7.82:
7«04:

2.715.00 7,688.75
3.090.00 9,540.00
3.490.00 11,440.00

11,123.75
13.UU3.75
15.sU3.75

10,403«75
12.630.00
14.930.00

72O.OO
813.75
913.75

6,47;
6.05:
5*77 *

78.75
• 101.25
123-75
153.75
388.12
622.50
856.87
1,091.25
1,560.00

3.U35.00
7,903.75
U.H03-75

..

37.50
52.50
67.50
90.00
277.50 $
465.00

28,13 $
79.38
56.25

250.000 11,903.75 9,490.00 41.440.00 53,3U3.75 50,930.00 2.U13.75
500.000 2H.U03.75 19,490.00 91.440.00 115.sU3.75 110,930.00 U,913.75
1,000,000 U9.H03.75 39,490.003191.440.00 2U0.sU3.75 .230,930.00 ■9.913-75

T o t a l tax,. T o t a l ta x ,
p ro p o sed
p res e n t
f o r 1929
law

fo rm a l
: llorm al
: t a x ,p re s ­ t a x , p ro ­

9.-32 $
13.13
22..5O

$

of one per icent'

th e rem ain d er o f th e t a x a b le n e t income.^

39.3S

5-63
16.88
28.13

39.32

13.13
22.50
37.50

1.88
5.-63
9 .3 2
13.13

R ed u c tio n
in ta:*
Amount

3.75 56.61
11.25 56..65
12.75 06.65
26.25 66.66
33.75 60 ..00
41.25 52.32

56*25

22.50

72.75

3 7.50

IOI..25
368*76

52.50
273.13

7 6 1 .2 5

618.75

1 , 282.51
1 ,881.25

1 ,0 9 3 .1 3

3 .2 5 3 .7 5

2 ,9 2 3 .7 5

189.32 1^.77
236.25 12.56
330.00 10.14
423.75
517.50
611.25

8.69
7*68
6.93

705.00
792.75
292.75

6.38
5. 9f

4*52: I I , 828.75 9.430.00 4 i , 440.00:* 5 3 ,2 6 8 .7 5 : 5 P ,2 7 0 .0 0 2,392.75
4.24: 2U ,328.75 19,^30.00 9 1 , 4 4 o .O O :ll5 »7 6 2 .7 5 M l p , 270.00 M 98*75
4.12: 49,323*75 3 9 , 4 3 0 . 0 a 1 9 1 , 4 4 o . 0 0 2 4 o , 7.68 . 7 5 : 25 J) ,8 7 0 00. *9 ^ 2 .7 5

4.50
4.23
4,11

56.25

52.50
216.25 >
405 «00

56.88
213.75

592.50

500.63

780.00

865.OO
1.768.75

1,155.00

1.645.00

2 ,,422.50

1,905.00

4 .3 1 2 .5 0

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

2 ,8 9 1 .2 5

2 ,2 8 0 .0 0

5 . 9 3 2 .5 0

2 .8 2 3 .7 5

4.455.00
6.217.50
8.212.50

3,360.00

2,655.00
3,030.00

7.688.75

1 1 .0 4 8 .7 5

1 0 ,3^3*75

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

1 5 .7 6 2 .7 5

I,

1,530.00
951*75

3 .8 2 8 .7 5
4 .3 2 8 .7 5

2».925*tOO

13.368.75

12.570.00
14.870.00

48.75 48.15
'95.63 25-93
142.50 18.72

5 .7 0

In so fa r as corporations are concerned, as pointed out in the
1927 Report of the Secretary o f the Treasury, they are, r e la t iv e ly
speaking, overtaxed, and whichever theory be adopted as to the in­
cidence o f the corporation income tax, i t can hardly "be ddnied that
the way to give the greatest Federal tax r e l i e f to the greatest num­
ber is through a reduction o f the corporation rate.

The number of

individu als contributing d ir e c t ly to the support of the Federal
Government through the Federal income tax has been s t r i c t l y lim ited ,
and, o f those contributing, the vast m ajority pay but an in s ig n ifi­
cant amount and at a very low rate.

Of 2,434,000 individu al returns

showing taxable income, 2,059,000 returned but $32,861,000 o f income
tax, while 375,000 returned a tax of $1,109,000,000,

The average

ra te of ta x on the net incomes of the 2,059,000 individu als was 0.42
per cent, whereas these and other m illio n s o f individuals owning
stock in corporations are v ir t u a lly paying taxes through the corpora­
tions at 12 per cent on that portion o f th e ir income a ris in g from the
p r o fit s o f the business enterprises in which they were shareholders.
For the calendar year 1927, when the tax rate was 13-2 per cent,
a l l corporations reporting net income reported a net income (including
tax-exempt in te re s t) before a l l taxes, o f $10,934,031,563.

They paid

in taxes other than income tax $1,543,516,930, and reported income
tax o f $1,131,000,000, making a to ta l o f $2,674,000,000.

In other

words, 24.46 per cent o f th e ir net income was taken by taxes.

In the

same year these corporations paid about $5,786,000,000 in cash dividends,
which was 52.92 per cent of th eir net income.

For every d o lla r paid

i I

I

I

-

8

4/7

«

-

in dividends, 46 cents were paid in taxes.

]Jf a ll corporations "be

included - that is to say, corporations reportin g a d e f ic it as w ell
as those reporting net income - the percentage o f net income paid in
taxes is 34.84 per cent.
I am submitting herewith a table showing the re ceip ts and expendi­
tures fo r the fis c a l year 1929, and estimated receip ts and expendi­
tures fo r the fis c a l years 1930 and 1931 .

-9
R eceipts and expenditures fo r the fis c a l year 1929, on the basis of d a ily treasury
statements (u nrevised), and estimated receip ts and expenditures fo r the fis c a l
years 1930 and 1931
~
!j
RECEIPTS
Ordinary
Customs.................... ......... *.

------1

1929

!
!

j
1930
---------------- ---------- i
!

1931

1
j

j-------------- .-- ------ ;-i

In tern al revenue:
Income ta x....... * ............ . ¡2,330,711,822.66
Miscellaneous in tern al
revenue.......................... . , 607,307,548.98

a$602,000,000.00

!a $602,000,000.00

2,480,000,000.00

2,460,000,000.00

635*000,000.00

640,000,000.00

,

:2 ,938,019,371.64
• ...... - -.. —----~~~—
-j
Miscellaneous re ceip ts:
Proceeds o f Governmentowned sec u rities -1Eoreign ob liga tion s P r in c ip a l. . i
.
In t e r e s t ...................
Railroad s e c u r itie s ...
A ll other s e c u ritie s ..
Trust fund re c e ip ts (r e appropriated fo r in vestment).........................
Proceeds sale of surplus
p ro p e rty,....................... ,
Panama Canal t o lls ,e t c . •
Other miscellaneous . . . . .

3,100,000,000.00
3,115,000^000.00
)*- ----- --- -------i-----

! •
I
i
38,790,660.67
; 160,340,908.23
15,473,795.82
7,031,516.21

97,614,913.00
141,935,095.00
4,708,600.00
6,699,275.00

51,579,059.00
184,564,540.00
11,213,350.00
6,985,540.00

53,641,113.08

46,750,000.00

39,570,000.00

9,398,732.44
28,046,704.23
; 180,244,636.56

7,139,800.00
28,218,660.00
199,197,091.00

4,604,300.00
28,060,600.00
197,150,277.00

j 492,968,067.24

532,263 ,434.00

1 523,727,666.00
--- --- --- --- ■
L...—
_—----------------------

Total ordin ary-receip ts .. ¡4,033,250,225,05
4,249,253,434.00
j------------- £-----------j
t
EXPENDITURES
|
Ordinary (checks and
i
warrants p a id ,e tc .)
I

j 4,225,727,666.00
------------------------

l|p
1
i

General expenditures:
L e g is la tiv e establishment
17,546,655.67
Executive proper.......
487,250.03
State Departm ent..,.. . . . .
13,284,510.33
Tr easury Depar tment.. . • • •
200,447,224.41
War Department,.........
416,901,546.42
Department o f Justice
28,891,620.32
A. — . b-45*090,870.27
.... 364,561,543.‘99

|

1
i

21,702 , 000.00
476 100.00
13,411 ,400.00
239,340 ,900.00
443,153 ,000.00
29,014 ,500.00

,

\ 384*900,000.00-—

28,879,500.00
410.700.00
15 ,881*300
209,301,500
439,215,90(3
31.752.000
285-,OO0*^000

- lo 1
I1

1929

EXPENDITURFS( Con' d .)
Ordinary ( Con' d .)
.
General expenditures( Con’ d .) 1
In te rio r Department. \* i i .. j $301,122,596.27
Depart*of A g r ic u ltu r e *i. . .
171,147,262.58
Depart.of Commerce.............
39,987 *346i 45
Depart.of Labor ................
11,311,190.36
U. S. Veterans * Bureau......... j
417,280,404.40
Other independent o ffic e s
and c o m m is s io n s .......... I
40,308,719.63
D is tric t o f Columbia......... j
40,116,586.38

i
]
!

1930

1931

$288,759,700,00
173,796,300.00
58,478,600.00
11,269,300.00
434,451,500.00

$285,810,000.00
•167,068,600.00
51,184,000.00
11,997,400.00
445,325,000.00

51,856,400.00
43,811,200.00

45,581,300.00
45,415,000.00

2,194,420,900.00

2,162,752,200.00

T o ta l.........................
2,106,503,130.91 2,194,420,900.00
Interest on public d e b t .....
c 678,330,399.50
656,000,000.00
Refunds o f receip ts:
Customs........... ....................
21,826,435.69
21,009,500.00
Internal revenue................
190,727,887.12
151,541,000.00
Postal d eficien cy ..................
b 94,699,744.06
84,000,000.00
Panama Canal...........................
9,045,647,29
10,111,000.00
Operations in special accts.:
R ailroads............
d 1,857,633,06
d 7,925,800.00
War Finance Corporation...
d 611,414.95
d 50,000.00
Shipping Board........... .
15,889,059.12
30,447,700.00
A gricultural marketing,
loan fund. .
75,000,000.00
Alien property funds....... .
d 1,345,327.26
d 500,000.00
Adjusted service c e r t i f i cate fund e .................. .
111,772,809.62
111,775,000.00
Civil Service retirement
and d is a b ilit y fund.............
19,955,190.64
20,500,000.00
Investment o f tru st funds:
!
Government l i f e insurance
fund.................... ...............
52,160,111.83
45,110,000.00
D is tric t of Columbia
teachers* retirement fund
503,158.37
585,000.00
Foreign service retirement
fund.................... ...............
282,444.12
292,000.00
General ra ilro a d contingent
fund....................................
977,842.88
1,000,000.00

2,162,752,200.00
619,000,000.00

Total ordinary expenditures.. 3,298,859,485.88

3,467,614,700.00

T o ta l............................. . 2,106,485,327.51
Add u n cla ssified ite m s .... !
17,803.40

¡3,393,316,300.00

21,009,500.00
141,511,000.00
78,500,000.00
11,845,000.00
1,790,000.00
d 50,000.00
59,417,000.00
200,000,000.00
d 500,000.00
111,775,000.00
20,850,000.00

37,830,000.00
585,000.00
290,000.00
1,000,000.00

-

j

1.1

1929

1930
• I
j

EXPENDITURES ( Con»d .)

j
....... . ■-* ■\■■

|

Public debt retirem ents
chargeable against o rd i­
j
nary receip ts:
Sinking fund..................... ; 370,277,100*00 |
Purchases from fo reig n
|
,1
repayments.......................
571,150.00 j
Received from fo reig n
{
1
governments under debt
s e ttle m e n ts ..*................ 1 175,642,350.00 !
Received from estate taxes
20,000.00 L
Purchases from franchise
;
tax receip ts (Federal re - ?
serve banks and Federal
;■
intermediate cred it banks):
2,933,400.00
F o r fe it u r e s ,g ift s ,e t c . .*
159,703.75
T o ta l......................... .

j' 549,603,703.75

Total expenditures
chargeable against ordinary r e c e ip t s * ........

1
i
3,848,463,189.63

Excess o f ordinary receip ts
over to ta l expenditures
chargeable against o rdinary r e c e ip t s . . . .............

i
j
J
j 184,787,035*42

1931

j
J
j
389,191,500.00. j

395,624,000*00

20,050,000.00 |

1,800,000.00

214,700,000.00 |
54,100.00 !

231,500,000.00

6,210,000.00
160,000.00

6,200,000.00
200,000.00

630,365,600.00
------------ —---------4,023,681,900.00

635,324,000.00

4,102,938,700.00

.

m ,' ■
225,581,534.00

122,788,966.00

. f Includes $2,000,000 estimated by Department o f Commerce fo r tonnage tax, re­
ceipts on account of which are covered into the Treasury as customs revenue.
, tnj
exPen^-I^nres o f the Post O ffic e Department and also on account of
PPs a l d eficien cy fo r the fis c a l year 1929 (month o f June, 1929) are $42,997,089.50
and $8,999,996, re sp ective ly , representing payment o f so-called back railw ay mail
pay to inland c a rrie rs under au th ority o f jo in t resolu tion approved June 6, 1929.
c Includes $774,912.65 accrued discount on war-savings sec u ritie s o f matured
series.
d Excess o f cred its (deduct),
e For d e ta ils o f th is account see p.100.- The d ifferen ce between amounts o f
a ove charges and the amounts appropriated fo r investment is due to working balance
required lo r use of Veterans1 Bureau in making authorized payments from the fund.

TREASURY DEPARTMENT

DOR RELEASE, MORNING PAPERS,
DECEMBER 5, 1929, OR
WHEN DELIVERY HAS BEGUN

RADIO ADDRESS OF
SECRETARY A. W* MELLON
FROM STATION WRC, WASHINGTON
AND A NET-WORK OF THE
NATIONAL BROADCASTING COMPANY
DECEMBER 4, 1929

Each year at the beginning o f a new session of Congress, members o f the
P resid en t's Cabinet are required to make a report o f the work o f th eir depart­
ments during the preceding year.

Tonight, fo r the f i r s t time, the radio

has made i t possible fo r the Treasury to g iv e a condensed version o f i t s
report d irect to the country.
Before entering upon the Report i t s e l f , I would lik e to say a word o f the
circumstances under which i t has been made each year.

When the Treasury

was established by the Act o f the f i r s t Congress, meeting in New York in 1789,
i t was provided that, among other s p e cified duties, the Secretary o f the
Treasury should make reports to Congress on matters pertain in g to his department.
Such reports ware made at irreg u la r in te rv a ls but no annual report was made u n til
i t was provided in the Act of May 10, 1800, that a, report should be made to
Congress at the commencement o f every session, "containing estimates of the
public revenue and public expenditures and plans fo r improving or increasing
the revenues".
In accordance with th is Act, we fin d Secretary G allatin in December 1801,
submitting the f i r s t Annual Report.

In i t he estimates that fo r the

ensuing year the revenues w i l l amount to 10'J* m illio n d o lla rs , o f which 3 i
m illion s w i l l be required fo r ordinary expenditures o f the Government and that
the remainder can be applied in payment of in te re s t and p rin cip a l o f the public
debt,
Today these amounts appear very small as compared with the amounts now
required to operate the Government.

As the country has grown in size and

wealth, the volume of the public business has increased, so that the Treasury
Report fo r 1929 is obliged to deal with b illio n s where the Report of 1801 was
concerned with only a very few m illio n s.

g lf g i
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But in i t s essen tials, the la s t report is much lik e the f i r s t .

Both

have to do c h ie fly with such matters as receip ts and expenditures, debts and
taxes; and, in so fa r as the Treasury i t s e l f is concerned, i t s t i l l conforms,
both in it s organization and in i t s method o f operation, to i t s ea rly tra d itio n s
and in most important respects can show a continu ity in p o lic y from the time
when i t was f i r s t established.
This is p a rtic u la rly true as regards i t s fundamental p o lic y of keeping
expenditures alwas's within re ceip ts, and applying the surplus eith er to tax
reduction or in payment of the public debt.

The la s t fis c a l year has been

no exception to th is ru le.
For that year, which ended June 30, 1929, to ta l ordinary receip ts were
$4,033,000,000 and expenditures chargeable against ordinary receip ts were
$3,848,000,000, g iv in g a surplus fo r the year o f $185,000,000*

This

surplus has been applied to retirement o f the public debt.
During the year the gross debt was reduced from $17,604,000,000 to
$16,931,000,000, or a to ta l reduction o f $673,000,000.

This la t t e r amount

was brought about by the application of the Sinking Fund expenditures and other
receip ts ear-marked fo r debt retirement and by the surplus which I have just
re ferred to.
I might add that the war debt, which reached a peak o f $26,594,000,000 on
August 31, 1919, has been reduced in the ten years ending August 31, 1929, to
$16,805,000,000, or an average o f nearly a b i l l i o n d olla rs a year fo r the
ten-year period.

The amount o f in te rest saved, due both to reduction o f

the prin cip al o f the debt and lowering o f the average in terest, rate over this
period, is about two b illio n d o lla rs.
Coming now to the question o f taxes;

the Treasury estimates that fo r the

next fis c a l year, that is , fo r the twelve months ending June 30th next, there
w ill be a surplus o f $226,000,000 of receip ts above expenditures, and fo r the
fis c a l year 1931 a surplus o f $123,000„000,

A surplus may be recurring

ip ',<W

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or temporary.

- 3 ~

In the one case, eith er through expanding revenue or reduced

expenditures, assured receip ts may have reached the point where they so exceed
normal expenditures as to create recurring surpluses.

Such a situ ation

ju s t ifie s a re visio n , more or less permanently, o f our tax laws with a view to
modifying tax rates downward.
In the second case, the surplus may be o f temporary character, a risin g
from an unusual increase in re ceip ts o f decrease in expenditures; or the
conditions,

while not extraordinary, may not have existed fo r a s u ffic ie n t period

of time to permit a d e fin ite conclusion as to th e ir permanency.
surplus obviously c a lls fo r d iffe re n t treatment.

Such a

This is p a rtic u la rly

true of a revenue system which places i t s c h ie f relian ce on one form of
taxation, as we do on the income tax, which is subject to sweeping variation s
depending on a v a rie ty of circumstances tut p rin c ip a lly on the upward and down­
ward flu ctu ation s o f business.

Under these circumstances, while a surplus

ju s t ifie s some measure o f tax r e l i e f and while the taxpayer should receive the
fu lle s t possible b en efits from the prosperous condition o f the Treasury during
the given f is c a l year, i t is impossible to assure the permanency o f the
reduced ra tes.
The estimated surpluses fo r the fis c a l years 1930 and 1931 seem to f a l l
into the second class.
Treasury has recommended:

Having in mind a l l of these considerations, the
f i r s t , that the normal tax rates on the income of

individuals fo r the calendar year 1929, payable in 1930, shall be g per cent,
2 per cent and 4 per cent, instead o f the e x is tin g rates o f l g per cent, 3 per
cent and 5 per cent; and second, that the tax ra te on the income o f corporations
fo r the calendar year 1929, payable in 1930, shall be 11 per cent instead of
the ex istin g 12 per cent.
This should resu lt in a decrease of income tax c o lle c tio n s during the
calendar ye ax 1930 of approximately $160,000,000

This reduction, i t is

- 4 -noped, w ill "bàli© the form o f a, Joint Resolution o f Congress» thus perm itting
prompt action by "both Houses hy avoiding a general revisio n of the revenue law.
The proposal has already been discussed with the Republican and Democratic
leaders of both Houses of Congress, who have te n ta tiv e ly approved the
proposed recommendations; and i t is con fiden tly expected that, ea rly in the
present session, Congress w i l l take a,ction to g iv e the taxpayers the r e l i e f
indicated.
This w ill be the f i f t h reduction in taxes which the Federal Government
has made w ithin le s s than nine years.

While the aggregate amount o f th is

la st reducoion may not be so great as form erly, the reduction proposed should
be of very re a l b en efit to the taxpayers, e s p e c ia lly to those with earned
incomes in the lower brackets.

I t is estimated that a married man with

no dependents, who at present pays a yea rly tax of $5,63 on a taxable income of
$4000, w ill have h is tax reduced to $1.88; with a taxable income of $10,000, he
w ill pay $52.50, instead o f, as now, $101.25; and on $15,000 he w ill pay
$273.13 instead o f h is present tax of $368.76,
In so fa r as the reduction o f the income tax on the incomes of individuals
is concerned, under our system o f graduated surtaxes the reduction of the normal
rate is of greater b en efit to those with small or moderate incomes than to those
with la rger incomes.

Income from dividends would re ceive no b e n e fit,

sine© dividends are not subject to the normal tax; but those who receive
dividends w i l l , o f course, b e n e fit in d ir e c tly from the reduction o f the
corporation tax ra te.
Turning now to other matters:

during the la s t year the Treasury, in

connection with i t s plans fo r financing the qu arterly m atu rities of the public
debt and in addition to the usual c e r t ific a t e o ffe rin g s , has arranged fo r
issuing a new type of secu rity, to be known as Treasury b i l l s ; and under
le g is la tio n o f Congress, approved by the President, i t is preparing to issue

P

4 *1

~ 5 -

them from time to time on a discount basis with m aturities not exceeding twelve
months, to be sold fo r cash under competitive conditions at the lowest discount
rates or highest prices bid by prospective purchasers.

This provides a

new type of short-term G-overnment security fo r banks and other investors., while
o ffe r in g many advantages to the G-overnment in i t s financing operations.
In July the French G-overnment r a t ifie d the agreement fo r funding i t s war
debt to this.country; and th is agreement w i l l sh ortly come before Congress fo r
r a t ific a t io n .

Settlement o f the Austrian debt has been authorized and the

G-reek debt has been s ettled , so that the long negotiations fo r the settlement
o f the war debts have now been concluded.
$11,579,000,000.

The to ta l amount funded is

During the fis c a l year 1929, the Treasury received from

the various fo reig n governments on account o f th e ir indebtedness to the United
States the sum of $199,000,000, of which $39,000,000 was fo r account of
prin cip al and $160,000,000 fo r account of in te re s t.
Taking up now the question o f banking p o lic y :

a review o f the p o lic y of

the Federal Reserve Board during the past year shows that i t has endeavored to
guard against an undue extension o f cred it through speculative channels and to
conserve the country*s cred it resources fo r the purpose o f meeting future
requirements o f industry and trade.

The strong p o sitio n in which the

Federal Reserve System found i t s e l f when the recent sharp decline in security
p rices took place, and also the prompt action taken by the System, were
important fa cto rs in r e lie v in g the strain incident to th is period of
readjustment.
In banking, as. in other en terprises of th is country, there is increasing
evidence o f a movement toward la rger operating units.

The number of

branches o f banks in operation has increased and more recen tly there has been
a growth also in the number o f groups in which several independent banks are
operated more or le s s as a sin gle system.

Both of these developments

r e fle c t changes in the underlying economic situ ation .

The time has

- 6 -

come when i t would seem wise to undertake a thorough study o f the situ ation
with a view to determining the soundness o f the present-day tendencies, and
more p a rtic u la rly the lim its of the economic areas within which branch banking
may be advantageously permitted.

Hasty le g is la tio n , eith er to lib e r a liz e

or to con strict lim ita tion s now in e ffe c t , should be avoided, fo r our banking
structure is the product o f many years o f dearly-bought experience and is part
o f an in tr ic a te economic fa b ric whose parts are clo s e ly adjusted to one another,
A too rapid reorganization would be lik e ly to create serious and co stly
disburbances that would a ffe c t the en tire country.
The Treasury contains many a c t iv it ie s o f which only the b r ie fe s t mention
can be made,

Turing the la s t year, the Bureau of Engraving and P rin tin g

completed the revisio n of the paper currency designs, with a reduction in the
size o f the currency.

The enforcement of the Federal narcotic laws has

continued and has resulted in over fiv e thousand arrests fo r v io la tio n s of
these laws during the year.

The Bureau of Customs, which c o lle c ts a large

part o f our revenue, reports a substantial increase in customs during the year.
The Public Health Service has done e ffe c t iv e work-in conserving health and co­
operating with the various States.

The Coast Guard reports a to ta l of

4,375 liv e s saved or persons rescued from p e r il during 1929 and, in addition to
i t s other a c t iv it ie s , gave valuable aid in the disastrous M ississippi flood s
during the spring o f the year,
Turing the past year the reorganization of the Bureau of P roh ibition has
been completed in accordance with the Act o f March 3, 1927,

The opera­

tion s of the Treasury Department in the enforcement of proh ib ition are becoming
stable and more e ffe c t iv e .

The a c t iv it y and cooperation of the several

bureaus engaged in these operations are making the business of v io la tin g
p roh ib ition laws more d i f f ic u lt and hazardous.

| ® i i « i m ^ ^ w # ! ■*;^i*;:”i"-;'i‘y:'‘">c^-x>'\-'^ '-i'-'-''v’:;o^-.f^:ii”^'^I:*;i

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p

i3?here remains one more important Treasury a c t iv it y o f which mention must
be made.

The O ffic e of the Supervising A rch itect, which has charge o f the

erection o f public buildings, has proceeded with the work o f remodeling and
erectin g buildings within Washington and throughout the country under the
Federal Building program which has been authorised by Congress.

To date

334 p rojects have been authorised fo r the country at large with a to ta l
authorization o f $189,000,000.

In the D is tr ic t o f Colombia 9 p ro jec ts

have .been authorized and work on some o f the bu ildings, such as the new
Department o f Commerce aid the Bureau o f In tern al Revenue, is now under way.
These buildings w i l l form part o f the monumental group o f buildings on
Pennsylvania Avenue and the M all, extending from the Capitol to the Treasury,
and with other plans now being made w i l l add g r e a tly to the beauty and d ig n ity
o f the Nation*.s Capital.
In so fa r as circumstances permit, the work on these buildings, both in
Washington and throughout the country, w i l l be pushed as ra p id ly as possible
in order to carry out the P resid en t’ s sound and constructive p o lic y fo r
increasing bu ildin g a c t iv it y and so stim ulating a l l other lin e s of endeavor
during the months immediately ahead.
Such, in b r ie f ou tlin e, are some of the major a c t iv it ie s o f the Treasury
during the past year.

They in dicate that the Government’ s business is

in sound condition and that the Government i t s e l f is in p o sitio n to do i t s
part in helping the country to tackle and solve the problems which are ahead problems which, a fte r a l l , o ffe r no insuperable d i f f ic u lt i e s to a people so
well-equipped with a l l the essen tia ls o f m aterials, organization, energy and
determination to carry the nation forward to a development whose vast
proportions we are beginning only dimly to perceive.

fl

A

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Friday, December 6, 1929»

STATEMENT BY SECRETARY MELLON

The Treasury is today o ffe rin g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks, an issue of nine
month 3-l/8 per cent Treasury c e r t ific a te s o f indebtedness of Series
TS-1930, dated and bearing in terest from December 16, 1929, and matur­
ing September 15, 1930.

The amount of the o ffe r in g is $325,000,000,

or thereabouts,
Apnlioations w i l l be received at the Federal Reserve Banks.
The Treasury w ill accept in payment fo r the new c e r t ific a t e s , at par,
Treasury c e r t ific a t e s of indebtedness of Series TD-1929 and TD2-1929,
both maturing December 15, 1929.

Subscriptions fo r which payment is

to be tendered in c e r t ific a te s of indebtedness maturing December 15,
1929, w i l l be given p referred allotment up to $200,000,000«
Bearer c e r t ific a te s w i l l be issued in denominations of $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have two

in terest coupons attached payable March 15, 1930, and September 15,
1930.
In addition to the o ffe r in g of c e r t ific a te s of indebtedness,
the Treasury w i l l on December 10 o ffe r about $100,000,000 o f ninety-day
Treasury b i l l s , to be sold on a discount basis to the highest bidders.
D etails as to this o ffe r in g ,’w i l l be made public on the morning of
December 10.

' r;-

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2

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About $700,000,000 of Treasury c e r t ific a te s of indebtedness
and nearly $97,000,000 in in terest payments on the public debt, become
due and payable on December 15, 1929 •
The text o f the o f f i c i a l circu la r g iv in g the terms of the
o ffe r in g o f c e r t ific a t e s of indebtedness fo llo w s:

The Secretary of the Treasury, under the authority of the Act
approved September 24, 1917, as amended, o ffe rs fo r subscription, at
par and accrued in te re s t, through the Federal Reserve Banks, Treasury
c e r t ific a te s of indebtedness o f Series TS-1930, dated and bearing
in terest from December 16, 1929, payable September 15, 1930, with in­
te re s t at the rate of three and one-eighth per cent per annum, payable
on a semiannual basis.
Applications w i l l be received at the Federal Reserve Banks.
Bearer c e r t ific a te s w i l l b e ‘ issued in denominations of $500,
$1,000, $5,000,$10,000, and $100,000.

The c e r t ific a te s w i l l have

two in terest coupons attached, payable March 15, 1930, and September
15, 1930The c e r t ific a te s of said series sh all be exempts both as to
p rin cip a l and in te re s t, from a l l taxation (except estate and in h eri­
tance taxes) now or h erea fter imposed by the United States, any State,
or any o f the possessions of the United States, or by any lo c a l taxing
a u th o rity.

f?^

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-3-

Th.e c e r t ific a te s o f this series w i l l he accepted at par
daring such time and under such rules and regulations as sh all he
prescribed or approved by the Secretary of the Treasury, in payment
o f income and p r o fit s taxes payable at the maturity of the c e r t i f i ­
cates.

The c e r t ific a te s of th is series w i l l he acceptable to secure

deposits of public moneys, hut w i l l not hear the circu latio n p r iv ile g e *
The rig h t is reserved to re je c t any subscription and to
a llo t less than the amount of c e r t ific a te s applied fo r and to close
the subscriptions at any time without n o tice.

The Secretary of the

Treasury also reserves the righ t to make allotment in f u l l upon applications-for smaller amounts, to make reduced allotments upon, or
to r e je c t , applications fo r la rger amounts, and to make c la s s ifie d
allotments and allotments upon a graduated scale; and his action in
these respects w i l l he fi n a l .

Allotment notices w i l l he sent out

promptly upon allotm ent, and the basis of the allotment w i l l he
p u b licly announced.
Payment at par and accrued in terest fo r c e r t ific a te s a llo tte d
must he made on or before December 16, 1929, or on la te r allotm ent.
A fte r allotment and upon payment, Federal Reserve Banks may issue in­
terim receipts pending d e liv e ry of the d e fin it iv e c e r t ific a t e s .

Any

q u a lifie d depositary w i l l he permitted to make payment hy cred it fo r
c e r t ific a te s a llo t t e d to i t fo r i t s e l f and it s customers up to any
amount fo r which it shall he q u a lifie d in excess of ex istin g deposits,
when so n o tifie d hy the Federal Reserve Bank of it s d is t r ic t .

Treasury

-4-

c e r t ific a t e s of indebtedness of Series TD-1929 and TD2-1929, both
maturing December 15, 1929, w i l l be accepted at par, in payment
fo r any c e r t ific a t e s of the series now o ffered which shall be sub­
scribed fo r and a llo tte d , with an adjustment of the in terest accrued,
i f any, on the c e r t ific a te s of the sefied so paid fo r*
As fis c a l agents of the United States ■, Federal Reserve
Banks are authorized and requested to receive subscript ions and 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 re­
spective d is t r ic t s .

TREASURY DEPARTMENT

FOR RSLFA.SE MORNING PIPERS
MONDAY, DECEMBER 9, 1929.

Secretary Mellon announced that he has authorized the Federal
Reserve Barilos, Beginning on Tuesday, December 10, 1929, and u n til
further n otice, to redeem in cash "before maturity, at the h olders’
option, at par and accrued in terest to date o f such optional re ­
demption, Treasury 4 ^ c e r t ific a t e s o f indebtedness o f Series
TD-1929, and Treasury 4j*f c e r t ific a te s o f indebtedness o f Series
TD-2-1929, both maturing December 15, 1929,

TREASURY DEPARTMENT

FOR MORNING PAPERS,
MONDAY, DECEMBER 9, 1929.

Secretary Mellon announced that subscriptions fo r the issue
of 3 l/8 per cent Treasury C e rtific a te s of Indebtedness, dated
December 16, 1929, Series TS-1930, maturing September 15, 1930,
closed at the close o f business on Saturday, December 7, 1929.
Subscriptions received through the mails up to 10:00 o 'clo ck
Monday morning, December 9th, w i l l be considered as having been
received before the close o f the subscription books*

TREASURY DEPARTMENT

EOR RELEASE MORNING PAPERS,
Tuesday, December 10, 1989.

Secretary Mellon announced that subscriptions fo r the issue of
Treasury c e r t ific a t e s o f indebtedness, dated December 16, 1929, Series TS-1930,
3-1/8 per cent, maturing September 15, 1930, closed at the close o f business on
Saturday, December 7, 1929,

The reports from the twelve Federal Reserve Banks

show that fo r the o ffe r in g , which was fo r $325,000,000, or thereabouts, to ta l
subscriptions aggregate some $722,000,000.

Of these subscriptions, $185,381,500

represent subscriptions fo r which Treasury c e r t ific a t e s o f indebtedness o f
Series TD-1929 and TD2-1929, both maturing December 15, 1929, were tendered
in payment, a l l o f which were a llo tte d in f u l l .
Allotments on other subscriptions were made as fo llo w s :

AH cash

subscriptions in amounts not exceeding $1,000 fo r any one subscriber were
a llo tte d in f u l l .

Cash subscriptions in amounts over $1,000 but not exceeding

$50,000 were a llo tte d 70 per cent, but not less than $1,000 on any one sub­
scrip tion ;

cash subscriptions in amounts over $50,000 but not exceeding

$100,000 were a llo tte d 60 per cent, but not le s s than $35,000 on any one sub­
scrip tion ;

cash subscriptions in amounts over $100,000 but not exceeding

$1,000,000 were a llo t t e d 40 per cent, but not le s s than $60,000 on any one
subscription;

cash subscriptions in amounts over $1,000,000 but not exceeding

$25,000,000 were a llo tte d 20 per cent, but not less than $400,000 on any one
subscription;

and cash subscriptions in amounts over $25,000,000 were

a llo tte d 10 per cent, but not le s s than $5,000,000 on any one subscription.
Further d e ta ils as to subscriptions and allotments w i l l be announced
when fin a l reports are received from the Federal Reserve Banks

treasury department

FOR RELEASE, MORNING PAPERS,
TUESDAY, DECEMBER 10, 1929,

STATEMENT BY SECRETARY MELLON

Ehe Secretary o f the Treasury gives n otice that tenders are in vited fo r
Treasury h i l l s to the amount o f $100,000,000, or th ereabou t!

The Treasury

b i l l s w ill be sold on a discount basis to the highest bidders.

Tenders w i l l

be received at the Federal Reserve Banks, or the branches th ereof, up to two
o 'c lo c k P . M E a s t e r n Standard time, on Friday, December 13, 1929.

Tenders

w i l l not be received at the Treasury Department, Washington.
116

b i l l s w i l l be dated December 17, 1929, and w i l l mature on

March 17, 1930, and on the m aturity date the face amount w i l l be payable with­
out in te re s t.

They w i l l be issued in bearer form only, and in amounts or

denominations o f $1,000, $10,000, and $100,000 (m aturity va lu e).
I t is urged that tenders be made on the printed forms and forwarded in
the special envelopes which w i l l be supplied by the Federal Reserve Banks or
"branches upon application th erefo r.
No tender fo r an amount le s s than $10,000 w i l l be considered.
tender must be in m ultiples o f $1,000.

Each

The p rice o ffe re d must be expressed

he basis o f 100, with not more than three decimal places, e. g . , 99.125.
Fractions must not he used.
Tenders w ill be accepted without cash deposit from incorporated banks and
tru st companies and from responsible and recognised dealers in investment
sec u ritie s .

Tenders from others must be accompanied by a deposit o f 10 per

cent o f the fa ce amount o f Treasury b i l l s applied fo r , unless the tenders are
accompanied by an express guarantee o f payment by an incorporated bank or
trust company.

.(TV' ■n |

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Immediately a fte r the closin g hour for, receip t o f tenders on December
13, a l l tenders received at the Federal Reserve Ranks or branches thereof up
to the closing hour w ill he opened and public announcement o f the acceptable
p rices w ill fo llo w as soon as possible th e re a fte r, probably on the fo llo w in g
morning.

The Secretary o f the Treasury expressly reserves the rig h t to

r e je c t any or a l l tenders or parts o f tenders, and to a llo t le s s than the
amount applied fo r , and h is action in any such respect shall be fin a l.

Those

submitting tenders w i l l be advised o f the acceptance or r e je c tio n th ereof.
Payment at the p rice o ffe re d fo r Treasury b i l l s a llo tte d must be made at the
Federal Reserve Banks in cash or other immediately a va ila b le funds on or be­
fo re December 17, 1929.
The Treasury b i l l s w i l l be exempt, both as to p rin cip a l and in terest
(discou n t), from a l l taxation, except estate and inheritance taxes.

The

amount o f discount at which the Treasury b i l l s are o r ig in a lly sold by the
United States shall be considered as in te rest fo r tax exemption purposes.
Department Circular No. 418, dated November 22, 1929, and th is n otice
as issued by the Secretary o f the Treasury, prescribe the terms of the Treasury
b i l l s and govern the conditions o f th e ir issue.

Copies o f the circu lar may

be obtained from any Federal Reserve Bank or branch th ereof.
This o ffe r in g w ill constitu te the f i r s t issue of Treasury b i l l s , which
are a new form of Government security authorized by a law enacted by the la s t
Congress.

While the law authorizes the issuance of Treasury b i l l s with a

twelve months’ maturity, gen era lly speaking they w ill be issued, as in the case
o f th is o ffe r in g , with a ninety-day maturity or with a m aturity not in excess
of three months.

Issued from time to time as the current fin a n cia l needs of

the Government may dictate and with frequent and convenient m aturities, they
should furnish an a ttr a c tiv e medium fo r short-term investment.

They are

intended to supplement rather than to supplant Treasury c e r t ific a t e s of

3

indebtedness, which with m aturities usually ranging from six to twelve months,
have up to the present time constituted the prin cip al medium of short-term
Government financing.
Treasury b i l l s o ffe r certain advantages as compared with Treasury
c e r t ific a t e s .

Their issue can be timed to coincide almost exactly with the

needs fo r funds as compared with the e x is tin g practice of borrowing four times
a year on fix e d dates through c e r t ific a t e -offerin gs; they w i l l not be sold at
par with an in te re s t rate fix e d by the Treasury but at a discount rate fix e d
by the subscribers through com petitive bidding; th eir m atu rities can be timed
to correspond c lo s e ly to the actual c o lle c tio n o f income taxes instead o f
f a llin g on the nominal date o f tax payment; and, fin a lly , the Treasury should
be able to take advantage o f periods o f seasonal ease fo r short-term borrowing
instead o f being compelled to o ffe r a large issue o f s e c u rities during a
temporary stringency and high money rates.
The Treasury Department b elie v e s that Treasury b i l l s w i l l prove to be an
e ffic ie n t and economical additional medium through which the short-term financ­
ing of the Government may be conducted and hopes that they w i l l receive a
favorable reception on the part of the public.

TREASURY DEPARTMENT

FOR RELEASE WHEN DELIVERED

Statement by Undersecretary M ills before the Ways and Means
Committee, Tuesday, December 10, 1929, in connection with
H. R. 6585 providing fo r the settlement o f the indebtedness
o f the French Government to the United States,

The b i l l now before you fo r consideration provides fo r the approval of
the agreement fo r the settlement o f the indebtedness of the French Government
to the United States a risin g during the World War and the years immediately
succeeding i t s termination, made by the duly authorized representatives of the
French Republic, on the one hand, and by the World War Foreign Debt Commission,
on the other, and approved by the President o f the United States.

The agree­

ment was signed on A p ril 29, 1926, and is set fo rth in Senate Document No. 102,
69th Congress, F irs t Session.

The b i l l was reported by the Ways and Means

Committee on May 29, 1926, and passed the House o f Representatives on June 2,
1926.

I t was not acted on by the Senate o f the United States.
Under date o f July 27, 1929, the French Ambassador o f f i c i a l l y n o tifie d the

Secretary o f State that the debt funding agreement with the United States had
been r a t ifie d by France,

I t remains, th erefo re, but fo r the Congress of the

United States to give i t s approval fo r th is agreement to become e ffe c t iv e .
Under the authority o f the L ib erty Bond Acts and the Act of July 9, 1918,
the Government of the United States extended loans and cred its to the Government
o f the French Republic, the p rin cip a l amount of which, together with the accrued
and unpaid in te re s t thereon, to ta led approximately $4,230,000,000 as of June 15,
1925, the date as o f which the debt is to be funded under the terms o f the

-

agreement signed A p ril 22, 1926i

2

-

Of th is to ta l $2,933,600,000 represents the

p rin cip al o f the obligation s acquired fo r cash advanced, le s s any repayments
made on account; $890,000,000 represents accrued and unpaid in te re s t at 5 per
cent, the ra te borne by the ob ligation s p rio r to funding, up to June 15, 1925;
and $407,000,000 represents the p rin cip al amount of ob liga tion s acquired in
connection with the sale on cred it o f surplus war m aterial.

On th is la s t

mentioned p rin cip a l amount in te rest has been paid currently up to the present
time.
The basis of the proposed settlement is as fo llow s!

A ll unpaid and accrued

in te re s t on o b ligation s other than those given fo r the war supplies purchase,
was figu red at 4^- per cent up to December 15, 1922, and at 3 per cent from that
date u n til June 15, 1925.

The 4^ per cent rate is the ra te applied in our

settlement with Great B rita in to the indebtedness o f Great B rita in up to the
date of settlement.

The 3 per cent rate is the rate applied to the indebted­

ness o f the Belgian Government from December 15, 1922 (up to which point in that
case likew ise a 4 j per cent rate had been applied) to the date of settlement.
may be added that the 3 per cent rate is the ra te paid by the B ritis h on i t s
funded debt fo r the f i r s t 10 years, which furnishes an additional reason fo r
lix in g th is rate on the unfunded indebtedness o f other countries during th is
interim period.
In so fa r as the ob liga tion s given fo r surplus war supplies are concerned,
i t is provided that in te rest thereon shall be fix e d at the rate o f 3 per cent
from December 15, 1922, to June 15, 1925, with the proviso, however, that any
in te re s t a ctu a lly paid during that period in excess o f the 3 per cent rate
should be applied on account o f the to ta l sum owed, p rin cip a l and in te re s t, as
o f June 15, 1925.

It

V

- 3 -

The above-described terms o f settlement resu lt in fix in g the net indebted­
ness as o f June 15, 1925, at $4,025,386,686.89, made up,as fo llow s:
P rin cip a l o f obligation s held fo r cash ad­
vanced under L ib erty bond a c ts ................ $2,933,405,070.15
Accrued and unpaid in terest at 4 i per
centum to December 15, 1922...............
445,066,027.49
$3,378,471,097;64
P rin cip a l o f obligation s given fo r sur­
plus war supplies purchased on credit.'.-.
In te re s t at 4^- per cehtum from the la s t
in te rest payment date p rio r to Decem­
ber 15, 1922, to December 15, 1922,.t . . .

407,341,145.01
6,324,940.79

Total indebtedness as o f December 15, 1922....................
Accrued and unpaid in te rest at 3 per centum per annum on
th is amount from December 15, 1922, to June 15, 1925.........
Total indebtedness as o f June 15, 1925.............................

413,666,085.80
3,792,137,183.44
284,410,288.75
4,076,547,472.19

Credits
Payments received on account o f in terest
between December 15, 1922, and June 15,
1925................................................................
Payments on account o f p rin cip al since December 15, 1922 ................... .......................
In te re s t on p rin cip a l payments at 3 pel­
een turn per annum from date o f payment
to June 15, 1925.................... ....................

$50,917,643.13
230,171.44

...........12,970.73

ITet indebtedness as o f June 15, 1 9 2 5 . . . . . . . ........
Paid in cash upon execution o f agreement..
Total indebtedness to be funded into bonds

51,160,785,30
4,025,386,686.89
_______386,686.89
4,025,000,000.00

The agreement provides that there is to be paid in cash upon i t s execution
the sum o f $385,686.89, which was a ctu a lly paid, leavin g a to ta l indebtedness
to be funded o f $4,025,000,000, which w ill be funded into bonds under the terms
o f th is agreement.
There is attached to th is statement a schedule showing the to ta l annual
payments to be made by Prance.

Generally speaking, Prance pays $30,000,000 a

year the f i r s t 2 years; $32,500,000 a year the th ird and fourth years, and
$35,000,000 the f i f t h year.

The annuities increase each year, reaching

$125,000,000 in the seventeenth year, th erea fter continuing at that fig u re ,

X yJj

- 4 -

except fo r the sixty-second year when the payment is approximately $118,000,000.
Thus under the agreement the to ta l p rin cip al o f the funded debt (including
$685,000,000 accrued in te re s t) w i l l he repaid in f u l l , with in te rest on the
funded p rin cip a l, as fo llo w s:

A fte r the f i r s t 5 years and fo r the next 10 years,

1 per cent per annum; fo r the succeeding 10 years, 2 per cent per annum; fo r
the succeeding 8 years, 2\ per cent per annum; fo r the succeeding 7 years, 3 per
cent per annum; and fo r the remaining 22 years, 3^ per cent per annum.
The to ta l payments to he received from Trance on account o f the
$3,340,000,000 o rig in a lly loaned are $6,847,674,104.17.

The present-day value

o f these payments on a 4^ per cent basis is $1,996,509,000, or p r a c tic a lly 50
per cent of the debt funded and something over 47 per cent o f the to ta l amount
due as of June 15, 1925.
During the four-year period from June 15, 1925, to June 15, 1929, the
Trench Government has paid us $102,748,536.74, as compared with the sum of
$125,000,000 which would have been payable under the terms o f the funding
agreement.

Tne sum paid i s la r g e ly accounted fo r by payments o f approximately

$20,000,000 a year due in in te re s t on the war supplies o b liga tion s, but in the
f is c a l years 1927 and 1928 the Trench Government paid us additional sums which
bring the to ta l amount paid during these fis c a l years up to approximately
the amount due fo r those years under the terms o f the settlem ent.

Such a pro­

cedure would unquestionably, I b e lie v e , have been follow ed la s t June had i t not
been fo r the fa c t that the proposed agreement was coming up in the Trench
Parliament fo r fin a l d isp osition one way or the other in July.

The payments

so made since June 15, 1925 are to be applied towards the annuities f i r s t due
under the funding agreement when r a t ifie d .

- 5 Since June 15th the French Government has paid us $10,183,528,63, leavin g
$12,067,934.63 s t i l l due under the terms o f the agreement, which w i l l become
immediately payable as soon as the Congress has given i t s approval to the agree­
ment,

I mention th is fa c t so that the Congress w i l l appreciate that i f the

agreement is to receive i t s approval, and i f other public business permits,
prompt action is desirable with a View to shvihg the in te re s t on the sum of
$ 12 , 000 , 000 .

This Committee has devoted so much thought and study to th is particu la r
problem and is so thoroughly fa m ilia r with a l l o f i t s phases, and with the
protracted negotiations that f i n a l ly led to an. agreement and u ltim ately to
r a t ific a t io n by the representatives of the French people by a narrow margin,
that I deem i t unnecessary to enter upon a discussion of the reasons which led
the members o f the World War Debt Commission to f i x these terms of settlement,
and two Presidents o f the United States and the House of Representatives to g iv e
them th eir approval other than to say that the terms, in my judgment, while
generous to the French people, g iv e due consideration to the rig h ts of our own
c itiz e n s .

The Treasury Department endorses the pending b i l l and recommends

i t s adoption.

Statement of amounts payable to the United States on account of
the proposed Refunding Bonds to be issued by Prance.

Annual
Annual
Total
F isca l
P rin cip al
in te re s t
p rin cip al
annual
years
___________________________ payment s_____________ payment s__________ payment s_________
$ 4,025,000,000.00
3.995.000. 000.00
3.965.000. 000.00
3.932.500.000.
00
3.900.000.
000.00
3.865.000. 000.00
3,863,650,000.00
3,852,286,500.00
3,830,809,365 .00
3,794,117,458.65
lfo
3,752,058,633.24
3,699,579,219.57
3,636,575,011.77
3,567,940,761.89
3,493,620,169.51
3,413,556,371.21
3,361,827,498.63
3.304.064.048.61
3,245,145,329.58
3,185,048,236.17
3,123,749,200.89
3,061,224,184.91
2.997.448.668.61
2,932,397,641.98
2,866,045,594.82
2,798,366,506.72
2,743,325,669.39
2,686,908,811.12
2,629,081,531.41
2,569,808,569.70
2 509,053,783.94
2,446,780,128.54
2,382,949,631.75
to to

2,317,523,372.54
,262,049,073.72
,204,910,545.93
2,146,057,862.31
2,085,439,598.18
2,023,002,786.13
1,958,692,869.71

2$

2j$

($38,650,000.00
( 38,636,500.00
( 38,522,865.00
( 38,308,093.65
( 37,941,174.59
( 37,520,586.33
( 36,995,792.20
( 36,365,750.12
( 35,679,407.62
( 34,936,201.70

$30,000,000.00
1926
$30,000,000.
30.000.
000.00 30.000.
1927
000.
32.500.000. 00
1928
32.500.000.
32.500.000. 00
1929
32.500.000.
35.000.
000.00 35.000.
000.1930
1,350,000.00
1931
40 ,000,000.
11,363,500.00
1932
50,000,000.
21,477,135.00
60,000,000.
1933
36,691,906.35
75,000,000.
1934
42,058,825.41
80,000,000.
1935
52,479,413.67
90,000,000.
1936
63,004,207.80
100,000,000.
1937
68,634,249.88
1938
105,000,000.
74,320,592.38
1939
110,000,000.
80,063,798.30
115,000,000.
1940

(
(
(
(
(
(
(
(
(
(

68,271,127.42
67,236,549.98
66,081,280.97
64,902,906.59
63,700,964.72
62,474,984.02
61,224,483.70
59,948,973.37
58,647,952.84
57,320,911.90

51,728,872.58
57,763,450.02
58,918,719.03
60,097,093.41
61,299,035.28
62,525,015.98
63,775,516.30
65,051,026.63
66,352,047.16
67,679,088.10

120,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.

1941
1942
1943
1944
1945
1946
1947
1948
1949
1950

(
(
(
(
(
(
(
(

69,959,162.67
68,583,141.73
67,172,720.29
65,727,038.29
64,245,214.24
62,726,344.60
61,169,503.21
59,573,740.79

55,040,837.33
56,416,858.27
57,827,279.71
59,272,961.71
60,754,785.76
62,273,655.40
63,830,496.79
65,426,259.21

125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.

1951
1952
1953
1954
1955
1956
1957
1958

(
(
(
(
(
(
(

69,525,701.18
67,861,472.21
66,147,316.38
64,381,735.87
62,563,187.95
60,690,083.58
58,760,786.09

55,474,298.82
57,138,527.79
58,852,683.62
60,618,264.13
62,436,812.05
64,309,916.42
66,239,213.91

125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.
125,000,000.

1959
1960
1961
1962
1963
1964
1965

- 2 -

$1,892,453,655.80
1,833,689,533.75
1,772,868,667.43
1,709,919,070.79
1,644,766,238.27
1,577,333,056.61
1.507.539.713.59
1,435,303,603.57
1,360,539,229•69
1,283,158,102.73
1,203,068,636.33 3j$
1.120.176.038.60
1,034,382,199.95
945,585,576.95
853,631,072.14
758,559,909.66
660,109,506.50
558,213,339.23
452,750,806.10
343,597,084.31
230,622,982.26
113,694,786.64

(Í
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

66,235,877.95
64,179,133.68
62,050,403.36
59,847,167.48
57,566,818.34
55,206,656.98
52,763,889.98
50,235,626.12
47,618.873.04
44,910,533.60
42,107,402.27
39,206,161.35
36,203,377.00
33,095,495.19
29,878,837.52
26,549,596.84
23,103,832.73
19,537,466.87
15,846,278.21
12,025,897.95
8,071,804.38
3,979,317.53

$2,822,674,104.17

$

58,764,122.05
60,820,866.32
62.949.596.64
65,152,832.52
67,433,181.66
69.793.343.02
72.236.110.02
74,764,373.88
77,381,126.96
80,089,466.40
82,892,597.73
85.793.838.65
88,796,623.00
91,904,504.81
95,121,162.48
98,450,403.16
101,896,167.27
105,462,533.13
109,153,721.79
112,974,102.05
116,928,195.62
113,694,786.64

$4,025,000,000.

$125,000,000.00 1966
1967
125.000.
000.00
1968
125.000.
000.00
1969
125.000.
000.00
1970
125.000.
000.00
1971
125.000.
000.00
1972
125.000.
000.00
1973
125.000.
000.00
1974
125.000.
000.00
1975
125.000.
000.00
1976
125.000.
000.00
1977
125.000.
000.00
1978
125.000.
000.00
1979
125.000.
000.00
1980
125.000.
000.00
1981
125.000.
000.00
1982
125.000.
000.00
1983
125.000.
000.00
1984
125.000.
000.00
1985
125.000.
000.00
1986
125.000.
000.00
117,674,104.17 1987
$6,847,674,104.17

TREASURY DEPARTMENT

POR IMMEDIATE RELEASE,
Wednesday, December 11, 19-23.

Secretary Mellon today announced that the to ta l amount of sub­
scription s received fo r the issue of Treasury c e r t ific a t e s of indebted­
ness, Series TS-1930, 3-l/8 per cent, dated December 16, 1929, maturing
September 15, 1930, was $722,552,500.

The to ta l amount of subscrip­

tions a llo tte d was $351,640,500, o f which $185,381,500 represents a l­
lotments on subscriptions fo r which Treasury c e r t ific a t e s of indebted­
ness o f Series TD-1929 and TD2-1929, were tendered in payment.

A ll

of such exchange subscriptions were a llo t t e d in f u l l , while allotments
on other subscriptions were made on a graduated scale.
The subscriptions and allotments were divided among the several
Federal Reserve D is tr ic ts and the Treasury as fo llo w s:
Federal Reserve
D is tr ic t:

Total Sub scriptions Received:

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

$ 19 ,-290,000
309.386.500
42.122.000
25.930.500
24.839.000
27.876.000
66.685.000
7,096,500
3,396,000
10.208.500
28.452.000
157.012.500
258,000

$ 7,028,000
189,531,500
16.500.000
11.891.000
13.659.000
14.284.500
45.141.000
5.176.000
1.953.000
6.097.000
14.009.500
26.174.000
196,000

$722,552,500

$351,640,500

Total

Total Subscriptions A llo t t e d :

TREASURY DEPARTMENT

EOR IMMEDIATE RELEASE,
Thursday, December 12, 1929.

In view o f the many in qu iries received at the Treasury with
respect to the 2 per cent Consols of 1930 which, hy th e ir terms,
are redeemable at the pleasure of the United States a fte r A p ril
1, 1930, Secretary Mellon today announced that these bonds would
not be c a lled fo r redemption on A p ril 2, 1930, which is the
e a r lie s t date the option reserved to the United States may be
exercised.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Saturday, December 14, 1929.

Statement by Secretary Mellon.

The Secretary of the Treasury announced to-day that the tenders
fo r $100,000,000, or thereabouts, o f Treasury B il l s which were o ffe r e d
on December 10, 1929, were opened at the Federal Reserve Banks on
December 13, 1929.

The to ta l amount applied fo r was $223,901,000.

The highest bid made was

99.310, equivalent to an in te re s t rate of

about 2 3/4$ on an annual basis.

The lowest bid accepted was 99.152,

equivalent to an in te re s t rate of about 3 3/8$ on an annual basis.
In order to avoid exceeding the to ta l required, only about 80$ o f the
amount bid fo r at the la t t e r price was accepted.
o f bids accepted was $100,000,000.
B ills to be issued i s 99.181.

The to ta l amount

The average p rice o f Treasury

The Treasury is informed that these

s ec u rities in 's o fa r as rate of discount i s concerned w i l l be dealt
in on the same basis as bankers b i l l s .
rate,

The average annual

on a bank discount basis is about 3^$.

\

treasury

M PARaam?

EOR IMMEDIATE RELEASE,
Saturday , December 14,1929

The D irector o f the Mint has announced, that on December 12,
1929, the Philadelphia Mint executed a coinage o f 1,866,800 pieces
o f coin, made up o f quarter d o lla rs, dimes, n ickels and cents. To
accomplish th is enormous coinage i t was necessary to operate the
Mint on a twelve hour basis*

This is the largest sin gle dayf s

output in the h isto ry of the Mint service, and did not take into
account the coinage made at the San Francisco Mint and the Denver
Mint;
I t is usual fo r the mints to be on an overtime basis at th is
period o f the year to meet the seasonal demand,

However, this

extraordinary accelera tion o f coinage indicates the more than usual
demand o f the banks fo r a volume o f coinage to meet the requirements
o f business.

' TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
December 16, 1929.

The Treasury today received payments amounting to #98,657,973.52
from the fo llo w in g fo reign governments on account of th e ir funded indebted­
ness to the United States, of which #97,819,750 was in obliga tion s o f the
United States, accrued in te re s t thereon of #671,880.28, and #166,343.24
in cash.
GREAT BRITAIN
The fourteenth semiannual payment o f in terest and the seventh
annual installm ent of prin cip al on the funded indebtedness of Great B rita in
to the United States under the terms o f the debt settlement approved
by the Act o f February 28, 1923.

The to ta l payment amounted to 793,795,000

o f which :p66,795,000 was fo r in te rest and #27,000,000 fo r p rin cip a l, and
as autnorized by the terms o f the settlem ent, was made in obligation s of
the United States which were accepted at par and accrued in te re s t.

The

obligation s were #500,000 face amount 3-l/2*C F ir s t L ib e rty Loan bonds due
in 1947; $18,282,500 face amount 3-l/2$ Treasury Notes Series C 1930-32,
maturing December 15, 1932; #74,358,250 face amount 3—l/2^ Treasury Notes
Series B 19o0-e>2, maturing September 15, 1932; accrued in te re s t thereon,
3654,229.33, and cash adjustment o f $20.67.
BELGIUM:
The ninth semiannual payment o f in te rest on the post-arm istice
funded indebtedness o f the Government of Belgium due the United States under
the terms o f the debt settlement approved by the Act of A p ril 30, 1926.

The

payment amounting to $1,375,000, as authorized by the terms o f the settlement,
was made in o b ligation s of the United States, which were accepted at par

and accrued in te rest.'

The obligation s were $891,000 face amount of 3-1/2$

Treasury Notes, Series B 1930-32, maturing September 15, 1932; $467,000
face amount 3-l/2$ Treasury Notes Series C 1930-32, maturing December 15, 1932;
accrued in te rest thereon, $16,011.82, and cash adjustment o f $983,18.
CZECHOSLOVAKIA:
The ninth semiannual installm ent o f p rin cip al on the funded indebted­
ness of the Government o f Czechoslovakia due the United States under the terms
o f the debt settlement approved by the Act o f May 3, 1926.

The payment amount­

ing to 31,500,000, as authorized by the terms o f the settlem ent, was made in
o b ligation s o f the United States which were accepted at par.

The obligation s

were $1,500,000 face amount F ir s t L ib erty Loan Bonds due 1947.
ESTONIA:
The eighth semiannual payment on account o f the funded indebtedness
o f the Government of Estonia, to the United States due under the terms o f the
debt settlement approved by the Act of A p ril 30, 1926.
to $125,000 and was made in cash.

The payment amounted

The balance w i l l be funded in accordance

with the option given the Government o f Estonia in the debt settlement agreement.
FINLAND:
The fourteenth semiannual payment o f in terest and the seventh annual
installm ent o f p rin cip al on the funded indebtedness o f the Government of Finland
due the United States under the terms o f the debt settlement approved by the Act
o f March 12, 1924*

The to ta l payment amounted to $183,680, o f which $130,680

was fo r 'in t e r e s t and $53,000 fo r p rin cip a l, and as authorized by the terms
o f the settlem ent, was made in obligation s o f the United States, which were
accepted at par and accrued in te re s t.
2>-lf2yo Treasury Notes

The obligation s were $182,000 face amount

Series B 1930-32, maturing September 15, 1932; accrued

3

in te re s t thereon o f $1,601.30, and cash adjustment of $78.70.
HUNGARY:

The tw elfth semiannual payment o f in te rest and the sixth annual
installm ent o f p rin cip al on the funded indebtedness o f the Government of
Hungary due the United States under the terms of the debt settlement approved
by the Act o f May 23, 1924.

The to ta l payment amounted to $40,218.40, of

which $28,973.40 was fo r in te re s t and $11,245 was fo r p rin cip a l.

The payment

was made in cash.
LATVIA:
The eighth semiannual payment on account o f the funded indebtedness
o f the Government of L atvia to the United States due under the terms o f the
debt settlement approved by the Act of A p ril 30, 1926.

The payment amounted

to $45,000, and as authorized by the terms o f the settlement, was made in
o b ligation s of the United States which ?rere accepted at par.

The obligation s

were $45,000 face amount o f 3-l/2$ F irs t L ib e rty Loan bonds due in 1947.

The

balance w ill be funded in accordance with the option given the Government of
L a tvia in the debt settlement agreement.,
LITHUANIA:
The eleventh semiannual payment of in te rest on the funded indebted­
ness o f the Government o f Lithuania to the United States under the terms
o f the debt settlement approved by the Act o f December 22, 1924.

The

payment amounted to $94,075.12, and as authorized by the terms o f the s e t t le ­
ment, was made in obligation s o f the United States which were accepted at par.
The obliga tion s were $94,050 face amount o f 3~l/2$ F ir s t L ib erty Loan bonds
due in 1947, and a cash adjustment o f $25.12.

- 4 POLAND:
The tenth semiannual payment on account of the funded indebtedness
o f the Government o f Poland to the United States under the terms of the debt
settlement approved by the Act of December 22, 1924.

The payment amounted

to $1,500,000, and as authorized by the terms o f the settlement was made in
obliga tion s o f the United States, which were accepted at par and accrued
in te re s t.

The obligation s were $1,495,650 face amount o f Z-l/zfo F irs t L ib erty

Loan bonds due in 1947, $4,300 face amount o f 3~l/2^ Treasury Notes Series
B 1930—32, maturing September 15, 1932, $37.83 accrued in te re s t on Treasury
•Notes, and a cash adjustment of ¿12.17.

The remainder due w i l l be funded

in accordance with the option given the Government of Poland in the debt
settlement agreement.
The obligation s o f the United States in the face amount o f $97,819,750
accepted in connection with the payments, have been canceled and re tir e d and
the public debt reduced accordingly.

fmmm

im

wamm mwim wm®

m m m x9 mmmm m È im .

Statement by Cow&iseioner ot ProhiMtic®,
£?• Borea*

W attenti©?* ben beo» called t© a statement % Sejietor Borali, in
^hieh Ita «tgr» tbeb tbe proli! bit ina law, in bis opinion, v i l i aerar be
anforeed by thè preeeat personnel*

With e li due respeet te thè Senato?,

It »«ae« te me thst sudb a sweepimg eondesmation of e group ©f pnblic
«errante «ho are boaeetXy end. eoceclentiously ende&rorl&g to perforai
tbe in dsity, i* most infortunate and bound to bere a diebeertenieg effeet
ujm3®

tbe morale of thè serri ©e* tb i* i» not te esy tbet in e largo

©rgenisftttoa «neb a» thet odf tbe Profeibitiea Bureau tfeere ere not reek
epote,

It i» set to eey tbet suiministratiom ie not su»capi ibi e to

improramaat, bnt to sey tbet prohibition emmot be enforced wltb tbe
preeent persona«! eoaes perilously arar to sayiag tbat it ©auaot be
eaforoed et «XX*

Btsed em uy St ysaro ©f esportene# in tbe Oorerianmt

serrioe, I eoa affine tbet en tbe molo re «re not lik ely te finà e
more loyal end eoa»eiest ione group ©f men than ere no* serving untar
me* In tfei# ©eaneetim, i t ebenX# set b® forgotten tbet tbey ere no»
ebosen fra * G iri! Serri«© lie te , based en open ©eapetitire esaminai ione
in eeeordanee witb tbe recrgsr» lesti©» net reosntXy pass ed by tbe Coagrees
ta l it ie hard to boiler# tbet in tbe future tbe Congrees wiXl autfeorize
looking elsewher© for ner recruits.
More©Ter snob e eweeping etetemuit orerXoe&e tbe w y aerbed
progress whicfe bae beo» onde in tb i« pertieular fie ld of le » enforcesient
rbieb in set fortb 1» datati in w report t© tbe Coagroee «ed rbiebie
amply eupported by feste*

iMportant a» is tse prob la» o f personas!, i t le not the only probian.
A» X aae i t f as i de txm. the coopar&tion o f prívate citln en a, there are
other fa c to r» ínvolvad la the eaforeeiaent o f the proh ibittoa Xana*
th er» mtet be the w lll te eaferee.

F irs t,

Me ene, X thinfc, w lll deny that un&er

the presant Administra*loa tnere he» enlatad e teiele-hearted detem ination
t e emforce the Xasr*

m i» has besa evideneed by the ciean-cut declarations

o f the CSilef Axeoutive, whieh la ay jmdgeant heve not oaly had «a in #p iriiig
o ffs e t o» the aéralo o f publlo aervm ta bat have met with a very genulna
rasposo m the part e f p rívate eltlse a s *

Mo ©na la ay Jiireaa ha» «ay

dottbt a » te the pos i t ion e f thia ¿ufcainistration en th l» p ein t.
Hat giren the v t ll te catorce, glvon a enltable pera© anal tafeen frote
C ivil Serví oe lle ta , there a t l ll rasmia» the problate of th* moet offset iva
feind o f m edminlatratIva aet-«pf and th l» relato» not ealy te th» enforoement ef the 1m etthln ser bordar» bat t© the ahattiag © ff ef the »tpply
of m ie it licuor frote vlthont oor borden*»

Aeting andar iaitruetien» fr e »

the preeídemt, in th» ooaree o f the lae* few montb# an exhaustivo »tmdy
ha» besa and», not ©nXy e f th» beet mean» te tmprove the admtsiat ration
of th» Xawy but of the proper relstion betweem Federal and State ©nforcement
torces •

A» a resolt e f these »ted ie», there ha» baam prepared and w lll be

eubftltted to th» Gongreas a plan ef reorgaaiaatio», whlch la my ittá®»ent
w lll prenote the better eaíoreteeant o f tha law*

tepreover, th# freasury Department 1» prepared te auholt te th# Congress
a progrsm loefelng te the mor» effeetlve preveation o f aategggXtag en oar land
bordare hy establishiag a limitad sambar e f poluta of entry and provid ing
fe r th# gaardtng e f the arca batwaen thoee poluta by a unified bordar petrel
andar th» Coast Quard.

Xa »# far as our 'testar frotetier» are coaeeraed, X

liter! ä

M

B U t e * te# «© t e ilte t * progrwi I oofcteg to t hm

•fcroa^tteiiiag o f m r O o m t W m rê fleet m t m l y <» Ik# aa#m te l on m v
taltmi m U m , #kidi h m m t mttk Ite «^provati o f Ik# ¥r«4»«*y tetarte#«**
te #oaete#i«af t rntfirm t t e t gesäte# pro&r### i# tein g » k it te Ik#
«atonem ent ©f I t e proh ibition law#, I t e l It e pmtrnmml te Ite te te ra !
Proh ibm on t e n t e # te «Ifm â ilÿ toa&mrirm te 3»©ral© mû e ffic ie n c y , t t e t

wy © te n m ll# » X#ate ss# I# teli© *© I t e l a n t e Ite leadership o f

Ite

fr e # item i Ite r# te# te#a * m te mer© h elpfu l « H ít e t e ©a it e part o f Ik#
pu blie, a te fin a lly te ## t e «# adm inistration te ©asteraeh, « program
1# ready t e «a te te # lo a l o Ik# Congress*

FOR RELEASE MORNING PAPERS,
FRIDAY, DECEMBER 27, 1929,

TREASURY DEPARTMENT.

.

The Treasury Department received yesterday from the Government of
France the sum o f $12,067,934.63, being the balance due on account of the
annuities under the funding agreement o f A p ril 29, 1926.

As authorized by

the terms o f the agreement, the payment was made in ob liga tion s o f the United
States which were accepted at par and accrued in terest to date.

The o b li­

gations tendered in payment o f the amount due were $10,572,500 face amount
3-l/2$ Treasury Notes; $1,398,600 face amount F ir s t L ib e rty Loan 3-1/2$ bonds
due in 1947; $96,820.96 accrued in terest on the ob ligation s; and a cash ad­
justment o f $13.67.
Under date of December 18, 1929, the President approved the b i l l
authorizing the settlement of the indebtedness o f the Government of France
to the United States.

The French Government having r a t i f i e d the settlement

in July of th is year, the liellon-Bcrenger Agreement o f A p ril 29, 1926, has
now been approved by both governments.
The Government o f France since June 15, 1925, the date as o f which
the debt is funded under the funding agreement, has paid on account o f the
p rin cip al o f the obligation s given fo r cash advances and on account of in terest
due on the o b ligation s given fo r surplus war m aterial purchased on c re d it, tne
sum of $112,932,065.37.

I t has been understood that upon r a t ific a t io n of the

debt-funding agreement by both governments, any sums paid by France since
June 15, 1925, would be applied on account o f the annuities f i r s t due under
the funding agreement.

The annuities due up to June 15, 1929, aggregated

$125,000,000, thus leavin g a balance due o f $12,067,934.63. The amount which
yesterday
the Treasury has received/3C5dg[^, th erefore, placQs the annuities on a current
basis.

The next annuity, amounting to $35,000,000, w i l l be due and payable

on June 15, 1930.
The obligation s o f the United States accepted in connection with
the payment have been cancelled and r e tir e d and the public debt reduced ac­
cordingly.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Sunday,- December 29» 1929»

Statement “by Acting Secretary o f _the_ Treasury M ills .
The State Department and the Treasury Department have fo r some weeks
past conducted conversations with the German Government with a view to d ra ft­
ing a proposed agreement covering payments hy Germany to the United States on
account of Army Costs and Mixed Claims in the annual amounts recommended hy
the Young Committee of Experts.

The two Governments are in accord as to the

form and terms o f such an agreement, hut i t cannot he d e fin it e ly concluded
u n til the Executive Branch o f the Government has heen so authorized hy the
Congress.

The purpose o f the negotiations was to enable the Executive Branch

o f the Government to submit to the Congress in d e fin ite form an agreement ac­
ceptable to the German Government so that the Congress before granting the
necessary authority would have before i t the form of the agreement.
The schedule of payments conforms to the annuities proposed by the Young
Prom each of
Committee fo r the United States.
the annuities to be received,. UO,SCO,000
reich-marks are to be a llo c a ted to the s a tis fa c tio n o f Mixed Claims and the
balance to the s a tis fa c tio n o f our Government's claims on account o f Army Costs.
This is su b sta n tia lly in accord with the program outlined at the White House
conference o f May 19» 1929» which was attended by a number o f the leaders o f
both Houses o f Congress.
The form o f the agreement and the provisions in respect o f postponement,
gen era lly speaking, fo llo w the agreements h eretofore negotiated fo r the s e t t le ­
ment o f the debts owed the United States by fo reig n g©vernments.

The execution

o f this agreement is contingent,, o f course, upon the coming intis e ffe c t o f the
Young Plan.
righ ts.

In the meanwhile the United States retains .a ll._o f it s exist;m g

For relea se, morning papers,
January 1, 1930.
u °
;| h

TREASURY DEPARTMENT

' 'V

'-Jy

U'V . . .

-

& .4

•'

A

Statement "by Secretary Mellon

Washington, December 31, 1929,

Forecasting the future course o f business can never be done with
any certa in ty that i t w i l l be borne out by subsequent events.

No one

can f u l l y appraise the complex forces which are always at work and i t
is hazardous to attempt doing so.
I see nothing, however, in the present situ ation that is eith er
menacing or warrants pessimism.

During the winter months there may

be some slackness or unemployment, but hardly more than is usual at
th is season each year.

I have every confidence that there w i l l be

a r e v iv a l o f a c t iv it y in the spring and that during the coming year the
country w i l l make steady progress.
In the cred it situ ation the trend of money rates is downward.
There is plenty o f c red it a va ila b le and we have reason to expect that
the ra tes fo r new ca p ita l in bu ilding construction and expansion w i l l
be such as to f a c i l i t a t e the promotion and accomplishment o f new under­
takings.

Statements from the executives o f ra ilro a d , public u t i l i t y

and in d u stria l concerns during the P resid en t’ s recent Conference were,
almost without exception, to the e ffe c t that th eir expenditures fo r new
construction and expansion in 1930 w i l l be as much or more than in 1929
The Government’ s finances are in a sound condition which warrants the
cut in taxes, and the Government, i t s e l f , is in a p o sitio n to do i t s
part in helping the country to meet and solve the problems which are
ahead.

i t

J RA .4Fm,.». . ■—i r 1

EdjR R^Je& C U
the ' Secret J9 w

TREASURY DEPARTMENT.

M •APPEARANCE OP
£ I oke!

Statement by Secretary Mellon before the Committee on
Expenditures in the Executive Departments o f the House o f
Representatives, Wednesday, January 22nd.
The provisions o f H. R. 8574 now before your Committee
fo r consideration may be b r ie fly summarized as fo llo w s:
The b i l l provides fo r the creation o f a Bureau o f
P roh ib ition in the Department o f Ju stice and fo r the tra n sfer to
that department o f the so -ca lled enforcement functions o f the
present Bureau o f Proh ib ition in the Treasury Department, and the
personnel, records, documents, and a va ila b le appropriations o f the
enforcement d iv is io n .

The Bureau o f P roh ib ition in the

Treasury Department is to be known h erea fter as the Bureau o f
Narcotics and In du strial Alcohol and is to be charged with the
so -ca lled regu latory functions under the Revenue and P roh ib ition laws.
The b i l l meets with the approval o f the Treasury Department.
The duty o f enforcing the P roh ib ition laws was vested
o r ig in a lly in the Commissioner o f Internal Revenue who, p rio r to the
adoption o f the Eighteenth Amendment, was charged with the duty o f
c o lle c tin g the excise taxes le v ie d on a lco h o lic liq u ors sold fo r
beverage purposes, and administering the provisions o f the Denatured
Alcohol Act o f 1906 providing fo r the withdrawal o f alcohol fre e o f
tax a fte r denaturation fo r use in the arts and in dustries.

Presumably

*kt <w
/ /4
«S

-

2

-

th is was the reason fo r placin g p roh ib ition enforcement in the Bureau
o f Internal Revenue.

I t was- an i l l o g i c a l choice.

There is

no connection between the assessment and c o lle c tio n o f taxes on
beverages which i t is le g a l to s e ll* and the enforcement of laws
intended to p roh ib it th e ir manufacture, transportation and sale.
When the Congress created the Bureau o f Proh ib ition i t formallyrecognized that there is no such relation sh ip*

I f th is be so,

Proh ib ition is unrelated to the duties o f the Treasury Department
and to the purposes fo r which that department was created.

The

Treasury, gen era lly speaking, IS responsible prim arily fo r managing
the finances o f the nation, c o lle c tin g the revenues, and p rotectin g
the in te g r ity o f the revenue laws and o f the currency, with a l l
in ciden tal duties re la tin g thereto.

I know o f no reason, therefore,

why the Treasury Department should be charged with the duty o f enforcing
an unrelated penal statute.

On the other hand, there is a very

sound basis fo r Charging the law-enforcement Department o f the
Government with th is task.

I t is the duty o f the Department o f

Justice, acting through United States D is tr ic t Attorneys, to prosecute
v io la to rs o f th is and other Federal statutes, and i t seems to me that
b etter resu lts may be obtained i f those who are to try the cases are
in a p o sitio n to control and d ire c t in vestiga tion s o f v io la tio n s o f
the law and the gathering o f evidence necessary fo r th e ir prosecution.
As the Wickersham Commission w ell said:

- 3 -

” I t is an anomaly that the cases are in vestiga ted and
prepared by agencies e n tire ly disconnected with and not
answerable to those which are to prosecute them.

A ll

experience of administration shows the importance of
concentration rather than d iffu s io n o f re s p o n s ib ility .
I f prosecution, the le g a l side o f enforcement* is pa rtition ed
between two d is tin c t agencies, the d iffu sed , ill- d e fin e d ,
nonlocated re s p o n s ib ility is sure in the long run to be an
obstacle to e ffic ie n c y .

IJo doubt in certain special

situ ation s, where technical knowledge o f a special type is
involved and where the number o f prosecutions each year is
very small, i t is consistent with a high degree o f e ffic ie n c y
to have these few cases in vestiga ted and prepared by some body
o f experienced men in some other department and turned over to
the Department o f Justice fo r t r i a l .

But where the

volume is so enormous and the circumstances are so varied as
in liq u or prosecutions, th is is not expedient.”
In so fa r as the so-ca lled regu latory functions are concerned,
i t can be argued with considerable fo rc e that there is no reason why
the Treasury Department should issue permits fo r the manufacture of
in d u stria l alcohol and fo r the sale of such a lco h o lic s p ir it s as can
be le g a lly sold fo r certain sp ecified purposes.

At the same

time i t is equally clea r that these functions do not f a l l within the
ju ris d ic tio n and duties o f the Department o f Justice.

In fa c t ,

they can f a i r l y be said to be e n tire ly fo re ig n to these duties and
functions.

And since they ane now being performed by the

Treasury Department there is no adequate reason fo r removing them

- 4 -

unless i t can be shown that they lo g ic a lly belong elsewhere.

Moreover,

there are certain occupational taxes applicable to such perm ittees, as
wholesale and r e t a il druggists, which i t is the duty o f the Treasury
Department to c o lle c t * as w e ll as on certain of the commodities covered
by permits which can le g a lly be sold, such as medicinal liq u or or
alcohol in a pure state when sold fo r commercial purposes permitted by
law.

I do not say the Treasury Department would not be in a

p o sitio n to c o lle c t these taxes were the permit system administered by
another Department, but the fa ct that i t is administered by the Treasury
Department makes the c o lle c tio n of tjpxes somewhat easier from an
adm inistrative standpoint.
I t may be urged that in d u stria l alcohol and medicinal s p ir its
constitu te a p o ten tia l source o f supply fo r i l l e g a l beverages and that
as such should be w ithin the control o f the law-enforcement agency.
The b i l l , I think, meets that objection by vestin g in the Department
o f Justice a f u l l measure o f jo in t control over the issuance of permits
and the making o f regu lation s.
I recommend the enactment o f the proposed le g is la tio n .

treasury department

FOR RELEASE, MORNING PAPERS
February 1 1 , 1930.

STATEMENT BY SECRETARY MELLON

The Secretary o f the Treasury g iv es notice that tenders are
in v ite d fo r Treasury b i l l s to the amount o f $50,000,000, or thereabouts.
The Treasury b i l l s w i l l be sold on a discount basis to the highest
bidders.

Tenders w i l l be received at the Federal Reserve Banks, or the

branches thereof, up to two o ’ dlock P. M., Eastern Standard time, on
February 14, 1930.

Tenders w i l l not be received at the Treasury Depart­

ment, Washington.
The Treasury b i l l s w i l l be dated February 18, 1930, and w i l l
mature on May 19, 1930, and on the maturity date the fa ce amount w i l l
be payaole without in te re s t.

They w i l l be issued in bearer form only,

and in amounts or denominations o f $1 , 0 0 0 , $1 0 , 0 0 0 , and $1 0 0 ,0 0 0
(m aturity v a lu e ).
I t is urged that tenders be made on the printed forms and fo r ­
warded in the special envelopes which w i l l be supplied by the Federal
Reserve Banks or branches upon a pplication therefor.
No tender fo r an amount less than $1,000 w i l l be considered.
Each tender must be in m ultiples o f $1,000.
expressed on the basis o f
e. g . , 99.125.

100,

The p rice o ffe re d must be

with not more than three decimal places,

Fractions must not be used.

Tenders w i l l be accepted without cash deposit from incorporated
banks and trust companies and from responsible and recognized dealers

-

in investment secu rities.

2

-

Tenders from others must oe accompanied by

a deposit of 10 per cent o f the face amount o f Treasury h i l l s applied
fo r , unless the tenders are accompanied by an express guarantee of pay­
ment hy an incorporated hank or trust company.
Immediately a ft e r the closin g horn- fo r re ceip t o f tenders on
February 14th, a l l tenders

received at the Federal Reserve Banks or

branches thereof up to the closin g hour w i l l he opened and public an­
nouncement o f the acceptable prices w i l l fo llo w as soon as possible
th e rea fter, probably on the fo llo w in g morning.

The Secretary of the

Treasury expressly reserves the righ t to r e je c t any or a l l tender's or
parts of tenders, and to a llo t less than the amount applied fo r , and
h is action in any such respect shall be fin a l.

Those submitting

tenders w i l l be advised o f the acceptance or re je c tio n thereof.

Payment

at the p rice o ffe re d fo r Treasury b i l l s a llo tte d must be made at the
Federal Reserve Banks in cash or other immediately a va ila b le funds on
February 18, 1930.
The Treasury b i l l s w ill be exempt, both as to prin cip al and
in te re s t (discou n t), from a l l taxation, except estate and inheritance
taxes.

The amount of discount at which the Treasury b i l l s are o r ig in a lly

sold by the United States shall be considered as in te re s t fo r tax
exemption purposes.
Department Circular Uo, 418, dated November 22, 1929, and th is
n otice as issued by the Secretary of the Treasury, prescribe the teims
o f the Treasury b i l l s and govern the conditions o f th e ir issue.

Copies

o f the circu lar may be obtained from any Federal Reserve Bank or branch
th ereof.

FOR RELEASE WHEN DELIVERED

TREASURY DEPARTMENT

Address o f Welcome of Undersecretary o f the Treasury M ills
in opening thé Conference on In tern ation al Double Tax­
ation held at the U. S, Chamber o f Commerce, Friday,
February 14, 1930, at 10t30 a. m.

On behalf o f the Secretary of the Treasury, I take pleasure in
welcoming you to th is informal conference on the prevention of international
double taxation,

I think we a l l r e a liz e the fundamental objections to

double taxation in the domestic f i e l d , - objections that are based on our
conception o f what is equitably and economically sound.

With the growth

o f world trade and commerce, the expansion of business o f an international
character, and the flow o f ca p ita l fo r investment purposes over in tern ational
boundaries, these objections apply with equal fo rce , and sometimes greater
fo rc e , to the taxation o f the same property or income by several countries.
Not only is such a 'p ra c tic e inequitable, but subjection to taxation in two
or more ju ris d ic tio n s constitu tes a rea l b a rrier to the expansion of in te r­
national trade and investments with a consequent retarding o f world produc­
tion and growth o f purchasing power.
In h is Annual Report to the Congress the Secretary o f the Treasury
c a lled atten tion to the importance of th is question under ex is tin g world
conditions and o f i t s v it a l in te rest to the United Statçs, and stated that
the Treasury Department proposed to submit i t s conclusions and recommendations
to the Congress during the present session.

-

2-

The purpose o f our meeting to-day is to discuss the general features
o f the proposed le g is la tio n and to get the "benefit o f your advice as to
the solution o f some o f the important technical problems.
R ea lizin g the heavy burdenfe double taxation imposes on commerce
and the b a rriers i t raises to the flo w o f investments into fo reign
countries with high tax rates, our Government has already, beginning with
the 191S Revenue Act, taken a lib e r a l a ttitu d e with respect to the income
from trading or investments abroad.

American industry a fte r the war was

everywhere seeking o u tlets in fo reig n markets.

The high poet-war t sis rates

in many countries, coupled with the heavy rates in the United States, raised
serious barriers to the scught-for expansion.

In recognition o f these

conditions the United States took the step o f foregoin g a l l or part o f it s
tax in respect o f income taxed abroad,

Tims double taxation was prevented

and the expansion o f trade appreciably fa c ilit a t e d .

Again, in the Revenue

Act o f 1921, Congress provided that the. shipping p r o fit s derived in this
country by foreign enterprises be exempted, provided an equivalent exemption
was accorded to the shipping p r o fit s derived abroad by American enterprises.
Other countries soon enacted corresponding provision s, with the resu lt that
the shipping: " 'r e fit s o f American companies are to-day exempt from tax in
p r a c tic a lly a l l important maritime countries and taxable only in the United
States.
In the meantime other countries, recognizing that the cnmol.at5on o f
high income tax rates often consumed most o f the p r o fit s o f in tern ational
commerce and that, estates spread over several countries almost vanished
a fte r payment o f th e ir respective duties, took measures to a lle v ia t e th is
double charge on th e ir taxpayers* - Somethinglike

1$

agreements between

European, countries regarding d irect taxes cane into being, and during the

- O-

coiii.se o f tfre la s t few ^ears there have been a number o f important in­
ternational meetings attended by experts from a number o f countries, who
have devoted much thought and study to th is extremely important problem.
Three model conventions have been prepared.

The American section o f the

In tern ation al Chamber o f Commerce has drafted a uniform code of p rin cip les
fo r elim inating the double imposition of income, property, and estate
taxes, and th is code was subsequently adopted by the Congress of the
In tern ation al Chamber o f Commerce at Amsterdam in July, 1929.
The Treasury Department has taken as a basis fo r le g is la tio n th is
uniform code, which is the fr u it o f studies carried on
years.

over a number of

One o f i t s prin cip al underlying purposes is to f a c i l i t a t e the

flow o f capital to the countries needing i t fo r development purposes by
exempting tne y ie ld of th is investment c a p ita l from taxation in the
country o f investment and taxing i t only in the country o f residence of
the in vestor.

This resu lt is to be brought about by applying the p rin cip l

o f recip rocal exemption, as exem plified in the case o f shipping p r o fit s ,
to income from cap ita l received in the form o f dividends and in te rest.

In

so fa r as the United States is concerned, any loss in revenue which might
resu lt from th is recip rocal exemption would be more than compensated fo r
by the p a r t ia l elim ination o f the credit fo r fo reig n taxes provided fo r
under e x is tin g statutes.
The program fu rther contemplates a more equitable system o f taxa­
tion o f in tern ation al business by imposing taxes on the fo reig n enterprise
only i f i t nas a permanent establishment w ithin the taxing country, thus
exempting income from casual transactions or from sales e ffe c te d through
a bona fid e broker or commission agent.

-lu
In so fa r as those businesses having permanent establishmentsare concerned, i t is hoped that u ltim a tely a l l income w i l l be subject
to only one tax, tne tax to be a llo c a ted on the basis o f the p r o fit s
re a liz e d within the taxing country.

But in the meanwhile, since the

treatment by a country o f it s own nationals or o f corporatioreorganized
under it s laws is not properly the subject of in tern ational agreement,
the proposal is l i m i t e d to r e s t r ic t in g fo reign countries from taxing
p r o fit s other than those earned w ithin th e ir borders u nder some f a i r and
w ell-d efin ed ru le o f a llo c a tio n .

She e s ta b lis h m e n t o f a f a i r rule o f

a llo c a tio n 0r a p p o rtio n m en t i s a d i f f i c u l t and technical question.

For

instance, when a corporation manufactures in one country and s e lls in
anotner through a permanent establishment, how are it s p r o fit s to be
allocated?

I f i t produces it s raw m aterial in one country* processes in

a second, turns i t into manufactured a r t ic le s in a third, and s e lls them
in a fourth, how much p r o fit is to be a llo c a ted to each country?

There

has recen tly been launched in p r a c tic a lly a l l important countries with
an income tax a study o f methods o f a llo c a tin g or apportioning business
p r o fit s with a view to devising uniform rules or p rin cip les susceptible
to gen eral.ap p lication .

This is work o f an exceedingly d i f f i c u l t nature.

I t is o f primary in te rest to such enterprises as those which you represent,
ana on tne basis o f ycur broad experience i t is hoped that you may render
valuable assistance in tne film in g o f a solution.

One o f the main purposes

in in v itin g you here to-day was not only to obtain the b en efit o f your
advice on the general problem, but more s p e c ific a lly to obtain your
collaboration in fin d in g a suitable and proper answer to th is and other
problems o f a h igh ly technical character.

-5 -

The Treasury Department appreciates exceedingly your w illingness
to come here ana to p a rtic ip a te in this discussion*

?Je are hopeful

that the labors and studies o f the la s t ten years are about to produce
resu lts and that m r country w i l l take the lead in elim inating the tax
b a rriers that stand in the way o f the growth o f world trade and industry,
accompanied as they would be by an a cceleration o f productive energies
and the attainment o f higher economic standards*

No bther country in

the world is more d ir e c t ly in te rested in the successful coni-letion o f
such a program.

TREASURY DEPARTMENT

FOB RELEASE, MORHIfG PAPERS,
Saturday, February 15, 1930*

Statement by Secretary Mellon*

The Secretary o f the Treasury announced to-day that the tenders
fo r $50,000,000, or thereabouts, of Treasury B ills which were o f­
fe re d on February 11th, were opened at the Federal Reserve Banks
on February 14th, 1930.
The to ta l amount applied fo r was $186,183,000.

The highest

bid made was 99.250, equivalent to an in te rest rate o f about 3 pe±
cent on an annual basis.

The lowest bid accepted was 99.125,

equivalent to an in te re s t rate o f about 3^ per cent on an annual
ba sis.

The to ta l amount o f bids accepted was $56,108,000.

average p rice o f Treasury B ills to be issued is 99.174.

The

The

average annual rate on a bank discount basis is about 3.30 per cent.

TREASURY DEPAZ

ENT

TO BE RELEASED UPON APPEARANCE OP THE
SECRETARY BEEORE THE COMMITTEE OH WAYS
AMD M S » PROBABLY ABOUT 101 30 a. m.

Statement o f Secretary of the Treasury Mellon at the Hearing
on the B i l l to Reduce In tern ation al Double Taxation "before
the Ways and Means Committee, Friday, February 28, 1930.

In my Annual Report on the State of the Finances fo r the fis c a l year
ended, June 30, 1929, I outlined the general movement to prevent international
double taxation and proposed to submit to you, during the present session o f
Congress, recommendations as to the manner in which th is Government could
p a rtic ip a te in the world-wide e ff o r t to remove th is b a rrier to the expansion
o f fo reig n trade and investments.

These recommendations have been

incorpor­

ated in the b i l l introduced by your Chairman, Mr. Hawley.
The movement to m itigate the e v ils and burdens that a ris e from the taxa­
tion o f the same income, p r o fit s , or property by two or more countries, has
in recent years gathered considerable momentum, due to the high

post-war tax

ra tes and to the growing r e a liz a tio n that double taxation o f th is character
is u n s c ie n tific and unsound.

Since 1921 most of the European countries

have entered into two-party agreements under which they preclude the double
taxation of a l l kinds o f income.
cessions.

These agreements embody reciprocal con­

Instead o f one state bearing the en tire burden o f r e l i e f , as is

done in the cred it provisions o f the United States Revenue Act, each party to
the European type o f agreement shoulders i t s share.
agreements d i f f e r w idely in form and content.

Unfortunately, these

-

2

-

While governments have been entering in to various arrangements, in te r­
national committees o f experts— fo r the most part high government o f f i c i a l s —
have heen endeavoring -to evolve a uniform scheme of r e l i e f from double taxa­
tion*

Dr. T. S. Adams has heen the American member o f these committees.
The outcome o f these e ffo r t s was the adoption, by the Congress of the In­

ternational Chamber of Commerce at Amsterdam, July, 1929, o f a uniform code of
prin cip les fo r elim inating double taxation.

This code was prepared by the

double taxation committee, o f the American section o f the In tern ation al Cnamber
of Commerce, .and embodies those p rin cip les o f taxation which are considered the
most favorable not only fo r American in te re s ts but also fo r world commerce in
general.

I t represents a consolidation, in so fa r as p ossib le, of the model

conventions fo r elim inating double taxation at the Geneva Conference on Double
Taxation, October, 1928, and embodies the substance o f the model convention
proposed by Dr. Adams at that Conference.

The p rin cip les contained in th is

code have been follow ed in the proposed le g is la tio n .
As you gentlemen know, our revenue laws make p a rtia l provision against
the e v ils o f double taxation by cred itin g , against our Federal income tax,
taxes Paid in fo reig n countries, and in the case o f shipping p r o fit s , by o ffe r ­
ing to exempt the p r o fit s derived in the United States by fo reig n companies i f
the country under the laws o f which th e ir ships were documented grants an
equivalent exemption in respect o f the shipping p r o fit s derived by American
companies in i t s t e r r ito r y .

Argentina, Canada, Denmark, France, Germany,

Great B rita in and Northern Irelan d , I t a ly , Japan, The Netnerlands, Norway, and
Sweden are among the countries which meet the requirements fo r reciprocal
exemption.

Thus, American ships to-day are exempt from tax in many countries

in which they embark passengers or fr e ig h t, and are, th erefo re, lia b le only
to the income tax o f th is country.

The b e n e fits assured the shipping in­

dustry by th is le g is la tio n are o f very great value indeed.

In so fa r as

- 3 the cred its fo r fo reig n taxes are concerned, at the time the le g is la tio n was
f i r s t enacted the s a c r ific e involved was r e la t iv e ly unimportant, hut as our
fo reig n trade and investments expand the c re d its claimed fo r fo reign taxes
correspondingly increase, and in 1927 American c itiz e n s and corporations
credited $26,534,807 in respect o f the taxes imposed hy other countries.*
so, f u l l r e l i e f is not afforded to American enterprises abroad.
fo r fo reig n taxes is lim ited .

Even

Our cred it

I t permits the fo reign tax to he credited,

in e ffe c t ,o n ly up to the amount o f the American tax.

Because fo reign tax

rates are in general higher than our rates, Americans s t i l l pay, despite the
r e l i e f afforded hy our c re d it, a considerable tax to the fo re ig n countries in
which they do business.
There are, gen era lly speaking, two lin e s o f approach to the solution o f
the double taxation problem;
The f i r s t is by trea ty with one or more countries, which involves mutual
concessions in respect o f the taxation of the nationals o f the treaty-making
countries*

The objections to th is method appear to me to be that the con­

cessions are more l i k e l y to be based on bargaining than on sound p rin cip les of
taxation, and that th is method resu lts in the taxation by the United States of
the nationals o f d iffe re n t countries on d issim ila r bases.
The second basis on which avoidance o f in tern ation al double taxation may
rest is exem plified by our present law covering the taxation o f shipping
p r o fit s , which as I have already stated, authorizes the exemption o f fo re ig n
shipping p r o fit s providing the shipping p r o fit s o f American companies are
exempt from taxation in fo re ig n countries.

This plan permits the adoption

of sound p rin cip les in respect o f the taxation o f income or p r o fit s taxable in
d iffe re n t ju ris d ic tio n s , and the o ffe r to a l l countries to apply these p rin cip les
uniformly to the taxation o f th e ir nationals providing they w i l l apply the same
p rin cip les to the taxation o f American c itiz e n s in th eir respective ju ris d ic tio n s .

17

- > While there are some obvious advantages in the trea ty method, the
Treasury Department b e lie ves that what I may c a ll the reciprocal exemption
method is the sounder o f the two and more in accordance with tra d itio n a l
American p o lic y .
Broadly speaking, the measure now before you fo r consideration divides
income into two classes:

(a) certain items which are to be exclu sively

taxed at the residence o f the taxpayer and exempted at source; and (b) other
items which are subjected to the f u l l tax o f the country o f source.

The

items o f income taxable at residence include in te re s t, dividends, patent
and copyright r o y a ltie s , and a few other items o f minor importance which
can be conveniently taxed only at the residence o f the taxpayer.

In tere st

and dividends are made taxable at the residence o f the taxpayer prim arily
because that is the only place where in te re s t and dividends can be successfully
subjected to progressive income tax.'

Our withholding provisions and our

c o lle c tio n at source (despite unusually good administration o f these provisions
of our tax laws) do not work e ff e c t iv e ly as regards in te re s t and dividends
paid to fo reign taxpayers.

Under the proposed b i l l , we should give up

a tax which we do not c o lle c t su ccessfully, fo r a tax which we know we can
c o lle c t.

In addition, taxation at residence represents the sound p rin cip le

of taxing in te rest.

Where a tax on in terest is c o lle c te d at source, i t

frequently must be borne by the debtor.
To accomplish th is end, i t is proposed to secure the exemption in other
countries o f such income derived by American investors through o ffe r in g a
reciprocal exemption from the American tax.
The reciprocal exemption o f the items o f income mentioned should not
mean a, s a c r ific e o f tax revenues by the United States but should a ffo rd a

- 5 -

gain in the course o f time.

Under our present law we co llect no tax

on dividends flowing to foreign corporations and no normal tax on
dividends derived by nonresident alien s.

It is true that nonresident

alien s are lia b le to American surtax on dividends and other income in
excess of $10,000 but i t is impracticable to c o lle c t surtax from them
because the co llection of surtax is dependent upon the f i li n g o f a return,
and as the alien is beyond the ju ris d ic tio n o f the United States, i t is
almost impossible to enforce any penalties fo r fa ilu r e to f i l e the return.
At the present time we know from information returns that $ 5,42 6 ,4 20
have been paid in dividends to nonresident aliens who have f i l e d no surtax
returns.
With regard to in terest, in 192S only $1, 175» 7
withheld from interest paid to nonresident alien s.

7

7

*

were

As you know the non­

resident alien on f i l i n g a return is en titled to a $1,500 personal
exemption, which means that the Bureau of Internal Revenue a fte r sorting
out a l l the ownership c e rtific a te s f i l e d by the nonresident alien and
checking h is tax l i a b i l i t y must refund the tax on $1,500 in a considerable
number of cases.

Again in respect o f interest the nonresident alien

is lia b le to surtax i f h is total net income from American sources exceeds
$10,000 but the d if fic u lt ie s in co llectin g surtax from them are almost
as great as in the case of dividends.

-

6

~

, As only $590,515*13 were withheld from copyright and patent
ro y a ltie s in 1928, the exemption o f th is type o f income would he
w e ll worth while i f in return we obtain fo r American owners o f
patents and copyrights the exemption by other countries o f such
income from licen ses in th e ir t e r r ito r y *
The items o f income subject to f u l l tax at source includes
(l)

income from a business, trade, or profession carried on within

the country through a permanent establishment;

( 2)

fo r personal services performed w ithin the country;

compensation
and (3 )

income

from real estate, including ren tals and ro y a ltie s therefrom, gains
from

the sale th ereof, and in te re s t on ordinary loans secured by

such property.

I f a fo re ig n en terprise has a permanent establishment

in the United States, such as a fa cto ry, sales o ffic e , warehouse, or
any other fix e d place o f business, the United States le v ie s it s f u l l
tax thereon at the corporation rate i f the fo reig n enterprise is
incorporated, at the combined normal and surtax rates i f the fo reig n
enterprise belongs to an individual or partnership*

I t is proposed

to tax business income at source prim a rily because we cannot permit
fo re ig n business concerns to compete with American concerns in our
market without subjecting the fo re ig n concern to the same tax which
the American concern must pay.

S im ila rly, compensation fo r services

rendered in the United States by an a lie n individu al, and income from
re a l estate situ ated in the United States are to be taxed at the usual
rates

~ 7 I f an .American resident in the United States or a corporation
organized in the United States derives any o f these types o f income
from a fo re ig n country, that country w i l l le v y i t s f u l l tax thereon
"but such tax may he cred ited against the .American tax in accordance
w ith the c red it provision s authorized hy Section 131 o f the Revenue
Act o f 1928,

Consequently, under the proposed regime, residents,

.American c itiz e n s and domestic corporations, w i l l s t i l l have the
b e n e fits o f the cred it provisions in respect o f income taxable abroad,
and have the additional advantage o f receivin g th e ir in te re s t,
dividends, and r o y a ltie s from abroad without deduction o f any tax in
the country assuring the re cip ro ca l exemption*
As a consequence o f the exemption in fo reig n countries, th er 8
w i l l be no occasion to cred it taxes in respect o f dividends, in te rest,
patent and copyright ro y a ltie s , and the other minor items o f income
thus exempted, against the .American tax, which means that the United
States w i l l c o lle c t f u l l tax thereon.
increase in revenues.

This should resu lt in an

I t is impossible to compute exactly the

amount o f taxes on the above-mentioned items o f income which have
been cred ited against the «American tax, but one may deduce from the
ra tio o f income derived by Americans from fo reig n sources to the
amount derived by foreign ers from American sources that the proposed
enactment should not reduce our revenues, but rather increase them
in the long run.
The machinery fo r bringing the proposed regime in to e ffe c t is
very simple.

I t consists in extending the application o f the

p rin c ip le o f recip ro ca l exemption, now observed in the case o f

A 1?

~ 8 ~
shipping p r o fit s , under Sections 212(h) and 231(h) o f the Revenue Act,
to dividends, in te re s t and other r e la t iv e ly unimportant items o f income
previou sly mentioned«

I t is hoped that other countries may meet

th is o ffe r o f recip roca l exemption hy means o f corresponding
enactments, ju st as has heen done in the case o f shipping p r o fits *
The opportuneness o f the proposed h i l l is shown hy the fa c t that
in the course o f the la s t year th is Government has received informal
advices from Canada, Great B rita in , The Netherlands and Switzerland
that they would welcome the p o s s ib ilit y o f entering into recip rocal
understandings w ith the United States,

A telegram has ju st heen

received from the .American Embassy at P aris sta tin g that the French
Government wishes to conclude a double taxation arrangement.

It

is not improbable that th is Government may in due time have occasion
to effectu a te recip ro ca l arrangements with Germany, Denmark, Sweden
and other countries.

The proposed h i l l o ffe r s a uniform and

simple basis fo r preventing double taxation as between the United
States and such in terested countries.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Friday, March 7, 1930.

STATEMENT BY SECRETARY MELLON
The Treasury is today o ffe r in g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks, an issue o f nine
months 3-1/4 per cent Treasury c e r t ific a te s o f indebtedness o f Series
TD-1930, dated and bearing in te re s t from March 15, 1930, and maturing
December 15, 1930.

The amount o f the o ffe r in g is $450,000,000, or

the re about s.
♦
A pplications w i l l be received at the Federal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a t e s , at par,
Treasury c e r t ific a t e s o f indebtedness o f Series TM-1930, maturing
March 15, 1930.

Subscriptions fo r which payment is to be tendered in

c e r t ific a te s o f indebtedness maturing March 15, 1930, w i l l be given
preferred allotment up to $150,000,000.
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have two

in te rest coupons attached payable June 15, 1930, and December 15, 1930.
About $404,000,000 e f Treasury c e r t ific a t e s o f indebtedness
and nearly $47,000,000 in in te rest payments on the public debt become
due and payable on March 15, 1930, and $100,000,000 o f Treasury B ills
become due and payable on March 17, 1930.
The text o f the o f f i c i a l circu la r follow s:

-

2-

The Secretary o f the Treasury, under the authority o f the
Act approved September 24, 1917, as amended, o ffe r s fo r subscrip­
tion , at par and accrued in te re s t, through the Federal Reserve
Banks, Treasury c e r t ific a t e s o f indebtedness o f Series TD-1930,
dated and bearing in te re s t from March 15, 1930, payable December
15, 1930, with in te re s t a t the rate o f three and one-quarter per
cent per annum, payable on a semiannual basis.
Applications w i l l be received at the Federal Reserve Banks.
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have

two in te rest coupons attached, payable June 15, 1930, and December
15, 1930.
The c e r t ific a t e s o f said series sh a ll be exempt, both as to
p rin cip al and in te rest, from a l l taxation (except estate and inheri­
tance taxes) now or h erea fter imposed by the United States, any State,
or any o f the possessions of the United States, or by any lo c a l tax­
ing authority.
The c e r t ific a te s o f this series w i l l be accepted a t par during
such time and under such rules and regulations as sh all be prescribed
or approved by the Secretary o f the Treasury, in payment o f income
and p r o fits taxes payable a t the maturity o f the c e r t ific a t e s .

The

c e r t ific a te s o f this series w i l l be acceptable to secure deposits
o f public moneys, but w i l l not bear the circu la tio n p r iv ile g e .

-3 -

The rig h t is reserved to r e je c t any subscription and to a llo t
le s s than the amount o f c e r t ific a te s applied fo r and to close the sub­
scription s at any time without n otice.

The Secretary o f the Treasury

also reserves the righ t to make allotment in f u l l upon applications fo r
smaller amounts, to make reduced allotments upon, or to r e je c t , applica­
tions fo r la rg e r amounts, and to make c la s s ifie d allotments and allotments
upon a graduated scale; and his action in these respects w i l l be fin a l.
Allotment notices w i l l be sent out promptly upon allotm ent, and the basis
o f the allotm ent w i l l be p u b licly announced.
Payment at par and accrued in te re s t fo r c e r t ific a t e s a llo tte d
must be made on or before March 15, 1930, or on la te r allotm ent.

A fte r

allotment and upon payment, Federal Reserve Ranks may issue interim
r e c a s t s pending d e liv e ry o f the d e fin it iv e c e r t ific a t e s .

Any qu ali­

fie d depositary w i l l be permitted' to make payment by c re d it fo r c e r t i­
fic a te s a llo t t e d to i t fo r i t s e l f and it s customers up to any amount
fo r which i t sh all be q u a lifie d in excess o f e x is tin g deposits, when so
n o tifie d by the Federal Reserve Bank of it s d is t r ic t .

Treasury c e r t i­

fic a te s o f indebtedness o f Series TMr-1930, maturing March 15, 1930,
w i l l be accepted at par, in payment fo r any c e r t ific a te s o f the series
now o ffered which sh all be subscribed fo r and a llo tte d , with an adjust­
ment o f the in te re s t accrued, i f any, on the c e r t ific a t e s o f the series
so paid fo r.
As fis c a l agents o f the.United States, Federal Reserve Banks are
authorized and requested to receive subscriptions and to make allotments
on the basis and up to the amounts indicated by the Secretary o f the
Treasury to the Federal Reserve Banks o f the respective d is t r ic t s .

EOR MOBHIffG PAPERS,
MOI'IDAY, MARCH 10, 1930..
'TREASURY D3PARTMEET.

Secretary Mellon announced that subscriptions fo r the issue o f
3 l/ 4 per cent Treasury C e rtific a te s o f Indebtedness, dated March
15, 1930, Series TP-1930, maturing December 15, 1930, closed at the
close o f business on Saturday, March

8

, 1930.

received through the mails up to 10 o 'c lo c k
1 0 th,

Subscriptions
Monday morning, March

w i l l be considered as having been received before the close

o f the subscription books.

FuTURr
i

R E L E AS

11 UA DD Cu ft pt! y¥ L D ai “I1Tt

TREASURY DEPARTMENT

}K )E RELEASE MONDAY, MARCH 10, 193(0

mil ffiffiî/Etçr B&Kf-THErW&^um ]
k m s , C ( M ..t l'f e , P ffo & A Y D lA i© t o <30À .M ,
I /

0 0

F o 1/ p

n

t

r

I

Statement of Undersecretary ck the ^ e a s t ^ M l l f s b l f ^ e ltd©. WayL and
Means Committee re la tin g to H,,R. 10480. a b i l l to authorize theTsettlenient o f the indebtedness of the German IfeT cir^
es
on account of the awards of the Mixed Claims Commission, United States
and C-ermany, and the costs o f the United States Army o f Occupation,

The h i l l now before you fo r consideration authorizes the Secretary o f the
Treasury, with the approval of the President, to enter in to an agreement with
Germany as set out in general terms in the b i l l , providing fo r the complete
and fin a l discharge o f the obliga tion s o f Germany to the United States in re ­
spect o f the awards o f the Mixed Claims Commission, United States and Germany,
and the costs o f the United States Army o f Occupation,
Under the terms of the Arm istice Convention signed November

11,

1918,

and of the Treaty Restoring Frien dly R elations signed at B erlin August 25,
1921j wnich incorporated by reference certain provisions o f the V ers a ille s
Treaty, Germany is obligated to pay to the United States the costs of the
Lnited States Army of Occupation and to s a t is fy claims o f the American
Government or i t s nationals who have suffered lo s s , damage or in ju ry to
th e ir persons or property, d ir e c t ly or in d ir e c tly , since Jilly 31, 1914,
through the acts o f the Im perial German Government or i t s agents.

Army Costs
The to ta l costs o f the United States Army of Occupation amount to
4>292,663,435.79,

Except fo r cash req u isitio n s on the German Government fo r

the use of the Army o f Occupation aggregating $37,509,605.97 and certain
other items, such as provost fin e s , abandoned enemy war m aterial, e t c ., amount—
ing to <*>7,288,184.33, the United States Government received no payments

-

2

-

on account o f array costs up to May 25, 1923.

On that date the United

States and the p rin cip al A llie d Powers signed the so-ca lled Wadsworth
Agreement which provided that our army costs should he divided into
twelve annual instalments, and should he, during the f i r s t four of the
twelve years, a f i r s t charge on cash payments received from Germany
a ft e r the expenses of the Reparation Commission and the current ex­
penses of the A llie d Armies o f Occupation, hut during the la s t eight
years should he an absolute p rio r charge on a l l cash payments, except
fo r the costs o f the Reparation Commission.

R a tific a tio n s o f the Wads­

worth Agreement were never exchanged hut we received a payment under i t
of $14,725,154,40 in January 1925.

The Agreement was superseded hy the

so-called P aris Agreement o f January 14, 1925, which also covered awards
o f the Mixed Claims Commission.

This la t t e r Agreement was concluded at

a meeting of representatives o f the cred ito r powers, including the United
States, c a lle d fo r the purpose o f making d istrib u tio n o f the annuities
provided fo r under the terms o f the Dawes Plan, which had been adopted
in 1924.

Under the provisions o f the P a ris Agreement the United States

was to re ceive on account o f i t s army costs, beginning September 1, 1926,
the sum o f 55,000,000 gold marks, or about $13,100,000 per annum, which
payments were to constitute a f i r s t charge on cash made a va ila b le fo r
tran sfer by the Transfer Committee out o f the Dawes annuities a fte r
the provision of the sums necessary fo r the service o f the 800,000,000
gold mark German external loan o f 1924 and fo r the costs o f the Repara­
tion and other Commissions.

Under the provision s o f the Wadsworth

Agreement our army costs should have been liq u id a ted by the end of 1935.

- 3 r

Under the P aris Agreement the payments would extend over a period of
about 18 years, beginning September 1, 1926.
Up to the f i r s t o f September, 1929, the United States had received
on Army Cost Account $39,203,725.89 under the Paris agreement.
As o f September 1, 1929, there was s t i l l due on account o f army
costs $193,936,765,20,

Mixed Claims
By v irtu e o f an agreement entered in to on August 10, 1922, by the
United States and Germany, there was set up a Mixed Claims Commission
charged with the duty o f passing upon the claims of American c itize n s
a ris in g since July 31, 1914, in respect o f damage to or seizure of th e ir
property, rig h ts and in te re s ts , and upon any other claims fo r loss or
damage to which the United States or i t s nationals have been subject
with respect to in ju rie s to persons or to property, rig h ts and in te rests
since July 31, 1914, as a consequence o f the war, and including debts
owing to American c itiz e n s by the German Government or by German nationals.
The f i r s t meeting o f the Commission was held on October 9, 1922.

Up to

August 31, 1929, awards had been c e r t ifie d to the Treasury fo r payment
which with in te re s t to August 31, 1929, aggregated $172,703,083.71.

It

is estimated as o f August 31, 1929 that the prin cip al amount o f awards
yet to be entered and c e r t ifie d together with in te rest to that date,
amount to $53,000,000, and in addition awards to the United States Govern­
ment with in te re s t to August 31, 1929, amount to $64,934,794.41.

In other

words, as o f August 31, 1929, i t is estimated that the to ta l awards o f the
Mixed Claims Commission made and to be made aggregated with in terest
$290,637,878.12.
Uo provision fo r the payment of the awards o f the Mixed Claims Commission

was made u n til the Paris agreement o f January l4 ,

1925.

The Paris agreement

provided that the United States should receive 2-^of a l l receip ts from
Germany on account o f the Dawes annuities a va ila b le fo r d istrib u tio n as
reparations, provided that the annunity resu ltin g from this percentage should
not in any year exceed the sum o f *+5*000,000 gold marks.
1929,

Up to September 1,

the United States had received from Germany under the Paris agreement

fo r account o f mixed claims, $3 1 , 331,*+72.0 3 , which with earnings and p r o fit s
on investments amounting to $2 ,l*+9 , 6 9 2 . 7 0 , made ava ila b le fo r distrib u tion
$33>921,16^.73» and l e f t $2 5 6 , 6 5 6 , 7 1 3 * 3 9 s t i l l to be provided fo r.

I t must

be understood in this connection that the fig u re s re la tin g to the to ta l amount
fin a lly awarded by the Mixed Claims Commission is n ecessarily only an estimate,
since a l l o f the awards have not as yet been made.
In the meanwhile, thé Congress in March, 1923, enacted what is known as
the "Settlement o f War Claims Act o f 1923".

You gentlemen are too fa m ilia r

with that act to make i t necessary fo r me to describe i t in d e ta il.

S u ffice

i t to say that i t made provision fo r the order o f p r io r it y in which mixed
claims should be paid, fo r the reten tio n o f part o f the German isroperty held
by the A lien Property Custodian and part of the funds to be received on
account o f awards made by the a rb ite r to German nationals u n til a certain per­
centage o f the American claims had been paid, and then fo r the ultim ate return
o f the German property and funds to th e ir owners.

The act also covered the

rate o f in terest to accrue on claims u n til th e ir fin a l liq u id a tio n .

Any

estimate o f the t o t a l amount due from Germany on account o f mixed claims must
depend, th erefore, not only on the awards o f the Mixed Claims Commission but
on the terms o f the Settlement o f War Claims Act.
I t w i l l be observed that the amounts received up to the present time,

- 5 ~
"both

021

acco-unt o f army costs and mixed claims, have been paid, not by v irtu e

o f m y agreement with Germany looking to the liq u id a tio n o f i t s Treaty
o b liga tio n s, but by virtu e o f an «agreement with the cred ito r powers, under
the terms o f which they undertook to assign to the s a tis fa c tio n o f our claims
'a portion o f the payments received through the Agent General fo r Reparation’
Payments.

This is .an anomalous situ ation .

In view o f the fa c t that the

other c re d ito r powers have now reached an agreement with Germany fo r the
fin a l liq u id a tio n o f th eir claims, the time has come fo r the United States to
do lik ew ise.

Two courses were open to us*

We could eith er jo in with the

other cred itors in a general settlem ent, or r e ly on a separate agreement
with Germany fo r the s a tis fa c tio n o f our claims.

The course o f events which

le d to the n ecessity fo r such a decision on our loart was as fo llow s.

The Young Plan
In I 9 2 S the p rin cip a l c re d ito r powers agreed to set up a committee o f
independent fin a n c ia l experts to be entrusted with the task o f drawing up
proposals fo r the complete and fin a l settlement o f the reparation problem.
The so -ca lled Young Plan is the report which th is committee rendered under
date o f June

7

» 1929«

As a re s u lt o f the Young committeef s reappraisal o f'

Germany1 s capacity to pay, i t recommended a n n u itiz e s smaller than the
standard, annuitjr o f
the Dawes Plan.
the

7

2 , 5 0 0 , 0 0 0 ,0 0 0

gold marks ($ 5 9 5 , 0 0 0 , 0 0 0 ) in fo rce under

Beginning with 742,000,000 reichsmarks ($176,000,000) in

months ending March

31»

193^* which are considered as the f i r s t Young

Plan year, the annuity i:& 1,707»9 0 0 » 0 0 0 reichsmarks ($406,000,000) in the
year ending March 31» 1931» ond increases gradually to the maximum o f
2,428,800,000 reichsmarks ($578,000,000) in the year ending March
or an average o f

1 , 9 8 8 , 8 0 0 ,0 0 0

continues at abqut

reichsmarks ($473,000,000) fo r

1 , 6 0 0 , 0 0 0 ,0 0 0

reichsmarks ($ 3 8 1 , 0 0 0 , 0 0 0 ) to

reichsmarks ($405,000,000) fo r an additional

22

years.

37

31, 1966,

years,'an d

1 , 7 0 0 , 0 0 0 ,0 0 0

<

.

-

6

-

I t is obvious that the reduction in the annuities to be paid by
Germany n ecessitated a scaling-down o f the amounts a llocated to each o f
the Creditor powers under the Dsw©& Flan and the Paris Agreement.

The

Young Plan undertakes not only to f i x the annuities to be paid by Germany
but to a llo c a te those annuities among the several cred ito r powers*
United States was a lloca ted annuities averaging

0 6 ,100,000

The

reichsmarks

($15,700,000) fo r the f i r s t 37 years and a fix e d annuity o f 40,S00,000
reichsmarks ($ 9 » 7 0 0 , 0 0 0 ) f o r

15

years th e rea fter.

The Young Plan, with some m odifications, which do not a ffe c t our
p o sition , was form ally adopted by representatives of a l l the in terested
powers, with the exception o f the United States,' at The Hague in January,
1930»

end the settlement there reached is now awaiting r a t ific a t io n by the

governments and the enactment o f certain necessary le g is la tio n by the
German parliament.
Two questions present themselves fo r decision: f i r s t ,

are the annuities

provided fo r the United States acceptable to u s*. and, in the second place,
should we become p a rties to the Young Plan agreement and re ceive payments
through the machinery provided therein, or should we r e ly on a d irect
agreement with Germany fo r the s a tis fa c tio n o f our claims?
While i t is true that under the so -ca lled Dawes Plan and the Paris
Agreement we were to receive on both accounts an annuity o f 100,000,000
gold marks ($ 2 3 , S0 0 , 0 0 0 ) as contrasted with an average o f

6 6 , 1 0 0 ,0 0 0

reichsmarks ($ 1 5 , ~[00,000) suggested under the Young Plan, i t should be p oin t­
ed out that the so -ca lled Dawes Plan was a temporary measure and that no
period was fix e d during which the aforesaid annuities were to be paid. In
other words, there was no assurance that we would continue to receive
1 0 0 , 0 0 0 ,0 0 0

go ld marks a year u n til the claims on account o f

arny costs and mixed claims had been completely discharged,
haps

a

b e tte r method o f approach

to the

P er-

=2.yt>
- 7

problem is to ascertain whether the proposed a n n u ity involves any essen tial
s a c r ific e in the s a tis fa c tio n o f our outstanding claims against Germany*

In

so fa r && mixed claims are concerned, t f , as is provided in the h i l l no#
before you, 40,800,000 reichsmcrksper annum are assigned to th e ir payment,
i t is estimated that that amount w i l l be adequate to discharge the Mixed Claims
o b lig a tio n in f u l l over the period o f years provided fo r , with in te rest at
5$ on unpaid amounts including the United States Governments claim.

Whatever

s a c r ific e is involved as compared w ith the Dawes annuity is in the time element.
In other words, i t is estimated that i t w i l l require 52 years to pay a l l
claims - about

35

years to pay a l l o f the p riva te claims awarded to American

c itiz e n s , including the return o f the unallocated in te rest fund belonging to
the German claimants, and about 17 years additional to liq u id a te the claims
allowed the Government o f the United States.

On the basis o f the 45,000,000

gold marks received under the P aris .Agreement, i t was estimated that i t would
have required 30 years to pay o f f p riv a te claims and 14 years additional to
pay o f f the Government claims.

($ 6, 000, 000 )
I f an average annuity o f 25,300,000 reichsmarks/for 30 years be allocated

to army costs, as the proposed agreement provides, i t w i l l liq u id a te that claim
in 37 years, a fte r reducing the amount o r ig in a lly due on th is account by 10$,
a s a c r ific e sim ilar to that being made by Prance and Great B rita in under the
Young Plan.

The 55,000,000 marks received under the Paris Agreement would

have discharged our army costs claim in about

15 years from September 1, 1929,

whereas the annuities proposed under the Young Plan w i l l liq u id a te the balance
due a ft e r deducting the 10$ in 37 years and allow in te rest on a l l deferred
payments at a ra te o f about 3-5/8$.

I t can f a i r l y be said, th erefo re, that

except fo r the time element, which is not o f v it a l importance in view o f the
fa c t that in te rest i s to be paid, no s a c r ific e is demanded o f us other than a

- 8 10$

redaction in our o rig in a l claim fo r army costs, that is as compared with

the situ ation ex istin g under the P aris .Agreement, which carried w ith i t no
assurance as to continuing payments.
The Treasury Department is o f the opinion that the annuities proposed
are acceptable.

In urging th e ir acceptance, I think I should point out to

you that as a p ra c tic a l matter our refu sa l to accept them would almost
in evita b ly in volve a readjustment o f the shares to be received by a l l other
cred itors, since the report o f the Young committee, which has now been form ally
accepted, d e fin it e ly fix e d the lim its o f the to ta l amounts to be paid by
Germany and any claim on our part to increase our share must occasion a
readjustment o f the shares to be re ceived by others.
This brings me to the second question o f whether, as a matter o f p o licy,
we should have join ed the other cre d ito r powers by becoming p a rties to the
Young Plan and a v a ilin g ourselves o f i t s provisions and machinery fo r the
sa tis fa c tio n o f our claims.

The Executive branch o f the Government b elieved

that i t was wiser and more consistent with our established p o lic y fo r us to
re fra in from such a course and to look to Germany d ir e c tly fo r the payment
o f the amounts due us.
The United States has not p a rticip a ted in the determination o f the to ta l
reparations payable by Germany "under the Treaty o f V e rs a ille s or in the
c o lle c tio n or d istrib u tio n o f reparation payments h eretofore received .

There

appears to be no ju s t ific a t io n at th is la t e date fo r in volvin g our country in
the re s p o n s ib ilitie s fo r c o lle c tin g , m obilizing, and d istrib u tin g reparation
payments which the adoption o f the Young Plan and p a rtic ip a tio n in the
organization and management o f the agency created under that plan would
n ecessitate.

Very obviously we could not properly a v a il ourselves o f the

machinery provided fo r by the Young Plan and at the same time refuse to
accept any o f the re s p o n s ib ilitie s *

The course which we advocate is

lo g ic a l, consistent, and sound, even apart from the question o f lin k in g
reparation: and debt payments, which, as we have con sisten tly maintained,
have no re la tio n in o rig in , p rin c ip le , or in fa ct*
Moreover, without even suggesting the p ro b a b ility o f such an event
taking place, suppose at some future date G-ermany fin ds i t s e l f unable to
continue the conditional payments.

I f at that time we are o f f i c i a l l y

represented on the board o f the Bank fo r International Settlements, or upon
the so -ca lled M v is o ry Committee to be appointed by the Governors o f central
banks o f issue o f the p rin cip al countries concerned, we, because o f our
comparatively small in te rest in the general settlement, might fin d ourselves
in the p o sitio n o f an a rb ite r c a lle d upon to s e t t le and decide a contro­
v e r s ia l and d i f f ic u lt European question*
I t may be urged that our fa ilu r e to become p a rtie s to the Young Plan
in volves an element o f s a c r ific e on our part, since we thereby forego the
claim fo r a share in the so -ca lled unconditional annuities which we could
very ju s tly have advanced in view o f the p r io r it y enjoyed by army cost
payments under the terms o f the P a ris Agreement.

But aside from the fa c t

that the Young Plan did not a llo c a te to the United States any share o f the
unconditional annuities and that, judging by events, they could not have
been obtained without the most serious kind o f controversy, i t seems to me
that the terms o f the agreement which we have submitted to you fo r approval
^ p l y protect the in te re s ts o f the United States and o f i t s n ationals.
it s terms G-ermany makes an u n qu alified and unconditional promise to pay.

Under
The

only proviso which in any way lim its that o b lig a tio n is the one which is
found in a l l o f our debt settlement agreements and which permits the debtor
to postpone payments fo r a lim ite d period o f time, with in te rest on the
postponed payments.

-

10

-

The Treasury Department, therefore, recommends the passage o f the "bill
under consideration granting to the Secretary o f the Treasury, with the
approval o f the President, the authority to enter into the agreement the
terms o f which are set fo rth in Senate Document No. 95, 71st Congress,
Second Session.
In "brief, the agreement provides that Germany agrees to pay 40,800,000
reichsmarks per annum fo r the period September 1, 1929, to March 31, 1930,
and the sum o f 40,800,000 reichsmarks per annum from A p ril 1, 1930 to
March 31, 1981, in s a tis fa c tio n o f Mixed Claims, and beginning September
1, 1929, an average annuity o f 25,300,000 reichsmarks fo r 37 years in f u l l
liq u id a tio n o f our army costs.

As evidence o f th is indebtedness Germany

is to issue to the United States, at par, bonds maturing semi-annually.
Germany, at i t s option, upon not less than 90 days* advance n otice, may
postpone any payment on account o f p rin cip a l f a llin g due to any subsequent
September 30th and March 31st not more than 2-|- years distant from i t s due
date, but only on condition that i f th is option is exercised the two pay­
ments f a l l i n g due in the next succeeding
than

2

12

months cannot be postponed more

years, and the two payments f a l l i n g due in the second succeeding

12

months cannot be postponed more than

1

year unless the payments previou sly

postponed have actu ally been made.

A ll postponed payments on account o f

mixed claims are to bear in te re s t, at 5$, the rate provided in the S e ttle ­
ment o f War Claims Act, and a l l payments postponed on account of army
costs are to bear in terest at the rate o f 3-5/8$.

While the annuities

are stated in terms of reichsmarks, payments are to be made in d o lla rs,
eith er at the Treasury or at the Federal Reserve Bark o f New York.

The

exchange value o f the mark in re la tio n to the d ollar shall be calculated
at the average o f the middle rates p re v a ilin g on the B erlin bourse during
the h a lf monthly period preceding the date o f payment.

The German

- ir
Government undertakes that the reichsmark sh all have and sh all retain
i t s c o n v e r t ib ilit y into gold or devisen as contemplated in the present
Reichsbank law and that the reichsmark sh all reta in the mint p a rity de­
fin ed in the German coinage law of August 30, 1924.

This provision

corresponds to the provision in the Young Plan settlement accepted hy
a l l of the other cred itor powers.

I t was not f e l t that the United

States was ju s t ifie d in demanding p r e fe r e n tia l treatment in th is respect.
The Secretary o f the Treasury w i l l not, o f course, execute any such
agreement u n til the Young Plan has form ally come into e ff e c t , thus g iv in g
assurance that the whole reparations question is , in a l l human p ro b a b ility ,
f in a lly liqu idated.

Uhat the proposed agreement does in so fa r as the

United States is concerned is to provide fo r a fin a l liq u id a tio n o f her
claims against Germany.
to your judgment.

I fe e l confident that i t w i l l commend i t s e l f

TREASURY DEPARTMENT

FOR RELEASE, ¡■¿OR:iIKO- PAPERS,
TUESDAY, .MARCH 11, 1930.

Secretary Mellon announced that subscriptions fo r the issue of Treasuryc e r t ific a t e s o f indebtedness, Series TD-1930 , 3-J- per cent, dated March 15,
1930, maturing December 15, 1930, closed at the close o f business on March

8

,

1930.
Reports received from the twelve Federal Reserve Banks show that fo r
the o ffe r in g , which was fo r $450,000,000, or thereabouts, to ta l subscriptions
aggregate some $1,291,000,000.

Of these subscriptions, $66,629,500 represent

subscriptions fo r which Treasury c e r t ific a te s o f indebtedness o f Series TM-1930,
maturing March 15, 1930, were tendered in payment, a l l o f which were a llo t t e d
in f u l l ,

Allotments on cash subscriptions were made as fo llo w s:

A ll sub­

scription s in amounts not exceeding $1 ,0 0 0 fo r any one subscriber were a llo t t e d
in f u l l .

Subscriptions in amounts over $1,000 but not exceeding $50,000 fo r

any one subscriber were a llo t t e d 80 per cent, but not less than $1 ,0 0 0 fo r any
one subscriber;

subscriptions in amounts over $50,000 but not exceeding

$500,000 fo r any one subscriber were a llo tte d 60 per cent, but not less than
$40,000 fo r any one subscriber;

subscriptions in amounts over $500,000 but not

exceeding $1 , 0 0 0 , 0 0 0 fo r any one subscriber were a llo tte d 50 per cent, but not
less than $300,000 fo r any one subscriber;

and subscriptions in amounts over

$1 , 0 0 0 ,0 0 0 fo r any one subscriber were a llo t t e d

20

per cent, but not le s s than

$500,000 fo r any one subscriber.
l^orther d e ta ils as to subscriptions and allotments by Federal Reserve
D is tric ts w i l l be announced when fin a l reports are received from the Federal
Reserve Banks,

FOR I MODI ATE RELEASE,
Thursday, March 13, 1930

TREASURY DEPARTMENT

Secretary Mellon to-day announced that the to ta l amount o f subscription s received fo r the issue o f Treasury c e r t ific a t e s o f indebted­
ness, S eries TD-1930, 3^ per centj dated March 15, 1930, maturing
December 15, 1930, was $1,290,990,000i

The to ta l amount o f subscrip­

tions a llo t t e d was $483,841,000, o f which $6$,481,500 represents a l l o t ­
ments on subscriptions fo r which Treasury c e r t ific a t e s o f indebtedness
o f Series TM-1930 were tendered in payment.

A ll o f such exchange sub­

scription s were a llo tte d in f u l l , while allotm ents on other subscriptions
were ma.de on a graduated scale.
The subscriptions and allotments were divided among the several
Federal Reserve D is tric ts and the Treasury as follow s:

Federal Reserve
D is tr ic t:

Total Subscription s Received:

Boston
Few York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St, Louis
Minneapolis
Kansas C ity
Dallas
San Francisco
Treasury

$

Total

Total Subscription s A llo tte d :

80,588,500
613,192,500
88.843.500
54.626.500
58.278.000
57.478.000
98.116.500
14.116.000
6,850,500
17,849 ;,000
39 ..295,500
161,STS,000
________85,500

27 ,427 ,500
184 ,840 ,500
35 ,520 ,000
25 ,313 ,000
35 ,067 ,500
34 ,692 .500
55 ,976 ,500
9 ,523 ,500
4 ,634 ,500
7 .656'.500
22 ,89‘
8 ,000
40 ,815 ,000
82 ,000

$ 1,290,990,000

$ 483,841,000

TREASURY DEPARTMENT

For immediate relea se,
March 15, 1930.

Secretary Mellon announced today that the Committee
composed o f the Attorney General, the Secretary o f the
Treasury, and the Secretary o f War, which was designated
hy Congress to recommend a lo ca tio n fo r the f i r s t n arcotic
farm, would recommend a s it e near Lexington, K y ., fo r this
purpose.
Necessary steps w ill he taken to submit an estimate
fo r appropriation to the present Congress looking to the
purchase o f the s it e recommended.

$53PESaaY DEPARTMENT

FOR RELEASE, MORNING PAPERS,'
SUERAI, MARCH 16, 1930.

. Secretary Mellon yesterday made the fo llo w in g statemenlTtîtir- r e f e r e e /to
the fin a l settlement fo r the years 1918, 1919, and 1920, o f the tax l i a b i l i t i e s
of the United States Steel Corporation.
The Treasury is closin g out f in a lly the tax l i a b i l i t i e s o f the United States
Steel Corporation fo r the years 1918, 1919, and 1920.

This is a fin a l s e t t le ­

ment of a l l the war taxes o f the Steel Corporation.
The case has been handled by a special committee o f thè best experts in the
Treasury and most c a re fu lly examined and reviewed.

A fte r the Treasury had

reached i t s decision, the case was forwarded to the Joint Committee on In tern al
Revenue Taxation o f the Congress and has been explained in d e ta il to i t .

In

addition, a thorough study and consideration has been given the case by the
S ta ff o f tax experts o f the Congressional Joint Committee.

Neither that Com­

mittee nor i t s S ta ff of experts has any c r itic is m to make o f the proposed s e t t le ­
ment.
In considering the case,we should not permit i t s size to a ffe c t our judgment.
The only question to be determined is what did the Steel Corporation owe the
Government on account o f taxes under the laws enacted by Congress.

This the

Bureau o f In tern al Revenue has determined a fte r the most painstaking and thorough
consideration.

The amounts involved are n ecessarily la rg e since the Steel

Corporation paid about

8$

o f a l l the taxes paid by corporations during the war

years, and fo r the year 1918, paid 56$ of i t s income to the Federal Government
in taxes,“'
Under the fin a l determination, the Federal Government is a ctu ally reta in in g
about $8,000,000 in addition to the taxes o r ig in a lly paid by the corporation.
a result o f intervening additional payments, however, the fin a l adjustment now
shows an actual overpayment fo r the three years of approximately $2 1 , 0 0 0 , 0 0 0 in

As

p rin cip a l and $11,300,000 in in te re s t.

The taxpayer had "brought suit in. court

fo r the recovery of about $130,000,000 (in clu d in g p rin cip a l and in te r e s t ).

As

a resu lt o f the fin a l settlem ent, in an amount of less than $33,000,000, th is
su it is "being dismissed.
I t has been suggested that the case should be tr ie d out in court*

As I

have repeatedly stated, i f we should in s is t upon a t r i a l in court o f controversial
issues in tax cases, we would merely be tra n sferrin g the adm inistration of the
tax laws from the Treasury to the courts.

An income tax system susceptible o f

adm inistration only by the courts must n ecessarily break down.

Furthermore,

l it ig a t io n in th is pa rticu la r case w ill merely resu lt in adding tremendously to
the in te re s t charges and in the recovery o f a much la rg er p rin cip a l amount by
the corporation.

The amount o f the present settlement represents the very

minimum to which the corporation is le g a lly e n title d .

Were i t not fo r i t s

desire to close the case without prolonged l it ig a t io n , and fo r i t s very f a i r
and *open—minded a ttitu de toward the Government, the case would not now be closed
upon as favorable a basis to the Government.
I f a i l to see any basis fo r c r it ic iz in g the proposed action o f the Treasury.
The case has been handled by the best experts in the Treasury.

I t has been ex­

amined c a re fu lly by the S ta ff o f the Congressional Joint Committee and reviewed
by the Joint Committee i t s e l f .

The overpayment is admitted.

Sound business

judgment and good administration demand that we return the amount promptly.

A

tax settlement cannot be understood by a consideration only o f misleading and
inaccurate statements made fo r partisan purposes.

We should not permit p o lit ic s

to become in je c te d into the administration o f our tax laws.
The making o f refunds is but a necessary part o f the administration o f our
tax laws.

Our revenue c o lle c tin g system is based upon the fundamental p rin c ip le

- 3 »
that the taxpayer must pay p rio r to an audit*

Ah audit almost in e v ita b ly , in

a complicated case, shows that he has paid too l i t t l e or too much*

I f he

owes an additional amount, steps are promptly taken to compel him to pay.
he has overpaid, the amount o f the overpayment should he refunded promptly*
ask fo r only the amount of taxes le g a lly due the Government.

If
We

In th is case the.

en tire refund is based upon and is s t r i c t l y allowable under fin a l decisions o f
the courts and the Board of Tax Appeals.

THFASUHY DUPAHT^TT

FOB I « « , SUNDAY MOUSING- PAPPUS,
MAHpH H b f 1930/

Statement "by Secretary Mellon regaVdmJpptlTS "presAffc
status o f the governmental, b u ildin g program.

A cceleratin g i t s a c t iv it ie s in lin e with President Hoover’ s policj^
o f increased construction as a means o f r e lie v in g unemployment, the
Treasury Department has mapped out a program fo r putting under way th is
year $92,000,000 worth o f public buildings in addition to the $40,000*000
now under construction*
Prompt passage o f the K e y e s -F llio tt public bu ilding b i l l by the
Senate would enable the Department to speed up i t s plans much more
ra p id ly than at present besides making a va ila b le fo r th is and other
years an increased sum o f money.
The contracts that have been or are to be awarded th is year cover
every section o f the country with the structures ranging in size from
v illa g e p o s to ffic e s to the enormous $14,000,000 bu ilding to be erected
in Chicago.

This w i l l be the la rg est p o s to ffic e bu ildin g in the World.

This program w i l l a ffo rd employment not only fo r many thousands o f men
in the actual bu ilding construction but fo r many other thousands in the
quarries and fa c to rie s .
Besides the Chicago bu ildin g, other mammoth structures, the con­
tra cts fo r which w i l l be l e t th is year, include a six-and-one-half m il­
lio n d o lla r structure in Pittsburgh; a 21-story s ix -m illio n d o lla r struc­
ture in Boston, and a $3,300,000 bu ilding which is to r is e on the present
s ite o f the fed era l bu ilding in Baltimore.
Leaving out o f the equation the $40,000,000 expenditure which w i l l
be expedited by the passage o f the K e y e s -E llio tt b i l l fo r th is calendar

-

2

-

year, $10,000,000 worth of p ro jec ts are to go on the market hy June, and
approximately $35,000,000 worth between that time and October 1st.
A ll o f th is projected work is outside the D is tric t of Columbia,
where n early $30,000,000 in fed era l construction is under Way with an
additional $10,000,000 to be put under way th is year under the KeyesE llio t t B i l l , beginning construction on the In te rs ta te Commerce and Pub­
l i c Health Service bu ildings, and the remodeling o f the State, War and
Wavy Building to make i t conform to the architectu re o f the Treasury De­
partment Building so that the White House w i l l be flanked by two sim ilar
structures as Congress o r ig in a lly intended.
Buildings fo r which contracts ha,ve been awarded th is year include
a $1,147,338 Marine Hospital in San Francisco; a m illio n d o lla r fed era l
bu ilding in Scranton, Pa.; a $900,000 fed era l building at Memphis, Tenn.;
a $585,000 Immigration Station at S eattle; an $830,000 bu ildin g at Denver,
and smaller structures at Honolulu, McMinnville, Tenn., R u sh ville, Ind.*
and Waynesburg and Tyrone, Pa.
Bids are now in fo r buildings in East Chicago, In d ., .Pullman, Wash%*
and S te rlin g , C o lo ., and tenders have been asked fo r structures in M il­
waukee, Ottawa, 111., P r ic e , Utah, and S co ttsb lu ff, Nebraska.
Treasury Department plans as now outlined c a ll fo r the award o f con­
tra cts during th is year fo r other new fe d e ra l building p ro jec ts as fo llo w s

Massachusetts......... .Boston, 2 buildings - Federal o ffic e building and
Immigration Station.
Worcester; Low ell; P a ll River and Framingham.
K a n sa s..................... .W ichita and Junction C ity. „
O h i o . . . . . . . . . .............Toledo, and Marine H ospital at Cleveland.
New Y o rk ... . . . . . . . . . . Assay O ffic e ; Parcel. Post and Government Warehouse
in Manhattan. Brooklyn, superstructure.
P ee k sk ill and White Plain s.

- 3 New Jersey.................... Red Bank and Passaic.
W isconsin................. . *Racine and Marshfield.
Louisiana........... ......... New Orleans, 2 bu ildin gs - Marine Hospital
and a Quarantine Station.
Bogalusa.
V irg in ia .................... .Lynchburg; Roanoke; Alexandria and Buena Vista.
North C arolin a.. . . . . . . Greensboro and Lenoir.
West V ir g in ia ............. .Morgantown and Parkersburg.
Oklahoma.......................Oklahoma C ity and Tulsa,
G eorgia..................... .. Savannah.
Alabama......................... S h e ffie ld and Union Springs.
M is s o u r i..,.,............... Kansas C ity and Sedalia.
A r iz o n a ...................... Prescott and San Luis.
Washington............. ... S e a t t le , Federal O ffic e Building.
Blaine, Inspection Station.
Michigan....................... Benton Harbor and F lin t .
Connecticut..................New London, Coast Guard Academy.
Indiana......................... L a fa yette.
Tennessee..................... Kingsport.
Iow a.............. ...............iowa City..
New Hampshire..............Hanover,
Vermont......................... .Highgate Springs, Inspection Station.
..
Bellows F a lls .
Oregon..........................Klamath F a lls .
Texas.............. ..............Galveston, Marine H ospital.
Minnesota..................... South St. Paul.
South Dakota................ V erm illibn .
North Dakota....... . . . . . S t . Johns, Inspection Station.
U t a h . O g d e n .
W yom in g..................... Casper.

- 4 New Mexico** . . . . . . . * . . Albuquerque,
I

d

a

h

o

.

. pampa.

Montana*• * . * . . * * . . * . i . Havre*
Rhode Is la n d .< * „ * ..,* * .Pawtucket.
C a liforn ia*

San Bernardino*

Scrath Car-0lina*.. *.... *.* Spat*tail sburg.
C o l o r a d o . . . . . . . . . . . . . . Canon C ity.
Arkansas.. . . . . . . . . . . . .Eldorado.
.M ississippi,.,, • • « •-»-*. .Greenwood.
M a in e .............. ... ...K ou lto n , Inspection Station.
This l i s t o f buildings does not include p rojects that may be se­
le c te d under the authorization o f $115,000,000 fo r the country at la rge
included in the K e y e s -E llio tt B i l l , and a ft e r the passage o f that b i l l
i t w i l l be possible to expedite the construction o f the federal* buildings
at Chicago, San Francisco, Pittsburgh, Portland,

Ore., Hartford, and

S p rin gfie ld , 111., in volvin g a to ta l o f approximately $30,000,000; be­
sides ten ( 1 0 ) other p ro jec ts yet to be determined.

TREASURY DEPARTMENT

POR RELEASE,MORNING PAPERS
TUESDAY, MARCH 25, 1930.

REMARKS OF
A. W. MELLON
SECRETARY OP THE TREASURY
at a dinner at
the PITTSBURGH GOLF CLUB
PITTSBURGH,
MARCH 2k, 1930.

Notes
For f u l l text of speech see Subject F ile ;

Secretary’ s Speeches.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Monday, A p ril 7, 1930,

STATEMENT BY SECRETARY MELLON

The Secretary o f the Treasury gives notice that tenders are invited
fo r Treasury h i l l s to the amount o f $50,000,000, or thereabouts«

The

Treasuxy h i l l s w i l l he sold on a discount basis to the highest bidders*
Tenders w i ll he received at the Federal Reserve Banks, or the branches
thereof, up to two o*clock P. M*, Eastern Standard time, on .April 1 1 ,
1930*

Tenders w i ll not he received at the Treasury Department, Washington*
The Treasury h i l l s w ill he dated A p ril 15, 1930, and w i l l mature on

July 14, 1930, and on the maturity date the face amount w i l l he payable with­
out interest*

They w ill he issued in hearer form only, and in amounts or de­

nominations o f $1 , 000, $10 , 000, and $100,000 (maturity vlau e)*
I t is urged that tenders he made on the printed forms and forwarded in
the special envelopes which w i l l he supplied by the Federal Reserve Banks or
branches xpon application therefor*
No tender fo r an amount le s s than $1,000 w i l l he considered*
tender must he in multiples o f $1,000*

Each

The price offered must he expressed

on the basis o f 100, with not more than three decimal places, e. g*, 99*125*
Fractions must not he used*
Tenders w i ll he accepted without cash deposit from incoiporated hanks
and trust companies and from responsible and recognized dealers in investment
securities*

Tenders from others must he accompanied by a deposit o f 10 per

cent o f the face amount o f Treasury h i l l s applied fo r , unless the tenders are
accompanied by an express guarantee o f payment by an incorporated hank or
trust company.

-

2

-

Immediately a ft e r the closing hour fo r receipt of tenders on A p ril 11,
a l l tenders received at the Federal Reserve Banks or “branches thereof up to
the closing hour w i ll “be opened and public announcement o f the acceptable
prices w i ll fo llo w as soon as p o ssible th ereafter, probably on the follow in g
morning.

The Secretary of the Treasury erpressly reserves the right to re­

je c t any or a l l tenders or parts o f tenders, and to a llo t le s s than the amount
applied fo r, and his action in any such respect sh a ll be fin a l#

Those sub­

m itting tenders w i l l be advised o f the acceptance or rejectio n thereof#

Pay­

ment at the price offered fo r Treasury b i l l s a llo tte d must be made at the
Federal Reserve Banks in cash or other immediately a v a ila b le funds on A p ril
15, 1930#
The Treasury b i l l s w i l l be exespt, both as to p rin c ip a l and interest (d is ­
count), from a l l taxation, except estate and inheritance taxes#

The amount o f

discount at which the Treasury b i l l s are o rig in a lly sold by the United States
sh a ll be considered as interest fo r tax exemption purposes#
Department Circular 418, dated November 22, 1929, and this notice as
issued by the Secretaxy of the Treasury, prescribe the terms o f the Tre&suiy
b i l l s and govern the conditions o f th e ir issue#

Copies o f the c irc u la r may be

obtained from any Federal Reserve Bank or branch thereof#

3 e>&

TREASURY DSPARTMSH’T

'POE RRLSASE-y A?T,ERNOOF PAPERS,
FSPInTESPAY, APRIL 9, 1S30.

STATEMENT! 1 OP SECRETARY MELLON

The examination of passengers' baggage at the docks in Greater Hew York
has at a l l times given the Treasury Department considerable concern and has
oeen the object o f c ritic is m fo r many years*
The Commissioner o f Customs, with my complete endorsement, is earnestly
endeavoring to improve the service.

In furtherance o f h is e ffo r t s , I have

secored the formation o f a Committee o f tw en ty-five representative Few Yorkers
o aco i_i an advisory capacity, in conjunction with the steamship companies,
the C ollector of the Port and the Surveyor o f the Port.
tfoods has consented to act as Chairman of th is Committee.

Colonel Arthur
With the excep­

tion of a few who are unavoidably absent, the members o f th is Committee are
meeting with me today at the Bankers Club^for |jumch~and fo r the i n i t i a l
meeting which w i l l fo llo w .
At th is meeting the Committee w i l l be informed concerning the problems
which face tne Customs a u th o rities and the steamship companies.

The •

Committee w i l l be asked to study and analyse the whole situ a tion and the
o ff ic ia ls o f the Treasury w i l l be prepared to g iv e information and assistance
in order to f a c i l i t a t e the work.

I am confident that the advice thus se­

cured w ill be of great assistance to the Treasury in i t s endeavor to render
better service to the public.
c itiz e n s a rrivin g home from tra vel abroad on account o f business, health
or pleasure have a rig h t to courteous treatment at the hands o f Customs
o ffic ia ls w hile undergoing the necessary fo rm a litie s o f passing through the

3

-

Customs.

2

-

At the same time Customs o f f i c i a l s are, o f course, e n title d to

an equal decree o f consideration on the part o f the tra v e lin g public; and
furthermore, we must see that strangers entering our country shall receive an
impression o f "both e ffic ie n c y and good manners*
In recent 3/ears the d i f f ic u lt i e s o f the situ ation have been aggravated
as a resu.lt of great increase in tra v e l, without corresponding reorganization
of procedure.

These matters can be b e tte r adjusted with the advice and

assistance o f p u b lic -s p irite d c itiz e n s , a l l o f whom have entered th is port
many times; and so, in order to secure th e ir help, I have asked the members
o f the Committee to meet today and discuss these questions.

\

TRSAS U II DEPARTMENT

POR RELEASE, MQRH2TG PAPERS,
• SATURDAY, APRIL 12, 1930.

Statement by Secretary Mellon.

TLe Secretary/ of the Treasury announced to~day that the
tenders fo r ¿50,000,000, or thereabouts, o f ninety-day Treasury
B ills Which were o ffe re d on A p ril 7th, were opened at the Federal
Reserve Banks on A p ril 11th,
The to ta l amount applied fo r was $132,377,000.

The highest

bin made was 99.315, equivalent to an in te re s t rate o f about 2f
per cent on an annual b asis.

The lowest bid accepted was 99.250,

equivalent to an in te re s t rate of 3 per cent on an annual basis.
Tne to ta l amount o f bids accepted was $51,316,000.
p rice o f Treasury B il l s to be issued is 99.267.

The average
The average

annual rate* 6n a bank discount basis is about 2.93 per cent.

FOR IMMEDIATE RELEASE,
Tuesday, A p r il 15, 1930

TREASURY DEPARTMENT

The Secretary o f the Treasury made the fo llo w in g
announcement :
Final steps were taken today in connection with the fund­
ing o f the indebtedness o f the French Republic to the United States,
Mr# Paul Claudel, Ambassador Extraordinary and P len ip o ten tia ry of
France at Washington, and Mr. Robert Lacoufc-Gayet, Financial Attache
to the French Bnbassy in Washington, d e liv e re d to the Treasury gold
bonds o f the Government o f 'the French Republic in the p rin cip a l
amount o f $4,025,000,000, receivin g in exchange the o rig in a l o b liga ­
tion s given by th e ir government in connection with cash advances
made by the Secretary o f the Treasury and surplus war m aterial
sold on c re d it by the United States Liqu idation Commission (War
Department) in the aggregate p rin cip al amount o f $3,340,129,356.83#
Of the gold bonds d elivered to the Treasury, Eos. 1 to 4 in the
aggregate p rin cip al amount o f $125,000,000, having been paid by
the French Government, were marked ’’Paid11 and returned to the
French Ambassador.
The Act approving the French settlement was signed by
the President on December 18, 1929.

The debt settlement has lik e ­

wise been approved by the French Government.

TO BE RELEASED UPON APPEARANCE BEFORE THE
COMMITTEE Oil INTERSTATE AND FOREIGN
COMMERCE OF THE HOUSE OF REPRESENTATIVES

STATEMENT BY OGDEN L. MILLS, UNDERSECRETARY OF THE TREASURY ON
TEE BILL (E. R.' 1120*+) TO REGULATE TEE ENTRY uF PERSONS INTO
THE UNITED STATES, TO ESTABLISH A BORDER PATROL IN THE COAST
GUARD, AND FOR OTHER PURPOSES.

Mr. Chairman and Gentlemen o f the Committee:
The B ill (H.R. 1120^) which you now have under consideration ca rries
out, in the opinion o f the Treasury, the recommendations submitted in the
l e t t e r o f the Secretary o f the Treasury to the President, which was trans­
m itted in the P r e s id e n ts Message to the Congress on January lHth o f this
year (House Document 2^2, f i s t Congress, 2nd Session). The S ecretary’ s
le t t e r states b r ie fly and succinctly the basis o f it s recommendations fo r
the creation o f a U n ified Border P a tro l.

I t is as fo llo w s:

,TMr. President: The Treasury has been considering fo r some
time the creation o f a u n ifie d border p a tro l, in order that the
execution o f the customs, immigration, p roh ib ition , and other
laws regu latin g or p roh ib itin g the entry into the United States
o f persons and merchandise may be made more e ff e c t iv e .

The

fo llo w in g recommendations are submitted fo r your consideration
and transmission to the Congress i f you approve:
(1) The entry into the United States o f a l l persons should be
proh ibited except at points o f entry designated by the President.
(2) The present number o f points o f entry should be increased
s u ffic ie n t ly to permit uninterrupted and unhampered intercourse
with our neighboring countries over established and customary
routes.
(3) A u n ifie d border p a tro l should be created to p a tro l the
border and prevent i l l e g a l entry

2

(4)

The u n ifie d border p a tro l should he part o f the Coast Guard*

A s p e c ific statutory p roh ib ition of entry in to the United States, o f
e ith e r a lien s or c itiz e n s , in any. manner and w ith or without
merchandise, except at designated points, is essen tia l as a basis
i f the border p a tro l is to function e ff ic ie n t ly ,

since i t w i l l give

the p a tro l a p la in and simple ra le to enforce, and r e lie v e them o f
any n ecessity o f in te rp retin g and applying the customs, immigration,
and other laws. Customs, immigration, quarantine, and other o ffic e r s
w ill be stationed at the designated points o f entry, and the
adm inistration o f the laws at these points should remain, o f course,
under the ju ris d ic tio n o f the present services.
The points o f entry should be designated by the President, ju st
as ports o f entry arenow designated.

Thej should be established

at the boundary in te rsec tio n o f a l l established and customary routes
and wherever intercouse with our neighboring countries ju s t ifie s .
P le x ib i l i t y is essen tia l in order to permit an increase in the points
o f entry conformably with the growth o f commerce and tra v e l and in
order to meet seasonal n ecessities and constantly changing conditions.
There should be a substantial increase, rather than a decrease, in
the present number o f customs and immigration station s.
I t is b elieved that the proposed plan w i l l promote m aterially
the convenience o f the tra v e lin g pu blic, as w ell as r e lie v e those
tra v e lin g on inland highways from inspection.

To-day, gen erally

speaking, tra vele rs may enter the United States anywhere but must
report at a customhouse, which may w ell be e n tire ly out o f th e ir lin e
o f tra v e l, and declare and enter th e ir merchandise. Moreover, our
present p a tro l must n ecessarily be maintained on in te r io r roads and
not along the border, with the consequent n ecessity o f stopping

- 3 ~

veh icles and pedestrians who may never have l e f t the country.
Adequate provision should, o f course, be made by regu lation so
as to meet the needs o f farmers and others whose property
extends across the border or who are liv in g along the border.
The u n ified border p a tro l should be charged with the enforce­
ment o f the statutory p roh ib ition - that is , i t should be charged
with the duty o f guarding the border between the designated
points and preventing entry o f a l l persons and merchandise, over
land and water borders, except at the points o f entry sp ecified ,
where the usual customs, immigration, quarantine, and other o ffic e r s
w ill be stationed.

The proposed u n ifie d border p a tro l w i l l replace

i/he p a tro ls now maintained by both the Customs Service and the
Immigration Service on our Mexican and Canadian boundaries, and w i l l
cover t^ie same t e r r it o r y as those p a tro ls, thus complementing the
work o f the Coast Guard on the maritime boundaries, elim inating
duplication o f effo rt,c o n cen tra tin g re s p o n s ib ility fo r the p rotectio n
o f a l l our borders, and bringing about a more e ffe c t iv e coordination
o f the work.
Prelim inary surveys have established the p r a c tic a b ilit y o f the
plan.

An actual physical examination o f our e n tire border, however,

w i l l be necessary p r io r to the fin a l designation o f points o f entry
or the clo sin g o f t r a ils and untraveled roads.

The work must be

done in harmonious cooperation with our neighboring countries and
th e ir consent obtained as a matter o f courtesy.

I t is b elieved

that at le a s t s ix months w i ll oe required before the new border
p a tro l can be organized and the prelim inary work completed.
The cost o f maintaining the u n ifie d border p a tro l w i l l exceed the
present cost o f maintaining our customs and immigration p a tro ls, and

3/

- H o d d iti nal immigration and customs stations w i l l "be required.
Surveys upon which estimates o f the increased cost can he
boned are under way and should soon he comifLeted*
Very sin cerely,

A4 Wi Mellon,
Secretary o f the Treasury.

The President,
The White House, January 13, 1930•"

-

5 ~

The proposed le g is la t io n is not s t r i c t l y a p roh ib ition measure.
Rather, i t is proper prim arily to improve the enforcement o f the customs,
immigration, and other laws regu latin g the entry o f persons and property
into the United States.

At present, there are two separate border p a tro ls,

one in the Immigration Service and one in the Customs S ervice.
a c t iv it ie s are not coordinated.

Their

The functions o f each are directed, and

properly so at the present time, in the in te rests o f i t s p a rticu la r ser­
v ic e .

Each p a trol is engaged in enforcing a very complicated body o f laws.

The pending b i l l proposes to create a U n ified Border P a tro l, which w ill
enforce a very simple rule o f law — Myou cannot enter the United States
except at one o f the designated points o f e n try .'*
Under the e x is tin g law a c it iz e n o f the United States may cross the
boundary anywhere, and need not report h is entry unless he has merchandise.
An a lie n coming into the country, except at an immigration sta tion in
accordance with regulations, is subject to arrest and deportation.

A

v e h icle may cross the boundary anywhere, but, whether or not i t ca rries
merchandise, must report to the nearest custom house.
in by pedestrians must also be reported.

Merchandise brought

The present regulations governing

entry o f persons and merchandise by a ir c r a ft w i l l not be a ffe c te d by the
b ill.
The new plan w i l l not be a nuisance to tra v e le rs and a burden on
le g itim a te in tern ational intercourse.

Qjiite the contrary, i t should provo

a convenience to the tra v e lin g public by g iv in g them service at the actual
point o f entry.

An adequate number o f points o f entry w i l l be maintained,

at which w i l l be stationed customs, immigration, public health, agricu ltu re,
and other o ffic e r s to administer the various laws applicable to entry into
the country.

Supervision and inspection o f veh icles, pedestrians, and

merchandise w ill "begin and end at the border, which is the lo g ic a l place.
There w i l l no longer be the l i a b i l i t y to interru ption o f tra v e l on
in te r io r roads by the p a tro l now maintained there.

At the present time

persons and veh icles that are several m iles from the boundary and may
never have been out o f the country are subjected to th is annoyance in the
b e l i e f that they may have entered the United States without compliance
w ith the law.

The concentration o f atten tion on the border w i l l also have

.the resu lt o f elim inating the e v ils which have arisen out o f the attempts
to detect smuggling on in te r io r roads.

Examination o f persons and property

at the designated border crossings can be ca refu l, thorough, and certain .
In the very nature o f things the accomplishment o f th is end by scattered
in te r io r p a tro ls is almost an impossible task, and i t is not surprising
that errors and misjudgnents o f those o ffic e r s have occasion ally had
unfortunate consequences, and that there have been many p rotests against
the working o f such a d i f f i c u l t and uncertain method o f regu latin g entry
in to the country.
One o f the essen tia ls o f an e ffe c t iv e Border P a tro l is that i t be
organized upon a m ilita r y basis, w ith an en listed and commissioned
personnel, and with m ilita ry tra in in g and d is c ip lin e .

I t nay be admitted

that i t is d i f f i c u l t to place a U n ified Border P a tro l l o g ic a lly and properly
in any one o f the Executive Departments or Establishments.

A fte r very

thorough consideration, the Treasury is o f the opinion that a U n ified
Border P a trol may best be established as a unit o f the Coast Guard.
th eless, i t should be organized and maintained as
organ ization.

Never­

d is tin c tly separate

The Coast Guard has other duties even more important than

the prevention o f smuggling on our land borders.

In the performance o f

these functions, the Coast Guard has established an enviable reputation.

- 7 -

P a tr o llin g our land borders is e s s e n tia lly a p o lic e function.

The Coast

Guard proper is a naval organization charged w ith the duty o f p rotectin g
l i f e at sea and enforcing on our ocean boundaries the laws o f the United
States.

We do not propose to make policemen o f our s a ilo rs .

But we do

want to a v a il ourselves o f th e ir cen tral organization*
The proposed plan w i l l cost the government more than the present
system in two ways — increased appropriations w i l l be required fo r the
customs and immigration station s, and the cost o f the new p a tro l w i l l be
grea ter than the combined cost o f the present p a tro ls .

But we should

obtain i n f i n i t e l y greater e ffic ie n c y , and an adm inistrative system adequate
to meet present day conditions on our land borders.
Surveys by the Bureau o f Customs and the Bureau o f Immigration in di­
cate that there w i l l be required 203 new customs stations and 9 new immi­
gra tion stations at points along the Mexican and Canadian borders where
the present stations are too fa r apart fo r convenient entry.

The estimate

o f the Customs Bureau represents the maximum number o f necessary stations*
While i t w i l l in p ra ctice be necessary to provide fo r the entry o f both
persons and merchandise at most o f these points, i t does not fo llo w that
both services must maintain an establishment at each.

To do so at unim­

portant border crossings would be a useless du plication o f expenditure*
Most o f the new customs station s can serve as immigration stations under
the present p ra ctice o f having the customs inspector hold the o f f i c e
(without pay) o f immigrant inspector, or vice versa.

The establishment

o f these stations w ill in volve an i n i t i a l expenditure fo r the erection
o f buildings o f $2,520,000 by the Customs Service.

Kb estimate fo r new

buildings has been furnished us by the Immigration Bureau; however, the
same bu ilding could house both services and the Customs estimate

is probably roughly s u ffic ie n t to cover the needs o f both.
The annual expenditures o f the two services would be increased, o f
course, by the amount necessary to maintain and operate these station s.
In the customs service th is would amount annually to $936,600 fo r
sa la ries o f 446 new inspectors and $105,000 fo r heat, lig h t , and maintenance
o f buildings, or an annual t o ta l o f $1,041,600.

The Immigration Bureau

estimates that the cost o f maintaining and operating i t s nine new stations
would be $22,500 a year.

The to t a l increase in the annual expenditures

o f both services would thus be $1,064,100.
A comparison o f the cost o f the present immigration and customs
border p a tro ls w ith the estimated cost o f the proposed p atrol w i l l show
t'.

increase in annual appropriations necessary fo r that purpose.

The

present customs p a tro l expends fo r sa la ries and other expenses $2,045,946
annually.
$1,868,440.

The annual appropriations fo r the immigration p a trol are
The to ta l fo r both p a tro ls is thus $3,914,386.

A fte r the

two-year period necessary to complete the establishment o f the proposed
u n ifie d p a tro l the annual appropriation necessary fo r i t is estimated at
$7,328,882.

This is an increase over expenditures o f the present p a tro ls

o f $3,414,496.
I n i t i a l expenditures in the establishment o f the border p a tro l fo r
barracks, tra in in g stations, airplanes, automobiles, horses, and other
o rig in a l equipment, are estimated at $3,177,679.

Two-thirds o f th is w ill

be required the f i r s t year and one-third the second.

Since the cost o f

maintenance and operation may be cut in h a lf fo r the f i r s t year, the
actual appropriations necessary w ill be?
F irst year

$5,782,896

Second year

$8,388,108

Annually th e re a fte r

$7,328,882

- 9 -

as compared with $3,914,386 fo r both the present p a tro ls ,
Combin&ng

these increased costs, we fin d that the t o ta l increase fo r

a ll services a ft e r the plan is in operation w i l l be an annual sun o f
$4,241,779,

The to ta l o f the i n i t i a l costs o f establish in g the new plan,

w ill be $5,697,679, to be required during the f i r s t two years.
The increase in personnel o f the proposed border p a trol over that
o f the present p a tro ls should not be given exaggerated weight.
not proposed to set up a standing army on the borders.

I t is

Considering the

s t r ic t e r control which w i l l be accomplished, only a reasonable increase
o f personnel over the e x is tin g organizations i s required.

The customs

p a tro l now employs 722 men, and the immigration p a tro l 847 men, a to ta l
o f 1569.

The number o f men to be on border duty in the proposed u n ifie d

p a tro l is estimated at 2495, an increase o f 924,

In addition to the men

on duty at the border, 230 o ffic e r s and men w i l l be required fo r general
courts, supervision and tra in in g, and headquarters, as w ell as 51 c iv ilia n
employees.
In considering th is increase, i t should be remembered that the pro­
posed p a tro l is to maintain a continuous p a trol o f the border by operation
in 8-hour s h ifts .

The present organizations are compelled by th e ir small

numbers to confine th e ir e ffo r t s la r g e ly to captures o f smugglers o f
whose operations knowledge is obtained.
The increase in men and money is moderate, to obtain the advantages
o f a continuous preven tive p a tro l, as compared with a system o f coping
with smugglers which does not e ff e c t iv e ly shut out contraband persons
and property, which in volves needless trouble and bloodshed, and which
has given ris e to widespread d is s a tis fa c tio n .

TREASURY DEPARTMENT

EOR IMMEDIATE RELEASE
Thursday, May 8, 1930.

The Secretary o f the Treasury made today the fo llo w in g
announcement:
An agreement fo r the settlement o f the R e lie f indebtedness of
the Government o f Austria to the United States was executed today
by the Austrian M inister to the United States on beh alf o f h is
Government and by the Secretary o f the Treasury with the approval of
the President on beh alf o f the United States.
The United States holds an o b lig a tio n o f the Government of
Austria designated as Bond Uo. 1, R e lie f Series B o f 1920, in the
p rin cip a l amount o f $24,055,708.92.

The agreement provides that

A u stria w i l l pay to the United States in liq u id a tio n o f th is indebted­
ness the sum o f $33,428,500 in tw en ty-five equal annual installm ents
o f $1,337,140 each, beginning on the f i r s t day of January in each o f
the years 1943 to 1967 in clu sive.

The date o f the i n i t i a l payment is

explained by the fa c t that the time o f payment o f the p rin cip a l and
in te re s t o f the o rig in a l o b liga tio n o f A u stria was extended to 1943
under the authority o f the Lodge Resolution o f A p ril 6, 1922, in
order to provide fo r our cooperation with the other r e l i e f cred itor
governments in perm itting the flo t a t io n o f the Austrian Reconstruction
Loan o f 1923.

Subject to the rig h t o f the trustees o f the Reconstruc­

tion Loan to ob ject, A u stria is given the option o f liq u id a tin g her
r e l i e f indebtedness by the fo llo w in g payments beginning January 1, 1929
f i v e installm ents o f $287,556 each; ten installm ents o f $460,093 each;
and tw en ty-five installm ents o f $743,047 each, or a to ta l over the

fo r t y years o f $24,614,885.

The present value on a basis o f 5$ per

annum o f the tw en ty-five payments o f $1,337,140 each, beginning
January 1, 1943, is p r a c tic a lly the same as the present value on the
same basis o f the payments provided fo r under the option.

Austria

has advised the United States that i t intends to exercise the option
and has already made payments due under the agreement fo r January 1,
1929 and January 1, 1930, o f $287,556 each.
The settlement compares favorably with the settlements made by
the United States with the Governments o f Greece, I t a l y and Yugoslavia.
The terms o f settlement agreed upon with the United States
are the same as those o ffe r e d by A u stria and accepted by a l l o f i t s
other r e l i e f cred itors, v iz :

Denmark, Prance, Great B rita in , I t a ly ,

The Netherlands, Norway, Sweden and Switzerland.

FOR IMMEDIATE RELEASE
Thursday, May 8, 1930.

THS AUSTRIAN LEGATION

Upon the execution today o f the debt funding agreement between
Austria and the United States, the Austrian M inister on beh alf o f h is
Government expressed to the United States through the Secretary of
the Treasury the sincere appreciation o f Austria fo r the fr ie n d ly
s p ir it o f helpfulness shown by the United States in concluding th is
arrangement which w i l l make a most favorable impression upon the
public opinion o f Austria.

The Austrian M inister fu rth er said,

MI t is one of the most important steps in the long process of
my country’ s fin a n cia l and economic reconstruction.

Without the

sympathetic understanding o f A u stria’ s in tr ic a te problems and the
readiness to a s s is t, which were found in the United States, our
e ffo r t s in rebuilding our h ea vily damaged country would have been
fu tile .

The agreement ju st signed paves the way fo r my Government

to proceed towards i t s goal o f f u l l re h a b ilita tio n and the reesta b lish ment o f normal conditions in our country's national l i f e .
"A u stria sin cerely appreciates the helping hand stretched out
by i t s s is te r republic over the sea and th is fe e lin g o f gratitu de
cannot f a i l to strengthen the most fr ie n d ly re la tio n s happily e x is t­
ing between our two cou n tries."

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS,
, Monday, May 12, 1930.

STATEMENT BY SECRETARY MELLON

The Secretary o f the Treasury gives notice that tenders are
invited fo r Treasury B ills to the amount o f $100,000,000, or there­
abouts.

The Treasury B ills w i l l be sold on a discount basis to the

highest bidders.

Tenders w i l l be received at the Federal Reserve Banks,

or the branches thereof, up to two o ’ clock P. M., Eastern Standard time,
on May 15, 1930.

Tenders w i l l not be received a t the Treasury Depart­

ment, Washington.
The Treasury B ills w i l l be dated May 19, 1930, and w ill mature
on August 18, 1930, and on the maturity date the face amount w i l l be
payable without in te rest.

They w i l l be issued in bearer form only, and

in amounts or denominations o f $1,000, $10,000, and $100,000 (maturity
value).
I t is urged that tenders be made on the printed forms and
forwarded in the special envelopes which w i l l be supplied by the Federal
Reserve Banks or branches upon application th erefor.
No tender fo r an amount less than $1,000 w i l l be considered.
Jiach tender must be in m ultiples o f $1,000.

The price o ffe re d must be

expressed on the basis o f 100, with not more than three decimal places,
e*g., 99.125.

Fractions must not be used.

Tenders w i l l be accepted without cash deposit from incorporated
banks and trust companies and from responsible and recognized dealers

-

in investment secu rities.

2-

Tenders from others must be accompanied by

a deposit o f 10 per cent o f the face amount o f Treasury B ills applied
for, unless the tenders are accompanied by an express guarantee o f pay­
ment by an incorporated bank or trust company.
Immediately a ft e r the closing hour fo r receipt o f tenders on
May 15, 1930, a l l tenders received at the Federal Reserve Banks or branches
thereof up to the closin g hour w i l l be opened and public announcement o f
the acceptable prices w i l l fo llo w as soon as possible th erea fter, probably
on the fo llow in g morning.

The Secretary o f the Treasury expressly reserves

the righ t to re je c t any or a l l tenders or parts o f tenders, and to a llo t
less than the amount applied fo r , and his action in any such respect shall
be fin a l.

Those submitting tenders w i l l be adviaed o f the acceptance or

rejection thereof.

Payment at the p rice o ffered fo r Treasury B ills a llo tte d

mast be made a t the Federal Reserve Banks in cash or other immediately
available funds on toy 19, 1930.
The Treasury B ills w ill be exempt, both as to p rin cip a l and
interest (discount), from a l l taxation, except estate and inheritance
taxes.

The amount o f discount at which the Treasury B ills are o r ig in a lly

sold by the United States shall be considered as in te rest fo r tax exemp­
tion purposes.
Department Circular No. 418, dated November 22, 1929, and this
notice as issued by the Secretary o f the Treasury, prescribe the terms o f
the Treasury B ills and govern the conditions o f th eir issuo.

Copies o f the

circular may be obtained from any Federal Reserve Bank or branch thereof.

TRM SURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,'
FRIDAY MORNING, MAY 16, 1930.

SPEECH TO tBE DELIVERED BY
UNDERSECRETARY OF THE TREASURY-MILLS
AT THE ANNUAL DINNER MEETING
OF THE
AMERICAN ASSOCIATION OF ADVERTISING AGENCIES
IN WASHINGTON, D. C ., M Y 15, 1930.

When a public o f f i c i a l is in v ite d to address a meeting of
business men at th is p a rticu la r time, he is expected to discuss
the business outlook.

This is embarrassing, but natu ral, since

every business man is v i t a l l y in terested in hearing what course events
are lik e ly to take in the immediate fu tu re, and those in public posi­
tion s are presumed to speak with au th ority.

Let me, th erefore, state

at the outset that I am not a prophet and that when I accepted your
courteous in v ita tio n I did so with the d is tin c t understanding that I
should not indulge in any forecastin g.

Once a year, at le a s t, I am

obliged to do so in connection with the estimates o f future revenues
o f the Government,

I have no désiré- to go beyond my o f f i c i a l o b liga ­

tion in th is respect and to enter the general f i e l d o f prophesying.
Estimating the revenue is quite enough to s a tis fy my ambitions along
these lin e s .
At the present time we are unquestionably passing through one
o f those depressions which, in spite o f a l l our advances in business
and economic science, seem to recur p eriod ica lly.-

We are a l l

¿M 7

- 2 -

the more impressed and depressed because the yesterday was so
ex tra o rd in a rily prosperous, and the sharpness of the contrast i s
accentuated by the ra p id ity with which the change has come.

B e in g

human, we are in clin ed to pich the best year as the standard year
and to compare e x is tin g business a c t iv it y w ith record rather than
with average fig u res.

Moreover, each business man in h is own

in dividu al lin e o f business must, from business n ecessity, attempt
to determine the l i k e l y course of h is business during the next few
months.

His in te rest is in the immediate future, and h is natural

basis of comparison is the immediate past.

There is thus a

tendency to shorten the perspective, whereas a more correct appraisal
o f the situ ation as a whole can only be obtained from a longer view.
I t is from th is more detached standpoint that I would lik e to ta lk
th is evening o f the economic prospects o f the people o f the United States.
Our present experience, and fo r that matter, a l l past experience in the
modern world, indicates that the machine cannot be made to function
at f u l l speed a l l the time.
somewhere along the lin e .

P e r io d ic a lly a lack o f balance develops
The whole fa b r ic is so c lo s e ly knit and

interdependent that a general slowing up in e v ita b ly occurs u n til a
readjustment has been e ffe c te d and the balance restored.

I t is

discouraging that th is should be so, and the day may come when we
shall have so mastered our economic machine as to have i t under b e tte r
con trol.

But in the meanwhile i t i s w ell to remember that these

- 3 -

downswings do not wipe out the progress achieved during the forward
movements, and that when the onward march is resumed once more we
s ta rt, not from the old mark, but from the new.
This is an i n f i n i t e l y important fa c t to us, who have progressed
at such a remarkably rapid rate during recent years*

I t is d i f f ic u lt

to b e lie v e that the progress achieved w i l l not be consolidated and re­
sumed, fo r the basic fa c to rs which made i t possible are s t i l l there.
I take i t that a nation may be said to be prosperous when
the people, gen era lly speaking, are f u l l y employed at a r e la t iv e ly
high ra te of remuneration which brings w ithin the purchasing range
o f the average man or woman a constantly increasing l i s t o f goods and
services.

Such a condition presupposes on the one hand a high le v e l

o f purchasing power, and on the other, high p ro d u ctivity with increased
e ffic ie n c y in production and d istrib u tio n , r e fle c te d in r e la t iv e ly low
p rices fo r a broad l i s t o f a r t ic le s , which includes not only n ec e s s itie s ,
but the luxuries demanded by the almost unlim ited desires o f human beings
constantly aspiring to a higher standard o f liv in g .
During the period which has recen tly witnessed such a remarkable
quickening

o f our economic l i f e and the attainment o f a standard in the

s a tis fa c tio n o f human wants h ith erto unheard o f, these fa cto rs have been
present.

Estimates by the National Bureau of Economic Research fo r 1928

place our to ta l re a liz e d income at about $90,000,000,000, as compared
with about $30,000,000,000 in 1909.

This represents an increase in

¿km
per cap ita income from $3^7 to $7^*9» ° r in income per individual
g a in fu lly employed from $864 to $1920.

Although adjustment fo r p ric e

changes over the period would reduce the increases, i t would by no means
elim inate them.

I t is in te restin g to note that the remuneration o f

employees, that is , s a la ries , wages, e t c ., are estimated to-day at about
57 p er cent o f th is t o t a l, as compared with about
years ago.

51

per cent twenty

Treasury s t a t is t ic s derived from corporation and in dividu al

income tax returns r e fle c t the growth in national income which has taken
place in recent years.

For example, between

1922

and

1 9 2 S,

a period

during which important tax reductions were e ffe c te d , the net income
tabulated from individu al returns increased from $2 1 , 0 0 0 , 0 0 0 ,0 0 0 to nearly
$25*000,000,000, in s p ite o f Revenue Act revision s which elim inated
more than three m illio n o f the smaller taxpayers; w hile net income o f a l l
reportin g corporations increased from$&,300,000,000 to about $7 ,^ 0 0 , 0 0 0 , 0 0 0 .
Here, then, we have the fa c to r o f growing purchasing power, which is
v a stly important not only from the standpoint o f what has been accomplished,
but as poin tin g to p o s s ib ilit ie s in the way o f future development.
In the second place, we have enormously expanded our national
plant as expressed in terms o f estimated national wealth.

Our national

wealth to-day may be considered as w e ll in excess o f the $3 2 0 , 0 0 0 , 0 0 0 , 0 0 0
estimated by the Bureau o f the Census fo r 1922, which compares with the
fig u re o f $1S6,000,000,000 in 1912.

This fig u re includes the value o f land,

structures and other improvements thereon, the equipment o f in du strial
en terprises and farms, liv e s to c k , ra ilro a d and pu blic u t i l i t i e s , pipe lin e s ,
shipping, ir r ig a t io n enterprises, etc.

33»

- 5 *■
What I have described as plant expansion has been accompanied
by a sharp increase in the volume o f production, p rin c ip a lly o f manu­
factured goods.
output in
197

i *1

1909

1929*

Thus, taking the physical volume o f manufactured
at 100, production increased to about

175

in

1927

and to

la the la t t e r part o f th is period the increased e ffic ie n c y

in production resu lted in increased per ca p ita output o f those engaged
in industry.

Comparing 1919 and 1927 there was an increase o f more

than Uo per cent in the output per in dividu al in manufacturing enter­
p rises, and o f 35 Per cent in manufacturing, mining, a gricu ltu ral and
railw ay transportation combined.
are even more strik in g ;
100

Comparisons fo r in dividu al industries

The individu al output per hour increased nearly

per cent in the automobile industry, about

industry, and about

52

163

per cent in the t i r e

per cent in s te e l works and r o llin g m ills , lin e s

which have been conspicuously capable o f adapting mechanical refinements
and organization improvements in th e ir processes.
Here, then, we have a rapid increase in the already large* purchasing
power o f

120

m illio n people; an improved and expanded plant; g rea ter

e ffic ie n c y in production and d istrib u tio n , and as a resu lt an ever widening
market fo r all3manner o f goods and services .
p rosp erity.

Here is a rea l basis fo r

I t is w e ll to remember that thèse basic fa cto rs are s t i l l

present and there is no reason why they should not contribute to- our
progress in the future as they have in the past.

We are the possessors o f a

vast t e r r ito r y , rich in natural resources and populated with an en ergetic
and in t e llig e n t people, con stitu tin g a tremendous economic u n it, fr e e from
trade r e s tr ic tio n s , and with a market in which mass production and a demand
fo r commodities sustained by a means to s a tis fy i t have gone hand in hand.

Although the standards o f equipment

o f the average man, whether fo r

h is labor, h is comfort, h is cu ltu ral development, or his recreation,
are adm ittedly high, ye t vast numbers in this country enjoy incom­
p le t e ly many even o f the n ecessities o f l i f e *

This is a fa c t which at

the same time o ffe r s an opportunity and a challenge to the business man
to-day.

C ertain ly one- o f the opportunities that confronts him is the

opportunity by increased e ffic ie n c y , lower costs, and studied adaptation
o f his products to market needs, so to diminish the p r ic e o f h is products
as to render possible a wider d istrib u tio n fo r them.

This is not incon­

sisten t w ith an expanding puftehasing power in the domestic market; fo r
increased p rod u ctivity and increased e ffe c t iv e demand, experience has
demonostrated, can go hand in hand.
Given such a fundamentally favorable situ ation as ex ists in th is
country, i t is ir r it a t in g and pu zzling to be confronted with p eriod ic
depressions.

They se#m somehow unnecessary.

And yet to me the progress

we have achieved in th is country, the marvel o f the present economic
order, with the almost unlim ited promise which i t seems to hold out to
the average man in the way o f m aterial betterment, are in fin it e ly more
impressive than any temporary recession.

With the economic world in balanc

increased production and increased purchasing power seem to supplement each
other so n atu rally that we accept the two phenomena as a matter o f course.
But l e t any consider ¡able group o f people produce what is n 't wanted, or more

than is wanted, l e t th e ir goods f a i l to fin d a market, and th e ir impaired

* 81

3 *

- 7 -

purchasing power immediately a ffe c ts the market fo r goods produced by
other groups.

A n icely adjusted balance is disturbed, the movement

spreads and almost before we know i t we are confronted with the
phenomenon known as a business depression and the most b a fflin g o f
problems.

I t is only in times lik e these that we r e a liz e the in tr ic a c ie s

o f the system and how necessary i t is to analyze and determine what are
the c o n tro llin g and determining fo rc e s .
When one considers what i t means to have a fr e e ly com petitive economic
order, such as p re v a ils throughout most o f the world to-day, in which men
engage fr e e ly in a wide v a rie ty o f sp e c ia lize d a c t iv it ie s fo r a money
income, which is spent by them also qu ite fr e e ly upon a wide v a r ie ty o f
commodities, and in response to frequ en tly unstable preferences, and when
one appreciates the importance o f the psychological fa c to r and the
tendency o f human beings to move a l l together in one d ire c tio n or the
other at the same time, i t is easy to understand how complicated and
susceptible is our whole economic structure.

I t explains why p eriod ic

depressions and readjustments seem almost to be in e v ita b le .

Whether they

can be e n tire ly elim inated is c e rta in ly questionable, but that they can
be fu rth er m itigated is not too much to expect.

A fte r a l l , there was a

time when we:*were s a tis fie d with a banking and cred it system subject only
to co rre c tiv e checks and balances that autom atically became operative
only when unsound developments had ca rried us to periods o f c o s tly and
pain fu l c ris e s .

With the organization o f the Federal Reserve System and

the consequent c e n tra liz a tio n o f re s p o n s ib ility fo r the supervision o f
c red it developments, we made a great step forward.

The Federal Reserve Act

- 8 -

has not only given added strength to our c red it structure, hut has provided
us with a group

o f o f f i c i a l s whose duty i t is to study changing business

and cred it conditions in order that business and commerce may b en efit from
an enlightened supervision o f banking and cred it developments*

We have

not ye t reached p e rfectio n in the use o f th is instrument, but X b e lie v e
that a l l w ill admit that i t s creation was a step in the rig h t d irectio n
and that i t has functioned, even in these ea rly years o f i t s existence,
with untold b en efit to the country#
The Federal Reserve System did not come into existence u n til a fte r
many years o f in tensive study and work*

The analogy is perhaps not quite

leg itim a te, but i f a proper solu tion o f one o f the great economic
problems has been found and su itable machinery has been evolved fo r
dealing with one o f the important business fa cto rs, namely, that o f cre d it,
is i t too much to hope that in ten sive study o f a l l o f the other complicated
and in tr ic a te fa cto rs may y ie ld s im ila rly fr u it fu l results?

The President

has recen tly proposed that **The whole range o f our experience from th is
boom and slump should be placed under accurate examination with a view to
determination o f what can be done to achieve greater s t a b ilit y fo r the
future, both in prevention and in remedy#*1
stru ctive suggestion*

To me th is is a most con­

C ertain ly, i f there i s any hope o f maintaining

balanced conditions in industry and trade as against haphazard adjustments
on which we have in the main r e lie d in the past, that hope l i e s in the
gathering o f accurate information, i t s carefu l analysis, the establishment
o f fundamental p rin cip les, and a wide understanding o f those p rin cip les

7

- 9 -

and fa c ts on the part o f in dividu als engaged in many lin e s o f business
a c t iv it y .

We have made such enormous strid es iii the gathering o f current

business s t a t is t ic s , information can be so re a d ily , rapid ly, and widely
diffused, that i t is not too much to hope that the business course o f
the future may be charted by the lig h t o f adequate information and
knowledge and in accordance with recognized ru les o f conduct, resu ltin g
in grea ter sa fety to individu al in dustries, and in more assured s t a b ilit y
in our economic l i f e .

What has been accomplished in the course o f the

la s t few months by c o lle c t iv e e ffo r t s in a comparatively lim ite d fie ld ,
with very rea l e ffe c t in taking up the se v e rity o f the present downswing,
is a p retty f a i r sample o f the grea ter resu lts that can be accomplished
i f the concerted e ffo r t s o f the nation can be in t e llig e n t ly directed
to the maintenance o f economic s t a b ilit y *

We might as w e ll understand,

however, that no such goal is to be attained u n til there is not only
in te llig e n t d ire c tio n but a very d e fin ite sense o f re s p o n s ib ility on the
part o f a l l .

Then, as now, there w i l l be no escape from the consequences

o f ill-a d v is e d actions.
Let me conclude as I began:

I am not here to t e l l you whether

business is going to be good, bad, or in d iffe r e n t in the next three or
four months.

But i t is not inappropriate at th is time to remind you

how fa r we in the United States have tr a v e lle d along the economic highway
in the la s t few years; that certa in d e fin ite fa cto rs contributed to our
progress; that they are s t i l l a va ila b le ; and that while the road may
temporarily run through a v a lle y , i t s t i l l stretches out before us holding
in fin it e promise.

S3

C (I T il

|~

r% r~

K
11 r?—

FOR. RELEASE, AFTERNOONj PAPERS ,

TREASURY DEPARTMENT

THft&R|pK^,h93y A I L

Address of
Secretary A. W. Mellon
to the
Graduating Class
o f the
United States Coast Guard Academy
Few London, Connecticut
May 15, 1930

JBl

I congratulate the members o f the Graduating Class on becoming
o ffic e r s o f the United States Coast Guard.

I t is a long and

d i f f ic u lt course of tra in in g which you have successfully completed.
But such a course is necessary i f a man is to be thoroughly tested and
trained fo r the r e s p o n s ib ilitie s which he must face in carrying on the
work o f the Coast Guard.
That Service does not o ffe r an easy l i f e .

But that, I know,

is one of i t s advantages in your eyes, fo r no man worth w hile wants an
easy l i f e when there is re a l work to be done in the world.

The

Coast Guard imposes a great v a rie ty of duties on i t s members*

Nearly

a ll of these duties are d i f f i c u l t and some, such as p a tr o llin g the coast
to prevent smuggling,are fa r from pleasant.

But the Coast Guard

never f a i l s to carry out any duty imposed upon i t and prides i t s e l f on i t s
readiness to face any emergency that may a ris e .

The manner in which

the. Coast Guard has always performed these duties makes o f i t a Service of
which we may a l l be proud.
I t s tra d itio n s go back to the very f i r s t days o f our h isto ry as
a nation.

I t is the oldest of a l l our sea-going fo rce s.

It

was organized during the administration o f President Washington when the
f i r s t Congress passed a law creating a Revenue Cutter S ervice.

The

Continental Navy had been disbanded at the close of the Revolutionary War;
and, in organizing the Treasury Department, Alexander Hamilton found no
sea forces a va ila b le fo r the protection o f the coasts or the prevention
of smuggling into the country.

U n til the creation o f the Navy

- 3 several years la t e r , the Revenue Cutter Service was the n ation ’ s only
arm of defense on the sea; and subsequently, when the L ife-S a vin g Service
was created, these two services were combined to form the Coast Guard,
Coast Guard vessels have always been armed and during time of war
have operated as part o f the Navy.

They have rendered distinguished

service in a l l the wars in which the country has been involved and in the
World War played an important part, p a rtic u la rly in that v i t a l and successful
operation o f transporting our troops abroad.
In time o f peace the Coast Guard’ s duties are no le s s dangerous than
in time o f war and each year are growing more d i f f ic u lt o f performance.
One o f i t s functions is to p a trol the coasts during stormy weather in order
to rescue ships and persons in d istress at sea.

The performance of

th is duty, as a l l o f us know, is hazardous in the extreme, in volvin g acts
o f heroism which are looked upon by the Coast Guard as merely part of the
day’ s routine.

Last year there was not a sin gle day when the Service

did not render some manner o f assistance to vessels or persons in d istress.
And yet these deeds, often dangerous and even h eroic, are sometimes recorded
in the newspapers with perhaps two or three lin e s , whereas some incident
o f a more sensational

nature in volvin g the Coast Guard is given prominence

out o f a l l proportion to i t s re a l importance.
This is no in d ication , however, that the country does not appreciate
the great service which the Coast Guard is rendering.

One recent

evidence o f such appreciation is the generous appropriation which Congress
has made in providing new and b etter bu ildings fo r the Academy here at
New London.

The present quarters are inadequate, but th is is a defect

which w ill soon be remedied.

The a rc h ite c ts ’ drawings fo r the new

buildings are now nearing completion and i t is expected that at some time

during the summer

bids w i l l be asked fo r constructing these buildings«

When completed, they w i l l provide improved f a c i l i t i e s fo r the train ing
which the future o ffic e r s o f the Coast Guard w i l l re ceive here, and they
w ill also serve to emphasize the importance which th is branch o f our national
defense has assumed in the d a ily l i f e o f the nation.
I t seems superfluous to comment on the value o f such a Service as
the Coast Guard, not only as regards liv e s saved and property rescued but
in it s humanitarian aspects.

In i t s tra d itio n s and in i t s record of
It

has shown that i t w i l l fig h t hard when an enemy threatens and w i l l k i l l and
destroy when necessary in time of war.

But i t w i l l also fig h t

equally hard against the greater odds o f wind and sea in order to save l i f e
and to p rotect the nation against those who defy her laws and threaten
her au thority in time o f peace.
Of such a Service the nation can w ell be proud.

In i t s d a ily

l i f e the Coast Guard exem p lifies the q u a litie s of courage, lo y a lty and
b e lie f that nothing must in te r fe r e with the performance o f duty.

I know

that the new o ffic e r s who are today entering the Service can be counted on
to uphold the best tra d itio n s o f the Coast Guard.

We are glad to

have you as a part o f that old and famous organization and on behalf of
the Treasury I wish to extend to you a most cord ial welcome and to wish
a ll o f you happy and useful careers in the service o f your Government
and the country.

TREASURY DEPARTMENT

DOR RELEASE, MORNING PAPERS,
Friday* May 16, 1930,

Statement by Acting Secretary M ill«

A cting Secretary o f the Treasury M ills announced to-day
that the tenders fo r $100,000,000, or thereabouts, o f Treasury
B ills dated May 19th and maturing August 18th, which were
o n e re d on May 12th, were opened at the Federal Eeserve Banks
on May 15th.
The to ta l amount applied fo r was $275,674,000,

The

highest hid made was 99.400, equivalent to an in te rest rate of
aoout 2 3/8 per cent on an annual basis.

The lowest hid ac­

cepted was 99,331, equivalent to an in te re s t rate o f about
2 5/8 per cent on an annual basis.
accepted was $104,600,000.
B ills to he issued i s 99.356,
discount "basis is about

2 .5 4

The to ta l amount o f bids

The average p rice of Treasury
The average rate on a bank
per cent.

FOR RELEASE, MORNING PAPERS,
Saturday, June 7, 1930.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MELLON

The Treasury is today o ffe r in g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks, an issue o f twelve
month 2-7/8 per cent Treasury c e r t ific a t e s o f indebtedness o f Series
TJ-1931, dated and bearing in te re s t from June 16, 1930, and maturing
June 15, 1931.

The amount o f the o ffe r in g is $400,000,000, or there­

abouts.
Applications w i l l be received at the Federal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a t e s , a t par,
Treasury c e r t ific a t e s o f indebtedness o f Series TJ-1930, maturing June
16, 1930,

Subscriptions fo r which payment is to be tendered in c e r t i­

fic a te s o f indebtedness maturing June 16, 1930, w i l l be given preferred
allotment up to $150,000,000.
Bearer c e r t ific a t e s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a t e s w i l l have two

in te re s t coupons attached payable December 15, 1930, and June 15, 1931.
These c e r t ific a t e s w i l l be exempt, both as to p rin cip a l and
in te re s t, from a l l taxation, except estate and inheritance taxes.
About $550,000,000 o f Treasury c e r t ific a t e s o f indebtedness
and about $9 5 , 0 0 0 , 0 0 0 in in te re s t payments on the public debt become
due and payable on June 16, 1930.
The tex t o f the o f f i c i a l circ u la r fo llow s:

-2 -

The Secretary o f the Treasury, under the au th ority o f the Act
approved September 24, 1917, as amended, o ffe r s fo r subscription, at par
and accrued in te rest, through the Federal Reserve Banks, Treasury c e r t i­
fic a te s o f indebtedness o f Series TJ-1931, dated and bearing in te re s t
from June 16, 1930, payable June 15, 1931, with in te re s t a t the rate o f
two and seven-eighths per cent per annum, payable on a semiannual basis.
•Applications w i l l be received a t the Federal Reserve Banks.
Bearer c e r t ific a t e s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000*

The c e r t ific a t e s w i l l have two

in te re s t coupons attached, payable December 15, 1930, and June 15, 1931.
The c e r t ific a t e s of said series sh a ll be exempt, both as to
p rin cip a l and in te re s t, from a l l taxation (except estate and inheritance
taxes) now or h erea fter imposed by the United States, any State, or any
o f the possessions o f the United States, or by any lo c a l taxing authority.
The c e r t ific a t e s o f this series r i l l be accepted a t par during
such time and under such rules and regulations as sh all be prescribed or
approved by the Secretary o f the Treasury, in payment o f income and p r o fit s
taxes payable at the maturity o f the c e r t ific a t e s .

The c e r t ific a t e s of

this series w i l l be acceptable to secure deposits o f public moneys, but
w ill not bear the c ircu la tio n p r iv ile g e .
The rig h t is reserved to r e je c t any subscription and to a l l o t
less than the amount o f c e r t ific a t e s applied fo r and to close the subscriptions a t any time without n otice.

The Secretary o f the Treasury

also reserves the righ t to make allotment in f u l l upon application s fo r
smaller amounts, to make reduced allotm ents upon, or to r e je c t , applications

fo r la rg e r amounts, and to make c la s s ifie d allotm ents and allotm ents upon
a graduated scale; and his action in these respects w i l l he fin a l.

A llo t­

ment notices w i l l he sent out promptly upon allotm ent, and the basis o f
the allotm ent w i l l he p u b licly announced.
Payment at par and accrued in te re s t fo r c e r t ific a t e s a llo t t e d
must he made on or before June 16, 1930, or on la te r allotm ent.

A fte r

allotment and upon payment, Federal Reserve Banks may issue interim
receipts pending d e liv e ry of the d e fin it iv e c e r t ific a t e s .

Any q u a lifie d

depositary w i l l he permitted to make payment by c re d it fo r c e r t ific a t e s
a llo tte d to i t fo r i t s e l f and it s customers up to any amount fo r which
i t shall he q u a lifie d in excess o f ex istin g deposits, when so n o tifie d
by the Federal Reserve Bank o f i t s d is t r ic t .

Treasury c e r t ific a t e s o f

indebtedness o f Series TJ-1930, maturing June 16, 1930, w i l l he accepted
at par, in payment fo r any c e r t ific a t e s o f the series now o ffe re d which
shall he subscribed fo r and a llo tte d , w ith an adjustment o f the in te rest
accrued, i f any, on the c e r t ific a t e s o f the series so paid fo r .
As fis c a l agents o f the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make a l l o t ­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks o f the respective d is t r ic ts .

TREASURY DEPARTMSRT.

POR RELEASE, AFTERROOR PAPERS,
WEDNESDAY, JURE 11, 1930.

REMARKS BY
HOR, PERRY K. HEATH,
Assistant Secretary o f the Treasury,
Prelim inary to the showing
o f the film
“ THE RATIOR*S CAPITAL“

MI CHI GAR BARKERS ASSOCIATIOR,
GRARD RAPIDS, MICHIGAR,
June 11, 1930.

coooOOOOoooo

Mr. President and members of the Michigan Bankers Association, and
guests:
A clause in the Constitution o f the United States authorized the
lo ca tio n and the "building o f a Capital fo r the nation,

Leningrad and

Canberra, A u stra lia , are the only other ca p ita ls which wore founded fo r
th is express purpose.

The f i r s t building commenced nnder the f i r s t

public b u ildin g program o f the Government was the Capitol at Washington,
Since then there have been bu ildings constructed in a l l states o f the
Union, u n til now there are some 1400 Government-owned bu ildin gs.

Most

of these have been b u ilt haphazard, both as to architecture and public
convenience, and have been b u ilt under separate b i l l s passed by Congress
under the old lo g - r o llin g method.
Public bu ildin g ceased in th is country in 1917 and in 1926 i t
was appreciated that owing to the enormous growth o f the country and
the pressing needs then evident, that a b u ild in g program conducted un­
der the old scheme o f things would prove e n t ir e ly f u t i l e .

I t was then

that Congress w isely adopted the present method o f bu ildin g our public
bu ildings and, in the law approved May 25, 1926, directed that the Sec­
reta ry o f the Treasury and the Postmaster General should make a nation—
wide survey and report back to Congress as to the public necessity.
In February, 1927, th is report was sent to Congress, a llo c a tin g
d istrib u tio n of $100,000,000 that had been authorized at the time the
May B i l l was passed, and in d ica tin g that i t would require $361,000,000
at lea st to provide fo r a l l the needs of the country outside
D is tr ic t of Columbia as o f that date.

the

-

2

-

There were addition al authorizations made amounting to another $100,000,000
and to include also the proceeds of the sale o f the old bu ildin gs and
grounds and i t was estimated that the to ta l amount a va ila b le would be
$248,000,000,

A report was sent to Congress ih February, 1929, in d i­

cating the allod atib n o f the en tire $248,000,000.

About th is same

time $50,000,0(36 was authorized to be expended fo r departmental bu ild­
ings in Washington and $25,000,000 fo r the acqu isitlori o f land fo r the
purpose.

These bu ildin g acts provided that expenditure o f th is huge

sum should be under the d ire c tio n of the Secretary o f the Treasury and
consequently the Supervising A rch itect*s O ffic e o f the Treasury Depart­
ment is in charge of the work and i t becomes an in te g ra l part of Treas­
ury a c t iv it y .
While Secretary o f Commerce, President Hoover took a great in te r­
est in the development of the b u ildin g plans o f the Government and, a f­
te r he became President, he inaugurated le g is la t io n that would allow
the expansion of the bu ildin g program to more n early comply with the
needs o f the country, not only outside the D is t r ic t o f Columbia, but
w ithin the D is t r ic t , and there has recen tly been passed what is known
as the K e y e s -E llio tt B i l l which provides $115,000,000 a d d ition al fo r
the Government program in the D is tr ic t of Columoia, and a lik e amount
fo r the country at la rge.
I t is not possible to l i s t the names o f those in public l i f e who
have been responsible fo r the sentiment in Congress which culminated
in th is le g is la tio n .

T h irty years ago McKinley, Root, R oosevelt and

T a ft, assisted by the constructive genius o f Senator McMillan of
Michigan, were very la rg e ly responsible fo r the inauguration o f the

work.

Of la t e r years the President, Secretary Mellon, Senator Fernald,

Senator Smoot, Congressman E l l i o t t and Congressman Cramton o f our own
State, have carried on the work.
We therefore now have a bu ildin g program authorized by Congress
which contemplates the expenditure of $363,000,000 outside the Dis­
t r i c t , and $190,000,000 in the City o f Washington.

The program is

carried on through what is known as the Interdepartmental Committee,
which is composed of an A ssistan t Secretary of the Treasury, an As­
sistan t Postmaster General, the Supervising A rch itect of the Treasury, •
and a Secretary to the Committee.

A ll p ro jec ts throughout the country

in which postal a c t iv it ie s are housed, are passed on by th is Committee,
In the ca.se of custom houses, quarantine station s, assay o ffic e s ,
appraisers1 stores, etc.*, as w e ll as courthouses, where there are no
postal a c t iv it ie s , the Secretary o f the Treasury is in en tire charge.
On January 1st o f th is year.we had $40,000,000 o f contracts on
hand.

Due to the extended program and the desire of the administra­

tion to place as much work as possible on the market th is year, we ex­
pect to have $80,000,000 of contracts in fo rce by the 1st of next Janu­
ary.

To carry on th is enormous amount of work, the Supervising Archi­

t e c t ’ s O ffic e has a force o f over 200 men working on sketches and de­
signs, plans and contracts, and we are expanding th is fo rc e by one-third
as ra p id ly as is possible under the C iv il Service rules.
Before an individual p ro jec t is authorized by Congress, an estimate
is made of the requirements and lim its of cost are set by the Secretary
o f the Treasury.

These p ro jec ts are lis t e d by installm ents and sent

to Congress fo r s p e c ific authorization and appropriation.

As soon as

the appropriations are made, the s ite s are purchased in case the

M l
- 4 -

Government does not own tiie s ite and, as soon as t i t l e has "been passed
to the Government and approved by the Attornejr General, plans are made
fo r the "building, sp e cifica tio n s are w ritten , "bids are asked fo r and
the contract awarded.

This process takes very much longer than some­

times seems necessary, "because of innumerable delays which cannot be
obviated.

To name a few, I might mention s ite loca tion disagreements in

the various communities, flaw s in the t i t l e when s ite s have been decided,
d if f ic u lt y in pleasing the various departments whose approval has to be
obtained before plans can be completed, im portunities o f various
producers and fa b rica to rs o f m aterials through th e ir Congressional
delegation, and in terferen ces o f various kinds which are bound to occur
in a governmental p ro jec t.
Of course the greatest sin gle p roject under the d irectio n of the
Secretary o f the Treasury i s the rebu ilding of Washington.

As you know,

the f i r s t Congress delegated the authority fo r the selection o f a s ite
fo r the fe d e ra l c i t 3/ to George Washington and, assisted by Jefferson and
Madison, he decided upon the present lo ca tio n o f the C apitol.

This f i r s t

commission chose a young french engineer, Major P ie rre Charles L fIn fa n t,
a frie n d of Washington in the Continental Army, Y/ho set to work with en­
thusiasm and evolved the now famous L ’ Enfant plan fo r the fe d e ra l c ity .
of
L 1Enfant was fa m ilia r with the work/Lehotre as h is youth had been spent
at V e r s a ille s , and you W ill observe the influence o f this greatest of
landscape a rch itects in the plan being follov/ed today.
The Capitol was commenced in 1793 and soon afterwards work began
on the White House.

In la t e r years several notable public buildings

were constructed - the Treasury, the Patent O ffic e , and the D is tric t

- 5 -

Courthouse - as examples.

A h a lf centuny ago the a u th o rities seemed

to have been a ffe c te d by a sort o f a rch itectu ra l g it t e r s , and some of
the m onstrosities s t i l l standing in Washington show what lack o f stan­
dards of taste can do in “b lig h tin g a b ea u tifu l plan.
The World* s P a ir at Chicago seems to have brought about an archi­
tectu ra l renaissance in th is country and, in 1900, Burnham, McKim, St.
Gaudens and Olnstead were c a lled together by President McKinley to dis­
cuss the Washington situ a tion , and the so -ca lled McMillan plan o f 1901
was evolved.

Prom that tin e on Congress has gradually been educated to

a sense o f the p o s s ib ilit ie s in Washington, as w ell as the n ecess itie s,
and, under the new bu ildin g Act, the L 1Enfant Plan is being developedby the Secretary o f the Treasury, advised by a Board of Consultants com­
posed of some of the leading a rch itects o f the country.
B r ie fly , the p rojects now in various stages of development include
a grand development of the Mall which stretches from the Capitol to the
Lincoln Memorial,

As adjuncts to th is .g re a t government park, bordered

as i t w i l l be by magnificent departmental bu ildin gs, w i l l be the expan­
sion of the Capitol grounds to the Union Station, the additions to the
Senate and House O ffic e bu ildin gs, the new bu ildin g fo r the Supreme
Court, the great Arlington Memorial Bridge, the new highway to Mount Ver­
non, and the drive from the Lincoln Memorial to the Great P a lls of the
Potomac,
The Grant on Park B i l l ju st passed which has been sponsored by Con­
gressman Cramton o f th is state, provides the means fo r a great develop­
ment of the d rives along the Potomac.

The highway to Mount Vernon w ill

soon be completed and, in a few years, there w i l l be a b ea u tifu l drive
extending from Port Washington to the Great P a lls o f the Potomac, where

-

6

-

a bridge is to be b u ilt and another highway extending from there a l l
the way to Mount Vernon.

In addition to th is the le g is la tio n provides

fo r the extension o f Rock Creek Park into Maryland, so that a l l the
very lo v e ly country and great natural beauties o f the scenery in and
around Washington w i l l be saved to the people fo r a l l time.
The development of th is program w i l l run over a period o f possibly
eigh t or ten years, but w ithin three or four years most o f i t w i l l have
been accomplished, or w i l l be w e ll on the way.
In a few years v is it o r s to Washington w i l l leave the Union Station
which, as you know, i s a magnificent gateway to the c it y , step out into
the station plaza, drive past the great bu ildin gs o f the Capitol group
down a fe d e ra l avenue lin ed w ith the most magnificent arch itectu ra l
composition to be found anywhere in the World; the outlines o f c la s s ic a l
buildings r e fle c te d in pools and cascades, b ea u tifu l gardens on every
side and shaded d rives, u n til they pass the Washington Monument and
a rriv e at the Lincoln Memorial.
years.

I t s beauty seems to grow with the

Prom the Memorial the great A rlin gton bridge leads you to the

Tomb o f the Unknown Soldier and the la s t re s tin g place o f thousands o f
the defenders of the land.
Tlie people o f the country w i l l have a c a p ita l expressing and fu lf i l l i n g th e ir needs, which w i l l become the great shrine o f the Republic.
To paraphrase two presidents, Washington w i l l express the soul o f America
and stand as the symbol o f the nation.

TREASURY DEPARTMENT

FOB RELEASE, MORNING PAPERS,
Wednesday, June 11, 1930.

Secretary Mellon announced that subscriptions fo r the issue of
Treasury c e r t ific a te s of indebtedness* dated June 16, 1930, Series TJ-1931,
2-7/8 per cent, .maturing June 15, 1931, dlosed at the close of business
on June 9, 1930.

The reports received from the twelve Federal Reserve

Banks show that fo r the o ffe r in g , which was fo r $400,000,000, or there­
abouts, to ta l subscriptions aggregate some $2,397,000,000.

Of these

subscriptions, about $265,000,000 represent subscriptions fo r which 4-7/8$
Treasury c e r t ific a t e s o f indebtedness o f Series TJ-1930, maturing June 16,
1930, were tendered in payment, o f which about $150,000,000 were accepted.
Allotments on other subscriptions were made as follows.:

A l l cash

subscriptions in amounts not exceeding $10,000 fo r any one subscriber
were a llo te d 50 per cen t* but not less than $500 on any one subscription;
cash subscriptions in amounts over $10,000 but not exceeding $100,000 were
a llo tte d 40 per cent., but not le s s than $5,000 on any one subscription;
cash subscriptions in amounts o ver.$100,000 but not exceeding $1,000,000
were a llo t t e d 20 per cent, but not less than $40,000 on any one subscription;
cash subscriptions in amounts over $1,000,000 but not exceeding $25,000,000
were a llo t t e d 10 per cent, but not le s s than $200,000 on any one subscription;
and cash subscriptions in amounts over $25,000,000 were a llo t t e d 5 per cent,
but not le s s than . $2,500*000 *on any one -subscript-ion.
Further d e ta ils as to subscriptions and allotm ents w i l l be announced
when fin a l reports are received from the Federal Reserve Banks.

FOR IMMEDIATE RELEASE,
Friday, June 13, 1930,

TREASURY DEPJffîTMEIfT

Secretary Mellon to-day announced that the to ta l amount of subscriptions
received fo r the issue of Treasury c e r t ific a t e s of indebtedness, Series TJ-1931,
2-7/8 per cent, dated Juno 16, 1930, maturing June 15, 1931, was $3,398,792,000.
Jhe to ta l amount of subscriptions a llo tte d was $429,373,000, o f which $148,938,000
represents allotm ents on subscriptions fo r which Treasury c e r t ific a t e s of in ­
debtedness of Series TJ-1930 were tendered in payment.

Such exchange subscrip­

tions were a llo tte d 56 per cent, while allotm ents on other subscriptions were
made on a graduated scale.
The subscriptions and allotm ents were divided among the several Federal
Reserve D is tric ts and the Treasury as follows:
Federal Reserve
D is tric t:

Total Subscrip­
tions Received:

Total Exchange
Subscriptions
Allotted;_____

Total Cash
Subscriptions
A llo tte d :

Total Subscrip­
tions a llo tte d :

Boston
ïïew York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapoli s
Kansas City
Dallas
San Francisco
Treasury

$ 188,935,000
1,310,951,000
149.359.500
99.049.500
74.155.500
74,703,000
128.275.500
32.285.500
6,318,000
17.613.500
47.273.500
269,826,000
_______ 46,500

$
806,500
129,255,000
262.500
880,000
286.500
165.500
13,506,000
1,172,500
304.500
647.500
267.500
1,362,000
22.000

$ 23,408,000
107,038,500
29.837.500
19.162.500
20.562.500
20.738.500
16.573.500
6,118,000
1,515,500
2,940,000
12,557,000
19.977.500
6,000

$ 24,214,500
236,293,500
30.100.000
20.042.500
20.849.000
20.904.000
30.079.500
7.290.500
1,820,000
3.587.500
12 *'824,500
21.339.500
28,000

$2,398,792,000

$148,938*000

$280,435,000

$429,373,000

Total

TREASURY DEPARTMENT

IMMEDIATE RELEASE
June 16, 1930

The Treasury has received payments amounting to $117,141,598,24,
due June 15, 1930, from the fo llo w in g fo re ig n governments on account of
th e ir funded indebtedness to the United States, o f which $45,786,467,50
was fo r account o f p rin cip al and $71,355,130.74 fo r account o f in te re s t.
A ll payments were received in cash.
P rin cip al
Belgium • • • • • $ 3,450,000.00
Czechoslovakia

.

1,500,000.00

In tere st
$ 1,375,000.00
—

Estonia * • • • •

—

150,000.00

Finland ...............

—

129,885.00

France . . . . ,
Great B rita in

.

Hungary • • • . •
I t a l y ..................
L a tv ia

. . . . .

Lithuania • • • «
Poland

. , . • •

35,000,000.00

—

—

66,390,000.00

—

28,804.73

5,000,000.00
—

36,467.50
—

—

50,000.00
94,075.12
3,137,365.89

Rumania...............

600,000.00

—

Yugoslavia

200.000.00

—-

• • .

$45,786,467.50

$71,355,130.74

I t w i l l he noted that a l l payments were made in cash, as compared
with the p ra ctice which has p reva iled fo r a number of years o f making

-

2

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payment of a greater part o f the amount due in United States s e c u rities, as
permitted "by the debt funding agreements.

In so fa r as fo re ig n in terest

payments are concerned, th e ir payment on June 16th in cash rather than in
United States secu rities w i l l have the e ffe c t of increasing the surplus
fo r the current fis c a l year.

When the Budget fig u res were made up, i t was

thought that June fo re ig n in te re s t payments would he made in secu rities
thus autom atically reducing the national debt by that amount.

However as

surplus funds in any given f i s c a l year are applied to debt retirement in
accordance with the w ell-esta b lish ed practice o f the Treasury, the payment
o f in terest in cash rather than in s ec u rities w i l l not a ffe c t the to ta l
reduction o f the national debt as contemplated fo r the current fis c a l year.
In so fa r as payments o f p rin cip a l are concerned, th e ir payment in
cash or s ec u rities does not su bstan tially a ffe c t our budgetary p o sition ,
since under the terms o f the L ib e rty Bond Acts a l l cash payments on account
of p rin cip al of o b ligation s o r ig in a lly acquired under those acts must be
applied to debt retirem ent.

On th is occasion that portion o f the p rin cip al

payments on account o f such obliga tion s (which represents approximately
90 per cent o f the to ta l p rin cip a l payments received ) has already been
applied to the retirement o f Treasury c e r t ific a t e s maturing today.

POE EELEASE, MOBNING PAPERS,
Saturday, June 21, 1930#

THEASUEY DEPARTMENT

In answer to the question o f whether the enactment o f the Smoot-Hawley
T a r iff Law would in his opinion adversely a ffe c t the business interests of
the United States and retard a business recovery, Secretary Mellon said :
BI do not believe that i t w i l l .
have been greatly exaggerated*

It seems to me that fears and criticism s

Whenever a new protective t a r i f f law has been

enacted gloomy prophecies have been made*

They have fa ile d to m aterialize

as fa r back as I can remember, and my memory goes back many years.

The rates

in the b i l l as i t passed the House a year ago were higher than in the b i l l
recently signed by the President*
alarm*

Yet business at that time did not take

There seems to be no reason why i t should now*

I know o f no industry

that is seriously hurt, while those industries which needed additional pro­
tection and received i t are benefited.
I have canvassed the situation with the Secretary o f Commerce, and the
notion that this law is going to destroy our foreign trade, expressed in some
quarters, is certain ly without foundation.

The United States w i l l continue

to buy a vast quantity o f foreign products and to s e l l the products o f it s
farms, mines, and factories a l l over the world.

In so f a r as imports are

concerned, fo reign nations that do business with us would do w ell to remember
that the all-im portant facto r i s the maintenance of the high purchasing power
and standard o f liv in g o f the American people.
The enactment o f th is measure brings to an end 15 months of uncertainty.
American industries know now where they stand and w i l l , I am confident, adjust
themselves without d iffic u lt y to new conditions*

There seems to be an

impression that the new h i l l makes a sweeping revision upward o f e x istin g
rates*

While i t is true that there is a sharp increase in rates applicable

to the a g ric u ltu ra l schedule, generally speaking other rates cannot he said
to have heen advanced s u ffic ie n tly to a lt e r su bstan tially our existin g
economic p o sition .

In fa c t, only a comparatively few o f the major items

have heen changed.

I do not mean to imply that the h i l l is free from

defects.

No t a r i f f h i l l i s .

But this measure at le a st by it s own terms

provides the means whereby in equ alities and errors may he adjusted.
upon the fle x ib le provisions as highly important.

I look

I believe that they o ffe r

the opportunity not only to correct errors and to adjust rates to meet new
and changing conditions, hut that they lay a foundation fo r a businesslike
method of t a r i f f revision, fre e from the pxill o f sectional »nd p o lit ic a l
interests that seem to make a s c ie n tific and well-balanced revision by the
le g is la t iv e body almost impossible.

I f these provisions are in te llig e n tly

and courageously applied, they should go a long way toward making another
le g is la t iv e revision of the t a r i f f unnecessary fo r many years to come*

This

of i t s e l f is o f inestimable benefit to business, fo r there is nothing more
unfavorable to prosperity than uncertainty and frequent necessity to adjust
economic conditions to le g is la t iv e enactments.

In short, it seems to me

that the fin a l enactment of the T a r iff Law, f a r from p lacin g a new obstacle
in the way o f business recovery, removes one by elim inating the uncertainty
of the la s t 15 months, and by it s promise o f more businesslike revision in
the future makes a d e fin ite contribution to business s t a b i l i t y . 8

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE,
MOiTEAIcRJITE 23, 1930.

The Secretary of the Treasury announced the signing today of
the Agreement authorized by Act of Congress approved June 5, 1930, pro­
vid in g fo r the comxolete and fin a l discharge o f the ob liga tion s of Germany
to the United States in respect o f the awards o f the Mixed Claims Commis­
sion, United States and Germany, and the costs o f the United States Army
o f Occupation,
In b r ie f, the Agreement provides that Germany agrees to pay
40.800.000 reichsmarks ($9,700,000) fo r the period September 1, 1929 to
March 31, 1930, and the sum o f 40,800,000 reichsmarks per annum from A p ril
1, 1930 to March 31, 1981, in sa tis fa c tio n o f Mixed Claims, and fo r the
period from September 1, 1929 to March 31, 1966 an average annuity of
25.300.000 reichsmarks ($6,000,000) in f u l l liq u id a tio n o f our Army
Costs.

As evidence o f th is indebtedness Germany is to issue to the

United States, at par, bonds maturing semi-annually.

Under the Agree­

ment the United States w i l l re ceive on account o f Army Costs over a period
o f 37 years approximately $250,000,000 and on account o f Mixed Claims
Awards over a period o f 52 years, approximately $505,000,000,

The pay­

ments to be received on account o f Army Costs include in te re s t at the
rate of about 3-5/8 per cent per annum on a l l payments deferred over a
period longer than would have been necessary to liq u id a te the Army Costs
under the P a ris Agreement.

The Mixed Claims Awards bear in te re s t at the

rates sp e c ifie d in such awards up to January 1, 1928 and the Settlement
o f War Claims Act s p e c ifie s a rate o f 5 per cent from that date u n til paid.

-

2

-

The payments to be received on th is account include, th erefo re, in te rest
which w ill be paid on the awards.

While the annuities are stated in

terms o f reichsmarks, payments are to be made in d o lla rs , e ith e r at the
Treasury or at the Federal Reserve Bank of New York.

The exchange value

o f the mark in re la tio n to the d o lla r shall be calculated at the average
o f the middle rates p re v a ilin g on the B erlin bourse during the h a lf
monthly period preceding the date of payment.

The German Government

undertakes that the reichsmark shall have and shall reta in i t s con­
v e r t i b i l i t y in to gold or devisen as contemplated in the present Reichsbank
law and that the reichsmark shall reta in the mint p a rity defined in the
German coinage law of August 30, 1924.

rdf.

TREASURY DSPABBOTT

SOS IMMEDIATE RELEASE,
TUESDAY, JUNE 24, 1930.

The Secretary of the Treasury announces that a ten ta tive agreement
has been reached with the c it y o f f i c i a l s o f Sew York City providing fo r
the acq u isition o f a new s ite fo r a Federal bu ildin g to accommodate the
post o ffic e a c t iv it ie s now located a t C ity H all Park and other govern­
mental o ffic e s now in rented quarters? the tran sfer to the C ity of Sew
York of the Federal property located in C ity H all Park and fo r the
purchase of a suitable s ite in the C ivic Center fo r a separate building
fo r the Federal Courts.
I t w i l l be necessary to obtain amendatory le g is la tio n to carry out
the agreement with the C ity o f Hew York and the Department w i l l take
immediate action looking toward the securing o f the le g is la tio n at
th is present session o f Congress.
The assistance rendered the Department by the Merchants’ Association
o f Hew York C ity in i t s n egotiations with the c it y o f f i c i a l s o f Hew York
is appreciated.

TREASURY /DEPARTMENT
#
.• * • •

TO BE RELEASED UPON APPEARANCE BEFORE
THE COMMITTEE, WEDNESDAY, «TUNE 25, 1930«

0

STATEMENT BY SECRETARY OF THE TREASURY MELLON BEFORE THE
COMMITTEE ON BANKING AND CURRENCY, HOUSE OF REPRESENTATIVES,
IN CONNECTION WITH H. J. RES. 364.

Mr. Chairman and Gentlemen o f the Committee:
This resolu tion is designed to proh ib it Federal Reserve Banks, national
hanks and State member banks of the Federal Reserve System from purchasing
German Reparation Bonds or other c e r t ific a t e s o f indebtedness issued pursuant
to the new plan fo r the settlement of the fin a n c ia l Questions resu ltin g from
the World War, as outlined in the agreement reached between certain signatory
nations at The Hague on the 20th of January, 1930.
Under present law Federal Reserve Banks have no au thority to purchase
bonds o f th is character.

Consequently, the resolu tion is meaningless in so

fa r as they are concerned.
National banks under the provisions o f Section 5136 o f the Revised
Statutes as amended by the McFadden Act o f February 25, 1927, are lim ited to
buying marketable obliga tion s in the form o f bonds, notes and/or debentures,
commonly known as investment s e c u rities, under such fu rther d e fin itio n o f
that term as may, by regu lation , be prescribed by the Comptroller o f the
Currency.
The regu lation s issued by the Comptroller define the term »marketable"
as meaning that the security has such a market as to render sales at in tr in s ic
values re a d ily possible.
1,

The p rin cip a l provision s o f the regulations being:

that the issue be o f a s u ffic ie n t ly la,rge to ta l to make
m arketability p ossib le; and

2.

such a public d istrib u tio n o f the secu rity must have been,
provided fo r or made in a manner to p rotect or insure the
m arketability of the issue.

- 2 -

The sec u rities which may "be purchased "by State member banks are, o f
course, governed by State law,
I b e lie v e both Congress and the Comptroller of the Currency showed sound
judgment and wisdom in dealing with such le g is la tio n .

They recognize that

while national banks are in stru m en talities o f the Federal Government, they
are operated by p riva te ca p ita l and by th e ir o ffic e r s and d irecto rs elected
by th eir stockholders.

The Government does not undertake to manage the

banks, and the wisdom o f placin g upon thorn the re s p o n s ib ility fo r th e ir in ­
vestments, with proper safeguards, cannot bo questioned.

There is , in my

opinion, no more reason fo r Congress to say that a national benk should not
purchase a reparation bond than to say that i t should not purchase a s p e c ific
ra ilro a d or in du strial bond.
in the banks1 management.

To do so trould place our Government d ir e c tly
I t is unsound and unnecessary.

To go fu rth er and t e l l a State member bank that regardless of State law,
i t may not purchase a p a rticu la r security is not consistent w ith my con­
ception ox our p rin cip les o f government as established by the Constitution.
I t is not apparent to me that any good purpose would be served by the
adoption o f th is resolu tion.
soever.

In fa.ct, I see no ju s t ific a t io n fo r i t what

The statement in the preamble that purchases of these bonds by

investors who are c itiz e n s o f the United States, or by banks o f the United
States, would resu lt in the interm ingling o f reparation payments with war
debts, is based, evid en tly, on a complete misconception o f the situ ation.
The settlements e ffe c te d by the United States Government with i t s debtors
are e n tire ly independent of the settlement e ffe c te d by Germany with i t s .
debtors.

The United States Government is not a party to the Young Plan.

Neither in the past has i t been, nor w i l l i t in the future, be responsible fo r
the c o lle c tio n or d istrib u tio n o f reparation payments.

The purchase by an

i* 1
- 3 -

American c itiz e n or an American bank o f a reparation bond, cannot a lt e r in
any way our situation or p o lic y in th is respect.

I t is not apparent to me

how the sale o f a portion o f th is particu la r bond issue in the American
market can a ffe c t our debt settlement p o lic y any more than when a portion
o f the German external loan o f 1924 was flo a te d in th is market.
I am very d e fin it e ly of the opinion that fo r the reasons above stated
there is no occasion fo r the adoption o f th is resolu tion and that i t would
be against public p o lic y to do so,
I may add fo r the sake o f accuracy that I know o f no provision providing
fo r the annual sale of German Reparation Bonds in the United States.

FOR IMMEDIATE RELEASE,
JULY 1, 1930.

TREASURY DEPARTMENT

The fo llow in g announcement was made today by Secretary Mellon
in connection with the close o f the fis c a l year o f the Government on June 30:
Figures now a va ila b le in the d a ily Treasury statement fo r June 30
reveal that the finances o f the Government fo r the fis c a l year ju st closed
made a sa tisfa cto ry showing.

Receipts again exceeded expenditures, and a

fu rther reduction was e ffe c te d in the public debt.

The to t a l ordinary

re ceip ts amounted to $4,178,000,000 as compared with $4,033,000,000 in
1929.

Expenditures chargeable against the ordinary re ceip ts were

$3,994,000,000 as compared with $3,848,000,000 in 1929.

The surplus,

th erefore, was £184,000,000 but included in th is amount is the abnormal
sum o f $75,000,000 paid by fo re ig n governments in June in cash instead of
in obliga tion s of th is government in accordance with the p re v a ilin g practice
fo r a number o f years and the abnormal customs re ceip ts due to an ticip ation
o f t a r i f f le g is la tio n .
RECEIPTS
The aggregate of customs and in tern al revenue re c e ip ts was
$3,625,000,000 or $86,000,000 greater than re ceip ts from these sources in
1929 and $11,000,000 below the Treasui^y's aggregate estimate a ft e r allowance
fo r tax reduction.
Income tax aggregated $2,411,000,000 as against $2,331,000,000 in
1929, or an increase of $80,000,000.

Based on prelim inary reports from

C ollectors, the receip ts from the current corporation income tax were higher
than during the previous f is c a l year due to the fa c t that growth in corporate
income more than o ffs e t the 1 per cent reduction e ffe c t iv e on c o lle c tio n s
made during the second h a lf o f the fis c a l year 1930.
were $6,000,000 greater than anticip ated .

Back tax c o lle c tio n s

The current in dividu al income

-

2

-

tax receip ts were also higher than during the previous fis c a l year.

In th is

connection i t w i l l he re ca lled that there was a substantial aggregate increase
in individual income in the calendar year 1928 due to re a liz a tio n on. sales
of cap ita l assets in the security market.
As above indicated, the to ta l income tax receip ts during the f i s c a l
year 1930 were $2,411,000,000.
reduction was $2,480,000,000.

The Treasury’ s estimate la s t f a l l before tax
A fte r taking in to consideration the e ffe c t of

the tax reduction applicable to co lle c tio n s made during only h a lf o f the fis c a l
year, the estimate became $2,400,000,000, or $11,000,000 below actual c o lle c tio n s .
Obviously, the advance estimate, in view of the amounts in volved, showed a re­
markable degree o f accuracy.
Receipts from customs duties, including the tonnage tax, were
$587,000,000 as compared with $602,000,000 in 1929, and the Treasury estimate
of the same amount fo r 1930.

For the f i r s t quarter o f the f i s c a l year 1930

customs receip ts were about $13,000,000 greater than fo r the same period in
1929,

Subsequently, there was a steady decline u n til the month o f May, which

was s lig h tly over May, 1929,

In June, 1930, however, the c o lle c tio n s were sub­

s ta n tia lly greater than in the same month a year ago, due to the large receip ts
during the period o f a few days p rio r to the e ffe c t iv e date o f the new t a r i f f
law.
Miscellaneous in tern al revenue re ceip ts were $628,000,000 as compared
with $607,000,000 in 1929,an increase o f $21,000,000 and a decrease below the es­
timate of $7,000,000. More than 90$ o f the Miscellaneous In tern a l Revenue receip ts
is derived from the tobacco ta x, the stamp tax,and the estate tax. On the basis of
co llection s received during the f i r s t 11 months o f the f is c a l year and estimates fo r

-3the month of June, 1930, the re ceip ts from tobacco were about $450,000,000, an
increase o f about $16,000,000 over 1929, as compared with an increase fo r 1929
of $38,000,000 over 1928.

Stamp tax receip ts were about $77,000,000, as compared

with the high fig u re o f $64,000,000 during 1929, and $49,000,000 in 1928.

Estate

tax yielded about the same as la s t year, when the re ceip ts were $62,000,000.

The

remainder of the d ifferen ce between 1930 and 1929 c o lle c tio n s is la rg e ly accounted
for by decrease in c o lle c tio n s under repealed laws.
EXPENDITURES
The t o t a l expenditures chargeable against ordinary re c e ip ts were
$3,994,000,000 as compared with $3,848,000,000 in 1929, or an increase o f
|146,000,000.

There are a number o f items of increases and decreases comprising

this d ifferen ce but the p rin cip a l items o f increases are $37,000,000 on account
of the War Department, $10,000,000 fa r the Navy, $29,000,000 fo r the Veterans’
Bureau, $14,000,000 fo r Department o f Commerce (due p r in c ip a lly to cost of the
Census) $16,000,000 fa r the Shipping Board, and $150,000,000 f o r the revolvin g
fund provided in the A gricu ltu ra l Marketing Act.

The main items o f

decrease are

119,000,000 reduction in in te rest payments, $57,000,000 decrease in in tern a l
revenue refunds, and $52,000,000 paid in the previous year to ra ilro a d s under a
Supreme Court decision on account o f back railw ay mail pay.
Estimated expenditures in the Budget were $4,023,000,000 or $29,000,000
greater than the actu al expenditures.

This d iffe re n c e is the net amount o f a

number o f Increases and decreases, the most important o f which are increased
expenditures under the A g ricu ltu ra l Marketing Act amd the Veterans’ Bureau, and
decreases under the Treasury Department on account of postponement to the fis c a l
year 1931 o f estimated expenditures under the Settlement o f War Claims Act and fo r
public bu ildin gs, and payments made in cash in June by fo reig n governments under
debt settlem ents.

-4 SURPLUS
The o rig in a l estimate o f the surplus made in advance o f the f is c a l year
was $225,000,000,

The 1 per cent ta x reduction o f la s t f a l l , estimated as

amounting to $80,000,000 fear tM s f i s c a l year, reduced th is fig u re to $145,000,000*
The actu al surplus fo r the year just closed is $184,000,000,

As above indicated,

however, there is included in th is amount the sum of $76,000,000 on account o f
payments by fo reig n governments in cash rather than in s e c u ritie s as h eretofore
under debt settlement agreements in accordance with the procedure follow ed fo r a
number o f years past, which change in method of payment was not anticipated at the
time the estimate was made,
PUBLIC DEBT
At the close o f the f i s c a l year 1930, the to ta l gross debt was
$16,185,000,000 as compared with $16,931,000,000 on June 30, 1929, or a reduction
of $746,000,000,

Of th is amount $554,000,000 is to be a ttrib u ted to the sinking

fund and other retirem ents chargeable against ordinary re c e ip ts .

The net balance

in the general fund at the close o f the fis c a l year was $318,000,000 as compared
with $326,000,000 on June 30, 1929.
The annual rate o f in terest on the in terest-b earin g debt on June 30, 1930,
was 3,804 Per cent as compared with 3,944 per cent on June 30, 1929,

The decrease

was due to lowering of the borrowing ra tes on short-term s e c u ritie s .

Total in terest

payments in the fis c a l year were $659,000,000 as compared with $678,000,000 in the
fis c a l year 1929, or a saving o f $19,000,000*
-oOo

FOR IMMEDIATE RELEASE,
JULY 3, 1930.

TREASURY DEPARTMENT
WASHINGTON

Secretary Mellon today issued the fo llow in g statement:

The Treasury deems i t advisable to correct certain inaccurate state­
ments and quotations' appearing in various newspaper a r t ic le s with reference
to proposed or purported agreements with Great B rita in and France with
respect to double taxation.
No n egotiations are pending with Great B rita in , nor are any negotiations
contemplated by the Treasury at the present time.
Informal and prelim inary n egotiations have been carried on between our
representatives and representatives o f the French Government with reference
to the tax situ ation ex istin g in France.

Mr. Ellsworth C. Alvord, Special

Assistant to the Secretary of the Treasury, returned from P a ris about a week
ago and has gone over in d e ta il with the Treasury o f f i c i a l s the resu lts of
the prelim inary n egotiations.

However, no agreement has been entered in to

and no action by the Treasury has been taken with respect thereto.

Inasmuch

as the Treasury is not empowered to enter in to agreements of th is nature, i t
can take no d e fin ite action u n til a fte r le g is la t iv e authority has been
granted, which obviously cannot be obtained p rio r to the next session of
the Congress.

Any agreement by the Treasury must, ’o f course, conform to

le g is la t iv e authority.

I t is impossible, th erefore, at th is time to make

any d é fin ite statement eith er as to the p o s s ib ilit y o f a fin a l agreement
or as to any o f i t s terms.

ROR RELEASE, MORNING- PAPERS,
Monday, July 7, 1930.

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY OP THE TREASURY HOPE

The Secretary o f the Treasury gives no tied that tenders are
in vited fo r Treasury h i lls to the amount o f $50,000,000, or thereabouts.
The Treasury h i l l s w i l l he sold on a discount basis to the highest
bidders.

Tenders w i l l he received at the Federal Reserve Banks, or

the branches thereof, up to two o*clock P.M ., Eastern Standard time,
on July 10, 1930.

Tenders w i l l not be received at the Treasury De­

partment, Washington.
The Treasury b i l l s w i l l be dated July 14, 1930, and w i l l
mature on September 15, 1930, and on the maturity date the face amount
w ill be payable without in te re s t.

They w i l l be issued in bearer form

only, and in amounts or denominations o f $1,000, $10,000, and $100,000
(maturity va lu e).
P a rticu la r atten tion is in vited to the fa c t that by the Act
o f Congress approved June 17, 1930, Treasury b i l l s were given an addi
tion a l tax exemption featu re.

That Act provides that any gain from

the sale or other d isp ositio n o f Treasury b i l l s issued a ft e r June 17,
1930, sh all be exempt from a l l taxation, except estate or inheritance
taxes, and that no loss from the sale or other disp osition thereof
shall be allowed as a deduction, or otherwise recognised, fo r the pur­
poses o f any tax now or h erea fter imposed by the United States or any
o f it s possessions.

Accordingly, these Treasury b i l l s w i l l be ex­

empt, as to p rin cip a l and in te re s t, and any gain from the sale or other

-

2-

disp osition thereof w i l l also Tbe exempt, from a l l taxation, except
estate or inheritance taxes.
I t is urged that tenders he made on the printed forms and
forwarded in the special envelopes which w i l l he supplied by the
Federal Reserve Banks or branches upon application therefor«
No tender fo r an amount less than $1,000 w i l l he considered#
Each tender must he in m ultiples o f $1,000#

The p rice o ffe re d must he

expressed on the hasis o f 100, w ith not more than three decimal places,
e# g . , 99.125,

fra c tio n s must not he used.

Tenders w ill he accepted without cash deposit from incorporated
hanks and trust companies and from responsible and recognized dealers
in investment securities#

Tenders from others must he accompanied hy

a deposit o f 10 per cent of the face amount o f Treasury h i l l s applied
fo r , unless the tenders are accompanied hy an express guaranty o f pay­
ment hy an incorporated hank or trust company#
Immediately a ft e r the clo sin g hour fo r receip t o f tenders on
July 10, 1930, a l l tenders received at the Federal Reserve Banks or
branches thereof up to the clo sin g hour w i l l he opened and public an­
nouncement o f the acceptable p rices w i l l fo llo w as soon as possible
th erea fter, probably on the fo llow in g morning#

The Secretary o f the

Treasury expressly reserves the rig h t to r e je c t any or a l l tenders
or parts of tenders, and to a l l o t less than the amount applied fo r , and
his action in any such respect sh all he fin al#

Those submitting

tenders w i l l he advised o f the acceptance or re jectio n thereof#

Payment

i €*

~3-

at the price o ffered fo r Treasury M i l s a llo t t e d must be made at the
Federal Reserve Banks in cash or other immediately a v a ila b le funds on
July 14, 1930.
Treasury Department Circular No. 418, as amended, dated June
25, 1930, and this notice as issued by the Secretary o f the Treasury,
prescribe the terms o f the Treasury b i l l s and govern the conditions of
th e ir issue.

Copies o f the c irc u la r may be obtained from any Federal

Reserve Bank or branch th ereof.

>

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
FRIDAY, JULY 11, 1930.

Statement by Acting Secretary Hope

Acting Secretary o f the Treasury Hope announced to-day that
the tenders fo r $50,000,000, or thereabouts, of Treasury B ills
dated July 14, 1930 and maturing September 15, 1930, which were
o ffered on July 7, 1930, were opened at the Federal Reserve Banks
on July 10, 1930.
The to ta l amount applied fo r was $328,968,000.

The highest

bid made was 99.720, equivalent to an in te re s t ra ta o f about
1.60 per cent on an annual basis.

The lowest bid accepted was

99.660, equivalent to an in te re s t rate o f about 1.94 per cent on
an annual basis.
$50,920,000,
is 99.672.

The to ta l amount of bids accepted was

The average price o f Treasury B ills to be issued
The average rate on a bank discount basis i s about

1-7/8 per cent.

TREASURY DEPARTMENT

FOR RELEASE, MORNING
JULY 15, 1930.

Some Recent Accomplishments of the Treasury

Address of
Honorable Walter E. Hope,
Assistant Secretary of the Treasury,
Over Network o f National Broadcasting Company,

37
'

I suspect there is a general disp osition to regard any descrip­
tion o f the a c t iv it ie s o f the United States Treasury as rather compli­
cated, somewhat formidable and therefore d i f f i c u l t to understand.
The re p e titio n of s t a t is t ic s , p a rtic u la rly when they deal in the
b illio n s , is apt to have a numbing e ffe c t on the human mind and the
average person is soon content to leave i t to the experts and turn to
something with more human in te re s t.
And yet the subject is one which i s o f v i t a l in te re s t to every
c itiz e n o f the country, in greater or le s s degree, and to the w elfare
o f h is fam ily and there is no reason why the essen tial fa c ts cannot be
placed before him in clea r and simple fashion so that he may re a d ily
understand and appreciate them.

I t i s not a question, fo r example,

whether he a ctu a lly pays income tax or not.

I t is a matter of d irect

concern to him how the finances o f the Government are conducted, what
are i t s revenues, receip ts and expenditures, and what e ffo r ts are being
made fo r the improvement o f the service.
In government, as in business, i t is w e ll to stop occasionally
and take stock o f what has been accomplished.

The present moment,

fo llow in g the adjournment o f Congress? seems the lo g ic a l time to review
what has been done, not only as regards le g is la tio n enacted by Congress
but also in respect to adm inistrative achievements in improving the
machinery o f government and in meeting and solvin g new problems that
have arisen.

-

2

-

U n til we review that record as a whole, i t is impossible to
assess properly the value o f what has been accomplished or the extent
o f the progress that has been made during the la s t sixteen months.

For

th is reason, i t may be worth while to review b r i e f l y the Treasury’ s
part in the making o f that record and in the conduct o f the public
business since the present Administration came into power.
'The Treasury has ju st closed i t s fis c a l year on June 30, 1930.
For that year, i t s records show a surplus o f $184,000,000, curiously
enough almost ex a ctly the same as the surplus o f the preceding year.
This surplus was brought about, notwithstanding the reduction in income
tax ra tes, to which I w i l l r e fe r again la t e r .
During th is period a fu rth er substantial reduction was effe c te d
in the public debt.

When the present Administration began on March 4,

1929, the gross public debt o f the United States Government amounted to
$17,345,000,000.

On June 30, 1930, at the end o f the f i s c a l year, the

debt has been reduced to $16,185,000,000, or a reduction during the
period o f $1,160,000,000.

At the present rate o f in te re s t, th is means

a saving in in te rest payments c f over $40,000,000 per year.

I t means

also that the Government has adhered s t r i c t l y to the sound and w e llestablished p o lic y o f paying o f f the public debt as ra p id ly as the
revenues permit.

You w i l l no doubt r e c a ll that on August 1, 1919, the

debt amounted to $26,500,000,000.

To-day i t is $16,185,000,000, which

represents a reduction o f $10,000,000,000 in a l i t t l e over 10 years, an
achievement o f which any nation might be proud.

I t represents a saving

3 -

in in te re s t o f approximately $350,000,000 per year.

To-day the debt

has “been reduced to manageable proportions; and eventually, as the debt
is fu rther cut down th is drain on our revenues w i l l continue to be
reduced, and we should be able to look forward to a corresponding
reduction in our taxes.
During the period since March 4, 1929, Congress has authorized
three debt settlements with fo reig n debtor nations*

Settlements were

concluded with Austria, Greece and Prance, thus completing the funding
o f the indebtedness owed to us by fo reig n governments, with the ex­
ceptions o f Armenia and Russia, with which, fo r obvious reasons, no
settlements can be made at present.

The t o ta l amount funded is

$11,577,000,000, on account o f which the United States w i l l receive in
payment o f prin cip al and in te re s t, over the periods sp e c ifie d in the
agreements, the sum o f $22,000,000,000.

In addition to th is , a s e t t le ­

ment was concluded with Germany on June 23, 1930, fo r the indebtedness
o f that country to the United States on account o f the awards o f the
Mixed Claims Commission, United States and Germany, and the costs o f the
United States Army o f Occupation.

Under th is agreement, the United States

w ill c o lle c t from Germany over a period o f years $250,000,000 on account
o f Army costs and $500,000,000 on account o f the awards o f the Mixed
Claims,Commission to be distribu ted to American nationals re ceivin g such
awards.
How as regards taxes;

on December 18, 1929, President Hoover ap­

proved a jo in t resolu tion o f Congress, reducing rates o f income tax fo r
the calendar year 1929.

The e ffe c t of th is reduction was to lower

the norma,! tax on the taxable incomes o f individu als by one per cent
and sim ila rly to reduce the tax on the taxable incomes o f corporations

fo r the calendar year 1929froml2 per cent to 11 per cent.

An out­

standing feature o f this reduction was the re la tiv e ly large benefit
afforded to taxpayers with re la tiv e ly small taxable incomes, c h ie fly
those with earned incomes derived from sa la rie s and wages.

It was

the f i f t h reduction in taxes which the Federal Government has made
within le ss than nine years.

I t s e ffe c ts have been far-reaching and

have benefited a l l those paying income taxes to the Federal Government.
In the co llectio n o f these taxes, the Bureau o f Internal Revenue
has effected many improvements during the la s t sixteen months, while at
the same time bringing about a reduction both in the number o f employees
and in the cost o f collection .

During this period substantial progress

has been made in establishing the work o f the Income Tax Unit upon a
current basis.

For example, on Jun. 30» 192S, there were pending in

the Income Tax Unit, 221,533 cases covering the years 1917 to 1927 in­
clusive.

In June, 1930, the number o f cases on hand for these years

requiring investigation in the f i e l d had been red&ced to

29, 7^ 3 *

It s efficien cy w i ll be further increased by the transfer during the
past month o f the Bureau o f Internal Revenue to the new bu ild in g which
has been erected to house a l l it s scattered a c t iv it ie s , which have
hitherto been quartered in separate buildings at some distance from
one another.

The bringing o f a l l divisions under one roof should make

possible better coordination and further economies o f time and expense.
In addition to it s accomplishments in the way o f reducing expense
and at the same time speeding up it s work, thfc Bureau has continued it s
e ffo rts to b u ild up a better relationship with the tax-paying public.

- 5 -

I t is at present engaged upon an endeavor to sim p lify the income tax
return with a view to reducing the d i f f ic u lt i e s and ©duplications,
p a rtic u la rly o f the smaller taxpayer.

I t has proceeded fu rth er upon

i t s p o lic y o f endeavoring to a rriv e at a ju st and equitable determination
o f disputes without resortin g to lit ig a t io n , w ith a resu lt that is f a i r
to both p a rtie s .

While in a business o f such magnitude controversies

are in evita b le, i t is the b e l i e f o f the Department that the conduct o f
a tax system should be p rim arily an adm inistrative problem, with resort
to the Courts only when the taxpayer and the Government cannot agree
upon a f a i r d isp ositio n .

I t is o f course ess en tia l that certa in

fundamental p rin c ip le s be determined by the Courts, but as these are
decided, from time to time, the necessity o f re so rtin g to lit ig a t io n , with
a l l it s attendant delay and expense, should ste a d ily decrease...

In th is

connection, the Bureau has so advanced it s work: that i t expects at the
end o f th is calendar year to dispense e n tire ly with the p ra c tic e o f r e ­
questing from any taxpayer a waiver extending the time o f expiration o f
the statute o f lim ita tio n s .

As a matter o f fa c t, in the great m ajority

o f cases this p ra c tic e has been fo r the b e n e fit o f the taxpayer, but i t
has been the subject o f some c r itic is m in the past, and in order to
avoid any p ossib le ground o f complaint, the Bureau proposes that a fte r
December 31, 1930, no waivers w i l l be requested by the Department and
that waivers w i l l th erea fter be executed only upon the request o f the
taxpayer.
Turning now to other matters*

in the f i s c a l operations o f the

Treasury certain improvements have been made as the re s u lt o f recent

- 6 le g is la tio n .

377

One o f t h e s i s the issuing o f a new form o f short-term public

debt security known as Treasury h i l l s » under authority o f the Act o f Congress»
approved June 17, 1939,
public debt.

These h i l l s g re a tly sim p lify the management o f the

They permit a new and more f l e x i b l e type o f security; they sup­

plement or add to the system established fo r short-term financing; they enable
the Treasury, by competitive bidding» to borrow fo r short periods at the lowest
rates consistent with current market conditions; and they provide the banks and
the in vestin g public with a new instrument, having frequent and convenient
m atu rities, fo r the investment o f temporary surplus funds.

Only la s t Thursday,

the Treasury sold i t s most recent issue o f Treasury b i l l s consisting of
$50,000,000, at an in te rest rate averaging 1-7/8 per cent per annum.

This

constituted a record, being the lowest rate at which the Government has ever
been able to borrow.
Another improvement which has been put in to e ffe c t is the reduction in
the size of the currency.
on July 10, 1929,

The actual issue o f the new currency was commenced

The reduction in size has resu lted in substantial savings

in the cost of manufacture, as w ell as in the handling o f currency.
standing the innovation, the new currency was accorded a favorable

Notwith­
reception

from the start and i t is remarkable how ra p id ly the old size b i l l s have d is ­
appeared from ordinary circu la tio n .
An important change in the Treasury organization has been the tran sfer to
the Department o f Justice o f certain functions in the adm inistration of the
National P roh ib ition Act, as provided in the Act approved May 27, 1930.

Under

th is Act a Bureau- o f Proh ib ition is created in the Department o f Justice and the
Bureau o f In d u stria l Alcohol is retained in the Treasury, with provision fo r
close co-operation between the two departments.

Another change in organization

has been made by the creation in the Treasury Department o f a Bureau o f N a rco tici
under the Act o f June 14, 1930.
There are a number of other important a c t iv it ie s which many people are un­
aware axe conducted under the Supervision o f the Treasury. Included among these
are the Public Health S ervice,the Coast Guard and the construction o f Public
Buildings.

- 7The f a c i l i t i e s o f the Public Health Service have been extended
and it s work in the study, prevention and cure o f disease has been made
more e ffe c tiv e .

The b i l l fo r the establishment o f a National In stitu te

o f Health, which was signed by the President on May 26, 1930, provides
fo r the gradual building up o f a large research in stitu te, o f which the
Hygienic Laboratory w i l l servo as the nucleus.

The b i l l authorizes the

Secretary o f the Treasury to accept private donations fo r use in research
work at the In stitu te ,

It further provides fo r the increase in the

research s t a ff by the establishment o f fellow ships p e m ittin g individual
scien tists to contribute the ben efits o f th eir research to the United
States,
In the period since March 4, 1929, the Coast Guard has been
larged and has greatly increased in effic ie n c y .

oeh

During the fis c a l year

ended June 30, 1929, the number o f liv e s saved or persons rescued from
p e r il by the Coast Guard was 4,375 and the value o f vessels assisted,
including th eir cargoes, was $49,128,375,

Plans are being prepared and

are nearing completion fo r the erection o f a new Coast Guard Academy at
New London, Connecticut,

Funds have been provided which w i l l greatly

improve the aviation f a c i l i t i e s o f the Service,
Pew people appreciate the magnitude o f the public buildin g program
which is being carried on under the supervision o f the Treasury,

In

order to conduct th is program expeditiously, the O ffice o f the Super­
vising Architect is being strengthened in i t s personnel; and in addition
the Treasury i s employing private architects fo r some o f the large
projects and w i ll employ more in. the near future under the enlarged
authority recently granted by Congress,

During the period since March 4,

1929, the K eyes-E lliott B i l l has been passed by Congress, adding $230,000,000

to the previous authorizations and making the to ta l amount now authorized
fo r public bu ilding $520,000,000.
In the D is tr ic t o f Columbia, the Internal Revenue Building, in­
vo lvin g nearly $10,000,000, and the Adm inistrative Building fo r the
Department o f Agricu ltu re, in volvin g approximately $2,000,000, have been
completed and are now occupied.

The extension to the Government P rin tin g

O ffic e , in volvin g $2,225,000, is nearing completion.

The Department o f

Commerce Building, in volvin g $17,500,000, is about h a lf completed; and
i t * i s expected that the cen tral p ortion w i l l be fin ish ed and ready fo r
occupancy by the end o f th is calendar year.

Other buildings which i t

is expected w i l l be started during the fis c a l year beginning July 1, 1930,
are;

the Post O ffic e Department Building, in volvin g s lig h t ly over

$10,000,000;

the bu ilding fo r the Department o f Ju stice, $10,000,000;

the General Accounting O ffic e , $4,500,000, refa cin g and remodeling the
State Department Building, in vo lvin g $3,000,000;

and the Administration

Building fo r the Public Health Service at an approximate cost o f $865,000.
With the inauguration o f these important p ro jec ts the long-awaited plan
fo r the b eau tifyin g o f Washington and the resto ra tio n o f the L *Enfant
plan w ill be w ell started on i t s way to accomplishment.
In the country at la rg e there are now under construction fift y - t w o
buildings, aggregating $26,000,000, and, o f these, f i v e exceed in cost
$1,000,000 each.
gatin g $11,000,000.

Twenty buildings are being advertised fo r bids, aggre­
In so fa r as circumstances permit, work on»these

buildings in Washington and throughout the country is being pushed as
rapid ly as possible in order to carry out President Hoover's sound and
constructive p o lic y fo r increasing building a c t iv it y and so stim ulating
a l l other lin e s o f endeavor during the months immediately ahead#

- 9 *

The Bureau o f Customs has been completely reorganized during bhe
past year, i t s personnel strengthened, and a course o f in stru ction in­
stitu te d fo r representatives going abroad and others engaged in the
c o lle c tio n o f duties on imports.

Much study has been given to the

handling o f passengers* baggage as a means o f aiding American tra v e le rs
returning from fo reig n countries.

A committee o f tw en ty-five prominent

c itiz e n s has been appointed who w i l l advise and recommend, p a rtic u la rly
with respect to conditions at the Port o f Hew York.

A new form o f baggage

declaration g re a tly s im p lifie d has been issued as an a id to incoming
passengers and a booklet o f instru ctions c le a r ly ou tlin in g the necessary
fo rm a litie s is in course o f preparation.

Provision has been made by the

Congress fo r the acqu isition o f 37 s ite s on the Canadian and Mexican
borders fo r the erection o f Customs-Immigration inspection station s.
These stations, when completed, w i l l g re a tly expedite inspection o f highway
t r a f f i c , a ffo rd in g proper f a c i l i t i e s fo r the inspection o f baggage and
protectin g the tra v e lin g public frgm the elements during such inspection.
The Treasury has en tire confidence in the fin a n c ia l s t a b ilit y both
of the Government and o f the country.

Even th is b r ie f and incomplete

outline o f the Treasury*s a c t iv it ie s indicates that the finances o f the
Government are in sound condition and that the Government i t s e l f , under
the leadership o f President Hoover, is in a p o sition to furnish the
steadying influence necessary in any situ ation that may a ris e .

The

unusual conditions through which we have been passing are world wide in
th e ir application and are lim ite d to no one country.
size or importance is immune from th e ir e ffe c t s .
are in process o f taking pla ce.

Ho country of any

Great economic changes

Many o f these conditions are new and

c a ll fo r a d iffe re n t treatment than in the past.

We are fortunate in

-

10

-

having at the head o f the Government at th is time a man who "by tra in in g
and experience is equipped to meet such a situ ation , a man o f outstand­
ing and demonstrated a b ilit y , t ir e le s s industry, unquestioned in te g r ity ,
and u n selfish devotion to duty and the public in terest*

He brings to

his task a thorough understanding o f the economic forces with which we
must deal*

The problems which confront us are admittedly not easy o f

solution but we have faced worse in the past and emerged with success,
and I am confident that with a leadership characterized by brains, in te g r ity
and public s p ir it backed by the natural resourcefulness and strength o f our
people, we w ill again find the solu tion and presen tly press forward to even
greater achievements*

FOR IMMEDIATS RELEASE,
FRIDAY, JULY 25, 1930.

TREASURY DEPARTMENT

Statement by Secretary M ellon»

The statement o f Congressman. Byrns

in the morning press con­

fuses the matter o f appropriations with actual expenditures and
leaves an erroneous impression*

As a matter o f fa c t , the figu res

presented "by the President to the press were furnished by the
Budget Bureau and are the July 1 working fig-ores o f the Treasury
Department.

As p reviou sly stated, including the estimated postal

d e f i c i t , the to ta l budget estimates o f expenditures fo r the present
fis c a l year are $4,203,354,457, as compared with actual expenditure
fo r the la s t f is c a l year o f $3,994,152,487, or an increase of
$209,101,970, being an increase o f 5$.

N atu rally these fig u res do

not include amounts appropriated fo r future years which w i l l not be
expended during the present fis c a l year..

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY

Acting Secretary o f the Treasury Hope g iv es notice that tenders are
in v ite d fo r Treasury h i l l s to the amount o f $120,000,000, or thereabouts#
The Treasury h i l l s w i l l he sold on a discount basis to the highest bidders.
Tenders w i l l he received at the Federal Reserve Banks, or the branches
th ereof, up to two o ’ clock P. M., Eastern Standard time, on August 14, 1930
Tenders w i l l not he received at the Treasury Department, Washington,
The Treasury h i l l s w i l l he dated August 18, 1930, and w i l l mature on
November 17, 1930, and on the maturity date the face amount w i l l he payable
without in te re s t.

They w i l l he issued in hearer form only, and in amounts

or denominations o f $1,000, $10,000, and $100,000 (m aturity va lu e).
I t is urged that tenders he made on the printed forms and forwarded
in the special envelopes which w i l l he supplied by the Federal Reserve
Banks or branches upon a p p lication th erefor.
No tender fo r an amount le s s than $1,000 w i l l he considered.
tender must he in m ultiples o f $1,000.

Each

The p rice o ffe re d must he ex­

pressed on the basis o f 100, with not more than three decimal places,
e. g . , 99.125.

Fractions must not he used.

Tenders w i l l he accepted without cash deposit from incorporated
hanks and tru st companies and from responsible and recognized dealers
in investment secu rities.

Tenders from others must he accompanied by

a deposit o f 10 per cent o f the face amount o f Treasury h i l l s applied
fo r , unless the tenders are accompanied by an express guaranty o f pay­
ment by an incorporated hank or trust company.

3<?y
-

2

-

Immediately a fte r the closin g hour fo r re ceip t o f tenders on
August 14, 1930, a l l tenders received at the Federal Reserve Banks or
branches thereof up to the closin g hour w i l l be opened and public an­
nouncement o f the acceptable p rices w ill fo llo w as soon as possible
th e rea fter, probably on the fo llo w in g morning.

The Secretary of the

Treasury expressly reserves the rig h t to r e je c t any or a l l tenders or
parts o f tenders, and to a l l o t le s s than the amount applied fo r , and
h is action in any such respect shall be fin a l.

Those submitting tenders

w i l l be advised o f the acceptance or re je c tio n thereof.

Payment at the

p ric e o ffered fo r Treasury b i l l s a llo tte d must be made at the Federal
Reserve Banks in cash or other immediately a v a ila b le funds on August
18, 1930.
The Treasury b i l l s w i l l be exempt, as to p rin cip al and in te re s t,
and any gain from the sale or other d isp osition thereof w i l l also be
exempt, from a l l taxation, except estate and inheritance taxes*

No

lo s s from the sale or other d isp osition o f the Treasury b i l l s shall be
allowed as a deduction, or otherwise recognized, fo r the purposes o f
any tax now or h ereafter imposed by the United States or. any o f i t s
possessions.
Treasury Department Circular No. 418, as amended, dated June 25,
1930, and th is n otice as issued by the Secretary o f the Treasury, pre­
scribe the terms o f the Treasury b i l l s and govern the conditions o f
th e ir issue.

Copies o f the circu la r may be obtained from any Federal

Reserve Bank or branch th ereof.

FOR RELEASE, MORNING PAPERS',
FRIDAY, AUGUST 15, 1930.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY OF THE TREASURY MELLON

Secretary of the Treasury Mellon announced today that the
tenders fo r $120,000,000, or thereabouts, of Treasury B i l l s
dated August 18, 1930 and maturing November 17, 1930, which
were o ffered on Au^nst 11, 1930i were opened at the Federal
Reserve Banks on August 14, 1930.
The to ta l amount applied fo r was $397,162,000*-

The

highest bid made was 99.59S1equivalent to an in te rest ra te of
about 1,61 per cent on an.annual basis.

The lowest bid

accepted was 90.473 equivalent to an in te re s t rate o f about
2,08 per cent on an annual basis.
accepted was $120,000,000.

The to ta l amount o f bids

The average p ric e of Treasury

B ills to be issued is 99.5044-^,

The average rate on a bank

discount basis is about 1.96 per cent.

FOR IMMEDIATE RELEASE,
Friday, August 22, 1930

TREASURY DEPARTMENT

Statement "by Secretary Mellon.
The sto ries appearing in the morning papers r e la tin g to the.
revenue prospects fo r the current f is c a l year overemphasize the unfavor­
able fa ctors*

I t is a ltogeth er too e a rly to make any d e fin ite statements.

The fin a l estimates need not he prepared u n til ju st p rio r to the meeting
o f thé Congress in December, at which time the Department w i l l be in a
much b e tte r position to determine the budgetary situ ation »

The revenue

during the fis c a l year 1931 w ill be reduced as compared with that of the
f is c a l year 1930, but i t should not be fo rgotten that we closed the la t t e r
year with a substantial surplus*

While no one could d e fin it e ly promise

at th is time that the one per cent tax reduction granted at the la s t
session of Congress can be maintained during the calendar year 1931, I
can say that a fte r a carefu l review o f such fig u res as are a va ila b le
at th is time I have a very re a l hope that we may be able to make such a
recommendation to the Cohgross in December*

TREASURY DEPARTSSHT

FOR IMMEDIATE RELEASE,
WEDNESDAY, AUGUST 27, 1930.

August 27, 1930.

My dear Governor Young:
I regret extremely, not only from the standpoint of
the Federal Reserve System, but from a personal one, that you
f e e l compelled to tender your resignation as Governor o f the
Federal Reserve Board.

You have conducted the very responsible

duties o f your o ffic e with a high degree o f s k ill, sometimes under
extremely d i f f ic u lt circumstances, and your three years o f service
have been of very d is tin c t b en efit to the Federal Reserve System.
Our personal re la tio n s have been the pleasantest possible , and
you w i l l carry away.with you from Washington not only the respect
but the a ffe c tio n o f your associates on the Board,
•Wishing you a l l success in the future., b e lie v e me,

'Very sin cerely yours.,

A,. W, MELLOW
Secretary o f the Treasury,

Hon. Roy A. Young,
Federal Reserve Board,
Treasury Bepar tment,
Washington, D. C,

| EOR RELEASE, MORNING PAPERS,
! Monday, .September 8, 1930. U,

TREASURY DEPARTMENT

Tru 5 1R v E DATE

STATEMENT BY SECRETARY MELLON
The Treasury is today o ffe r in g fo r subscription, a t par and
accrued in te re s t, through the Eederal Reserve Banks, an issue o f twelve
month 3-3/8 per cent Treasury c e r t ific a te s o f indebtedness o f Series
TS-1931, dated and bearing in te re s t from September 15, 1930, and matur­
ing September 15, 1931,

The amount o f the o ffe r in g is $325,000,000, or

thereabouts.
A pplications w i l l be received at the Eederal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a t e s , a t par,
Treasury c e r t ific a t e s o f indebtedness o f S eries TS-1930 and Treasury
b i l l s dated July 14, 1930, both maturing September 15, 1930, but such
subscriptions w i l l not be given p referred allotm ent.
Bearer c e r t ific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a te s w i l l have two

in te re s t coupons attached payable March 15, 1931, and September 15, 1931
These c e r t ific a te s w i l l be exempt, both as to p rin cip a l and
in te re s t, from a l l taxation, except estate and inheritance taxes.
About $350,000,000 o f Treasury c e r t ific a t e s o f indebtedness,
about $51,000,000 in Treasury b i l l s , and about $35,000,000 in in te rest
payments on the public debt become due and payable on September 15, 1930
The text o f the o f f i c i a l c ircu la r fo llow s:

-3 -

The Secretary o f the Treasury, under the au th ority o f the Act
approved September 24, 1917, as amended, o ffe r s fo r subscription, at par
and accrued in te re s t, through the Federal Reserve Banks, Treasury c e r t i­
fic a te s o f indebtedness o f Series TS-1931, dated and bearing in te rest
from September 15, 1930, payable September 15, 1931, with in te re s t at
the rate o f two and three-eighths per cent per annum, payable semi­
annually.
Applications w i l l be received at the Federal Reserve Banks.
Bearer c e r t ific a t e s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a t e s w i l l have two

in terest coupons attached, payable March 15, 1931, and September 15,
1931.
The c e r t ific a t e s o f said series sh all be exempt, both as to
p rin cip al and in te re s t, from a l l taxation (except estate and inheritance
taxes) now or h erea fter imposed by the United States, any State, or any
o f the possessions o f the United States, or by any lo c a l taxing authority.
The c e r t ific a t e s o f th is series w i l l be accepted at par during
such time and under such rules and regulations as sh all be prescribed or
approved by the Secretary o f the Treasury, in payment o f income and p r o fit s
taxes payable at the maturity o f the c e r t ific a t e s .

The c e r t ific a t e s o f

this series w i l l be acceptable to secure deposits o f public moneys, but
w ill not bear the circu la tio n p r iv ile g e .
The rig h t is reserved to r e je c t any subscription and to a llo t
less than the amount o f c e r t ific a t e s applied fo r and to close the sub­
scriptions a t any time without notice.

The Secretary o f the Treasury

-3 -

also reserves the righ t to make allotment in f u l l upon applications fo r
smaller amounts, to make reduced allotm ents upon, or to r e je c t , applica­
tions fo r la rg e r amounts, and to make c la s s ifie d allotm ents and allotments
upon a graduated scale; and his action in these respects w i l l he fin a l.
Allotment n otices w i l l he sent out promptly upon allotm ent, and the basis
o f the allotm ent w i l l he p u b licly announced.
Payment a t par and accrued in te re s t fo r c e r t ific a t e s a llo tte d
must he made on or before September 15, 1930, or on la t e r allotm ent.
A fte r allotm ent and upon payment, Federal Reserve Banks may issue interim
receipts pending d e liv ery o f the d e fin it iv e c e r t ific a t e s .

Any q u a lifie d

depositary w i l l he permitted to make payment by c re d it fo r c e r t ific a te s
a llo t t e d to i t fo r i t s e l f and i t s customers up to any amount fo r which i t
shall he q u a lifie d in excess o f ex istin g deposits, when so n o t ifie d by the
Federal Reserve Bank o f i t s d is t r ic t .

Treasury c e r t ific a t e s o f indebtedness

o f Series TS-1930 and Treasury b i l l s dated July 14, 1930, both maturing
September 15, 1930, w i l l be accepted, at par in the case o f the c e r t i f i ­
cates and at maturity value in the case o f the Treasury b i l l s , in payment
fo r any c e r t ific a t e s o f the series now o ffe re d which sh a ll be

subscribed

fo r and a llo t t e d , with an adjustment o f the in te rest accrued, i f any, on
the c e r t ific a t e s o f the series so paid fo r.
As f is c a l agents o f the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions and to make allotments
on the basis and up to the amounts indicated by the Secretary o f the
Treasury to the Federal Reserve Banks o f the respective d is t r ic t s .

TREASURY DEPART!,1
!MT

FOR lORUIEG- PAPERS, /
Wednesday, Septemb\jyaO, 1930

Secretary Mellon announced that subscriptions fo r the issue
o f 2—3/8 per cent Treasury c e r t ific a t e s of Indebtedness, Series TS~*1931,
dated September 15, 1930, maturing September 15, 1931, closed at the
close o f business on Tuesday, September 9, 1930.
Subscriptions received through, tno mails up to ten o ’ clock
Wednesday morning, September 10th, w i l l be considered as having been
received before the close of the subscription books.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Wednesday, September 10, 1930,

STATEMENT BY SECRETARY MELLON

The Secretary o f the Treasury announces that a l l 3-l/2 per
cent Treasury notes of Series A-1930-32 and Series B-1930-32 have been
called fo r redemption on March 15, 1931, on which date the p rin cip al of
any such notes then outstanding w i l l be payable, together with in terest
then accrued thereon.

Accordingly, in te rest on a l l 3-l/2 per cent

Treasury notes of Series A-1930-32 and Series B-1930-32 w i l l cease on
said redemption date, March 15, 1931.
The Series A-1930-32 3-l/2 per cent notes were issued on March
15, 1927, and were made redeemable on six months’ notice on any in te rest
payment date on and a fte r March 15, 1930.

Of the $1,360,456,450 o r ig in a lly

issued, there were outstanding as o f September 1st $649,076,350.

The

Series B-1930-32 notes were issued on September 15, 1927, and were made
redeemable on six months* n otice on any in te re s t payment-date on and a ft e r
September 15, 1930.

Of the $619,495,700 o r ig in a lly issued, there were

outstanding as of September 1st $500,303,700.
P a rticu la r atten tion is in vited to the fa ct that the 3-l/2 per
cent Treasury notes of Series C-1930-32 are not included in th is c a ll fo r
redemption and to the further fa c t that the notes which have been ca lled
for redemption should not be presented fo r redemption u n til March 15, 1931,
or shortly p rio r thereto.
The text o f the o f f i c i a l circu la r c a llin g the notes fo r redemp­
tion fo llow s:

-

2

-

To Holders o f 3jjff> Treasury Dotes o f Series A-1930-32 and B-1930-32:
1.

Call fo r Redemption. - Public n otice is hereby given that, in

accordance with the terms o f th e ir issue and pursuant to the provisions o f
Treasury Department Circulars Nos. 379 and 387, dated March 8, 1927, and
September 6, 1927, re s p e c tiv e ly , a l l o f the 3-|$ Treasury notes of Series
Arl930-32, which by th eir terms were made redeemable on and a ft e r March 15,
1930, and a l l of the 3^fo Treasury notes o f Series B-1930-32, which by th e ir
terms were made redeemable on and a fte r September 15, 1930, are ca lled fo r
redemption on March 15, 1931, on which date the p rin cip al o f any such notes
then outstanding w ill be payable, together with the in te re s t then accrued
thereon.

In tere st on a l l 3

Treasury notes o f Series A-1930-32 and Series

B-1930-32 w i l l cease on said redemption date, March 15, 1931.
2.

Presentation fo r Redemption At or A fte r March 15, 1931. -

A ll 3^Jo Treasury notes o f Series A-1930-32 and Series B-1930-32 should
be presented and surrendered fo r redemption to any Federal'Reserve Bank
or branch, or to the Treasurer o f the United States at Washington, D. C.
The notes must be d elivered in every case at the expense and ris k of
the holder, and should be accompanied by appropriate w ritten advice.
F a c ilit ie s fo r transportation of the notes by re gistered mail
insured may be arranged between incorporated banks and trust companies
and the Federal Reserve Banks, and holders may take advantage o f such
arrangements, when a va ila b le, u t iliz in g such incorporated banks and
trust companies as th eir own agents.

Incorporated banks and trust

companies are not agents o f the United States under th is circ u la r.
3.

In tere st coupons. - In terest .coupons dated March 15, 1931,

should be detached and c o lle c te d in regular course when due.

Coupons

dated September 15, 1931, and a l l coupons bearing dates subsequent

- 3 -

thereto, must "be attached to the notes when presented.

In the event

that any notes are presented fo r redemption with the September 15,
1931, or any subsequently dated coupons detached, the notes w ill
nevertheless be redeemed, but the f u l l face amount of any such missing
coupons w ill be deducted.
4.

Any further information which may be desired as to redemp­

tion o f Treasury notes of Series A-1930-32 and B-1930-32 may be obtained
from the Treasury Department, D ivision o f Loans and Currency, Washington,
D. C ., or from any Federal Reserve Bank or branch.

The Secretary of the

Treasury may at any time or from time to time prescribe supplemental or
amendatory ru les and regulations governing the matters covered by this
circu la r

FOR RELEASE, MORNING PAPERS,
SEPTEMBER 11, 1930.

treasury department

Statement By Secretary Mellon.

Secretary Mellon announced that subscriptions fo r the issue of
Treasury c e r t ific a t e s of indebtedness, dated September 15, 1930, Series
TS-1931, 2-3/8 per cent, maturing September 15, 1931, closed at the close
o f business on September 9, 1930.

The reports received from the twelve

Federal Reserve Banks show that fo r the o ffe r in g , which was fo r $325,000,000,
or thereabouts, to ta l subscriptions aggregate some $1,237,000,000.

As

previously announced, subscriptions in payment fo r which Treasury c e r o ific a te s
and Treasury b i l l s maturing September 15, 1930, were tendered were treated
as cash subscriptions.
Allotments on subscriptions were made as fo llo w s:

A l l subscriptions

in amounts not exceeding $1,000 fo r any one subscriber were a llo tte d in
fu ll.;

subscriptions in amounts over $1,000 but not exceeding $50,000 were

a llo t t e d 70 per cent, but not le s s than $1,000 on any one subscription;
subscriptions in amounts over $50,000 but not exceeding $100,000 were
a llo t t e d 50 per cent, but not le s s than $35,000 on any one subscription;
subscriptions in amounts over $100,000 but not exceeding $500,000 were a llo t t e d
40 per cent, but not le s s than $60,000 on any one subscription;

and subscrip­

tions in amounts over $500,000 but not exceeding $1,000,000 were a llo tte d
30 per cent, but not less than $200,000 on any one subscription;

sub­

scriptions in amounts over $1,000,000 were a llo t t e d 15 per cent, but not
le s s than $300,000 on any one subscription.
Further d e ta ils as to subscriptions and allotm ents w i l l be announced
when fin a l reports are received from the Federal Reserve Banks*

FOR IMMEDIATE RELEASE,
FRIDAY, SEPTEMBER 12, 1930

TREASURY DEPARTMENT

Secretary Mellon today announced that the to ta l amount o f subscrip­
tions received fo r the o ffe r in g o f 2-3/8 per cent Treasury c e r t ific a te s
of indebtedness o f Seri’es TS-1931, dated September 15, 1930, maturing
September 15, 1931, was $1,237,502,500, and that the to ta l o f subscrip­
tions a llo t t e d was $334,211,000,

As previou sly announced, subscriptions

in payment fo r which Treasury c e r t ific a t e s and Treasury b i l l s maturing
September 15, 1930, were tendered were not given preferred allotment
but were treated as cash subscriptions.
The subscriptions and allotm ents were divided among the several
Federal reserve d is t r ic ts and the Treasury as fo llow s:

Federal reserve
d is t r ic t

Total subscriptions received:

Total sub scrip—
tion s a llo tte d :

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

$

$

Total

56,950,000
574,087,000
107 j711,500
61,028,000
52,321,000
60,320,500
160,184,500
18,779,000
4,137,000
20,662,000
50,072,000
71,233,500
16,500

$1,237,502,500

24,502,000
108,557,000
25,939,500
23,531,000
26,137,000
.29,753,000
44,409,000
8,447,000
2,244,500
5,873,000
21,200,000
13,605,500
12,500
$334,211,000

FOR RELEASEs MORNING PAPERS,
Tuesday, October l f 1930.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MELLON
The Secretary o f the Treasury gives notj co that tenders are
in vited fo r Treasury h i]I s to the amount o f $100,000,000, or there­
abouts.

They w i l l 'be 62—day h i l l s ; and w ill he sold on a discount

basis to the highest bidders.

Tenders w i l l be received at the Federal

Reserve Banks, or the branches thereof, up to two o 'clo ck P« M.,
Eastern Standard time, on October 10, 1930.

Tenders w i l l not be re­

ceived at the Treasury Department, Washington,
The Treasury b i l l s w i l l be issued in two series, $50,000,000,
or thereabouts, to be dated October 15, 1930, and maturing on December
16, 1930, and $50,000,000, or thereabouts, to be dated October 16, 1930,
and maturing December 17, 1930.

Bidders w i l l not be required^ or per­

mitted tc bid fo r a p a rticu la r series, but the Treasury w i l l apportion
each accepted bid equally between the two series in so fa r as the
minimum denomination o f $1,000 w i l l permit.

At maturity the face

amount o f the b i l l s w i l l be payable without in te re s t.

The b i l l s w i l l

be issued in bearer form only, and in amounts or denominations o f
$1,000, $10,000, and $100,000 (maturity va lu e).
I t is urged that tenders be made on the printed forms and fo r ­
warded in the special envelopes which w i l l be supplied by the Federal
Reserve Banks or branches upon application therefor.

fit?

-

2~

No tender fo r an amount loss than $1,000 w i l l bo considered.
Each tender must be in m ultiples o f $1,000. The p rice o ffe re d must
be expressed on the basis o f 100, with not more than three decimal
places, e. g ., 99.125.

Fractions must not'be used.

Tenders w i l l be accepted without cash deposit from incorporated
banks and tru st companies and from responsible and recognized dealers
in investment s e c u rities.

Tenders from others must be accompanied by

a deposit o f 10 per cent o f the face amount o f Treasury b i l l s applied
fo r , unless the tenders are accompanied by an express guaranty o f pay­
ment by an incorporated bank or trust company.
Immediately a ft e r the closin g hour fo r receip t o f tenders on
October 10, 1930, a l l tenders received at the Federal Reserve Banks or
branches thereof up to the closin g hour w i l l be opened and public an­
nouncement o f the acceptable p rices w i l l fo llo w as soon as possible
th erea fter, probably on the fo llo w in g morning.

The Secretary o f the

Treasury expressly reserves the righ t to r e je c t any or a l l tenders or
parts o f tenders, and to a l l o t less than the amount applied fo r , and
his action in any such respect sh all be fin a l.

Those submitting tenders

w i l l be advised o f the acceptance or re je c tio n th ereof.

With respect to

bidders whose tenders have been accepted, such advice w i l l state the
amount o f each series a llo t t e d .

Payment at the p rice o ffe re d fo r Treasury

b i l l s a llo t t e d must be made at the Federal Reserve Banks in cash or other
immediately a va ila b le funds on October 15, 1930, fo r the b i l l s a llo tte d

S7 7

-3 bearing that date o f issue, and on October 16, 1930, fo r b i l l s a llo tte d
bearing the la t t e r date o f issue.
The Treasury b i l l s w i l l be exempt, as to p rin cip al and in te re s t,
and any gain from the sale or other d isp ositio n thereof w*ill also be
exempt, from a l l taxation, except estate and inheritance taxes.

Ho

loss from the sale or other d isp ositio n o f the Treasury b i l l s sh all be
allowed as a deduction, or otherwise recognized, fo r the purposes o f
any tax now or h erea fter imposed by the United States or any o f it s
possessions.
Treasury Department Circular No* 418, as amended, dated June
25, 1930, and this notice as issued by the Secretary o f the Treasury,
prescribe the terms o f the Treasury b i l l s and govern the conditions
o f th eir issue.

Copies o f the circu la r may be obtained from any

Federal Reserve Bank or branch thereof.

FOR IMMEDIATE RELEASE,
Thursday, October 0, 1950.

treasury department

Statement by Secretary Mellon
The statement o f Representative I^yrns, o f Tennessee, appearing in th is morn­
ing’ s press, has been ca lled to my atten tion .

Representative Byrns charges that

the Treasury Daily Statement fo r September 30th, which showed a surplus fo r the
fir s t quarter o f the fis c a l year, is "a p o l i t ic a l campaign document,” rather than
”an honest, straightforw ard, unbiased business statem ent.”

Mr. Byrns goes on to

say that the Treasury is ’’ attempting to create a fic t it io u s surplus by withdrawing
from the sinking fund sums*legally required fo r the reduction o f the public deb t.”
These are serious accusations.

They are due, however, to a complete misun­

derstanding o f the situ a tio n , which is rather surprising in so experienced and
in te llig en t a member o f the House o f Representatives, who would hardly at any time
other than the month preceding e le c tio n display such a convenient ignorance of
Treasury finances.

Mr. Byrns’ charges are evid en tly based on the fa c t that only

$65,000,000 were applied to debt retirement on account o f the sinking fund during
the f i r s t quarter o f the f is c a l year 1931, as compared with $236,S^6^000 during
the f i r s t quarter of the f is c a l year 1930.

The explanation is simple enough.

During the f i r s t three months o f the fis c a l year 1930 United States Government
bonds and Treasury notes were s e llin g at a discount.

I t was, th erefo re, good

business fo r the Treasury to take advantage o f th is situ a tio n and to r e t ir e them
at that time.

Accordingly, smme $286,000,000 o f 3j$ Treasury notes were pur­

chased at prices varying from 96 20/32 to 98 30/32.

The p re v a ilin g p rice was 98,

and over $198,000,000 were purchased at that fig u re , thus e ffe c tin g a saving of
almost $4,000,000.

During the f i r s t three months of the present fis c a l year

United States Government bonds and Treasury notes have sold consistently at a
premium.

By applying the sinking fund appropriation to the retirement o f the

Treasury notes which have been ca lled on March 15th, next, and which w i l l be
retired at par, the Treasury avoids the payment o f a premium.

Accordingly, the

• not

|o |;

I |

' || Sif 1
-

#1 '.
2-

sinking fund purchases during the f i r s t quarter o f this fis c a l year have been
lim ited to the minimum amount made advisable by the established program of
financing.
Just a word as to the charge that funds are being "withdrawn from the sink­
ing fund" to meet the ordinary expenses of the Government, with its im plication
that we are drawing on a tru st fund set up fo r a s p e c ific purpose.

I t is d i f f i ­

cult to understand how the ranking Democratic member o f the Committee on Appro­
priations could f a l l into such an erro r.

Mr. Byrns must know that debt r e t ir e ­

ments on account o f the sinking fund are made by virtu e o f a continuing appro­
priation, ava ila b le throughout the f i s c a l year, and, as in the case o f every
other appropriation, constitute a charge on the general revenues o f the Govern­
ment, and that no sp ecia l fund in the nature o f a tru st fund is ever set up fo r
this purpose.

Moreover, he is u tte r ly mistaken in his assumption that the amount

of debt retirement on account of the sinking fund during the present f i r s t
quarter is unusually low.

Omitting the fis c a l year 1929, in the f i r s t quarter

of which the Third L ib erty Loan matured, and the f is c a l year 1930, as to which
the explanation is given above, sinking fund retirements during the f i r s t
quarter o f th is f i s c a l year are not out of lin e with the sinking fund r e t ir e ­
ments made during the f i r s t quarter o f any year from 1921 to 1931.

For instance,

in 1922 the fig u re was §81,000,000; in 1923, §52,000,000; in 1924, §77,000,000;
in 1925, §118,000,000; in 1926, §82,000,000; in 1927, §134,000,000; and in
1928;. §74,000,000.
In the lig h t o f these fa c ts , I leave i t to the public to decide which sta te­
ment can f a i r l y be described as "a p o l i t ic a l campaign document", the Treasury
statement of September 30th or Representative Esyrns’ statement o f October 9th.

FOR RELEASE,- MORNING PAPERS,
SATURDAY, OCTOBER 11, 1930.

TREASURY DEPARTMENT

STATEMENT BY ACTING- SECRETARY MILLS

Acting Secretary M ills announced, today that the tenders fo r
$100,000,000, or thereabouts, of 62-day Treasury B i l l s ‘which were
o ffered on October 7, 1930, were opened at the Federal Reserve
on October 10, 1930'*

Banks

The Treasury’ s e a r lie r announcement provided

that the b i l l s would be issued in two series, $50,000,000, or there­
abouts, dated October 15, 1930, and maturing December 16, 1930, and
$50,000,000, or thereabouts, dated October 16, 1930, and maturing
December 17, 1930, the accepted bids to be apportioned by the Treasury
equally between the two series, in so fa r as the minimum denomination
o f $1,000 w i l l permit.

.

Tnc to ta l amount applied fo r was $360,964,000.

The highest bid

made was 99.736, equivalent to an in te rest ra te o f about 1.53 per cent
on an annual basis.

The lowest bid accepted was 99.671, equivalent

to an in te re s t rate of about 1.91 per cent on an annual basis.

The

to ta l amount of bids accepted was $102,525,000, o f which $51,262,000
have been apportioned to the series dated October 15, 1930, maturing
December 16, 1930, and $51,263,000

have been apportioned to the series

dated October 16, 1930, maturing December 17, 1930.
o f Treasury B ills to be issued i s about 99.680,
bank discount basis is about 1.85 per cent.

The average p rice

The average rate on a

THE SECRETARY OF THE TREASURY
Washington
October IS, 1930.

Dear Mr. Alvord;
I have received your l e t t e r of October 16th tendering your resignation
as Special Assistant to the Secretary of the Treasury and asking to be re ­
lie v e d of your duties on November 1st.
I t is with great regret that I accept your resignation and see you and
your service at the Treasury.

In your work you have shown a b ilit y , energy,

resourcefulness and u n tirin g devotion to duty, which have been of great value
to the Treasury and to me.

You have been p a rtic u la rly h elp fu l in presenting

the Treasury’ s viewpoint to committees of Congress in connection with revenue,
t a r i f f , and other le g is la tio n ; and you have also had much o f the re s p o n s ib ility
in the preparation of rules and regulations governing the Treasury’ s adminis­
tra tion o f these and other laws.

In addition to this you rendered valuable

service in developing the Treasury program fo r the avoidance o f in tern ational
double taxation.
For a l l these and other services which you have rendered to the Treasury
and fo r the assistance which you have given to me personally, I wish to thank
you and to wish fo r you the greatest success and happiness in the new work to
which you are going.
Sincerely yours,

(Signed) A. W. MELLON
Secretary o f the Treasury.
E. C. Alvord, Esq.,
Special Assistant to the
Secretary of the Treasurjr,
Treasury Department,

FOR RELEASE, MORNING PAPERS,
SATURDAY, OCTOBER 25, 1930.

TREASURY DEPARTMENT

SPEECH TO BE DELIVERED BY
HONORABLE OGDEN L. MILLS,
UNDERSECRETARY OF THE TREASURY,
IN MECHANICS BUILDING, BOSTON,MASS.,
ON FRIDAY EVENING, OCTOBER 2U, 1930»

Note:
For f u l l text o f speech see Subject F ile :

Secretary*s Speeches

FOR RELEASE, MORNING- PAPERS,
THURSDAY, OCTOBER 30, 1930.

Address of
A. W. Mellon
Secretary of the Treasury
from Station WMAL,

Washington

at 10 o ’ clock P. M., Eastern Standard Time,
October 29, 1930.

We are in the midst o f a campaign in volvin g the e le c tio n o f one-third
of the United States Senate, the en tire membership o f the House o f
Representatives, and a vast number o f State, county and municipal o ffic e r s .
Such a bien n ial e le c tio n , in an o f f year when the Presidency is not
involved, ra re ly turns on a s in g le, c le a r cut issue.

The s itu a t'o

usually too confused fo r that; and i t is too confused today.

In tne

coming e le c tio n candidates w i l l be chosen in some States because o f th e ir
views on p roh ib ition ; in others because o f the t a r i f f or farm r-relief or
some other measure; and, in p r a c tic a lly a l l cases, the person ality o f the
candidates themselves w i l l la rg e ly a ffe c t the fin a l re su lt.

On top o f

a ll th is , the situ ation w i l l be fu rther confused by the e ffo r t s o f the
Democratic candidates to make an issue o f the present commercial and
indu strial depression and to charge the Republican Party w ith re s p o n s ib ility
fo r matters beyond it s con trol.
I t is not unnatural, perhaps, that the opposing Party should seek to
, c a p ita liz e d is s a tis fa c tio n w ith e x is tin g conditions.
have always been prone to do th is .

P o l i t i c a l p a rties

But any one whose memory goes back

even a few years knows that depressions have always follow ed periods o f
over-expansion, regardless o f went p o l i t ic a l party is .in power.

Purther

more, such depressions have been, almost without exception, the resu lt o f world
conditions and consequently have not been confined to any one country but nave
been world-wide in extent.

-2 -

My own memory goes took to 1873 when, during the Adm inistration o f
President Grant, there was a complete collapse o f c re d it and commodity
prices, both in th is country and in Europe, due to over-expansion and
excessive speculation.

The same thing happened in 1893 under President

Cleveland and was due, as "before, to World conditions.

Again, in 1920,

a major c r is is arose, th is time becoming acute under the la s t Democratic
Administration and extending into the f i r s t year o f the incoming Republican
Administration.

That c r is is , as a l l o f us remember, extended to

p r a c tic a lly every country in the world, and was due prim arily to tne liq u id a tio n
o f commodity values which had become unduly in fla te d during the war.
How we are in the midst o f another business and in d u stria l depression.
Like the e a r lie r ones, i t is world-wide in extent and has resu lted from much the
same causes.

I t was not caused by speculation in stocks, though that was

a fa c to r, o f course, in the situ ation .

I t s underlying causes were deeper

than that and may be traced p rim arily to over-production o f certa in commodities,
esp ecia lly raw m aterials, both in th is country and abroad.
Production processes in a gricu ltu re and industry had been enlarged
throughout the world to supply the needs created by four years o f almost
universal war.

Those needs having been supplied in the ten years that

had elapsed since the war ended, there developed a lack o f balance between
production and consumption in certain commodities, resu ltin g in a fa l l i n g
o f f in p rices o f these commodities and a consequent collapse in the buying
power o f many countries, accentuated in some cases by p o l i t ic a l uphoavals
w e ll as d islo ca tio n o f trade.

-

3 -

We are now going through the process of readjustment,

I do not

underestimate i t s seriousness or the su fferin g i t must cause to many innocent
people whose savings or jobs have been swept away through no fa u lt o f th e ir
own.

We must a l l do what we can to help the man who is in d i f f ic u lt i e s

but, meanwhile, i t is w ell to get a clea r conception, i f we can, o f those
unseen forces in the grip o f which we fin d ourselves, and o f how we can
best work together as a nation in combating them.
We have found by experience that what a ffe c ts one country adversely,
in time a ffe c ts the other countries a lso,

Wo one nation, among the

clo sely -k n it nations o f the world, can long expect to escape a world
condition.

But we in th is country were fortunate in being so w ell

prepared to cope with the emergency when i t came.

We were p a rtic u la rly

fortunate in having in the White House a man who had the knowledge and the
experience that p ec u lia rly f i t t e d him to deal w ith the situ ation .
Throughout h is career, both during the war and afterwards, President Hoover
has exhibited a genius fo r organization and fo r quick and d ec isive action .
These were the q u a litie s that made him so e ff e c t iv e in dealing with the
situ ation la s t autumn; and I fe e l that too much cred it can not be given him
fo r h is very rea l and constructive contribution in m obilizin g the business
forces o f the nation at a c r i t i c a l moment in i t s h istory.

-4 -

In so fa r as the in tern al organization o f th is country is concerned»
we enjoy one advantage over most other nations.

America is more

nearly self-con tain ed , as regards both production and consumption, than
any other country in the world.

Hot only do we produce most o f the

goods which we requ ire, hut we have a domestic market o f tremendous
purchasing power, capable o f consuming not less than nine-tenths o f a l l
that we produce.
Any study o f consumption in th is country shows what America’ s enormous
purchasing power means, not only to industry and agricu ltu re here hut
to the rest o f the world a lso .

I t proves con clu sively that our

w ell-bein g as a nation rests on a s o lid foundation and that our p rosp erity
in the future, as in the past, w i l l he based prim a rily on our own domestic
purchasing power - a purchasing power to which no lim its can he set so
long as we continue to maintain the wage scale and standard o f liv in g
which in the past have created an ever expanding market fo r goods and
services.
Ho one can make any predictions as to how long i t w i l l take fo r
our country to make the readjustment necessary in a time lik e th is .
But o f one thing we can he certain ; w ith our great in tern al organization,
our vast resources, our unparalleled domestic buying power and the

-5 -

indomitable s p ir it o f our people, we sh all be among the f i r s t o f a l l
the nations to recover and to resume the onward march o f progress.
Now as to the part which the Adm inistration can play in
hastening that recovery.

Except fo r the exigencies o f p o lit ic s ,

no thoughtful person, I f e e l sure, would make the assertion that e ith e r
th is or any other Adm inistration could be held responsible fo r the
conditions now a f f l i c t i n g th is coim try and the world.

We have not

yet learned how to avoid in d u stria l depressions and c e rta in ly no one,
who gives any consideration to underlying causes, w i l l charge any
p o lit ic a l party or group o f men or even nations w ith re s p o n s ib ility fo r
a depression which is world-wide in extent and could not have been
prevented, so fa r as one can humanly see, by any action that might have
been taken.
There is only one challenge that, in fa irn ess , can be made, and that
is :

have those in charge o f the Government conducted i t s a ffa ir s with

prudence and fo re s ig h t, so that the Government now fin ds i t s own house
in order and the fin a n c ia l structure o f the country in ta ct and in a
p o sitio n to meet a l l

leg itim a te demands that may be made upon it?

That challenge the present Adm inistration is prepared to meet and
welcomes the opportunity to submit i t s record to the country.
I t can be said a t once that the Government’ s finances are in a
sound condition.
surplus.

The la s t f is c a l year closed w ith a s a tis fa c to ry

Up to June 20th la s t , $1 , 051,.000,COO o f the public debt

had been r e tir e d since the beginning o f the present Adm inistration.

6

This, added to the amounts which have "been re tir e d since the
Republican Party came into o f f ic e in 1921, makes a to ta l o f nearly
8 b illio n d o lla rs o f public debt which has been paid o ff.

The

importance of these debt retirem ents may be -seen in the fa c t that they,
together with refunding operations at lower rates of in te re s t, have
resulted in a saving to the Government of in te re s t payments of nearly a
m illio n d o lla rs a day.
The t a r i f f has been revised in accordance with the promise o f the
Administration to extend the b e n e fits of p rotection to agricu ltu re.
The b i l l is not fr e e from d efects.

No t a r i f f b i l l is .

But th is

measure at le a s t, by i t s own terms, provides the means whereby errors and
in eq u a lities may be adjusted.

I f the fle x ib le provisions are

in t e llig e n t ly applied, and I b e lie v e they w i l l be by the excellen t personnel
which the President has secured fo r the T a r if f Commission, they should
go fa r toward making another re visio n o f the t a r i f f by Congress unnecessary
fo r many years to come.

This, o f i t s e l f , is o f inestim able b e n e fit

to business, fo r nothing i s more unfavorable to prosp erity than ■uncertainty
and constant readjusting o f economic conditions to le g is la t iv e
enactments.

I might add that, most assuredly, i t w i l l not be

a contribution to business s t a b ilit y i f a Democratic m ajority should be
returned to Congress and should begin a l l over again the long period o f

business uncertainty that must of necessity accompany t a r iff agitation
in Congress.
The Administration has made a further effort to find some solution
of the difficulties with which agriculture is confronted in this country.
Under the authority of the Agricultural Marketing Act, the Federal Farm
Board is assisting farmers to set up their own marketing agencies, owned
and controlled by the cooperatives that form them, so that these organisa­
tions are the marketing agencies of the farmers themselves and are not,
in any sense of the word, governmental agencies.

It is only a

beginning, of course, but it is a step in the right direction; and, when
these agencies have been thoroughly organized, it is believed that they
w ill offer a means whereby the farmers* products can be marketed in an
orderly manner, while at the same time these associations, because of their
relationship to their members, w ill be in a position to advise against
unwise expansion of acreage and over-production of crops*
So much for the manner in which the Government*s a ffairs have been
conducted.

Hot only has the Government kept its own house in

order but it has held its e lf in readiness to meet unexpected emergencies
that arise from time to time and call for prompt and decisive action.
The Government was faced with such a situation in the current business
depression.

The scope of governmental activities was necessarily

limited, but within those limits the President acted with decision and
courage.

Accustomed to deal with great emergencies and with a

I

•.. ...

.

.

~

a , -

*

■

, . . . . . . ,

knowledge-"born.of wide experience, . he c a lled together leaders in
business, industry and labor, and secured an agreement, on the one

.

hand,. to maintain the. existing-.wage scale, and.keep up .employment so...
fa r as p ossib le, and,on th e :other -hand, t o .avoid.labor disputes,and
c o n flic ts between employers and employees.

That agreement has

been-kept-.and has been •o f inestimable, .benefit in .the. present emergency* •
• Jt was a ls o ( agreed .that both business and the Government should,
carry out, as promptly as p ossib le, a l l needed construction fo r which .
funds might be a va ila b le.

As a re s u lt, the ra ilro a d s, public

u t i l i t i e s and other great enterprises have pushed construction work
during the la s t eight months,

I'n a ddition , a vast amount of

public, improvements are under construction by States and m u n icipalities;
and,,this amount w i l l doubtless be,,g re a tly augmented by bond issues to
be authorized .in the coming -elections*-

■

. . . . .

In so fa r as the Federal Government is concerned, the Treasury and
the Post O ffic e Departments have been making every e ff o r t to expedite
public bu ildin g construction throughout the. country,
January 1 st, 66 bu ilding

.

. . Since

p ro jec ts have been placed under contract and.

21 buildings have been completed in the country at la rg e*

Plans

are;.being rushed fo r $163,000,000 worth o f addition al construction and
i t is estimated that a to ta l of $75,000,000 w i l l be spent throughout
the. country, in the current fis c a l year as compared.with a to ta l of"
$65,000,000 during a l l the three preceding years,

,

. •

- 9 -

The amount to he spent th is year w i l l he increased in subsequent
years under authorizations already made*

But i t should he borne

in mind that th is public bu ildin g program is not in any respect a
wasteful or unnecessary expenditure o f the public funds to meet an
emergency situ a tion .

On the contrary, the buildings now under way

or contemplated, in Washington and throughout the country, are essen tial
fo r the housing and proper functioning o f the Government * s various
a c t iv it ie s and w i l l make i t unnecessary fo r the Government to continue
paying expensive ren tals in many c it ie s , as i t does at present.
Furthermore, by bu ilding now when contracts can be made on a basis o f
more than 15 per cent lower than even a few years ago, the Government
w i l l save money and at the same time provide employment and stimulate
a c t iv it y in many lin e s which are a ffe c te d d ir e c t ly or in d ir e c tly by
the bu ildin g industry.
This perhaps is one o f the most p ra c tic a l measures which the
Government can undertake in helping to meet the pressing and a l l important question of unemployment.

In order to deal with th is

question d ir e c t ly and to co-ordinate the various agencies e x is tin g fo r
th is purpose, the President has appointed a national committee which
w i l l have behind i t a l l the organization and p restige o f the Government.
I have said enough to show that the Administration is doing a l l
i t can both to a lle v ia t e su fferin g and to hasten recovery from the
present depression.

I t can not work m iracles.

The most

i/ ) $

■V

-

10

-

that any administration can do is to keep the boat steady and headed
in the rig h t d irection -until the storm "blows over; and that the
President has shown he is w ell able to do.

He can not be held

responsible fo r the extent or violen ce o f the storm, any more than he can
be blamed fo r the drought which added one more plague to those that beset
us la s t summer.
President Hoover has shown him self a man capable o f dealing with
great emergencies.

I am confident that he w ill lead the country

out o f it s present d i f f ic u lt i e s ; but i f he is to do so with a minimum
o f fr ic t io n and lo ss of time, h is hands should not be tie d by a Congress
con trolled by h is p o lit ic a l opponents.
divided authority*

I t is not a time fo r

I t is rather a time fo r strong and united

action and, in asking support fo r the President and the Administration,
I do so in the b e l i e f that in th is way we shall atta in most quickly
that f u l l measure o f economic recovery which is in evita b le in a nation
so s e lf- r e lia n t and so ju s t ifia b ly confident o f the future.

yw

FOR RELEASE, MORNING"PAPERS,
'-THURSDAY, OCTOBER 30, 1930.

SPEECH TO BE DELIVERED BY HON; OGDEN L. MILLS,
/
* I ¿f'
UNDERSECRETARY OF THE TREASURY,

'

..

AT PERTH AMBOY, w P jQ , /
ON WEDNESDAY EVENING, OCTOBER 29, 1930.

¿J A

On Tuesday next, the c itiz e n s of the United States w i l l ele c t a
new House o f Representatives and one-third o f the members o f the United
States Senate.

I t l i e s in th e ir hands to determine whether the President

is to have the support and cooperation of the Congress, or, in other words,
whether we are to have team-work and unity o f e ff o r t in Washington or
whether, by turning over the le g is la t iv e branch o f the government to the
opposition party, we are to have divided au th ority, re su ltin g, at best, in
a stalemate and, at worst, in confusion, f u t i l e controversy, and loss of
confidence.

The decision must not be made l ig h t ly , but with a deep sense

o f re s p o n s ib ility .

The times are too serious to ju s t ify any other course.

The en tire world i s in the midst of one o f those periods o f deep
economic depression which brin g misery and unhappiness to m illio n s o f in­
dividu als, and in many regions threaten p o l i t ic a l and economic s t a b ilit y .
Even our own country has not escaped the universal malady and, though le s s
seriously a ffe c te d , i t is undeniable that there is a very d e fin ite slackening
in our economic a c t iv it y below the normal le v e l.
nor f u t ile complaints w ill get us anywhere.

Neither, unjust criticis m s

What we need is courage, fa it h

in ourselves and in our fu tu re, and, above a l l , a united e ff o r t in the over­
coming o f d i f f i c u l t i e s which, however severe, can, in the very nature of
things, be but temporary.

Disorganization in government, through d iv is io n

-

2-

o f au th ority, is c le a r ly not a step in the rig h t d ire c tio n .
Herbert Hoover is to be the Captain o f our ship in any event fo r the
next two and a h a lf years.

Are we to e n lis t a crew that may be r e lie d on

to cooperate with the skipper in n avigating the ship through stormy seas,
or to handicap him with one much more in terested in obtaining con trol o f
the vessel than in reaching port?
We may approach the problems created by e x is tin g conditions from
two points o f view: f i r s t , the immediate and pressing need o f m itiga tin g
unnecessary hardship, tid in g over the e x is tin g emergency by a l l means.in
our power through cooperative e ff o r t ; and, secondly, from a long-time stand­
poin t, we may address ourselves to the task o f how best to avoid sim ilar
depressions in the fu ture.

But, whether we look at the present situ ation

with a view to the immediate fu tu re, or from the standpoint o f our more
distant prospects, in eith er event we are fortunate in having as our Chief
Executive a man who, by tra in in g, experience, human sympathy and broad
knowledge, is supremely w e ll-q u a lifie d to deal with eith er aspect o f the
problems.

Hoping to p r o fit by discontent, our opponents, as E lection Day

approaches, spare no pains in emphasizing the dark side o f the pictu re.

But

the grea ter the d is tre s s or threatened d is tre s s , the greater the need o f g iv ­
ing our whole-hearted support to the President; fo r he has no equal in the
handling o f human d i f f i c u l t i e s in the mass.

The children and parents o f

Belgium, France, Russia, Finland, Germany, Poland, and o f our own lower Mis­
sis s ip p i States, t e s t i f y to his s k i l l , his fo re s ig h t and his humanity in
solvin g the problems o f food, sh elter and health.

Is th is the time to deny him

our support at the behest o f an opposition which, in many months o f lea th e rlunged campaigning, has fa ile d to develop a sin gle p o lic y o f it s own or td

-3-

o ffe r one constructive suggestion?

In the meanwhile, the President, from

the day i t became evident that the tid e o f p rosp erity had receded and the
bare rocks o f adversity were in s ig h t, with the decision and broad visio n
ch ara cteristic o f the man, began the work o f m obilizing our resources to
meet the emergency.

You a l l remember hov/ la s t f a l l the leaders o f great

indu strial en terprises, railw ays, u t i l i t i e s and business houses, and the
leaders o f labor were ca lled in , how there was an agreement to maintain
the rate o f wages, to d is trib u te work as evenly as p o ssib le, to urge e f­
fo rt in production and to prevent c o n flic t and dispute; how the cooperative
e ffo r ts resu ltin g from those meetings and from the further movement undertaken
under the leadership o f the President by the Federal, State and municipal
governments, resulted in the carrying out o f a vast program o f public and
other works, e ffe c tin g an expansion of the expenditures fo r these purposes
exceeding those of even the boom year o f 1929.

Who can doubt but that fo r

the prompt and vigorous action o f the President, and the magnificent coopera­
tion o f those who were only too glad to follow his leadership, conditions
last w inter and today would have been in fin it e ly worse than they are now?
Does anyone in th is audience doubt, does any thoughtful man anywhere in
the United States doubt but that i f we lend the President our whole-hearted
support and cooperation, a l l w i l l be done th is w inter that can be done to •
re lie v e s u ffe rin g and d istress and to move forward step by step to the point
where we can once more resume the onward march o f .American economic p ro s p e rityl
I t is w e ll to remember, vrtien that time comes, that these down-swings do
not wipe out the progress achieved during the forward movements, and that when the on-

-

4-

ward, march is resumed once more, we s ta rt not from the old mark, hut from
the new.

This is an in f i n i t e l y important fa c t to us who have progressed

at such a remarkably rapid rate during recent years, who have witnessed
a steady expansion in the already la rge purchasing power o f our hundred
and twenty m illio n people, an improved and expanded plan t, grea ter e ffic ie n c y
in production and d istrib u tio n , and as a resu lt an ever-widening market fo r
a l l manner o f goods and services.

Here is a re a l basis fo r prosp erity, and

in these days o f possimism, i t is w e ll to remind you that these basic fa cto rs
are s t i l l present.
Given such a fundamentally favorable situ a tion as ex ists in th is
country, i t is ir r it a t in g and puzzling to he confronted w ith period ic de­
pressions.

They seem somehow unnecessary.

And yet to me the progress we

have achieved in th is country, the marvel o f the present economic order,
with the almost unlim ited promise which i t seems to hold out to the average
man in the way o f m aterial betterment, are i n f in it e ly more impressive than
any temporary recession.

With the economic world in balance, increased pro­

duction and increased purchasing power seem to supplement each other so na­
tu ra lly that we accept the two phenomena as a matter o f course.

But l e t any

considerable group o f people produce what is n ! t wanted, or more than is wan

,

le t th e ir goods f a i l to fin d a market, and th e ir impaired purchasing power
immediately a ffe c ts the market fo r goods produced by other groups.

A n ic e ly

adjusted balance is disturbed, the movement spreads and almost before we know
i t we are confronted w ith the phenomenon known as a business depression and
the most b a fflin g o f problems.

I t is only in times lik e these that we r e a liz e

the in tr ic a c ie s o f the system and how necessary i t is to analyze and determine

-

5-

what are the co n tro llin g and determining forces*
When one considers what i t means to have a fr e e ly com petitive
economic order,, such as p reva ils throughout most o f the world to-day, in
which men engage fr e e ly in a wide v a rie ty o f sp e cia lize d a c t i v i t i e s fo r a
money income, which is spent hy them also quite fr e e ly upon a wide v a rie ty
of commodities, and in response to frequently unstable preferences, and when
one appreciates the importance o f the psychological fa c to r and the tendency
of human "beings to move a l l together in one d ire c tio n or the other at the same
time, i t is easy to understand how complicated and susceptible is our whole
economic structure.

I t explains why period ic depressions and readjustments

seem almost to be in e v ita b le .

Whether they can be e n tir e ly elim inated is

certa in ly questionable, but that they can be fu rth er m itigated is not too
much to expect.

A ft e r a l l , there was a time when we were s a t is fie d with a

banking and c re d it system subject only to c o rrective checks and balances that
autom atically became operative only when unsound developments had ca rried us to
periods o f c o s tly and pain fu l c ris e s .

With the organization o f the Federal

Reserve System and the consequent c e n tra liz a tio n o f re s p o n s ib ility fo r the
supervision o f c re d it developments, we made a great step forward.

The Federal

Reserve Act has not only given added strength to our c re d it structure, but has
provided us with a group o f o f f i c i a l s whose duty i t is to study changing
business and c red it conditions in order that business and commerce may b en efit
from an enlightened supervision o f banking and c re d it developments.

We have

not yet reached p erfectio n in the use o f th is instrument, but I b e lie v e that
a l l w i l l admit that it s creation was a step in the rig h t d ire c tio n and that
i t has functioned, even in these ea rly years o f i t s existence, w ith untold
ben efit to the country.

-

6

-

The Federal Reserve System did not come into existence u n til a ft e r
many years o f in tensive study and work.

The analogy is perhaps not quite

leg itim a te, hut i f a proper solution of one o f the great economic problems
has been found and suitable machinery has been evolved fo r dealing with one
o f the important business fa c to rs , namely, that of cred it, is i t too much
to hope that in tensive study o f a l l o f the other complicated and in tr ic a te
fa cto rs may y ie ld sim ila rly fr u it fu l results?

The President has proposed

that “ The whole range o f our experience from th is boom and slump should be
placed under accurate examination with a view to determination of what can
be done to achieve greater s t a b ilit y fo r the fu tu re, both in prevention and
in remedy.11

To me th is is a most constructive suggestion.

We have made

such enormous strid es in the gathering of current business s t a t is t ic s , in ­
formation can be so re a d ily , ra p id ly and w idely d iffu sed , that we may look
forward to the day when the business course o f the future may be charted
by the lig h t o f adequate information and knowledge and in accordance
with recognized rules o f conduct, resu ltin g in greater sa fety to individual
indu stries, and in more assured s t a b ilit y in our economic l i f e .
There is , perhaps, no greater problem that confronts the modern
world than the development o f means and methods o f avoiding the c y c lic a l
depressions, or at le a s t o f m itiga tin g th e ir se v e rity and duration.

I

know of no man so w ell q u a lifie d to furnish the leadership in such a move­
ment as the President o f the United States*
I f we look, then, e ith e r to the immediate or to the more distant
future, i t would seem, that s e lf- in t e r e s t demands that we should not change
our Doard o f d irecto rs at th is time.

When circumstances im peratively c a ll

fo r unity, we must not have d iv is io n ; when cooperation should be the order
o f the .day, we should not enthrone opposition; and, c le a r ly , when the
immediate task is construction, we should not turn to those who cannot view
a brick except in the lig h t o f something to be hurled.

But th is administration is e n title d to your support not only by
virtu e of what i t can accomplish, but because o f what i t has already done.
In the face o f very d i f f ic u lt conditions and the kind o f partisan opposition
from which i t might f a i r l y have claimed exemption, the adm inistration has
carried w ell nigh to completion the program on which i t was elected .
We pledged ourselves to such fu rth er reduction of the tax burden
as the condition o f the Treasury might from time to time permit.

Taxes

have been reduced by no less than $160,000,000 th is year,
We pledged ourselves to continue to reduce our national debt in
accordance with a w ell-esta b lish ed program.

From March 4., 1029, to June

30, 1930, the public debt vn-as reduced by a b i llio n and fift y - o n e m illio n
d o lla rs; and a fte r both debt and tax reduction, we closed the fis c a l year
with a surplus o f $184,000,000.
We pledged ourselves to re vise the t a r i f f in accordance with pro­
te c tiv e p rin c ip le s , and more s p e c ific a lly with a view to adjusting ex is tin g
discrepancies between a gricu ltu ral and other in du stries.

I t has been done.

We pledged ourselves to adhere to the established fo reig n debt
p o lic y and to-make provision fo r the settlement o f the claims o f our citize n s
and o f our government against Germany,

The la s t o f the war debt settlements

has been r a t i f i e d and signed, and an agreement has been made with Germany
providing fo r the repayment o f the costs o f our Army o f Occupation and o f the
ju st claims o f our c itiz e n s .
We pledged ourselves to bu ild up c o rd ia l in tern ational understanding
that w ill make world peace a permanent r e a lit y .

The three-power naval pact,

which became fi n a l ly e ffe c t iv e la s t Monday, is an epoch-making contribution
to the cause of world peace by bringing to a h a lt fo r the f i r s t time in
h isto ry com petitive building.

We pledged ourselves to the enactment o f le g is la tio n creating a
Federal Farm Board, clothed with the necessary powers to promote the estab­
lishment o f a farm marketing system o f farmer-owned and co n trolled s t a b ili­
zation corporations or association s, and the establishment o f a Federal
system of organization fo r cooperative and ord erly marketing of farm
products*

I t has been done in spite o f the e ff o r t s of the opposition to

destroy th is constructive e ff o r t by attaching to i t the unsound proposal
known as the Export Debenture Plan, which contemplated subsidizing exports
from the Federal Treasury and dumping in the world markets*
We pledged ourselves to increased Federal support fo r improved
highways*

Appropriations have been increased from the usual $75,000,000

yearly to $125,000,000.
We pledged our opposition to government ownership or operation
of our Merchant Marine and to the promotion of i t s development under p riva te
ownership and management.

Since March 4, 1929, the Shipping Board has sold

a to ta l of 189 ships, while new routes established under p riva te auspices
since that date require 51 new ships, aggregating 467,500 tons and costing
approximately $200,000,000.
We pledged ourselves to the reorganization o f the government
supervision o f radio f a c i l i t i e s .

Acting under Congressional authority, the

Federal Radio Commission has been reorganized and established upon a permanent
basis.
We pledged ourselves to the continued development of our inland and
in tercoastal waterways, and an enlarged national program fo r the development
of inland railw ays has been worked out a d m in istratively and le g is la t iv e ly by
the President and Congress.
We pledged ourselves to fu lle r and more adequate r e l i e f fo r our
disabled veterans.

This has been accomplished.

- 9 -

Back in the days when I used to campaign against former-Governor
Smith, one of h is fa v o rite phrases was, " L e t 's consult the record."
there i t is .

W ell,,

On that record we go to the Country with complete confidence*

There c^re two measures which X fe e l ju s t ifie d in sin glin g out fo r
further discussion— the t a r i f f and the A gricu ltu ral Marketing Act.
I do not desire to discuss the t a r i f f eith er from the standpoint of
the

p ro tective p rin cip le to which th is country is committed, or from the

standpoint o f ra tes, which, while they lend themselves to a l l kinds o f p o l i t ­
ic a l misrepresentation and d is to rtio n , cannot adequately "be discussed in the
time at my disposal.

But there is one featu re which should he called to

your p a rticu la r attention, and that is the so—ca lled f le x ib le provision.
One great fa u lt about t a r i f f b i l l s in the past has been th e ir lack of
f l e x i b i l i t y and our in a b ilit y to modify rates to meet ra p id ly changing
economic conditions without resortin g to the cumbersome and none too sa tis­
factory method of g e n e r a l- ta r iff revision .
The Congress cannot undertake a general t a r i f f re v is io n oftener tnan
once every seven or eight years unless a l l other public business is to be
neglected and we are to su ffer at frequent in te rv a ls a l l of the uncertainty,
confusion, and costs incident to a complete re v is io n of ra tes.

Nor is i t

disputed that in the interim the new situ ations which a ris e almost from month
to month in an economic world in which ¿’evolutionary changes are the rule
rather than the exception w i l l render many established rates obsolete overnight.
Under rapid ly changing conditions, i t is uneconomic and unjust to freeze t a r i f f
rates over long periods o f time.

Moreover, provision should be made fo r

correcting such errors as are bound to creep into any t a r i f f re visio n and to
enable us to review schedules which experience has demonstrated are out o f lin e
with actual conditions.

-

10

-

“What, then, is the businesslike solution of th is adm ittedly
p lica ted and d i f f i c u l t economic problem?

com­

Let us have a T a r if f Commission

composed o f trained, w e ll-q u a lifie d and unbiased men; l e t them in each in ­
stance determine the fa cts and, based on those fa c ts and the p rin cip les and
rules la id down by the Congress fo r th e ir guidance, make th e ir recommendations
to the President.

Give him the authority to make th eir recommendations

e ffe c t iv e by proclamation.

This i s exactly what the present provision does.

In addition, i t provides fo r open hearings and fo r making public the recommenda­
tions o f the Commission.

Such a plan conforms to the fundamental p rin cip les

which should govern the adm inistration o f a p ro tective t a r i f f law under
present-day conditons.

The in te re s ts of the country w i l l best be served i f ,

a fte r Congress has la id down a p o lic y and enacted a general ra te revisio n ,
subsequent readjustments are brought about s o le ly on the basis of economic
considerations and fre e from a l l of the p o l i t ic a l and partisan controversy
which h isto ry has demonstrated is inseparable from le g is la t iv e t a r i f f re v is io n .
The p rin cip le that u nderlies the A gricu ltu ral Marketing Act is simple
enough.

The farmers of the country are to be encouraged and assisted in form­

ing strong organizations through which they, a ctin g c o lle c t iv e ly , can control
the marketing and, u ltim a tely, the production o f th e ir products.

In other

words, the same business p rin c ip le s that govern the conduct o f other in dustries
are to be applied to the a gricu ltu ra l industry.

The major reason agricu ltu re

has fa ile d to keep pace is that i t has operated as an in dividu al en terprise,
competing with organized e ffo r t s in other in du stries by in dividu al action and
planning, as compared with c o lle c t iv e thinking and acting.
L e ft to themselves, the work o f organizing six and a h a lf m illio n
farmers, scattered over a vast area, would be altogeth er too slow a process»
There is need o f assistance, leadership and fin a n c ia l help.

These the

-

- 11 r

Government is furnishing in the in te rest of the national w elfa re,
thing must he home in mind.

The Federal Farm Board is a ss is tin g farmers

to set up th e ir own cooperative organizations.
them.

But one

I t is n ’ t doing the job fo r

These central associations are owned and con trolled by the cooperatives

that form them.

They are the marketing agencies of the farmers, not in any

sense governmental.

When thoroughly organized and firm ly established, they

w i l l o ffe r agencies fo r the u n ified marketing o f the d iffe r e n t products o f the
farm, on an orderly basis.

At the same time, because o f th e ir relation sh ip

to th eir members, the cooperative associations are the one agency which can
e ff e c t iv e ly discourage unwise expansion in acreage and over-production.
The program is e s s e n tia lly a long-tim e program.
be achieved in a day.

The goal cannot

The work o f organizing six and a h a lf m illio n farmers •

so that they can e ff e c t iv e ly control and manage th e ir own business along
modern business lin e s is not one that lends i t s e l f to

rapid action or im­

mediate re su lts , but a foundation is being la id , on which to erect a firm
and la s tin g structure.

Before many years have passed, i t is not unreasonable

to hope that the Government w i l l have stepped out o f the p ictu re, that the
a gricu ltu ra l industry in the United States w i l l be an organized,w ell managed
industry, and that agricu ltu re w i l l atta in the standard American le v e l o f
p rosp erity.
In New Jersey you are to e le c t a United States Senator and an en tire
delegation to the House o f Representatives.

I t would be id le , notwithstanding

my admiration fo r Dwight Morrow, to attempt to praise him before an audience
o f h is fellow-Jerseymen.

He w i l l be elected w ell nigh unanimously.

But, in

weighing the m erits o f the candidates fo r seats in the House, may I suggest
to you that you review the le g is la t iv e h is to ry -of the la s t eighteen mo'nthsi
and consider how often you had reason to be thankful fo r the steadying in­
fluence and the sound p o lic ie s pursued by the Republican House of Repre-

-

sentatives,

12

-

To use an ancient formula, the House o f Representatives, under

the leadership o f Speaker Longworth, has deserved w ell of the country*

Two

years from now, i f i t seems wise, we can have an en tire change o f management.
In the meanwhile, our task is to m obilize the resources and e ffo r t s o f the
Nation in meeting and overcoming the conditions created by th is world depression.
The problem o f employment must be solved.

The American economic system must

and w ill prove equal to the task: of providing fo r a l l our people in the days
of adversity as i t does so abundantly in those o f p rosp erity.
fortunate in the character o f our leadership.

We are

Is n ’ t i t the part o f wisdom

to give our leader united support and to put the f u l l weight o f the country
back of h is constructive program fo r the solution o f our common problem?

Or

do we want the weak and h a ltin g p o lic y that re su lts from divided authority
and p o lit ic a l confusion?
at the p o lls on Tuesday*

That is the one, the only real issue to be s e ttle d

FOR RELEASE, MORNING PAPERS,
FRIDAY, OCTOBER 31, 1930.

TREASURY DEPARTMENT

Statement by Secretary M ellon.
The statement o f Congressman Garner on the subject of Tax Refunds in th is
morning1s press has been ca lled to my atten tion .

"While the fa c ts have re ­

peatedly been set fo rth , i t is important that i t should be c le a r ly understood
why refunds are made and by what methods they are determined.
The system prescribed by Congress fo r the c o lle c tio n o f Federal revenues
is based upon the proposition that the needs o f the Government demand the im­
mediate payment o f taxes.

Any dispute over the amount to be paid cannot be

permitted to postpone payment.

Any controversy can be considered and f a i r l y

determined th e rea fter.
Accordingly, under our system o f income taxes, each taxpayer prepares h is
own return and pays whatever tax he estimates to be due.

Thereafter, the

Bureau of In tern a l Revenue audits <his return and examines the various elements
involved*

I f the return is found to be co rrect, the matter is closed.

taxpayer has underestimated h is tax, an addition al tax is assessed.

I f the

I f he has

overestimated h is tax, he is e n title d to the refund o f the amount overpaid.

If

the taxpayer is d is s a tis fie d with the determination o f the Bureau, he is en­
t it le d to a f u l l hearing, or, at h is option, he may have recourse to tne Board
o f Tax Appeals or to the courts.
F u ll precautions have been taken to see that the in te re s ts o f the Govern­
ment are protected.

A system has been set up which provides adequate checks

and review in a l l cases.

Let me b r i e f l y state the various steps that are taken

before any money is paid to a taxpayer by way o f tax refund:
F ir s t .

There is a f i e l d examination and audit made by C iv il Service em­

ployees under the supervision and d irection of a Treasury agent, who him self is
in the c la s s ifie d C iv il Service.

7
- 2 Second*

The fa c ts as reported by. the agent in the f i e l d are submitted to

and c a re fu lly reviewed by the Audit Review D ivision of the Bureau of In tern al
Revenue in Washington, with the assistance of the Valuation D ivision o f the
Bureau, composed of technical experts, a l l o f whom are in the c la s s ifie d C iv il
Service.
Third.

I f the refund involved is le s s than $10,000, they report th e ir

recommendation to the Commissioner of In tern al Revenue fo r approval or d is­
approval*
Fourth.

I f the amount is over $10,000, the proposed refund, together with

a l l data, is forwarded to the o ffic e of the General Counsel o f the Bureau of
Internal Revenue.

There a complete review is made of each and every item,

with the assistance, i f necessary, of the technical s t a ff o f the Bureau o±
In tern al Revenue.
F ifth .

A l l refunds in excess of $75,000 are submitted in advance o f pay­

ment and passed upon by the Congressional Joint Committee on In tern al Revenue
Taxation, consisting o f Senator Smoot, of Utah, Senator Watson, o f Indiana,
Senator Reed, o f Pennsylvania, Senator Harrison, o f M ississip p i, Congressman
Hawley, of Oregon, Congressman Treadway, of Massachusetts, Congressman Bacharach,
o f Hew Jersey, Congressman Garner, o f Texas, and Congressman C o llie r , of
M ississippi*
The suggestion that under any system such as th is refunds fo r p o lit ic a l or
any other improper purpose are p ossib le, is simply preposterous.
By fa r the la rg est amount o f refunds is due to court decision s, or other
causes, over which the Treasury has no con trol.

Furthermore, the la rg est re­

funds in recent years have almost without exception been a ttrib u ta b le to the
years o f the War.

At that time the Government was under the necessity of

c o lle c tin g more than four b i l l i o n d o lla rs annually.
complicated and understood by few.

The statute was new and

There was no time to determine controversies

- 3 and in tile emergency taxpayers gen erally paid la rg e amounts into the public
treasury, the le g a lit y of which was in dispute.

There was always, however,

the assurance that u ltim ately these payments would he analyzed, that correct
in terp retation s would he applied, that ju s tic e would he done and excessive
payments refunded.
To say that refunds should he made only hy virtu e of the decision o f a
court is to delegate to the courts the en tire administration o f the Income Tax
Law,

I t is evident that what would apply to refunds would he equally applicable

to additional assessments.

In e ffe c t a l l questions in volvin g disagreement

would have to he referred to the courts.

This would resu lt in such interminable

delay as to break down the administration o f our income tax system,and would
place an in to le ra b le burden upon our already overworked Federal Courts*

The

suggestion cannot he intended seriou sly.
I t is s ig n ific a n t to note that the Bureau has c o llected fa r more in
additional taxes than i t has paid out in refunds.

Luring the past fourteen

years the t o t a l amount o f additional assessments resu ltin g from o ffic e audits
and f i e l d in vestiga tion s has been $5,345,202,277, while the amount paid out in
refunds during the same period has been $1,254,317,890,

Luring that period

the to ta l in tern al revenue re ceip ts have been $44,032,371,357, so that the
amount refunded by the Bureau has been only approximately 2.8^ o f the amount
c o llected

v»
treasury department

FOR RELEASE, MORNING PAPERS,
SATURDAY, NOVEMBER 1, 1930.

In connection with the Public Buildings Program

Secretary

Mellon made the fo llo w in g statement:

The Secretary of the Treasury has directed that such repair jobs necessary
for the maintenance o f Federal "buildings he expedited so that as much work as
possible w ithin the lim its o f the appropriations a va ila b le, w i l l be placed on
the market within the next three months.

This class of work is gen erally a l—.

located to the quarters of the fis c a l year but in view o f the present unemploy­
ment situ ation , th is a llo c a tio n w i l l be disregarded.
The Government has t i t l e to approximately 50 building s ite s fo r which no
appropriations have yet been obtained fo r the construction of buildings thereon.
The Department contemplates securing the necessary appropriations fo r these
projects in the ea rly part of the next session of Congress.

As a means toward

expediting construction in these cases, the Department has under consideration
the immediate use of another appropriation fo r the making o f topographical sur­
veys and test p it borings, which are usually paid fo r out o f the bu ilding ap­
propriations.

With such data at hand, work on the plans and sp ecifica tio n s fo r

the buildings can be advanced to a point where the p rojects can be placed on the
market fp r construction bids sh ortly a ft e r appropriations have been secured from
Congress.
In lin e with the Department’ s desire to have lo c a l labor employed on Federal
building p ro jec ts to the greatest extent p ossib le, consideration is now being
given to the inclusion o f a paragraph in the sp ecifica tio n s fo r public bu ilding
construction which would n o tify bidders that the Department w i l l look with d is­
favor upon any departure by the contractor from the well-known p o lic y of the
Government to maintain ex is tin g rates o f wages.

TREASURY REPARTidMT

tern I mmediate release ,
SATURDAY,, NOVEMBER 1, 1930

Secretary Mellon announced today the appointment o f Mr,
B, H, Bartholow as Special Assistant to the Secretary o f the
Treasury in matters o f le g is la tio n to f i l l -the vacancy occasioned
"by the resignation of Mr. Ellsworth C. Alvord,

P r io r to h is

appointment, Mr. Bartholow was General Assistant to the General
Counsel o f the Bureau o f In tern al Revenue, haying been on the
le g a l s t a ff of the Bureau fo r over seven years,

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
SUNDAY, NOVEMBER 2, 1930.

SPEECH DELIVERED BY HON. OGDEN L. MILLS,
UNDERSECRETARY OF THE TREASURY,
AT COOPER UNION, NEW YORK CITY,
SATURDAY EVENING, NOVEMBER 1, 1930.

Note:
For f u l l text of speech see Subject F ile :

S ecretary^ Speeches.

FOR RELEASE, MORNING PAPERS,
SUNDAY, NOVEMBER 2, 1930.

RADIO TALK DELIVERED IN BEHALF OF REPRESENTATIVE RUTH PRATT
BY HON. OGDEN L. MILLS, UNDERSECRETARY OF THE TREASURY,
OVER STATION WMCA
SATURDAY EVENING, NOVEMBER 1st

I t is to me a very pleasant p r iv ile g e in these closin g days o f the Cam­
paign to have the opportunity to say a few words to the voters o f the Seventeenth
D is tr ic t, many o f whom I had the honor to represent fo r many years in the State
Senate and in Congress.

I trust that I s t i l l deserve and enjoy th e ir confidence

and that they w i l l give some consideration to these n ecessarily b r ie f and income
p lete observations.
The Country is to e le c t on Tuesday a new House o f Representatives.

In our

D is t r ic t , our present Representative, Ruth P r a tt, is a candidate fo r re -e le c tio n .
She is e n title d to your support not only on grounds o f broad public p o lic y but
because o f high personal m erit, a distinguished public career, and fa it h fu l repre­
sentation o f your in terests and views.
At the present time the business depression, which brings so much su fferin g
and d istress to many, overshadows a l l o f those issues that would normally hold
our in te re s t.

The Democratic Par;ty, n atu rally enough, seeks to make ca p ita l

out o f the dépréssion by attempting to hold responsible the Party in power.

It

has been done b efore, and doubtless w i l l be again; and i f the depression were
lim ited to one country, or could be traced to any p o lic y of government, the argu­
ment might be le g itim a te enough.

But, in view o f the fa c t that the economic de­

pression is world-wide, that many countries are su fferin g i n f i n i t e l y more serious­
ly than we, and that admittedly the forces which brought i t about are beyond the
control of government, I do not b e lie v e that you fin d th is argument p a rtic u la rly
persuasive or relevan t.

- 2 -

u

The all-im portant question is , How best to solve the problem of employment,
to m itigate the se v e rity of the depression, to avoid hardship and d istress, and
4

to take such steps as w i l l bring us quickest to the point where we can resume once
more our normal economic progress*

Are our votes next Tuesday lik e ly in any way

to a ffe c t or influence th is situation?

I b e lie v e they w i l l .

You cannot, under any circumstances, e ffe c t a complete change o f government-.
We are simply to e le c t a new board o f d irecto rs.

President Hoover, as Chief

Executive, w ill in any event remain in command of our ship fo r the next two and a
half years#

At that time, i f i t seems desira b le, there can be a complete change

of management and we can a l l bo swept from o f f i c e .

But, in the meanwhile, leav*-

ing aside h is extraordinary equipment fo r dealing with just such situ ation s, and
the leadership and i n i t i a t i v e which he has displayed, and the constructive e ffo r t s
he is now engaged in to solve our immediate problems, is i t wise at th is time to
seek the cure of divided, authority?
resources of the Nation,

We need u nity in m ob ilizin g the e ffo r t s and.

Do we want, then, to begin by disorganizing the govern­

ment through the ele c tio n of a Democratic Congress to oppose a Republican P r e s i­
dent?
In th is connection, i t is not amiss to remind you— and i f you think back, you
w ill w e ll remember—how often during the course o f the la s t year you had reason to
be thankful fo r the steadying influence and sound p o lic ie s o f the Republican House
of Representatives as contrasted with those o f the Democratic-Insurgent combina­
tion.

Even Democratic papers have repeatedly stated that the House o f Repre­

sentatives, of which Ruth P ra tt was an in flu e n tia l Member, under the leadership
of Speaker Longworth, had deserved w ell of the Country.
Moreover, while I have no desire to be unnecessarily partisan , p a rtic u la rly
as I b e lie v e Ruth Pratt is e n title d to support, irre s p e c tiv e of party, as an id ea l
type o f public servant, i t is c e rta in ly pertinent to c a ll your atten tion to the
fa ct that there is nothing in the Democratic record o f the la s t session to in spire
the Country with confidence should they, as the resu lt of your votes, fin d them-*

- 3' selves in control o f the next Congress.

Presumably, measures which they fought

for so vigorou sly must in evita b ly be placed at the head of th e ir le g is la t iv e
program once they fin d themselves in a p osition to make such a program e ffe c t iv e .
What are they?

They voted s o lid ly against the fle x ib le provision in the T a r if f

Law, which, whether you lik e the present T a r iff Law or not, constitu tes a d e fin ite
and constructive step looking to n o n -p o litic a l, s c ie n t ific readjustment o f rate
schedules.

With almost equal unanimity in Senate and House, they supported the

so-called Export Debenture Plan fo r farm r e l i e f , which contemplated the subsidiz­
ing o f exports by a wholesale raid on the Treasury and an attempt to dump them in
world markets.

Had i t not been fo r the Republican m ajority in the House of Rep­

resentatives, there is n ! t the s lig h te s t doubt that they would have succeeded in
passing th is unsound measure, which not only would have fa ile d to g iv e r e l i e f to
American a gricu ltu re, but have proved to be a c o s tly and dangerous experiment.
I t took the.combined authority o f the President and the Republicans in the
House to defeat th eir Rankin Veterans’ Pension B i l l , which might w ell have cost
between $400,000,000 and $500,000,000 yearly, in addition to the almost
$900,000,000 now being spent fo r the b en efit o f veterans o f former Wars, and at
that have afforded the veterans an unsound and inequitable program o f r e l i e f .
Through the espousal by the Democrats in the Senate of the H orris Muscle Shoals
B ill, they voted to put the Federal Government in the power business.
I have no h esita tio n in saying that such a program constitu tes a real menace
to business recovery.

I t won’ t do to say that i t s enactment is unthinkable.

I

know that the Democrats came w ithin measureahle distance of carrying i t through.
Give them enough additional votes in Senate and House, and they can and may w ell
enact these measures into law, a l l the more so since th eir success in th is Elec­
tion w ill almost n ecessarily carry with i t the implied approval by the elec to ra te
of th e ir actions and votes.
F in a lly , may I say a word or two about your Representative?

You a l l know

her magnificent record in the Board o f Aldermen, where single-handed, in the face,

- 4 f i r s t , of cyn ica l, and fin a lly re sp ectfu l, "but always overwhelming, opposition,
she with amazing knowledge o f our complex c it y government, fo r two years fought
the b a ttle of good government,

I think i t is f a i r to say that her services

earned the respect and admiration o f the en tire c it y ,

Washington is fu rth er o f f ,

and you may not have been able to fo llo w her a c t iv it ie s so c lo s e ly .

But, from

personal observation, I can say that there as here she has continued to show a
marked capacity fo r public service.

During her f i r s t term she has already made

fo r h e rs e lf a p o sition of real influence in a body which is in d iffe r e n t to any­
thing but real m erit, and which very quickly appraises the capacity o f a now
le g is la to r .

She is a member o f one o f the leading committees o f the House, the

Banking and Currency Committee, one o f unusual import once to a world fin a n cia l
center lik e Hew York.

I f you w i l l but keep her in the House o f Representatives,

she has before her an ever—expanding career o f usefulness to our c it y and country.
The situ ation in our D is tr ic t is complicated th is year by the candidacy o f a
b r illia n t and en tertainin g gentleman running as a S o c ia lis t,

Why he should have

selected the Seventeenth D is tr ic t in which to run on the S o c ia lis t tic k e t, is hard
to understand, unless, o f course, the candidacy is designed prim arily to help the
Tammany candidate.

In any event, since, under no circumstances, is i t con­

ceivable that the Seventeenth D is tr ic t should send a S o c ia lis t to Congress, i t
is w ell fo r those attracted by Mr, Broun* s cheerful a m ia b ility to remember tnat a
vote fo r him is in e ffe c t a vote fo r Judge Brodsky.

Elect him, and you w i l l

simply add ju st one more Member to the co lo rless Tammany delegation .

Elect

Ruth P ra tt, and you w i l l send to Washington at le a s t one Representative capable
of representing ably and adequately the in te re s ts o f th is great c it y in the
Congress of the United States.

POR IMMEDIATE RELEASE,
FRIDAY, NOVEMBER 7, 1930.

TREASURY DEPARTMENT

The Secretary o f the Treasury made the fo llo w in g
announcement:
Final steps were taken today in connection with the
funding of the indebtedness o f the German Reich to the United
States on account of the awards of the Mixed Claims Commission
and the costs of the American Army o f Occupation pursuant to
the terms o f the agreement executed June 23, 1930.

Mr. Rudolph

L e itn e r, F ir s t Secretary o f the German Embassy at Washington,
d elivered to the Treasury bonds o f the Government o f the German
Reich in the p rin cip al amount o f Rm.3,169,700,000, o f which
Rm. 2,121,600,000 was on account o f the awards o f the Mixed Claims
Commission and Rm.l ,048,100 ,‘000 was on account o f the costs of
the American Army o f Occupation.

Of the bonds so d eliv ered to

the Treasury, numbers one and two o f the Mixed Claims Series in
the aggregate p rin cip al amount of Rm.61,200,000, and numbers one
and two o f the Army Costs Series in the aggregate p rin cip a l amount
o f Rm,37,850,000, having been paid were returned to the German
Government.

,

The act approving the settlement was signed by the
President on June 5, 1930.

The settlement has lik ew ise been

approved by the German Government.

FOR RELEASE, MORNING- PAPERS,
Monday, Novender 10, 1930.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MELLON

The Secretary o f the Treasury gives notice that tenders are
in vited fo r Treasury h i lls to the amount c f $125,000,000, or there­
abouts.

They w i l l he 31-day h i l l s ;

basis to the highest bidders.

and w i l l he sold on a discount

Tenders w i l l he received at the Federal

Reserve Banks, or the branches thereof, up to two o’ clock P.M., Eastern
Standard time, on November 13, 193C.

Tenders w i l l not he received at

the Treasury Department, Washington.
The Treasury h i l l s w i l l he dated November 17, 1930, and w ill
mature on February 16, 1931, and on the maturity date the face amount;'
w ill he payable without in te re s t.

They w i l l he issued in hearer farm

only, and in amounts or denominations o f $1,000, $13,000, and $100,000
(maturity va lu e).
I t is urged that tenders he made on the printed forms and
forwarded in the special envelopes which w i l l he supplied by the Federal
Reserve Banks or branches upon application th erefor.
Mo tender fo r an amount less than $1,000 w i l l he considered.
Each tender must he in m ultiples o f $1,000.

The p rice o ffe re d must he

expressed on the basis o f 10G, with not more than three decimal places,
e . g . , 99.125.

Fractions must not he used.

Tenders w i l l he accepted without cash deposit from inctrporated
barucs and trust companies and from responsible and recognized dealers in
investment sec u rities.

Tenders from others must he accompanied by a

deposit o f 10 per cent a f the face amount o f Treasury D ills applied
fo r,, unless the tenders are accompanied by an express guaranty o f pay­
ment by an incorporated bank or trust company..
Immediately a ft e r the closin g hour fo r receipt o f tenders on
November'13, 1930, a ll. tenders received at the Federal Reserve Banks
or branches thereof up t o the closin g hour w i l l be opened and public
announcement o f the acceptable prices w ill fo llo w as soon as possible
th e rea fter, probably on the fo llow in g morning..

The Secretary o f the

Treasury expressly reserves the rig h t to r e je c t any or a l l tenders or
parts o f tenders, and to a l l o t less than the amount applied fo r , and
his action in any such respect sh all be fin a l,

Tfiose submitting

tenders w i l l be advised o f the acceptance ar re je c tio n th ereo f.

Pay­

ment at the price o ffered f o r Treasury b i l l s a llo t t e d must be made at
the Federal Reserve Banks in cash or other immediately a v a ila b le funds
on November 17, 1930.
The Treasury b i l l s w i l l be exempt, as to p rin cip a l and in te rest,
and any gain from the sale or other d isp ositio n thereof w i l l also be
exempt, from a l l taxation, except estate and inheritance taxes.

No less

from the sale or other d isp o sitio n o f the Treasury b i l l s sh a ll be allowed
as a deduction, or otherwise recognized, fo r the purposes o f any tax now
or h erea fter imposed by the United States or any o f i t s possessions.
Treasury Department Circular No, 418, as amended, dated
June 35, 1930, and this n otice as issued by the Secretary o f the Treasury,

prescribe the terms o f the Treasury b i l l s and govern the conditions
of th e ir issue.

Copies o f the c irc u la r may be obtained from any

Federal Reserve Bank, cr branch thereof.

TREASURY DEPARTMENT

EOR IMMEDIATE RELEASE,
Thursday, November 13, 1930

Secretary Mellon has selected Bebb & Gould and
John Graham, a rch itects of S ea ttle, Washington, to be
associated in furnishing arch itectu ra l services in the
preparation o f drawings and s p e cifica tio n s fo r the
proposed Marine H ospital, S eattle.

I UI

UK

t

II L L

l

n

FOR RELEASE WHEN DELIVERED

TREASURY DEPARTMENT

SPEECH TO BE DELIVERED BY HON.':’ 'OGDEN L7 HULLS,
UNDERSECRETARY OF THE TREASURY,
AT THE ANNUAL MEETING
OF
THE ACADEMY OF POLITICAL SCIENCE,
TO BE HELD AT THE HOTEL ASTOR, NEW YORK CITY,
ON FRIDAY, NOVEMBER 14th, at 2:30 P. M.

AMERICA'S SEPARATE AGREEMENT WITH GERMANY,

On June 23, 1930, the United States and Germany executed an
agreement providing fo r the settlement o f the claims o f the United States
and it s c itiz e n s against the German Government.

The agreement may he

B r ie fly summarized as fo llow s:
I t provides that Germany is to pay 40,800,000 Reichsmarks
fo r the period September 1, 1929, to March 31, 1930, and the sum of
40,800,000 Reichsmarks per annum from A p ril 1, 1930, to March 31, 1981,in
sa tisfa ction o f mixed claims, and beginning September 1, 1929, an average
annuity o f 25,300,000 Reichsmarks fo r 37 years in f u l l liq u id a tio n o f our
Army Costs*

The combined annuities equal the annuity a llo c a ted to the United

States under the terms o f the Young Plan.

Germany at i t s option, upon not

less than 90 days’ advance n otice, may postpone any payment on account o f the
prin cip al f a l l i n g due to any subsequent September 30th and March 31st not more
than 2-| years distant from i t s due date, a provision that accords, gen era lly
speaking, with provisions re la tin g to postponement to be found in our other

t
ù |.

- 2y

debt settlem ents.

A ll postponed, payments, on account of mixed claims are to

tear in te rest at 5 per cent, the rate provided fo r in the Settlement o f War
Claims Act of 1928, and a l l payments postponed on account o f Army Costs are to
bear in te rest at the rate o f 3 5/8 per cent,.

While the annuities are stated

in terms o f Reichsmarks, payments are to be made in d o lla rs, eith er at the
Treasury or at the Federal Reserve Bank o f $few York.
I f we would understand the reason^ which le d up to the making o f
a separate agreement with Germany, i t is necessary to consider the situ ation
of the United States as compared with that o f the other cre d ito r powers*

At

the time the Young Plan came in to existence, the claims o f the United States
against Germany f e l l into two lim ite d classes:

F ir s t , those covering the re­

imbursement o f our Government fo r the costs o f our Army of Occupation; and, se­
condly, those r e la tin g to the compensation o f our c itiz e n s fo r damages sustained
from acts of war, as adjudicated by a jo in t tribunal set up by agreement with
Germany and popularly known as "mixed claim s."

On the other hand, our Govern­

ment had recognized two classes o f claims by German c itiz e n s against i t , the
fir s t comprising the return in cash or in kind o f property o f p riva te persons
seized by the A lien Property Custodian; and the second covering compensation
for ships, radios and patents seized by the United States Government fo r i t s
own use.
The h isto ry o f the Army Costs and Mixed Claims items i s as fo llo w s :

Army Costs.
The to ta l costs o f the United States Army o f Occupation amounted to
$292,663,435*79.

Except fo r cash req u isitio n s on the German Government fo r

the use o f the Army of Occupation aggregating $37,509,605.97 and certain
other items, such as provost fin e s , abandoned enemy war m aterial, e t c .,
amounting to $7,288,184.33, the United States Government received no payments

on account o f Army Costs up to May 25, 1923.

On that date the United States

and the p rin cip a l A llie d Powers signed the so-ca lled Wadsworth Agree:.***,
ment, which provided that our Army Costs should he divided in to twelve annual
instalments, and should he, during the f i r s t four o f the twelve years, a f i r s t ,
charge on cash payments received from Germany a ft e r the expenses of the Repara­
tion Commission and the current expenses of the A llie d Armies of Occupation, hut
during the la s t eight years should he an absolute p rio r charge on a l l cash pay­
ments, except fo r the costs o f the Reparation Commission.

R a tific a tio n s o f the

Wadsworth Agreement were never exchanged hut we received a payment under i t of
$14,725,154.40 in January, 1925.

The Agreement was superseded hy the so -ca lled

Paris Agreement o f January 14, 1925, which also covered awards o f the Mixed
Claims Commission.

This la t t e r Agreement was concluded at a meeting of repre­

sentatives of the cred itor powers, including the United States, ca lled fo r the
purpose of making d istrib u tio n of the annuities provided fo r under the terms of
the Dawes Plan, which had been adopted in 1924.

Under the provision s of the

Paris Agreement, the United States was to receive on account o f i t s Army Costs,
beginning September 1, 1926, the sum o f 55,000,000 gold marks, or about
$13,100,000 per annum, which payments were to constitu te a f i r s t charge on cash
made a va ila b le fo r tran sfer by the Transfer Committee out o f the Dawes annuities
a fte r the provision o f the sums necessary fo r the service o f the 800,000,000
gold mark German external loan of 1924 and fo r the costs o f the Reparation and
other Commissions.

Under the provisions of the Wadsworth Agreement, our Army

Costs should have been liqu idated by the end o f 1935.

Under the Paris Agreement,

the payments would extend over a period of about 18 years, beginning September
1, 1926.
Up to the f i r s t of September, 1929, the United States had received
on Army Costs Account, $39,203,725.89 under the P a ris Agreement.
As o f September 1, 1929, there was s t i l l due on account o f Army
Costs $193,936,765.20.

' > 4

Mixed Claims»
By virtu e of an agreement entered in to on August 10j 1922, by the
United States and Germany, there y^as set up a Mixed Claims Commission, charged
with the duty o f passing upon the-'claims o f American c itiz e n s a risin g since
July 31, 1914, in respect of damage to or seizure o f th eir property, rig h ts end
in te rests, and upon any other claims fo r lo ss or damage to which the United
States or i t s nationals had been subject with respect to in ju rie s to persons or
to property, rig h ts and in te rests since July 31, 1914, as a consequence of the
War, and including debts owing to American c itiz e n s by the German Government or
by German nationals.
The f i r s t meeting o f the Commission was held on October 9, 1922#
Up to August 31, 1929, awards had been c e r t ifie d to the Treasury fo r payment
which, with in te re s t to August 31, 1929, aggregated $172,703,083.71.

I t was

estimated as of August 31, 1929, that the p rin cip a l amount o f awards yet to be
entered and c e r t ifie d , together with in te rest to that date, amounted to
$53,000,000, and in addition awards to the United States Government, with in­
terest to August 31, 1929, amounted to $64,934,794.41.

-In other words, as of

August 31, 1929, i t was estimated that the to ta l awards o f the Mixed Claims
Commission, made and to be made, aggregated with in te rest $290,637,878.12*
No provision fo r the payment o f the awards of the Mixed Claims
Commission was made u n til the P a ris Agreement o f January 14, 1925.

The P a ris

Agreement provided that the United States should receive 2%j> o f a l l receip ts
from Germany on account o f the Dawes annuities a va ila b le fo r d istrib u tio n as
reparations, provided that the annuity resu ltin g from th is percentage should
n°t in any year exceed the sum of 45,000,000 gold marks.

Up to September 1,

1929, the United States had received from Germany under the P a ris Agreement
for account of mixed claims $31,831,472.03, which, with earnings and p r o fit s
on investments amounting to $2,149,692,70, made a va ila b le fo r d istrib u tio n

- 5 -

$33,981,164.73, and l e f t $256,656,713.39 s t i l l to "be provided fo r .

I t imist

be -understood in th is connection that the fig u re s re la tin g to the to ta l amount
fin a lly awarded by the Mixed Claims Commission were n ecessarily only an e s t i­
mate, since a l l o f the awards had not as yet been made.
Turning, now, to (Jermany1s claims against the United States, our
Government, in common with other nations engaged in the Great War, had segues-*
tered or seized fo r i t s own use the property o f German c itiz e n s .

Once the War

was over, i t could have elected , as others did, to retain that property and ap­
ply i t to the sa tis fa c tio n o f i t s own claims and those o f i t s c itiz e n s , lea v­
ing the German owners to seek compensation from th e ir own Government.

Had the

United States follow ed th is course in the f i r s t instance, i t seems probable
that at the time of the adoption o f the Young Plan we would have been completely
out o f the p ictu re, and there would have been no occasion fo r eith er a jo in t or
a separate agreement.
However, in accordance with a time-honored tra d itio n and what
we conceived to be sound public p o lic y , we elected eith er to return the property
or to compensate the owners, the payments to extend over a number of years, the
to ta l period fo r fin a l liq u id a tio n corresponding in a general way to that re­
quired to discharge the o b ligation s o f our own c itiz e n s .

This is a noteworthy

fa c t, fo r i t resu lts in the tra n sfer of important sums to Germany during the
period o f payment to us.

And what is even more s ig n ific a n t, in the e a r lie r ,

years d o lla r payments to Germany w i l l exceed mark payments to the United States.
During the f i r s t three years of the l i f e o f the separate agreement, we w i l l re­
ceive some 198,000,000 Reichsmarks, or about $47,000,000; whereas we w i l l place
at the disposal o f German c itiz e n s — I can g iv e you but approximate fig u res—
about $148,000,000 in cash or property.

This, as I understand i t , is not true

-

6

!1a )

-

of other cred ito r countries.
Moreover, i t must he remembered that, in accordance with the p o lic y
established by President Wilson, who as ea rly as 1919 had said that in his
opinion we should claim nothing under the general reparation clauses, we had
never presented a claim fo r general reparations; we had not p a rticip ated
in the fix in g o f the sums to be paid by Germany or in the apportioning o f those
sums among the cred itor powers» we had never joined others in the c o lle c tio n of
payments, and we had never been represented on the Reparation Commission, which,
a fte r a l l , came into existence to deal with an almost s t r i c t l y European problem.
I t appears, then, that at the time the question arose as to whether
we should become p a rties to the Young Plan, or r e ly on a separate agreement with
Germany, the p o sitio n o f the United States d iffe r e d in several important particu ­
la rs from that o f the other p rin cip a l creditors?

P ir s t , our claims were o f a

lim ited character and, compared with the to ta l reparation b i l l , were compara­
t iv e ly small.
payments.

We w i l l re ceive le s s than three per cent of the to ta l Young

Secondly, by reason o f our p o lic y o f non-confiscation and compensa­

tion o f German c itiz e n s , mark payments to the United States w i l l be o ffs e t to
some extent throughout the period of payment, and in the e a r lie r years more than
o ffs e t by d o lla r payments to Germany, which obviously f a c i l i t a t e s b i- la t e r a l
transfers? and, th ird ly , we had never joined our war associates in the assessment?
c o lle c tio n and d istrib u tio n o f general reparation payments.
The adoption of the Young Plan, by our becoming a party to the Hague
Conventions, would have involved o f f i c i a l approval on our p a rt, not only o f the
to ta l reparation b i l l presented to Germany, a question in which we had no
primary in te re s t, but o f the fa irn ess o f the d istrib u tio n o f the amounts to be
paid as between European cred ito rs, as to which we had no knowledge and no
in te rest whatsoever.

In addition, we would have had to assume in the future

a share o f the re s p o n s ib ility c f c o lle c tin g and d istrib u tin g payments, fo r we

- 7 -

could not have accepted the b e n e fits afforded by the Young Plan machinery and
have declined to bear any part o f the burdens.
C learly, our in te rests were not s u ffic ie n t ly important to ju s t ify our
plunging headlong into th is troublesome European problem, and reversing the
p o lic y la id down by President Wilson, and follow ed since h is day, p a rtic u la rly
since, had we p articip ated , i t i s probable, should any d i f f i c u l t i e s a rise in
the future, that we, as a comparatively d isin terested party, would fin d our­
selves in the p o sition o f a rb ite r , ca lled upon to s e ttle and decide a contro­
v e rs ia l and d i f f i c u l t European question.
But there is another co n tro llin g reason which made i t inadvisable and
inconsistent fo r us to accept and become a party to the Young Plan.

The Plan

apparently seeks to lin k and merge reparation payments by Germany with a llie d
debt payments to the United States.

Here again President Wilson, on the very

f i r s t occasion that th is attempt was made, took the p o sition that the settlement
and payment o f the obliga tion s to us, incurred by our associates, were e n tir e ly
independent and unrelated to the reparation claims made against Germany.

He

said the United States Government ” f a i l s to p erceive the lo g ic in a suggestion
in e ffe c t eith er that the United States shall pay part o f Germany’ s reparation
ob ligation or that i t shall make a gra tu ity to the a llie d governments to induce
them to f i x such ob ligation at an amount w ithin Germany’ s capacity to pay.

This

Government has endeavored h eretofore in a most fr ie n d ly s p ir it to make i t clear
that i t cannot consent to connect the reparation question with that of in te r­
governmental indebtedness .

11

That p o lic y has been con sisten tly adhered to by

our Government.
In short, when the question arose as to whether we should make a
separate agreement with Germany fo r the s a tis fa c tio n o f our r e la t iv e ly modest
claims, or decide to pool them with the in f i n i t e l y larger claims o f the Eurppean
creditors, a l l o f the arguments appeared to be in favor o f the f i r s t course..

-- . f

i
~ 8 r.

I t was simple, d ir e c t, e n tire ly adequate to protect American in te re s ts , and in
accordance with established p o lic y ; whereas the a lte rn a tiv e involved not only,
abandonment o f the attitu d e stea d fa stly maintained toward both war debts and
reparation problems, but the assumption o f r e s p o n s ib ilitie s on our part wholly
disproportionate to the magnitude o f our claims and re la tin g to problems almost
s t r ic t ly European in character.

While, th erefo re, we were quite ready to accept

the annuities a lloca ted to us by the Young Plan, which involved some s a c r ific e
on our part, i t seems to me that we would not have been ju s t ifie d in becoming
particip an ts, and that we follow ed a wise and proper course in providing fo r
the sa tis fa c tio n of our Claims against Germany in a separate agreement.

I

TREASURY DEPARTMENT

. '

EOR RELEASE,. MORNING PAPERS,
FRIDAY, November 14, 1930.

STATEMENT BY SECRETARY OP THE- TREASURY MELLON
Secretary of the Treasury Mellon announced today

that the tenders fo r $125,000,000, or thereabouts, of 91-day
Treasury B ills dated November 17, 1930, and maturing February 16,.
1931, which were o ffe re d on November 10, 1930 were opened at the
Federal Reserve Banks on November 13, 1930.
The to ta l amount applied fo r was $568,280,000. The
highest bid made was 99.605 equivalent to an in te re s t rate of about
an
1.56 per cent on/annual basis.
The lowest bid accepted was
99.558 equivalent to an in te rest ra te o f about 1.75 per cent on
an annual basis.

The to ta l amount o f bids accepted was $127,455,000.

The average p rice o f Treasury B i l l s to be issued is 99.564.
The average rate on bank discount basis is about 1.72 per cent.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE,
TUESDAY, NOVEMBER 18, 1930

Secretary Mellon announces the selectio n of the fo llo w in g
a rch itects:
P a is t & Steward fo r the fed era l bu ildin g at Miami, F lorid a.
H. J. Klutho, parcel post bu ildin g at Jackson ville, F lorid a.

FOR RELEASE WHEN DELIVERED

TREASURY DEPARTMENT

SPEECH TO BE DELIVERED BY HON. OGDEN L. MILLS,
UNDERSECRETARY OF THE TREASURY,
BEFORE THE NATIONAL ASSOCIATION OF STATE AUDITORS, COMPTROLLERS AND TREASURERS,
AT THE PENNSYLVANIA HOTEL, NEW YORK CITY,
ON THURSDAY MORNING, NOVEMBER 20th.

THE EXECUTIVE BUDGET SYSTEM.
We have, among other problems, a tax problem in the United States,
which is , of course, d ir e c tly rela ted to the high cost of government.

We

very r ig h tly take pride in our increased in d u stria l e ffic ie n c y , our low cost
of production, our constant s triv in g in the business and commercial f i e l d
to elim inate waste; and yet we are curiously apathetic toward the problem of
e ffic ie n c y in the f i e l d o f government, and apparently unmindful that here,
too, waste is d is tin c tly uneconomic.

The cost o f the Federal, State and lo c a l

governments constitutes in a sense a part of our national overhead expense, and
i f too heavy must be a drag on our economic progress.

When governmental

expenditures absorb almost 14 per cent o f our national income, is i t too much
to say that we have a very re a l in terest in seeing to i t that a proper system
of control Is set up?

Based on nine years* experience, I think I am safe in

a ffirm in g that, in so fa r as the Federal Government is concerned, suer, control
e x is ts through the establishment of a sound budget system.
While I am fa r from claiming that the resu lts are due more than in
part to e ffe c t iv e ¿budgetary p ractices, the fo llo w in g fig u re s are sig n ific a n t
in emphasing'where* the tax problem of the fu tu re lie s :

-

2

-

While Federal taxes, were reduced from $4,905,000,000, in 1921, to
$3,364,000,000, in 1928, or a decrease of $1,541,000,000, State and lo c a l
increased from $3,933,000,000 to $6,095,000,000, or $2,162,000,000.

The in­

crease in State and lo ca l taxes not only o ffs e t the reduction in Federal tax­
es, hut resu lted in an increase of $621,000,000 in a l l taxes*

Federal taxes

amounted per capita to $28.03, in 1928, as compared with $45.23, in 1921;
while State and lo c a l taxes were $50.79 per capita in 1928 and $36,27 in 1921.
Turning, now, to public expenditures, the fa c ts are even more
s ig n ific a n t,

Tax receip ts are frequ ently confused with governmental costs.

As a matter of fa c t, they do not by any means correspond.

Year in and year out

our governments, with the exception of the Federal Government, spend much more
than th eir current revenues, the d iffe re n c e as a rule being made good from the
proceeds o f borrowing.

Total expenditures by Federal, State aid lo c a l govern­

ments amounted to $12,179,000,000, in 1927, the la te s t complete fig u re a v a il­
able, representing an increase o f $1,257,000,000, or 18.3 per cent, as compared
with 1924, in the disbursements of a l l State and lo c a l governments, and a net
increase of $1,205,000,000 fo r a l l governments.
financed over and above tax revenues?
in public debt outstanding.

How were these expenditures

The answer is to be found in the changes

The Federal Government is paying o ff i t s indebted­

ness, while the States and m u n icipalities are resortin g to bond issues to finance
additional expenditures, apparently n e g le c tfu l o f the fa c t that in the long run
borrowing is the most expensive method o f public financing.

Haring the seven
c rie r
years, 1922-1928, the net funded or financed indebtedness o f o&toy and lo c a l
governments increased from $7,264,000,000 to $12,579,000,000, an increase of
more than $5,300,000,000.

Meanwhile, the national debt, which by 1922 had a l­

ready been considerably reduced from the war peak, was fu rth er reduced by nearly

«i 3 $5,400,000,000 "by the end of the fis c a l year 1923.
High taxes and the high cost o f government do not n ecessarily iA p fe
uneconomic expenditures hy the community as a whole, in spite o f the very
natural resentment which the in dividu al may f e e l at the increased encroachment
ty government on h is personal resources.

Under complex modern conditions,

governments must undertake re s p o n s ib ilitie s which in simpler days coula be
safely l e f t to p riva te in d ivid u als.

IMrthermore, i t is unquestionably true

that the people want, and, th e o r e tic a lly at le a s t, are w illin g to pay fo r ,
more and b e tte r service from th eir government.

The mere fa c t , then, tnat we

are expending an increasing amount o f money does not n ecessarily mean that
there is extravagance and waste or u n ju s tifie d expenditures.

On the other hand

when there i s reason to b e lie v e that extravagance and waste e x is t, to plead the
worthiness o f the objects, as is so freq u en tly done, is u t te r ly beside the point.
So one w i l l deny that we must have highways and an adequate educational system.,
but whether in these f ie ld s we are g e ttin g a f u l l return on the money spent is
the question which must be answered.

The re a l problem, as I see i t , i s not so

much as to whether we shall decrease or increase our governmental a c t iv it ie s ,
but whether we could not get what we are g e ttin g to-day from government fo r a
good deal less than we are paying; ond, from my experience, that is a very l i v e
and real question.
In order to answer i t , i t is necessary to ascertain in each p a rticu la r
instance whether a system has been set up which w i l l insure a proper co..trol
over appropriations and expenditures, and at the same time tend to develop
the e ffic ie n c y necessary to y ie ld a d o lla r 's worth o f service fo r every d o lla r
appropriated and expended.

In the commercial and business f i e l d , competi

insures e ffic ie n c y and economy; in the f i e l d o f government, we must look to the

^L
If 3 b

-In­
settin g up o f public accounts in such a way that the public can re a d ily
grasp not only what the routine administration o f government is costing,
but what is involved in the way o f expenditures by new p o lic ie s suggested
fo r th e ir approval.

Aside from eternal vig ila n ce on the part o f the public,

which can only be e ffe c t iv e i f the books are always open and the accounts in
re a d ily understandable form, control o f the purse-strings must be exercised
in such a manner as to compel the e f f ic i e n t and economical administration o f
the government machine.

What is known as the Executive Budget System, proper­

ly organized and applied, meets these fundamental requirements.
Stated from the point o f view o f our Federal experience, a budget
system fo r government finance in volves not only a systematic plan o f receipts
and expenditures, but also the machinery fo r putting th is plan in to operation.
In the plan i t s e l f , the budget proper, the needs o f the government are estimated
and balanced against anticipated income fo r a d e fin it e period in advance, and
are also compared witJi the actual expenditures and actual receip ts in pre­
ceding periods.

Such a plan, presented to the L eg isla tu re and to the pu blic,

permits a careful survey o f the needs of the various branches o f the govern­
ment as a basis fo r le g is la tio n covering receip ts and expenditures.

The

budget and accounting system fu rther provides fo r a thorough and independent
audit o f the expenditures.
Most important a f a l l , when properly in stitu ted , the budget system
is the most e ffe c t iv e way o f c o n tro llin g current expenditures and providing
fo r adm inistrative e ffic ie n c y .

I have had first-h a n d opportunity to study the

old system o f control through Committees o f the L egisla tu re, and control by
means o f an executive budget system.

As a State Senator, I was a member o f the

Finance Committee, and fo r the la s t four’ years, among other duties, I have

- 5 ~
been the Budget O ffic e r o f the Treasury Department.

When I was in Albany,

the heads o f the d iffe r e n t Departments and Bureaus would appear before us and
présent th e ir needs as they saw them, in great d e ta il.

We had a va ila b le past

experience and figu res o f former years, and we had opportunity fo r crossexamination lim ited only by the time element.

We could check inordinate and

apparently u n ju s tifie d increases, but we had no machinery fo r ascertaining
whether the current needs were determined by mere routine and perhaps a waste­
fu l system of. administration, or by a high state of- adm inistrative e ffic ie n c y .
Moreover, fre e from any current checking up on the conduct o f his o ffic e , and
o f n ecessity knowing more o f his Departments a c t iv it ie s than we members o f
the Legisla tu re could possibly know, each adm inistrative head was in an admirable
p o sitio n to make out the most p lau sib le case in support of h is estimates.

We

did the best we c ould, and on the whole the system worked f a i r l y w e ll, though
I never had the fe e lin g that I had before me a l l o f the information necessary
to form a sound business judgment.
Contrast such a system with that now fu nctioning in Washington.
There we have a Budget D irector who is in complete control o f alL adm inistrative
requests fo r appropriations, since no estimates con go- to Congress except through
the President, who acts, o f course, upon recommendation of the Budget D irector.
The la t t e r is supported by an expert s t a ff, the several members o f which are as­
signed to the various Departments and independent establishments o f the govern­
ment.

They are expected to become thoroughly fam iliar with a l l phases o f the

la t te r * s respective a c t iv it ie s and be prepared to advise the Budget D irector as
to what funds are actu ally needed fo r e ffic ie n t operation.

In addition, each

Bopartm©at and separate establishment has a budget o ffic e r , responsible fo r a ll
estimates submitted, and fo r the supervision o f expenditures.
the system works in the Treasury Department#

Let us see how

tj 3°
-

6

-

In tii© ea rly summer each Bureau in the Department is required
tq prepare an estimate o f i t s needs fo r the ensuing year, together with sheets
ju s tify in g every item.

These estimates are f i r s t examined by the Budget and

Improvement Committee o f the Treasury Department, composed o f men o f long ex­
perience, and each o f whom is thoroughly fa m ilia r with one or more Bureaus.
They review the estimates and make th e ir recommendation to the Budget O ffic e r o f
the Department.

He then holds hearings, la s tin g from three weeks to a month,

at which the representatives o f every Bureau appear and are required to ju s t i ­
fy th eir estimates in d e ta il, in the lig h t o f the c ritic is m o f the Budget and
Improvement Committee.

Remember that the Budget O ffic e r is not an outsider,

unfamiliar with the administration o f the Department,, but one o f the c h ie f
administrative o ffic e r s , in d a ily contact with a l l o f it s a c t iv it ie s .

A fte r

the estimates have received h is approval, they are re fe rre d to the Budget Di~
reefcar and subjected to the scrutiny o f his s t a ff.

When there has been ample

opportunity to analyze them the Budget D irector holds his hearings, and, on
the basis o f the information thus made a va ila b ly to him ,is in a p o sition to
make his recommendations to the President fo r transmission to the Congress.

Such

a system not only insures the reduction o f estimates to a point where they repre­
sent the real needs o f a Department, bit i t has the e ffe c t o f stim ulating every
Bureau Chief and adm inistrative o f f ic e r to study the ways and means whereby he
««»increase the e ffic ie n c y o f h is organization and cut the costs; fo r you can
rest assured that the Budget O ffic e r , and the Budget and Improvement Committee
working under him, aside from the very real sense o f re s p o n s ib ility which comes
from the o b lig a tio n placed on them, in the very nature o f things take pride in
asking a good showing under a system which tends to bring to lig h t the defects

and make clea r improvements and economies effected *
There is one fu rth er advantage which should he pointed out*
The Budget D irector, once h is hearings are complete, has before him, on the
one hand, the complete pictu re o f the Government needs during the coming
fis c a l year, and, on the other, has the estimates submitted to him by the
Treasury and other Departments o f the probable receip ts*

I f the l a t t e r

are not adequate to cover a l l o f the proposed expenditures, one or two
courses are open— eith er the revenues oust be increased by new taxation,
or the le s s necessary o f the proposed expenditures can be elim inated.

This

is a question o f p o lic y to be determined by the Chief Executive, but he is
enabled to reach h is conclusions and make h is recommendations to Congress
based, not on guesswork or haphazard estimates, but on d e fin it e ly ascer­
tained fig u res, founded on a thorough business procedure.
A fte r the Congress has made the necessary appropriations, covering
the various a c t iv it ie s o f government, we in the Treasury, fo r instance,
require each one o f our Bureaus to set up reserves out o f i t s appropriations
and to a llo c a te the balance to the four quarters.

They cannot, gen erally

speaking, exceed the a llo c a tio n in any quarter or draw on the reserve without
the permission o f the Budget O ffic e r o f the Department, who in turn reports
to the Budget D irector*
Thus, you see, that from the day the f i r s t estimates are set up
to the day the la s t cent is expended, a control is in fo rce designed to
protect the public funds from useless, wasteful or extravagant expenditure.
U ntil about twenty years ago the systematic planning o f government
expenditures through a budget was p r a c tic a lly unknown to th is country.

L egis­

la tu res, Federal, State and lo c a l, appropriated money in a haphazard fashion
and accordingly the executive departments spent ca relessly , in many cases

without an adequate audit o f accounts,

¿Is a resu lt o f the pressure o f

increasing governmental expenditures, some form o f cen tra lized control
was regarded with increasing fa v o r.

This was recognized in President T aft Is

Commission on Economy and E ffic ie n c y organized in 1910 to in vestig a te the
organization,, administration and fin a n c ia l procedure o f the Federal Govern­
ment,

One o f the most important reports o f th is Commission was that on

»The Need fo r a National Budget,» transmitted to Congress in 1912 by
President T a ft with a message o f approval,

Although the work o f th is

Commission did not resu lt in the National Budget u n til about nine years
la t e r , sim ilar in vestiga tio n s were in itia t e d in a number o f states*
Considerable progress has been made by certain state governments and by
certa in c it y governments in in s titu tin g budget systems*

However, too often

in these cases the budget is merely a c o lle c tio n o f the fig u res o f proposed
expenditures with no machinery fo r bringing expenditures into balance with
receip ts, fo r providing an independent audit o f expenditures, or fo r
promoting adm inistrative e ffic ie n c y and economy.

Or, again, an Executive

Budget System has been looked upon as an instrument designed to augment the
power o f the Executive at the expense o f the L e g isla tu re,
no such purpose.

I t should have

As a matter o f fa c t, a properly presented budget, furnish­

ing as i t should more adequate and r e lia b le data, puts the L e g is la tiv e body
in a b e tte r p o sitio n to control executive expenditures.

Moreover, while

le g is la t iv e bodies are on occasions, to say the le a s t, extravagant, year in
and year out in our c it ie s and States the spending agencies are the ones
that c a ll fo r constant supervision, check and con trol.
Not only do State and lo c a l governments need more businesslike
methods in planning th e ir en tire budgets? they also need more systematic and
businesslike planning o f the financing o f one special group o f expenditures,

namely, those which are now paid fo r from debt issues*

In State and lo c a l

government finance there is a ltogeth er too common a p ra ctice o f la b e lin g
each debt issue as an emergency issue fo r an unusual permanent improvement*
The volume o f debt issues and o f the debt charge# have cumulated
in recent years at an alarming rate*

. V-

Since 1922 the public debt o f State

and lo c a l governments has increased at an average rate o f almost $900,000,000
per year, o f which about $800,000,000 has been indebtedness o f lo c a l govern­
ments*

The value o f the to t a l bonds issued in 1927 was about 40$ greater

than the amount expended fo r in te rest and debt redemption.

In other words,

States and l o c a l i t i e s have made such fr e e use o f the borrowing power that
the b illio n and a h a lf o f bonds which they sold in 1927 l e f t them a very small
margin over the amount they were o bliged to pay on account o f deot already
incurred*

This fa c t alone is s ig n ific a n t enough to serve as a warning that

the time has come to examine not only the cost o f government but also the
e x is tin g methods o f financing that cost.
Comparatively l i t t l e atten tion has been given to the fa c t that
expenditures fo r and the financing o f improvements constitu te a special
budget problem*

I t is ju st as fe a s ib le to plan fo r permanent improvements,

talcing into account a period o f years, as i t is to plan current expenditures
fo r a budget.

Furthermore, i f plans were made in a more businesslike way,

the costs o f improvements could be covered w ith the minimum tax burden*
I t is obvious that State and lo c a l governments w i l l .continue year
a ft e r year to make expenditures fo r improvements.

As the scope o f a c t iv it y

o f these governments grows, increased permanent improvements are in evita b ly

in volved,
extension,

Furthermore, improvement a once male require replacement and
For example, each year improved highways are replaced by “b etter

ones and each year additions are made to the number o f improved m iles o f
highway.

In such a situ ation i t i s obviously unbusinesslike fo r governments

to regard the expenditure fo r each new improvement as an extraordinary
expense, never to recur.
Whether an improvement should be paid fo r from current revenue
or from the proceeds o f debt issues, depends upon the character o f the
improvement, the length o f i t s l i f e , whether or not the ca p ita l expenditure
is a recurring one, the state o f the public finances and c re d it, the tax
burden and whether or not e x is tin g tax rates bring in more revenue than is
needed fo r current purposes,
each instance.

A careful and thorough inquiry is required in

In so fa r as certa in expenditures fo r improvement occur

regu larly from year to year, provision should be made to finance these
from current revenues.

Furthermore, i t is i n fin it e ly b e tte r to finance

non-productive investments from current revenue than to incur a burden fo r
future budgets.

In th is connection, I suggest a study o f the p o lic y adopted

by the State o f Massachusetts, which in recent years has made a tru ly remark­
able record o f sound financing.
I t is obvious that l i t t l e real b en efit is being derived from the
present method, even in the way o f r e l i e f from present tax burdens, and that,
i f bonds continue to be issued at th e ir present rate, th is method o f public
financing w i l l prove in fin it e ly more expensive in the immediate future than
had v/e financed ca p ita l expenditures, more p a rtic u la rly those ui

r .curring

kind, from current revenue.
The conclusions which I draw from a l l tu is are that we are con­
fronted with two very d e fin it e questions,— f i r s t , whether the costs o f our
State and lo c a l governments are excessive, judged from the standpoint o f

j g
-

11

whother we could not got the present service at lower cost through more oCi~
\

e n t ific "budgeting; and, secondly, whether e x is tin g methods o f financing these
costs are sound, economically*

There is no one answer to tnese questions* They

must "be asked separetely in every State, ar.d in p r a c tic a lly every community.
Moreover, they are recurrent questions that nave tc be asked and answered every
year, and th eir answer, therefor©* presupposes the existence o f permanent
budget machinery.
We must have, on the one hand, a budget system that w i l l permit
in te llig e n t planning and e ffe c t iv e control, and that w ill enable the people to
get a correct p ictu re o f the fin a n cia l transactions and status o f th e ir
governments; and, on the other hand, a w illin gn ess on the part o f the people
to g iv e the in te llig e n t consideration and a ctive in te rest without which in
the lorg run no popular government w i l l function adequately-

TREASURY DEPARTMENT

V

K)R RELEASE, MORNING PAPERS
Monday,. December 8 ,. 1930, •

.. BY SECRETARY MELLON

The Treasury is today o ffe r in g fo r subscription, at par and
accrued in te re s t, through the Federal Reserve Banks, Treasury c e r t i­
fic a te s o f indebtedness in two series, both dated and bearing in te rest
from December 15, 1930, one series, TJ2-1931, being fo r

6

months, with

in te re s t at the rate o f i f per cent, and maturing June 15, 1931, and
the other series, TD-1931, being fo r 12 months, with in te re s t at the
rate o f 1-7/8 per cent, and maturing December 15, 1931.

The amount

o f the six months* o ffe r in g is $150,000,000, or thereabouts, and the
amount o f the twelve months’ o ffe r in g is $250,000,000,' or thereabouts.
Applications w i l l be received at the Federal Reserve Banks.
The Treasury w i l l accept in payment fo r the new c e r t ific a t e s , at par,
Treasury c e r t ific a te s o f indebtedness o f Series TD-1930, maturing
December 15, 1930.

Subscriptions fo r the six month i f per cent cer­

t ific a t e s o f Series TJ2-1931, in payment o f which c e r t ific a t e s o f
indebtedness maturing December 15, 1930, are to be tendered, w i l l be
given preferred allotment up to $30,000,000, w hile subscriptions fo r
the twelve month 1-7/8 per cent c e r t ific a te s o f Series TD-1931, in
payment o f which c e r t ific a te s maturing December 15, 1930, are to be
tendered, w i l l be given p referred allotment up to $50,000,000,

-

2

-

Bearer c e r t ific a te s w i l l be issued in denominations o f
$500, $1,000, $5,000, $10,000, and $100,000.

The c e r t ific a t e s of

Series TJ2-1931 w i l l have one in te rest coupon attached, payable June
15, 1931, and the c e r t ific a te s o f Series TD-1931, two in te re s t coupons
attached, payable June lo , 1931, and December 15, 1931.
Those c e r t ific a te s w i l l be exempt, both as to p rin cip a l
and in te rest, from a l l taxation, except estate and inheritance taxes.
About $480,000,00^ o f Treasury c e r t ific a te s of indebtedness
and about $90,000,000 in in te re s t payments on the public debt become
due and payable on DeceEiber 15, 1930, and about $51,000,000 in
Treasury b i l l s become due and payable on December 16 and $51,000,000
on December 17.
The text o f the o f f i c i a l c ircu la r follow s;

-3-

The Secretary o f the Treasury, under the authority o f the
Act aporoved September 24, 1917, as amended, o ffe r s fo r subscription,
at par and accrued in te rest,

through the Federal Reserve Banks, Treasury

c e r t ific a te s o f indebtedness, in two series, both dated and bearing
in te rest from December 15, 1930, the C c ftific d te s o f Series TJ2-1931
being payable on June 15* 1931, with in terest at the rate o f one ana
three-quarters per cent per anniim^ payable on a semiannual basis* ahd
the c e r t ific a te s o f Series TD**1931 being payable on December 15, 1931*
with in terest at the rate o f one and seven-eighthS per cent per annum*
payable semiannually.
Applications w i l l be received at the Federal Reserve Banks*
Bearer c e r tific a te s w i l l be issued in denominations o f $500,
$1,000, $5,000, $10,000, and $100,000.

The c e r t ific a t e s o f Series TJ2-1931

w i l l have one in te re s t coupon attached, payable June 15, 1931, and the
c e r t ific a t e s o f Series TD-1931, two in te rest coupons attached, payable
June 15, 1931, and December 15, 1931.
The c e r t ific a te s o f said series sh a ll be exempt, both as to
p rin cip al and in te rest, from a l l taxation (except estate and inheritance
taxes) now or h erea fter imposed by the United States, any State, or any
o f the possessions o f the United States, er by any lo c a l taxing authority.
The c e r t ific a t e s o f these series w i l l be accepted at par
during such time and under

such

rules and regulations as slnall be pre­

scribed or approved by the Secretary o f the Treasury, in payment o f
income and p r o fit s taxes payable at the maturity o f the c e r t ific a t e s .

-4-

The c e r t ific a te s o f these series w ill he acceptable to secure deposits
o f public moneys, but w i l l not bear the circu la tio n p r iv ile g e .
The rig h t is reserved to re je c t any subscription and to
a llo t less than the amount o f c e r t ific a te s o f eith er or both series
applied fo r and to close the subscriptions as to eith er or both series
at any time without notice*

The Secretary o f the Treasury also re­

serves the rig h t to make allotm ent in f u l l upon apiplications fo r smaller
amounts, to make reduced allotm ents upon, or to r e je c t, applications
fo r la rg e r amounts, and to make c la s s ifie d allotm ents and allotments
upon a graduated scale; and his action in these respects w i l l be fin a l.
Allotment notices w i l l be sent out promptly upon allotm ent, and the
basis o f the allotment w i l l be p u b licly announced.
Payment at par and accrued in terdst fo r c e r t ific a t e s a llo tte d
must be made on or before December 15, 1930, or on la t e r allotm ent.
A fte r allotment and upon payment Federal Reserve Banks may issue interim
receipts pending d eliv ery o f thé d e fin it iv e c e r t ific a t e s .

Any q u a lifie d

depositary w i l l be permitted to make payment by cred it fo r c e r t ific a t e s
a llo tte d to i t fo r i t s e l f and i t s customers up to any amount fo r which i t
shall be q u a lifie d in excess o f ex is tin g deposits, when so n o tifie d
by the Federal Reserve Bank o f it s d is t r ic t .
indebtedness o f Series TD-1930, maturing

Treasury c e r t ific a t e s o f

December 15, 1930, w i l l be

accepted at par, in payment fo r any c e r t ific a t e s o f the series now o f­
fered which sh all be subscribed fo r and a llo tte d , with an adjustment o f the
in te rest accrued, i f any, on the c e r t ific a te s o f the series so paid fo r.

-5-

As f i s c a l agents o f the United States, Federal Reserve
Banks are authorized and requested to receive subscriptions and to
make allotments on the basis and up to the amounts indicated by the
Secretary o f the Treasury to the Federal Reserve Barks o f tne respec­
tiv e d is t r ic ts .

*X

.

7

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Thursday, December 1 1 , 1930,

Secretary Mellon announced that subscriptions fo r the two issues of
Treasury c e r t ific a te s of indebtedness, Series TJ2-1931, 1-3/4 per cent,
dated December 15, 1930, maturing June 15, 1931, and Series TD-1931,
1-7/8 per cent, dated December 15, 1930, maturing December 15, 1931,
closed at the close of business on December 9, 1930,
Reports received from the twelve Federal Reserve Banks show that
fo r the o ffe r in g of 1-3/4 per cent c e r t ific a t e s of Series TJ2-1931, which
was fo r $150,000,000 or thereabouts, to ta l subscriptions aggregate some
$939,000,000, and that fo r the o ffe r in g o f 1-7/8 per cent c e r t ific a te s
o f Series TD-1931, which was fo r $250,000,000 or thereabouts, to ta l sub­
scription s aggregate some $517,000,000,

Of these subscriptions, about

$144,000,000 represent subscriptions fo r which 3-l/4 per cent Treasury
c e r t ific a te s of indebtedness of Series TD-1930, maturing December 15, 1930,
were tendered in payment, of which about $80,000,000 were accepted.
Allotments on the cash subscriptions fo r 1-3/4 per cent c e r t ific a te s
o f Series TJ2-1931 were made as fo llo w s:

Subscriptions in amounts not

exceeding $1,000 were a llo t t e d 50 per cent, but not less than $500 on any
one subscription; subscriptions in amounts over $1 ,0 0 0 but not exceeding
$10,000 were a llo tte d 40 per cent, but not less than $1,000 on any one
subscription; subscriptions in amounts over $1 0 ,0 0 0 but not exceeding
$100,000 were a llo tte d 30 per cent, but not less than $4,000 on any one
subscription; subscriptions in amounts over $1 0 0 ,0 0 0 but not exceeding
$1,000,000 were a llo tte d 15 per cent, but not less than $30,000 on any
one subscription; and subscriptions in amounts over $1 , 0 0 0 , 0 0 0 were
a llo tte d 10 per cent, but not less than $150,000 on any one subscription.

-

2

-

Allotments on cash subscriptions fo r 1-7/8 per cent c e r t ific a te s of
Series TD-1931 were made as fo llo w s :

A l l subscriptions in amounts not

exceeding $1,000 fo r any one subscriber were a llo tte d in f u l l .

Sub­

scription s in amounts over $1 ,0 0 0 but not exceeding $1 0 0 ,0 0 0 were a llo t t e d
80 per cent, but not less than $1 ,0 0 0 on any one subscription; subscriptions
in amounts over $1 0 0 ,0 0 0 but not exceeding $1 , 0 0 0 ,0 0 0 were a llo tte d 60 per
cent, but not less than $80,000 on any one subscription.; and subscriptions
in amounts over $1,000,000 were a llo tte d 35 per cent, but not less than
$600,000 on any one subscription,
Further d e ta ils as to subscriptions and allotments w i l l be announced
when fin a l reports are received from the Federal Reserve Banks,

TREASUHY DEPARTANT

POR IMMEDIATE RELEASE,
Friday", December 12, 1930»

Secretary Mellon to-day announced that the to ta l amount o f
subscriptions received fo r the two issues o f Treasury c e r t ific a t e s o f
indebtedness, Series TJ2-1931, 1-3/4 per cent, dated December
maturing June
December

15,

15, 1931,

and Series TB-1 9 3 1 ,

1930, maturing December

1—
7 /g

15, 1931,

15, 1930,

per cent, dated

was $1,457,197,000.

The

to ta l amount o f subscriptions a llo t t e d was $422,322,000, o f which
$79*817,500 represents allotments on subscriptions fo r which Treasury
c e r t ific a te s o f indebtedness o f Series TD-1930, maturing December
were tendered in payment.

15,1930,

Such exchange subscriptions tendered fo r

Series TJ2—1931 were a llo tte d

4o per cent, and the exchange subcriptions

tendered fo r Series TD-1931 were a llo t t e d 72 per cent.

Allotments on

other subscriptions were made on a graduated scale.
The subscriptions and allotments were divided among the several
Federal Reserve D is tric ts and the Treasury as follow s:

SERIES TJ2-1Q31
Federal Reserve

Total Subscrip- Total Exchange Total Cash
Total SubscripH>ons Received: Subscriptions Subscriptions tions Allotted:
Allotted:
A llo t te d ? _____ __

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

113,247,000
9 . 6 1 2 .0 0 0
6 , 4 6 2 ,0 0 0
10.724.000
3 7 . 3 8 7 .5 0 0
92 181.000

Total

939,372,000

$

$

,

53.470.500
32.529.000

47.274.000

.

1 6 , 6 9 3 ,0 0 0
55»9^9» 0 0 0
13 218,000
1 0 , 3 4 7 ,0 0 0
9 . 6 6 7 .0 0 0
1 2 . 1 0 9 .5 0 0
1 9 . 0 8 2 .5 0 0
1 . 2 0 3 .5 0 0
1 . 6 1 3 .0 0 0
1 . 8 4 9 .5 0 0
7 . 0 8 8 .5 0 0
10.520.500

*+,599,000
1 1 8 .5 0 0
4 1 7 .5 0 0
4 9 7 .0 0 0
1 3 2 .0 0 0

137.500
$2 9 , 8 4 0 ,5 0 0

14,483,500
1 , 6 8 5 ,0 0 0
1 , 1 9 5 ,5 0 0
1 , 3 5 2 ,5 0 0
6 , 9 5 6 ,5 0 0
10,383,000
$1 3 0 , 1 0 0 , 5 0 0

$1 5 9 , 9 4 1 ,0 0 0

<
2

*

SERIES TP-1951
Federal Reserve
D is tric t:

T otal Subscrip*tions Received:

T otal Exchange
Subscriptions
A llo tte d :

Total Cash
Subscriptions
A llo tte d

Total Subscrip­
tions A llo tte d :

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

$ 25,8^0,000
1 7 8 , 1 6 6 ,5 0 0
HU,5 5 9 ,0 0 0
3 5 .^ 5 8 , 5 0 0
19,372,500
2 6 , 0 7 3 ,0 0 0
9 6 , 6 U2 ,5 0 0
5,3SH,ooo
3,555,500
U,lU3 , 5 0 0
15,283,500
6 2 , 3 2 5 ,0 0 0
-....
2 1 .5 0 0

$

$

$

$5 1 7 , 8 2 5 ,0 0 0

$ ^9,977,000

Total

Total
Total
Total
Total

1 2 6 ,0 0 0

32,525,500
8 ,0 0 0
1 , 8 2 6 ,5 0 0
7 0 5 ,0 0 0
1 2 1 ,5 0 0
1 3 , 7 6 7 ,0 0 0
3 6 3 ,0 0 0
8 ,5 0 0

90,500
1 0 8 ,5 0 0
3 1 0 ,5 0 0

_____ 1 6 . 5 0 0

1 1 , 6 6 7 ,5 0 0

5^,756,000
2 2 , 6 0 0 ,0 0 0
1 9 , 8 5 2 ,5 0 0
1 2 , 7 0 7 ,5 0 0
18,757,500
3 6 , 8 9 0 ,5 0 0
3,228,000
l , 8 U l, 5 0 0
2,503,500
9,702,500
23,897,000
— .. _ — ..
$218,U0U,000

1 1 , 7 9 3 ,5 0 0
8 7 , 2 8 1 ,5 0 0
2 2 , 6 0 8 ,0 0 0
2 1 , 6 7 9 ,0 0 0
1 3 ,U l 2 , 5 0 0
1 8 , 8 7 9 ,0 0 0
5 0 , 6 5 7 ,5 0 0
3 , 5 9 1 ,0 0 0
1 , 8 5 0 ,0 0 0
2 , 5 9 H, 0 0 0
9,811,000
2 U,2 0 7 ,5 0 0
1 6 .5 0 0

$2 6 8 , 3 8 1 , 0 0 0

Subscriptions Received, both series ......................... $1,^57,197,000
Exchange Subscriptions A llo tte d , both series . . . . . .
79,817,500
Cash Subscriptions A llo tte d , both series ...............
3U8,50U,500
Subscriptions A llo tte d , both series
............. .
5-28,322,000

TREASURY DEPARTIUCNT

FOR IMMEDIATE RELEASE
December 15, 1930.

Tlie Treasury has received payments amounting to $122,989,450.22,
due today, from the fo llow in g fo re ig n governments on account o f th eir
funded indebtedness to the United States, of which $30,854,052.37 was
fo r account o f principal,.m d $92,135,397.85 fo r account o f in te re s t.
A l l payments were received in cash.
P rin cip a l

B e lgiu m .......................................
Czechoslovakia .........................
Estonia ........................................
Finland .......................................
Prance ........................................
Great B rita in .............................
Hungary......................... ...

1,500,000.00
55,000.00
-

In terest

$ 1,625,000.00
150,000.00
129,885.00
19,325,000.00

28,000,000.00

66,390,000.00

11,755.00

28,804.73

................................

1,260,625.00

L a tvia ........................................

50,000.00

I t a ly . . .

Lithuania ....................................
Poland .........................

. . . .

-

93,528.11

1,287,297.37

3,082,555.01

$30,854,052.37

$92,135,397.85

Of the p rin cip al payments received, the sum of $28,995,117.64 was
fo r account of the obligation s o r ig in a lly acquired fo r cash advanced under

-

2

the authority of the L ib erty bond acts.

-

Under the terms o f these acts a l l

such cash payments of p rin cip a l must be applied to debt retirem ent.

The

above-mentioned amount has been applied to the Treasury c e r t ific a t e s maturing
today.

The balance of the payments amounting to $93,994,332.58 is a va ila b le

to meet current expenditures of the Government and was so treated in the
estimates submitted in the P r e s id e n ts la s t budget message.

TREASURY DEPARTMENT

POR IMMEDIATE RELEASE,
SATURDAY, DECEMBER 20, 1930

The Secretary o f the Treasury announces the selection o f the firm o f
A. Ten Eyck Brown, Atlanta, Georgia, as a rch itects fo r the proposed Pederal
■building to he located at Spring, Hunter and Forsyth Streets, Atlanta, Georgia*
Formal contract with the above firm w ill he entered in to as soon as
t i t l e to the new s ite is vested in the United States*

A* W. Mellon
Secretary Of the Treasury.