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JUN I 4 T972
TREASURy DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Friday, July 1, 1932«

TREASURY DEPARTMENT

Secretary Mills made the following announcement:

The Greek Government has advised the Treasury that
because of recent developments in that country, it has
taken advantage of the option granted in paragraph 2 of
part I of the debt funding agreement of May 10, 1929,
by postponing for a period of two and one-half years
from July 1, 1932 the payment of the bond in the principal
amount of $130,000 due that day.

In accordance with the

terms of the agreement, the amount of the payment so post­
poned will bear interest at the rate of
annum, payable semiannually.

per cent per

4

.

TH3A3URY rSPARTMEOT

FOR IMMEDIATE RELEASE,
Friday, July 1, 1933,

The following announcement is made today hy Secretary Mills;
The Federal finances for the fiscal year just closed reflect
of the unprecedented depression upon hoth the revenues and the oultlays of the
Government.

A reduction in Federal revenues during the fiscal year 1932 and

an increase in expenditures due to emergency measures, resulted in a deficit of
$2,885,000,000, as compared with a deficit of $903,000,000 for 1931.

Retire­

ments of United States obligations to meet sinking fund requirements chargeable
against ordinary receipts totaled $412,000,000, so that the deficit, exclusive
of debt retirement, amounted to $2,473,000,000.

The total gross debt out-

I

standing was increased by $2,686,000,000.
Total receipts amounted to $2,121,000,000 which represents a decline of
$1,196,000,000

from 1931.

Expenditures chargeable against ordinary receipts

aggregated $5,006,000,000 and were $786,000,000 larger than for the previous
year*

The increase may be accounted for by the following items:

expanded

governmental construction activities and payments under the settlement of war
claims act, the postal deficiency, and payment for the capital stock of the
Reconstruction Finance Corporation and the Federal Land Banks.
The deficit for the fiscal year 1932 was $762,000,000 larger than the
estimate of $2,123,000,000 which was presented in the annual report of the
Secretary.

Expenditures exceeded the estimate of $4,482,000,000 by $524,000,000

as a result of subsequent authorizations by Congress for the purchase of capital
stock of the Reconstruction Finance Corporation and Federal Land Banks, together
aggregating $625,000,000.

Expenditures exclusive of these items were

$101,000,000 less than estimated.

Total ordinary receipts were $238,000,000

less than estimated due to the fact that business did not maintain the
anticipated level of activity*

~

2

-

RECEIPTS
The aggregate amount of customs and internal revenue receipts during
the year was $1,888,000,000 or $919,000,000 less than for 1931.
Income tax receipts totaled $1,057,000,000 which was $803,000,000 less
than during the fiscal year 1931, and $83,000,000 less than the estimate of
$1,140,000,000.
Receipts from customs duties were $328,000,000 as compared with
$378,000,000 in 1931, a decline of $50,000,000.

The decline is to he accounted

for primarily by a further reduction in the volume and value of imports.

Eor

the ten months ended April, 1932, the value of dutiable imports fell off 19 per
cent, and of nondutiable, 30 per cent as compared with a like period in the
fiscal year 1931.

The estimate indicated receipts of $410,000,000 from this

source.
Miscellaneous internal revenue receipts totaled $503,000,000 or
$66,000,000 less than for 1931 and $41,000,000 less than estimated.

Reports

through May indicate that tobacco tax receipts, which account for over 79 per
cent of the total, were $42,000,000 smaller than in 1931; documentary stamp
taxes declined about $14,000,000 primarily as a result of smaller receipts
from taxes on capital stock transfers and on capital issues.
Miscellaneous receipts other than internal revenue amounted to
$233,000,000 and'were $276,000,000 less than in 1931.

This decline was due

chiefly to the postponement of the payments due from foreign governments
%
during the fiscal year 1932 in the amount of about $252,000,000.

The numerous

smaller items included under this head yielded a diminished revenue.
EXPENDITURES
Total expenditures chargeable against ordinary receipts were
$5,006,000,000 as compared with $4,220,000,000 for 1931, an increase of
$786,000,000.

- 3 ~
5?he preliminary information now available concerning the details of ex­
penditures for 1932 shows the following principal items of increase:

For the

Reconstruction Finance Corporation, $500,000,000 for capital stock; for the
Federal Land Banks, $125,000,000 for additional capital stock; for the TreasuryDepartment, an increase of $83,000,000 representing payments on account of the
awards of the War Claims Arbiter under the Settlement of War Claims Act of 1928
and construction activities in connection with the public building program; for
the Department of Agriculture an increase of $22,000,000 reflecting largely ad­
ditional outlays for Federal aid highway construction; an increase of
$57,000,000 in the postal deficiency in consequence of reduced postal revenues;
an increase of $79,000,000 in the Veterans* Administration as a result largely
of liberalized provisions for military and naval compensation and insurance to
war veterans; an increase of $20,000,000 for Interior Department principally
on account of the Boulder Dam project,

an increase of $18,000,000 for the

Shipping Board on account of construction loans; an increase in tax refunds of
$10,000,000/an^increase of $8,000,000 for Department of Justice on account of
penal institutions*
The more important reductions in expenditures for 1932 as compared with
the previous fiscal year include a decrease of $9,000,000 for the Conmerce De­
partment due to the fact that the census was practically completed in 1931; a
decrease of $54,000,000 in the net advances under the Agricultural Marketing
Act; a decrease of $10,000,000 for the War Department; a decrease of $12,000,000
of interest on the public debt; and a reduction in debt retirements chargeable
against ordinary receipts due to the fact that there were no foreign repayments
to apply to debt retirement.
Leaving out the extraordinary items above mentioned such as Reconstruc­
tion Finance Corporation and Federal Land Banks, ordinary expenditures were
$101,000,000 l.ess than estimated,

~ 4 ~
Exclusive of expenditures resulting from legislation enacted after the
submission of the budget, the deficit is thus $137,000,000 more than was
estimated*
PUBLIC DEBT
The fiscal year 1933 closed, with the total gross public debt at
$19,487,000,000 as compared with $16,801,000,000 on June 30, 1931, or an iDe­
crease of $2,686,000,000,

The net balance in the general fund was $417,000,000

on June 30, 1932, or $55,000,000 less than at the end of the preceding fiscal
year.
Public debt.retirements of $413,000,000 were made from the sinking fund
as required by law.

This reduction was more than offset by new borrowings.

The average annual rate of interest on the outstanding interest-bearing
debt on June 30, 1932, was 3.50 per cent as compared with an average rate of
3.56 per cent on June 30, 1931.

Total interest payments during the year were

$599,000,000 as compared with $611,000,000 for the year 1931.
GENERAL
In considering the record of the fiscal year just closed, and mor
particularly the heavy deficits of the last two years, it must not be forgotten
that while these combined deficits aggregate $3,788,000,000, the aggregate sur­
plus from the preceding years applied to the reduction of our national debt w
$3,460,000,000.

We have, in effect, been drawing on what might fairly be

termed a reserve previously set up.
Moreover, the expenditures of the last two years include items such as
advances to the Federal farm Board, payments for the stock of the.Federal land
nsmVg and for the stock of the Beconstruction Finance Corporation.

These

will in large measure be repaid into the general fund to be available either
for current expenditures or debt retirement

And finally the considerable reductions in expenditures and the enactment of so sweeping a tax measure as the Revenue Act of 1932 constitute real
achievements in putting our financial house in order*

While much remains

to "be done in reducing the cost of Government, under the pressure of an en—
lightened and aroused public opinion, I am confident this movement will go
forward.
Important progress has been made, but there is need for continued
prudence and self-restraint in the conduct of our public finances*

TREASURY DEPARTMENT

POR RELEASE, MORNING PAPERS,
Thursday, July 7, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury hills to the amount of $75,000,000» or thereabouts.
They will be 90-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o'clock p. m . , Eastern Standard time,
on Monday, July 11, 1932.

Tenders will not be received at the Treasury

Department, Washington.
The Treasury bills will be dated July 13, 1932, and will
mature on October 11, 1932, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be suppled by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each ténder must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g., 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

$$$£im
-

2-

applied for, unless the tenders are accompanied by an express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
July 11, 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on July 13, 1932,
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

FOR IMMEDIATE RELEASE
Monday, July 11, 1932

TREASURY DEPARTMENT

Statement of Acting Secretary of the Treasury
Ballantine Before the Rules Committee of the
House of Representatives.

The Treasury Department makes no objection whatever to a
Congressional investigation of the administration of the tax laws.
What is presented by the Resolution before you seems to us wholly
a question of Congressional policy.

I wish merely to state a few

facts which may bear upon your determination.
Obviously, a Congressional investigation now will do much
to tie up the Bureau of Internal Revenue at the very time when its
resources and energy are demanded for putting into effect the new
revenue law.

The Bureau has the immediate burden of familiarizing

the public and its own force with a new tax measure planned to raise
about $1,100,000,000 of additional revenue.

The act changes

existing laws and inposes many new taxes, each presenting a variety
of new and important questions.

While dealing with the new act the

Bureau must continue to dispose of the multitude of cases already in
hand, a task of especial importance under existing conditions.
Because of the imperative need for economy the Department is
trying to handle the new law without adding to its force.

Indeed,

the force has Been held at a minimum without provision of additional
personnel for new duties.

The furlough system which of course must

/

-* 2 —

now te observed, does not make operating conditions any easier*
Meeting the requirements of a Congressional investigation
will involve a very substantial diversion of the activities of the
Bureau from its present tasks*

Many of the personnel will be

occupied with compiling facts and reports*

A considerable portion

of the time of officials will necessarily be withheld from their
normal activities*

This will be bound to be reflected in handling

the new law in a manner less satisfactory to the public who have been
called upon by Congress to submit to that law*

It would also slow1

down both the securing of additional back taxes which the Treasury needs
and the closing up of old cases which the taxpayers regard as especially
important in their effort to find a basis today for business operations*
Since 1927 the standing Joint Committee on Internal Revenue
Taxation, composed of 5 members of the House and 5 members of the Senate,
aided by a permanent staff, clothed with ample powers, has continuously
investigated the administration and development of the tax law*

Pursuant

to the requirements of law, in the case of every refund or credit of
$75,000 or more, the action determined upon by the Treasury, with a state­
ment of facts and the reasons, has been submitted to the Joint Committee
not less than 30 days before the action is taken*
There are always suspicious or disgruntled individuals who
propose investigation of Government officials, particularly those

- 3 -

having to do with, financial matters, without regard to what such
investigations impose upon officials or upon the public.

Any real

demand for an investigation of the Bureau of Internal Revenue at
this time appears to arise from considerations having no connection
whatever with the orderly administration of the tax laws in the
general public interest.

Ho facts have been submitted suggesting

any warrant for an investigation.
If the Speaker in his new role determines upon an investiga­
tion at this time, the Treasury stands ready to cooperate, even
though this action does not seem particularly in line with the
purpose of eliminating commissions and investigations.

But those

who decree this investigation and not the Treasury must account to
the public for the additional burden which the investigation will
impose upon the already harassed taxpayer.

The taxpayer may feel

that he is entitled for the time to have the attention of tax of­
ficials concentrated on the adjustment of his new burdens so that
they will rest as easily as possible.
If there is anything to investigate it could equally well
be investigated in December when Congress reconvenes, at which time
the atmosphere will be clearer, and the new law will have become
established,

FOR RELEASE, MORNING PAPERS,
Tuesday, July 12, 1932,

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY BALLANTINE

Acting Secretary of the Treasury Ballantine announced
to-day that the tenders for $75,000,000, or thereabouts, of
90— day Treasury Bills, dated July 13, 1932, and maturing
October 11, 1932, which were offered on July 7th, were opened
at the Federal Reserve Banks on July 11th.
The total amount applied for was $273,658,000.

Except

for three bids aggregating $15,000, at prices averaging 99.955,
the highest bid made was 99.915, equivalent to an interest rate
of about 0.34 per cent on an annual basis.

The lowest bid

accepted was 99.901, equivalent to an interest rate of about
0.40 per cent on an annual basis.

Only part of the amount

bid for at the latter price was accepted.
of bids accepted was $75,278,000.-

The total amount

The average price of

Treasury Bills to be issued is 99.904.

The average rate on

a bank discount basis is about 0*39 per cent*

FOR RELEA.SE MORNING PARERS,
TUESDAY, JULY 12, 1932.

SPEECH TO BE DELIVERED BY HON. OGDEN L. MILLS
SECRETARY OF THE TREASURY
AT FANEUIL HALL,
BOSTON, MASS.,
AT NINE 0*CLOCK P.M., E.S.T., MONDAY, JULY 11, 1932.
--- .~oOo— —

My time "being limited, I propose to confine my remarks this evening
to a discussion of some of the economic questions presented in the speech
of acceptance of the candidate and in the platform of the Democratic party.
Later I hope to discuss Republican principles and policies.

To-night we

are just taking off some of the trimmings and tin foil to get at the facts.
The basis of the Democratic appeal is now clearly outlined.

They

propose to place the blame for the depression on the present Administration;
they promise, if returned to power, that, as the Candidate exclaimed,
days will come again."

Happy

They lay claim to being the party of liberalism and

progress.
Uow, the depression began shortly after President Hoover had taken office.
Even before that time, it was already under way in many countries.

Resulting,

ad it did, from the combined effects of many economic forces so deep-seated
and so violent as to defy arrest anywhere and everywhere, it eventually swept
the world.
While making all allowance for the temptation to a party out of power
to make full use of such an argument, to charge any government anywhere with
the responsibility for such a world disaster is sheer nonsense.
In so far as the past is concerned, the real question for the American
people to decide is:

Has the Administration, in the face of this world-wide

calamity, conducted the affairs of government with that judgment and skill
which would mitigate the effects of the depression and lay a foundation for
recovery?

It can he demonstrated beyond question that it has»

I challenge

Governor Roosevelt, instead of indulging in vague and unsupported attacks,
to state specifically what the present Administration has failed to do or has
done in this emergency that is open to fair criticism, and what steps he would
have taken that have not been taken to meet the successive forces that have
threatened to undermine and to destroy our economic structure and to bring
complete disaster to our people.
What his party, if in power, would have done and would do, is unmistakably
indicated by the record of the Democratic House of Representatives under the
leadership of the Democratic candidate for the Vice-Presidency.
Before discussing economic questions, may I devote a minute or two to
the much-abused term 11liberalism?11

What justifies the application of the

term Hliberal11 to either a candidate or a party?
beating and loud claim to the title.

Certainly not mere breafct—

There must be a moral quality in true

liberalism, without which it becomes an empty name.

There must be real

convictions and a definite program, unless it is to melt away into mere words.
I cannot detect evidence of. true liberalism in either the Democratic
candidate or in the Democratic party.

Appeal to discontent and a program de­

signed to catch votes cannot be confused with a bold leadership that stakes
its all in a battle for the triumph of deep-seated principles.

In the face

of the shocking system of government existing in Hew York City, which the
great Democratic paper, the Hew York Times, describes as one which “thrives at
the expense of justice to the pdor and f&ir-dealing to the millions that cannot

- 3 "boast the acquaintance of a district leader11— and, remember, I am not talking
about mere individual delinquencies and failures, but of a system— Governor
Roosevelt1s failure for three years to use the power of his great office to
clean up his own party, and his failure to assert his moral leadership, bar
him definitely— honest, amiable and attractive gentleman that he is— from
spiritual kinship with such liberal statesmen as Woodrow Wilson or Theodore
Roosevelt, or that independent and rugged Democrat, Grover Cleveland#
All parties claim to be liberal and progressive, and, in so far as their
aspirations are concerned, honestly are, for the right-thinking men and women
that compose them desire to see a correction of existing evils and a steady
improvement in opportunities to all men for advancement#

It is not too much

to say that all .Americans, Democrats and Republicans alike, share a common
ideal in their conception of what American life holds in the way of promise#
The difference, then, is not one of purpose, but of method.

The sharp

line of demarcation is that under the stress and pressure of existing condi­
tions the Democrats seem willing to try anything, whereas the Republicans are
firm in their belief that a violation of well-established,

sound, economic

principles will not only defeat the purpose of the remedial measures proposed,
but will, in fact, result in even greater disaster#
The consistent, comprehensive program carried out by the Administration
has been lacking in neither boldness nor originality, but it presents
a complete contrast to the program of legislation passed by a Democratic
House of Representatives under the leadership of Speaker Garner,
candidate for the Vice-Presidency.

- 4 -

Measures actually passed by the Democratic House of Representatives
provide for;

The printing and issuance of fiat currency; the immediate

payment of the bonus;

an appropriation of over a billion dollars

for post offices, rivers and harbors, roads, etc., these two items
alone aggregating over three billion dollars;
bank deposits;

the guarantee of

instructions to the Secretary of the Treasury and

Federal Reserve Board to manipulate commodity prices;
ing of a budget balanced by great effortJ

and putting

the unbalanc­
the Govern­

ment into the general commercial banking business on a huge scale#
All were doubtless well-meaning remedial efforts#

Yet they

would bring ruin and disaster, running counter as they do to sound economic
and financial principles, and being destructive as they are of the con­
fidence so badly needed throughout the country.
Governor Roosevelt takes exception to this very Republican insistence
on adherence to sound economic principles.
speech of acceptances

He said sarcastically in his

”0ur Republican leaders tell us economic laws— sacred,

inviolable, unchangeable— that these laws cause panics which no one could
prevent*

But while they prate of economic laws, men and women are starving.

We must lay hold of the fact that economic laws are not made by nature.

They

are made by human beings.1’
If by the words ’’made by human beings”, the Governor means to express
the belief that economic laws are the result of a conscious, deliberate
purpose, he is entirely mistaken.

They are, however, based in l^rge noasure

on human nature, of which, if I may quote Burke, ’’reason is but a part, and
by no means a preponderant one,”

From which it follows that we cannot run

counter to them without running counter to human nature itself.

- 5 ~
Why do we resist the printing of fiât currency?

Hot simply because it

offers no solution, or because a limited amount would necessarily be harmful,
but because all experience demonstrates that once the printing presses are
started, human nature being what it is, there is no stopping them short of
disaster.
Why did we fight for many long months to establish the principle of a
balanced budget?

Not because denial of that principle means necessarily

the immediate impairment, but, human nature being what it is, the ultimate
destruction of the public credit.
Here then is the first great line of cleavage between the Democratic
and Republican parties.

The Democratic House of Representatives, speaking

with greater authority for the Democratic Party than any party convention
can, has demonstrated its willingness to disregard economic law and
sound financial principles#

The Democratic candidate scoffs at them.

By

what compass or chart, I wonder, do they propose to direct the economic
life of the Nation in these perilous times?
Taking up now the few definite suggestions to be found in this long
speech, the Governor points out that credits "issued in the form of bonds
and mortgages, Government bonds, bonds of all kinds" are all interrelated*
He then asks "Why has Washington failed to understand that all of these
groups * * * * must be considered together; that each and every one of
them is^dependent on every other; each and every one of them affecting
the whole financial fabric?"

"Statesmanship and vision," he says, "re­

quire relief to all at the same time."

-

6-

Does the Governor think he is making an original discovery?
has he been these many months?

Where

Doesn’t he know that at the President’s

suggestion the Congress has provided additional capital for the Federal
Land Banks, and made provision through the Reconstruction Corporation for
additional credit to Joint Stock Land Banks, Intermediate Credit Banks,
and livestock loan companies, all in the interest of strengthening agricultural credit?

Doesn’t he know that the Reconstruction Finance Corpo­

ration has been created with two billion dollars of available funds to
underpin the whole credit structure of the Nation by providing necessary
credit for banks, for insurance companies, for mortgage companies, for
building and loan associations, and for the railroads, whose securities
are held by the billion by the great fiduciary institutions of the country,
to whom are entrusted the savings of the Nation?

Doesn’t he know that

the President has recommended the creation of home loan discount banks to
take care of the credit needs of home builders and home owners?
Of all the credit groups that he mentions the only ones that haven’t
been provided for by the Federal Government are the States and municipali­
ties«

Are we to understand from his criticism that he would make the

credit of the United States Government available to 16,000 municipalities?
If so, I say to him that if he ever gets the opportunity to carry out
that purpose he will undermine the credit of the United States Government
itself.
Governor Roosevelt states that Republican tariff legislation has
erected an impregnable barbed—wire entanglement around our borders, and
that he accepts the admirable tariff statement in the platform, adding that

"it would protect American “business and American labor.11

The Democratic

platform promises "a competitive tariff for revenue,'1 which, if we add the
Governor1s words, would read:

"A competitive tariff for revenue to protect

American business and American labor."

If anyone can tell me what sort of

a tariff this means, I shall heartily welcome an explanation.
During the Democratic Convention they decried ad infinitum iniquities
of the Smoot-Hawley tariff, and the Democratic Keynoter, Senator Barkley,
fairly spread himself op. this subject.

But not once was there mention of

the Tariff of 1932, which imposed specific rates equivalent to anywhere
from 16 to 61 per cent ad valorem duties on crude petroleum, fuel and gas
oil, gasoline, paraffin, coal, and lumber and copper.

A tariff which, by the

way, the distinguished Keynoter from Kentucky worked and voted for, as did the
Permanent Chairman, Senator Walsh*

When Governor Roosevelt goes to Texas,

Kansas and Oklahoma and condemns the protective tariff on oil; when he goes to
Kentucky and condemns the tariff on coal; when he goes to Arizona, Utah and
Montana and condemns the 61 per cent tariff on copper; when he goes to Oregon
and Washington and condemns the protective tariff on lumber, I will believe in
the sincerity

of his criticisms of barbed-wire entanglements.

I d o n H know any subject in American political life that is responsible for
more buncombe than the tariff controversy.
publican Party.

Let this be said in favor of the Re­

It has stood steadfastly and Still stands by the protective

principle, and can without violation of policy apply this principle to natural
resources, whereas our Democratic brethren, of whom Senator Barkloy is a typical
example, attack the principle of protection, but•inevitably logroll and vote for
the protection of every article produced in their States.

This may be the reason

8

-

-

why they are so strongly opposed to placing in an independent hoard the authoiity
to make adjustments in the light of ascertained facts without Congressional inter­
ference.

They don!t want scientific tariff-making.

They want log-rolling.

governor Roosevelt, in spite of past experiences, would abandon our wellestablished policy of treating all nations alike under the most-favored nation
clause, and enter into a series of bargaining tariffs according tq the European
practice.

He would invite representatives of foreign nations to sit around

a table as friends and discuss these problems, we on one side of the table, and
the rest of the world, hungry for the American market, on the other.

The American

people will want to know whether he proposes to consult foreigners aq to what the
rates of an American tariff law are to be.

If so, we take definite-is sue with him,

for the Republican Party holds that the rates in our tariff laws are a purely
domestic question to be determined by the Congress of the United Spates without
consultation with foreign governments.
In any event, is this the time to make our reduced purchasing power fully
available to foreign manufacturers, rather than to preserve it in the interest of
our own unemployed?
In so far as the farmer is concerned, the Governor makes the original
discovery that the prosperity of this country is dependent upon a prosperous
agricultural population.

I had supposed that this was a self-evident, uni­

versally recognized economic fact.

Other than his suggestion that interest N

rates on farm mortgages should be reduced, without saying how it is to be done,
I find nothing in his program which does not constitute a mere endorsement in
principle of what has and is now being done, and nothing to indicate how he
would proceed to carry out these principles.

- 9 -

Both Governor Roosevelt and the Democratic platform pledge themselves
to drastic economy and an immediate program to abolish useless offices and
to consolidate bureaus and subdivisions of government.

If the American

people have any sense of humor left, they must have had a laugh out of this.
What does the record show?

Under Governor Roosevelt, the already swollen

expenditures of the*State of New York increased from 1929 to 1931 by more
than one-third.

The Democrats of the House voted 194 to 10 for Speaker

Gamier*s pork barrel measure with its 60 closely printed pages of specifi­
cally named post offices.
to a bare $30,000,000.

They whittled an economy bill from $150,000,000

They then proceeded to pass two measures that would

have involved an expenditure of over $3,000,000,000.

They declined to give

the President the necessary authority to abolish useless bureaus and consoli­
date others.

In the face of this record, what is their economy promise worth?

The Democratic platform and the'Governor declare themselves in favor wof
a sound currency to be preserved at all hazards.”

Yet the Democrats in the

House of Representatives within the last two months voted 152 -to 50 to start
the printing presses going and to issue fiat currency, and voted 172 to 3 to
instruct the Federal Reserve System and the Secretary of the Treasury to
manipulate commodity prices.
The Democratic platform and the Democratic candidate pledge themselves
to the maintenance of the National credit by a Federal budget annually
balanced.

Yet the Democratic House of Representatives has already veted

to unbalance it by over three billion dollars this fiscal year, and within
the last four days the House has passed a bill providing for $322,000,000
of expenditures with no revenue to cover them.

10

-

-

Such promises must "be made on the assumption that the .American people
either have no memory or no humor.
Finally, we come to relief, as to which we would have thought the
Democratic candidate had definite ideas and definite remedies.

But we

find that, aside from the fact that he would plant trees where his runningmate would plant post offices, all Governor Roosevelt has to say is that
he favors the use of certain types of public works and the issuance of bonds.
Bat he is not very sure, for the works are, "in so far as possible, (whatever
that may mean) to be self-sustaining if they are to be financed by the issuing
of bonds”, and no economic end is served ”if we merely build without building
for a necessary purpose”.
The Governor favors shortening the working day and the working week,
thus indirectly— though, of course, without giving him any credit

endorsing

the lead taken by the President in urging furloughs rather than pay cuts
in the Federal service.
It is apparent that in so far as relief is concerned
the Governor has no program at all*

And yet when he spoke there

were three definite programs before the Congress, any one of which he
might have accepted as his own.

Here is one of the great problems of the

¿Lay,— a problem running deep into

our

very structure of Government,

and

involving not only immediate difficulties, but having far-reaching effect
on the future policies of our country; a problem in which it might be sup­
posed a true liberal would have been more intensely interested than any other.
And yet in this, the most important speech, which he will make, for it is one
in which he outlined his creed, with all ox the space which he found for the

-

11

-

criticism and abuse of his opponents, he found none for a program of unem­
ployment and destitution relief.
To the casual listener, the program and speech were appealing, but when
we subject them to the acid test of careful analysis, except for that part
of the program which is indistinguishable from ours they dissolve into vague
aspirations, commonplace generalities, and a few promises that had already
been broken by his party in Congress even before they were made.
I do not happen to be one of those who believe that Government, whoever
may control it, is the possessor of a magic wand, the mere waving of which
will bring back normal times*

But it is undeniable that under the present

critical conditions the part played by Government is more vital than ever,
and that the wise management of public affairs, not only in the meeting of
emergencies but in the protection of fundamental principles of Government
and of those conditions essential to recovery, is of supreme importance to
the Nation.

What I mean is exemplified by the actions taken by the President

to meet from time to time new problems arising out of the various phases of the
depression, such as the cushioning of the earlier stages of the depression by
securing an agreement between industry and labor for the maintenance of wages
and by the stimulation of construction programs; the nation-wide organization to
relieve the distress that was brought into being; the suspension of inter­
governmental debts for one year with a view to preventing the economic collapse
of Central Europe; the creation of the National Credit Corporation; the bringing
into being of the Reconstruction Finance Corporation; the mobilizing of the
resources of the Federal Reserve System so as to make them more effective; and
above all, the maintenance of the national credit in an impregnable position
through sound public financial policy; and his unyielding resistance to those
measures prompted by expediency that would have undermined American traditions

-

and principles of government.

12

-

These are hut illustrations, yet they serve to

emphasize the overwhelming necessity of assuring wise and experienced leadership
during a period when we may be faced with events that are literally unforeseeable.
In my opinion, no man living has the qualifications for the task equal
to the qualifications of President Hoover.

Himself a veteran in Government

service, he is the leader of a seasoned organization, which for three years
has been waging on many fronts the battle against depression.

Say what you will

about us, we are an experienced force, and while under the irresistible pressure
of circumstances we have had to give ground, we have preserved intact the es­
sential integrity of the economic fabric of the country and maintained the
principles upon which the American form of government rests.

Is this the time,

at the very peak of the struggle, to order the veterans to the rear and to put
raw recruits in charge?

I think not.

TREASURY DEPARTMENT

POE RELEASE, MORNING PAPERS,
Thursday, July 14, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury "bills to the amount of $75,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount bawis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o ’clock p. m . , Eastern Standard time,
on Monday, July 18, 1932.

Tenders will not be received at the Treasury

Department, Washington.
The Treasury bills will be dated July 20, 1932, and will matn»e
on October 19, 1932, and on the maturity date the face amount will be
payable without interest.

They will be issued in bearer form only, and

in amounts or denominations of $1,000, $10,000, $100,000, $500,000, and
$1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
•Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
6. g . , 99,125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must bo accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-a-

applied for, unless the tenders are accompanied by an express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
July 18, 1932, all tenders received at the Federal Reserve Barks or
branches thereof up to the closing hour will be opened and public an­
nouncement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay«»

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
o n July 20, 1932,
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No, 418, as amended, and this
notice prescribe the terras of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Tuesday, July 19, 1932.

STATEMENT BY ACTING SECRETARY BALLANTINE

Acting Secretary of the Treasury Ballantine announced to-day
that the tenders for $75,000,000, or thereabouts, of 91-day Treasury
Bills, dated July 20, 1932, and maturing October 19, 1932, which
were offered on July 14th, were opened at the Federal Reserve Banks
on July 18th.
The total amount applied for was $241,256,000.

The highest

bid made was 99.917, equivalent to an interest rate of about 0.33
per cent on an annual basis.

The lowest bid accepted was 99.887,

equivalent to an interest rate of about 0.45 per cent on an annual
basis.

The total amount of bids accepted was $75,923,000.

average price of Treasury Bills to be issued is 99.899.

The

average rate on a bank discount basis is about 0.40 per cent.

The

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Thursday, July 21, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury “bills to the amount of $80,000,000, or thereabouts.
They will he 91-day hills; and will he sold on a discount basis to the
highest bidders.

Tenders will he received at the Federal Reserve Banks,

or the branches thereof, up to two o*clock p. m., Eastern Standard time,
on Monday, July 25, 1932.

Tenders will not he received at the Treasury

Department, Washington.
The Treasury hills will he dated July 27, 1932, and will
mature on October 26, 1932, and on the maturity date the face amount
will ho payable without interest.

They will he issued in hearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders he made on the printed forms and
forwarded in the special envelopes which will he supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will he considered.
Each tender nnist he in multiples of $1,Q00.

The price offered mast he

expressed on the basis of 100, with not more than three decimal places,
e. g . , 99.125.

Fractions must not he used.

Tenders will he accepted without cash deposit from incorpor­
ated hanks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must he accom­

panied by a deposit of 10 per cent of the face amount of Treasury hills

applied for, unless the tenders are accompanied by an express guaranty
of payment by an incorporated hank or trust company.
Immediately after the closing hour for receipt of tenders on
July 25, 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting tenders

will be advised of the acceptance or rejection thereof.

Payment at the

price offered for Treasury bills allotted must be made at the Federal
Reserve Banks in cash or other immediately available funds on July 27,
1932.
The Treasury bills will be exempt, as to principal and interest
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes,

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Monday, July 26, 1932.

STATEMENT BY SECRETARY MILLS

The Treasury is today offering for subscription, at par and
accrued interest, through the Federal Reserve Banks, $650,000,000, or
thereabouts, Treasury notes in two series, both dated and bearing
interest from August 1, 1932.

One series, offered in the amount of

$325,000,000, or thereabouts, is for two years, with interest at the
rate of 2-1/8 per cent, and matures on August 1, 1934.

The other

series also offered in the amount of $325,000,000, or thereabouts,
is for four years, with interest at the rate of 3-1/4 per cent, and
matures on August 1, 1936.

The notos will not bo subject to call

for redemption prior to maturity.
The principal and intorost of tho notes will bo payable in
United States gold coin of tho present standard of value.
Tho notos will be exempt, both as to principal and interest,
from all taxation (except ostato or inheritance taxes) now or hereafter
imposed by tho United States, any State, or any of tho possessions of
tho United Statos, or by any local taxing authority.
Applications will bo received at tho Federal Rosorvo Banks.
The Troasury will accept in payment for tho now Treasury notos, at par,
Treasury certificates of indebtedness of Series A—1932, maturing August
1, 1932, and subscriptions in payment of which such Troasury certificates
of indebtedness are tendered will bo given preferred allotment.

-

2-

The Treasury notes will be issued in bearer form only, in
denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000.
The interest on the notes will be payable semiannually on February 1
and August 1, in each year.
Outstanding certificates of indebtedness in the amount of
$227,631,000 are duo on August 1, 1932.

The new offering will provide

funds for this maturity, and also to meet current financial require­
ments, principally for the Reconstruction Finance Corporation.
The text of the official circular follows:

—

3 *" »

The Secretary of the Treasury, under the authority of the Act
approved September 24, 1917, as amendod, offers for subscription, at par
and accrued interest, through the Federal Reserve Banks, $650,000,000, or
thereabouts, Treasury notes, in two series,
DESCRIPTION OF NOTES
The notes of Series B-1934 will be dated August 1, 1932, and
will bear interest from that date at the rate of two and one-eighth per
cent per annum, payable semiannually on February 1 and August 1 in each
year.

They will mature August 1, 1934, and will not be subject to call

for redemption prior to maturity.

The amount of the offering of this

series is $325,000,000, or thereabouts.
The notes of Series A-1936 will be dated August 1, 1932, and
will bear interest from that date at the rate of three and one-quarter
per cent per annum, payable semiannually on February 1 and August 1 in
each year.

They will mature August 1, 1936, and will not be subject to

call for redemption prior to maturity.

The amount of the offering of

this series is $325,000,000, or thereabouts.
The principal and interest of the notes will be payable in
United States gold coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in
denominations of $100, $500, $1,000, $5,000, $10,000. and $100,000.

The

notes will not be issued in registered form.
The notes shall be exempt, both as to principal and interest,
from all taxation (except estate or inheritance taxes) now or hereafter
imposed by the United States, any State, or any of the possessions of the
United States, or by any local taxing authority.

-4-

The notos will not bo acceptable in payment of taxes*

ft
The notes will be acceptable to secure deposits of public
moneys, but will not boar the circulation privilege.
APPLICATION AND ALLOTMENT
Applicationswill bo rocoived at the Federal Reservo Banks.
Subscriptions for which payment is to bo tendered in Troasury
certificates of indebtedness of Series A-1932, maturing August 1, 1932,
will be given preferred allotment.
The Secretary of the Troasury reserves the right to reject any
subscription, in whole or in part, and to allot less than the amount of
notes of either or both series applied for and to close the subscriptions
as to either or both series at any time without notice; the Secretary of
the Treasury also reserves the right to make allotment in full upon appli­
cations for smaller amounts, to make reduced allotments upon, or to reject,
applications for larger amounts, and to make classified allotments and
allotments upon a graduated scale; and his action in these respects shall
be final.

Allotment notices will be sent out promptly upon allotment, and

the basis of the allotment will bo publicly announced.
PAYMENT
Payment at par and accrued interest for notes allotted must be
made on or before August 1, 1932, or on later allotment.

Any qualified

depositary will be permitted to make payment by credit for notos allotted
to it for itself and its customers up to any amount for which it shall be
qualified in excess of existing deposits, when si) notified by the Federal
Reserve Bank of its district.

Treasury certificates of indebtedness of

Series A-1932, maturing August 1, 1932, will be accepted at par in payment

-5-

for any notes of the series now offered which shall he subscribed for
and allotted, with an adjustment of the interest accrued, if any, on the
notes of the series so paid for*
GENERAL PROVISIONS
As fiscal agents of the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make allot­
ments on tho basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks of the respective districts*
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive notes*

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Tuesday, July 26, 1932.

STATEMENT BY ACTING SECRETARY LOWMAN

Acting Secretary of the Treasury Lowman announced
to-day that the tenders for $80,000,000, or thereabouts,
of 91-day Treasury Bills, dated July 27, 1932, and
maturing October 26, 1932, which were offered on July
21st, were opened at the federal Reserve Banks on
July 25th.
The total amount applied for was $191,613,000..
The highest Bid made was 99.930, equivalent to an
interest rate of aBout 0.28 per cent on an annual
Basis.

The lowest Bid accepted was 99.877, equivalent

to an interest rate of aBout 0.49 per cent on an annual
Basis.~

The total amount of Bids accepted was $83,317,000.

The average price of Treasury Bills to Be issued is 99.882.
The average rate on a Bank discount Basis is aBout 0.47
per cent.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Tuesday ; July 26, 1932.

STATEMENT BY SECRETARY MILLS

Secretary Mills to-day announced that the subscription hooks
for the current offering of two-year 2—l /8 per cent Treasury Noteo
of Series B-1934, maturing August 1, 1934, and four-year 3-l/4 per
cent Treasury Notes of Series A-1936, maturing August 1, 1936, closed
at the close of business to-day, Monday, July 25, 1932.
Subscriptions placed in the mail before 12:00 o1clock midnight,
Monday, July 25, 1932, will be considered as having been entered before
the close of the subscription books.
Announcement of the amount of subscriptions and the basis of
allotment will be made on or about Thursday, July 28th.

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS,
Thursday, July 28, 1932*

STATEMENT BY SECRETARY MILLS

Secretary Mills to-day announced the subscription figures and
the basis of allotment for the August 1st offering of two-year
Treasury Notes of Series B-1934, 2-l/8 per cent, maturing August 1,
1934, and of four-year Treasury Notes of Series A-1936, 3-1/4 per
cent, maturing August 1, 1936.
2-1/8 PER CENT TREASURY NOTES« SERIES B-1934
Reports received from the Federal Reserve Banks show that for
the offering of 2—l /8 per cent Treasury Notes of Series B—1934,
maturing August 1, 1934, which was for $325,000,000, or thereabouts,
total subscriptions aggregate over $1,703,000,000.

Of these sub­

scriptions, $3 4 ,995,000 represent exchange subscriptions, in payment
for which Treasury Certificates of Indebtedness, maturing August 1,
1932, were tendered.
full.

Such exchange subscriptions were allotted in

Allotments on cash subscriptions for 2-l/8 per cent Treasury

Notes of Series B—1934 were made as follows:
not exceeding

Subscriptions in amounts

$10,000 were allotted 60 per cent, but not less than

$100 on any one subscription; subscriptions in amounts over

$1 0 ,000 ,

but not exceeding $10 0 ,000 , were allotted 4.0 per cent, but not less
than $6,000 on any one subscription; subscriptions in amounts over
$100,000, but not exceeding $500,000, were allotted 30 per cent, but
not less than $40,000 qn any one subscription; subscriptions in amounts
over $500,000, but not exceeding $1 ,000 ,000 , were allotted 20 per cent

but not less than $150,000 on any one subscription; subscriptions
in amounts over $1,000,000, but not exceeding $25,000,000, were
allotted 15 per cent, but not less than $200,000 on any one sub­
scription; subscriptions in amounts over $25,000,000 but not ex­
ceeding $100 ,000 ,000 , were allotted 10 per cent, but not less than
$3,750,000 on any one subscription; and subscriptions in amounts
over $100,000,000 were allotted 5 per cent, but not less than
$10 ,000,000 on any one subscription*
3-1/4 PER CENT TREASURY NOTES OF SERIES A-1936
Por the offering of 3-l/4 per cent Treasury Notes of Series
A-1936, maturing August 1, 1936, which was for $325,000,000, or
thereabouts, total subscriptions aggregate over $3,803,000,000.
Of these subscriptions $139,467,500 represent exchange subscriptions
in payment for which Treasury Certificates, maturing August 1, 1932,
were tendered.

Such exchange subscriptions were allotted in full.

Allotments on cash subscriptions for the 3-l/4 per cent Treasury
Notes of Series A-1936 were made as follows:

Subscriptions in amounts

not exceeding $1,000 were allotted 50 per cent, but not less than $100
on any one subscription; subscriptions in amounts over $ 1 ,000 , but not
exceeding $10,000, were allotted 25 per cent, but not less than $500
on any one subscription; subscriptions in amounts over $1 0 ,000 , but
not exceeding $100 ,000 , were allotted 10 per cent, but not less than
$2,500 on any one subscription; subscriptions in amounts over $100,000
but not exceeding $1 ,000 ,000 , were allotted 8 per cent, but not less
than $10,000 on any one subscription; subscriptions in amounts over

~ 3 ~

$1,000,000, "but not exceeding $10,000,000, were allotted 5 per cent,
but not less than $80,000 on any one subscription; subscriptions
in amounts over $1 0 ,000 ,000 , but not exceeding $10 0 ,000 ,000 , were
allotted 3 per cent, but not less than $500,000 on any one subscription;
and subscriptions in amounts over $10 0 ,000,000 were allotted 2 per cent,
but not less than $3,000,000 on any one subscription.

Farther details as to subscriptions and allotments will be
announced when final reports are received from the Federal Reserve
Banks,

POR RELEASE, MORNING PAPERS,
SUNDAY, JULY 31, 1932.

TREASURY DEPARTMENT

Statement by Secretary of the Treasury Mills.

I listened with interest to Senator Harrison*s heralded answer
to my Boston speech.

The answer was no answer at all, unless an attack

on the President's policies and on my position as to estimates and
economies may be said to constitute an answer to an analysis of. the Demo­
cratic record.

Perhaps there is no answer.

The Senator charges that from December to June the Treasury re­
vised its estimates of anticipated revenues.
had to.

Of course it did.

It

The -unpardonable delay in enactment of needed tax legislation

and the fantastic economic proposals emanating from the Democratic House
of Representatives kept the business world and the country in such a state
of uncertainty and apprehension that instead of the business resumption
upon which the Treasury had counted, and which at ru c

time seemed in

sight, we witnessed further decline in business and were compelled to
revise our estimates downward.
The Senator accuses me of having opposed economies in general,
a reduction in appropriations for my Department, and more particularly
curtailment of building construction.

The exact opposite is true.

I vigorously supported the President's economy program before both the
House and Senate Committees.

With one exception of $50,000, every re­

duction effected in the Treasury Appropriation Bill by the Senate Appro­
priations Committee was suggested by me item by item.

In so far as

public buildings are concerned, far from opposing the slowing up of public
building expenditures, I actually recommended it.

In my letter to the

~

2

-

Chairman of the sub-committee in charge of the Treasury Appropriation
Bill I stated:
"I recommend that for the year 1933 the contracts cover­
ing certain building projects be not let, as indicated in my
letter of March 29.u
I then went on to say:
"It is pertinent to observe that if towns and cities
throughout the country have gotten along with their existing
post office facilties up to the present time, they surely
can during these trying days wait a year or two longer for
a new building of a monumental character.
What is sacred
about a new post office in times like these?"
There can then be no question as to my position.

It was the

Senate that specifically excluded the Treasury building program from any
reduction.

It was the Democratic House of Representatives, backed by

the Democratic Senators, that insisted on unbalancing the budget by in­
creasing the public works program.
After listening to Senator Harrison I repeat what I said in
Boston that if the American people have any sense of humor left they will
get a good laugh out of the Democratic promise of economy.
Let us stick to the facts.

Let us be candid, even to the ex­

tent that, when Senator Harrison next makes the kind of an attack on the
protective tariff that he did last night, he will at the same time tell
the American people of the gallant and successful fight he made to impose
high duties on long staple cotton.

I had hoped that we might get through

the Campaign without the usual tariff humbug.

Certainly such Democratl-c

leaders as Senator Pat Harrison with his long staple cotton, Senator
Barkley with his coal, Senator Connally with his oil, and Senator Walsh
of Montana with-his copper, when it comes to protecting the products of
their own States, see eye to eye with former Senator Grundy of Pennsylvania.
They at least are foreclosed by their official acts from complaining about
tariff interference with foreign trade.

FOR RELEASE, MORNING PAPERS,
MONDAY, AUGUST 1, 1932.

TREASURY DEPARTMENT

Statement by Secretary of the Treasury Mills.

I have read with amazement Governor Roosevelt’s remarks
in respect of fiscal policies.

The Governor complains:

1. That during the decade preceding the depression
the National debt was not drastically reduced;
2. That adequate steps were not taken to meet
the deficits;
3. That the Administration has resorted to in­
flation.
As to the first statement.

Doesn’t the Governor know

that the public debt for ten years was reduced at an average rate
of about $900,000,000 a year, in spite of the repeated and constant
opposition of the Democratic Senators and Representatives who comr*
plained bitterly of the large surplusses and demanded further tax
reduction?

Doesn’t he know that the reduced tax rate he com­

plains of did not diminish the revenue, but served constantly to
increase it?

The Governor may be ignorant of the facts, but

the record stands.
As to his second point with reference to continuing deficits.
Doesn’t he know that the Administration led

and won the fight for

the establishment of the principle of a balanced budget, in spite of
a Democratic House of Representatives that passed measures at the
last session which would have entailed additional expenditures amount­
ing to over three and one half billion dollars, and that it was the

~

2

~

insistence of the Democrats in both Houses of Congress on a three
hundred million dollar public building program, and their failure
to adopt the Presidents economy program that finally threw this
year!s budget somewhat out of balance?
In retrospect it may be that action might have been taken
a year earlier, but it must not be forgotten that no one foresaw
the full extent and depth of this depression until the second shock
came in the spring of 1931 with the European collapse, and that the
increased expenditures referred to were all of relief and remedial
character.
Finally as to inflation.

D o e s n H the Governor know

that this country has been undergoing the most drastic and devastat­
ing deflation ever witnessed?

A deflation that has closed banks,

destroyed credit, stifled industry, wiped out values, and reduced
commodity prices, more particularly agricultural prices, to a point
which is bringing ruin to millions of our people?

Does the

Governor really believe that deflation has not gone far enough?
As I view it, our greatest single economic problem today is to
arrest deflation and expand credit.
then indeed is the outlook dark*

Unless this can be done,
How anyone in the face of this

picture can talk of the Administration being guilty of inflation
passes comprehension.

As far as I am concerned, as long as I

am head of the Treasury Department .1 shall use all sound means, and
urge others to do likewise, to expand credit as long as the present
circumstances exist.

— 3 —

The Governor expresses concern over the lack of confi­
dence both here and abroad in our National credit*

He needn't#

Thanks to the Administration's insistence on adherence to sound
financial principles, in spite of the immense problems that con­
front us, the Government credit never stood higher at home and
abroad#

In proof of this statement, I refer the Governor to

the great success of the last offering of Treasury notes, the
prices at which all Government securities are now selling, and to
the foreign exchange quotations which show the dollar in an un­
assailable position.
If there were any doubts abroad during the course of the
last winter, they were aroused by the actions of the Democratic
House, such as their fiat money bill, which did threaten both the
national credit and the soundness of our currency, and which were
as incomprehensible abroad as they were at home#
Tflhat makes the Governor's statement even more amazing is
that the whole record of the Democratic House shows that they were
determined to force uncontrolled inflation on the country#
The Governor knows not whereof he speaks#

POR RELEASE
5:00 P. M« , Angus t 1

TREASURY DEPARTMENT

Address of
HONORABLE ARTHUR A. BALLANT INE,
Under Secretary of the Treasury,
At the Symposium on Taxation
at Columbia University,
New York City,
August 1, 1932,

FEDERAL INCOME TAX PROCEDURE
Remarks of Arthur A, Ballantine,
Under Secretary of the Treasury,
At the Symposium on Taxation
At Colombia University,
August 1, 1932»

The high rates imposed hy the new Revenue Act bring out the
importance of Federal income tax procedure.

Determination with

reasonable promptness of the precise amount which settles the
tax account with the Government is particularly important to the
business man»

The technique and personnel which the Treasury has

developed under past laws will help in minimizing uncertainties
and delay under the new law*
A distinctive feature of Federal income tax procedure is what
may be referred to as self-assessment.

Under our system* designed

to accomplish prompt payment for the convenience of the Government*
the amount of the original payments by taxpayers is computed by the
taxpayers themselves upon their returns.

Subsequent check by the

Treasury is, of course, required by law and in any case may result
in an additional assessment or in a refund.

The war tax measures

contained many novel provisions which it- took years to work out»
Income tax provisions cannot be made entirely simple; facts in
particular cases are frequently complicated, and adjustments from
amounts originally paid in must be a normal incident of the ap­
plication of the Federal income tax law»

Failure to understand

the nature of Federal income tax procedure has been the cause of
criticism of tax administration which is entirely unwarranted.
The process of determination upon additional assessments and
refunds called for hy the law is conducted by the Treasury with
every safeguard and check to insure sound results.

In every case

the procedure calls for field examinations or field office audits
by trained auditors acting in groups or under group supervision,
A physical examination of the books of the taxpayers is required
in all cases involving any doubt.

The field examination is followed

by determination in Washington in which especially trained officers
deal with special questions.

There is a large engineering force

for questions of valuation and a large legal staff for legal questions
The determination of the audit or audit review in Washington is re­
examined by the Commissioner of Internal Revenue, who has immediately
about him a corps of trained technical advisers.
Reaching a decision in a case where any considerable amount is
involved requires the participation of many individuals trained for
their work and fully aware of their responsibilities,

Most of these

trained employees occupy their positions under Civil Service require­
ments,

Under this procedure a result in a particular case dictated by

the desire on the part of some officials either to harm or to benefit
a taxpayer is out of the question*
In the case of any refund of the amount of $20,000 or over a
public decision is made setting forth the fact of the refund and the
ground of the decision*

In the case of every refund or credit to the

amount of $75,000 or over, there must be a special review by the

>
— 3 —
General Counsel and his staff, and the proposed refund or credit must
also he submitted to the Joint Committee on Internal Revenue Taxation,
composed of five members of the Senate and five members of the House,
operating with a permanent staff.

Submission to this Committee of

Congress must be made thirty days before the refund or credit is made,
accompanied by a statement of the facts and of the reasons for the pro­
posed action.

The Treasury annually submits to Congress a list of all

refunds of $500.00 and over, and the Joint Committee annually publishes
a report on refunds of $75,000.00 or over, with its comments.

The Joint

Committee of Congress has never attacked the motive of the Treasury
in making any refund.
The checking of taxpayers* liabilities by the Treasury has re­
sulted in very large net additional payments to the Government.

During

the period beginning with the fiscal year 1917 and including the first
nine months of the fiscal year 1932, the Bureau of Internal Revenue
has been called upon to administer collections of $47,696,120,436.97
in taxes and to deal with 119,098,969 returns.

During this period,

in dealing with this mass of returns, the Treasury has assessed ad­
ditional taxes to the amount of $5,981,632,503.00; has made refunds
totaling $1,384,352,575.09, and has credited or abated tax in the
amount of $2,661,509,775.01.

The total of additional tax assessed

during this period has thus exceeded the total of the amounts re­
funded and the amounts credited or abated by $1,935,770,152.90.
In the case of the proposed assessments of additional taxes,
the taxpayer has the right before payment is made to secure a de­
termination by the United States Board of Tax Appeals.

This body,

~ 4 entirely independent of the Treasury, is substantially a court and
proceeds as such.

Through further intensive consideration cases

pending before the Board may, however, be disposed of without actual
trial, and for that purpose the treasury maintains a body of ex­
perienced officials known as the Special Advisory Committee.

It is

the position of the Treasury that the tax law should be enforced by
administration rather than by litigation, and that in any

ordinary

case it should be possible for the taxpayer and the Treasury to arrive
at a determination of the tax liabilities.
Finality in tax determinations has been promoted by the pro­
visions of the law authorizing final agreements with the taxpayer
settling tax questions, and these provisions of law have been widely
used.
A prompt and fair disposition of tax cases depends on the taxpayer
as well as upon the tax officials.

The Treasury, through publishing

and keeping up to date its Regulations interpreting the law and other­
wise, takes pains to advise the taxpayers as fully as possible as to
their rights and obligations.

The task of publishing Regulations and

issuing requested rulings under the new Revenue Act has been an arduous
one, particularly as only fifteen days intervened between the signing
of the new law and the effective date of most of the new taxes imposed.
The importance of certainty and clarity as to meaning and operation
of the new law is realized by the Treasury with a view to minimizing
the confusion and uncertainties in business transactions affected by
the new taxes.

To this end the Department is making every effort to

act promptly on all requests for rulings arising under the new Revenue
Act

Xf
i

TREASURY DEPARTMENT
FOR IMMEDIATE RELEASE,
Tuesday, August 2 , 1932

Secretary Mills to-day announced the final subscription and allotment
figures on the August 1st offering of 2-1/8 per cent Treasury Notes of Series
B-1934, maturing August 1 , 1934, and 3-1/4 per cent Treasury Notes of Series
A-1936, maturing August 1 , 1936.
Subscriptions and allotments were divided among the several Federal Reserve
Districts and the Treasury as follows:

2-1/ 8$ TREASURY NOTES OF SERIES B-1934.
3
District

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

$

Total Cash
Subscriptions
Received
62,101,500
865,812,200
92,020,000
79,455,500
36,657,500
51,106,000
71,560,700
8,527,500
9,683,800
15,564,000
25,022,100
351,376,000

$1,668,886,800

$

Total Exchange
Subscriptions
Received

Total Subscrip­
tions Received

458,000
27,722,000

$

270,000
125,000
7,528,000
24,000

1,000
12,000
1,600,000
$ 37,740,000

62,559,500
893,534,200
92,020,000
79,725,500
36,782,500
51,106,000
79,088,700
8,551,500
9,683,800
15,565,000
25,034,100
352,976,000

$1,706,626,800

Total Sub*scriptions
Allotted
$

*$

*Includes $37,740,000 exchange
subscriptions, which were
allotted in full.

17,911,700
189,141,400
23,200,000
19,214,900
12^024,900
16,818,400
23,051,000
2,387,500
2,320,300
3,634,400
8,660,500
26,927,600
345,292,600

-

2

-

3-1/4$ TREASURY NOTES OF SERIES A-1936.

Federal Reserve
District

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

Total Cash
Subscriptions
Received
$

191,419,000
1,845,959,000
359,216,400
195,431,900
71,984,200
122,547,100
298,782,200
46,941,500
18,073,400
33,128,200.
64,860,400
416,893,200
19,700

$3,665,256,200

Total Exchange
Subscriptions
Received

Total Subscrip­
tions Received

Total Sub­
script ions
Allotted

15,933,500
101,219,500
1,251,500
854,500
275,000
230,000
11,807,500
1,864,000
186,000
593,000
44,000
5,118,000
90,000

$ 207,352,500
1,947,178,500
360,467,900
196,286,400
72,259,200
122,777,100
310,589s700
48,805,500
18,259,400
33,721,200
64,904,400
422,011,200
109,700

$ 32,715,700
207,837,500
22,920,000
14,866,900
6,961,800
12,308,700
30,718,100
5,576,100
1,883,800
3,405,500
6,672,200
19,175,000
96,700

$ 139,466,500

$3,804,722,700

*$365,138,000

$

♦Includes $139,466,500 exchange
subscriptions, which were
allotted in full.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Thursday, August 4, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury hills to the amount of $75,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o*clock p. m. , Eastern Standard time,
on Monday, August 8 , 1932.

Tenders will not be received at the Treasury

Department, Washington.
The Treasury bills will be dated August 1C, 1932, and will
mature on November 9, 1932, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1 ,000 , $10 ,000 , $ 100 ,000 ,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will bo considered.
Each tender must be ip multiples of $1,000.

The price offered mdst be

expressed on the basis of 100 , with not more than three decimal places,
e. g*, 99.125.

Fractions must not be used.

Tenders will be accepted without cask deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

- 2-

applied for, unless the tenders are accompanied by an express guaranty
of payment "by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
August 8 , 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted oust be made at
the Federal Reserve Banks in cash or other immediately available funds
cn August 10, 1932.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

FOR RELEASE, MORNING PAPERS
Tuesday, August 9, 1932,

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced to-day that
the tenders for $75,000,000, or thereabouts, of 91-day
Treasury Bills, dated August 10, 1932, and maturing November
9, 1932, which were offered on August 4th, were opened at
the Federal Reserve Banks on August 8 th.
The total amount applied for was $333,468,000.

The

highest hid made was 99.899, equivalent to an interest rate
of about 0.40 per cent on an annual basis.

The lowest bid

accepted was 99.853, equivalent to an interest rate of about
0.58 per cent On an annual basis.

'Only part of the amount

bid for at the latter price was accepted.
of bids accepted was $75,317,000.

The total amount

The average price of

Treasury Bills to be issued is 99.866.

The average rate

on a bank discount basis is about 0.53 per cent.

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Thursday, August 11, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice Ihat tenders are
Invited for Treasury hills to the amount of $75,000,000, or thereabouts.
They will he 91-day hills; and will he sold on a discount basis t§ the
highest bidders.

Tenders will he received at the Federal Reserve Banks,

hr the branches thereof, up t« two o* clock p. m., Eastern Standard time^
on Monday, August 15, 1932.

Tenders will not he received at the

Treasury Department, Washington*
The Treasury hills will he dated August 17, 1932, and will
mature on November 16, 1932, and on the maturity date the face amount
will he payable without interest.

They will he issued in hearer form

only, and in amounts or denominations of $ 1 ,000 , $10 ,000 , $ 100 ,000 ,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders he made on the printed forms and
forwarded in the special envelopes which will he supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will he considered.
Each tender must he in multiples of $1,000.

The price offered must he

expressed on the basis of 100 , with not more than three decimal places,
e. g., 99.125.

Fractions mast not he used.

Tenders will he accepted without cash deposit from incorpor­
ated hanks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must he accom­

panied by a deposit of 10 per cent of the face amount of Treasury hills

applied for, unless the tenders are accompanied "by an express guaranty
of payment "by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
August 15, 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on August 17, 1932.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, f£om all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imnosed by the United States or any of its uossessions.
Treasury Department Circular No. 418,. as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

FOR IMMEDIATE RELEASE,
August 12, 1932é

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS.

Secretary Mills today made public the following
correspondence:

’’June 23, 1932.
The Secretary of the Treasury,
Mr. Mellon.

On account of my illness which I contracted
during the world war, I may be called from this
world any time. But before I will have to depart,
I intend to fulfill the promise I gave to a soldier
of the American Army, who saved my life in 1918.
I therefore lay in your hands a bracelet made out of
old German Coins as a sign of appreciation for a
Nation whose soldiers even in war treated their
enemies with great consideration, as the soldier
who saved my life without giving his name and address.
I respectfully ask you to accept this little
gift in his name.
With sincerest thanks I remain
August Ullrich,
Dittersbach, Kreis,
Waldenburg,
Hauptstrasse No. 20,
Schlesien, Germany.
Large Coin: King William & Qp.een of Prussia 1861.
Small Coins: 20 Pfennig pieces from the 70*s."

"August 11, 1932.
My dear Mr. Ullrich:
Your letter of June 23, 1932, together with
a bracelet made of old German coins which you
present to the United States, has been received.

It is a most gracious act on your part in send­
ing this bracelet as a token of appreciation for the
consideration shown you by an American soldier, in saving
your life during the World War,
The bracelet has been turned over to the military
establishment of the United States, and will be placed
in the museum at the United States Military Academy at
West Point,
There it will remain as a lasting symbol
in recognition of a worthy deed by an unknown American
soldier, and a generous act on your part in so nobly
expressing your appreciation in the matter.
Very sincerely yours,

OGDEN L, MILLS,
Secretary of the Treasury,

Mr, August Ullrich,
Dittersbach, Kreis,
Waldenburg,
Hauptstrasse No, 20,
Schlesien, Germany.”

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Saturday, August 13, 1932,

The „Secretary of the Treasury to-day made public
the following opinion of the Attorney General relating to
the circulation privilege granted certain United States
bonds under Section 29 of the Federal Home Loan Bank Act
of July 22, 1932:

"August 12, 1932.
My dear Mr. Secretary:
I have the honor to refer to your letter of
July 28, 1932, requesting my opinion (l) as to whether
the Treasurer of the United States shall collect onehalf of one per centum or one-fourth of one per centum
each half year upon the circulating notes issued under
Section 29 of the Federal Home Loan Bank Act of July 22,.
1932 (Public No* 304* 72d Congress, 1st Seas.), and
(2) whether Section 29 requires bonds deposited with
the Treasurer of the United States thereunder as se­
curity for the issuance of circulating notes to be
withdrawn as such security at the expiration of three
years from the date of the Act,
Section 29, supra, provides:
That notwithstanding any provisions of
law prohibiting bonds of the United States from
bearing the circulation privilege, for a period
of three years from the date of enactment of this
Act all outstanding bonds of the United States
heretofore issued or issued during such period,
bearing interest at a rate not exceeding 3 3 / 8
per centum per annum, shall be receivahle by the
Treasurer of the United States as security for the
issuance of circulating notes to national banking

-

2

-

associations, and upon the deposit with the
Treasurer of the United States by a national
hanking association of any such bonds, such
association shall he entitled to receive cir­
culating notes in the same manner and to the
same extent and subject to the same conditions
and limitations now provided by law in the case
of 2 per centum gold bonds of the United States
bearing the circulation privilege; except that
the limitation contained in section 9 of the Act
of July 12, 1882, as amended, with respect to
the amount of lawful money which may be deposited
with the Treasurer of the United States by national
banking associations for the purpose of withdrawing
bonds held as security for their circulating notes,
shall not apply to the bonds of the United States
to which the circulation privilege is extended by
this section and which are held as security for
such notes* Nothing contained in this section shall
be construed to modify, amend, or repeal any law
relating to bonds of the United States which now
bear the circulation privilege.
This statute provides for the issuance of cir­
culating notes to national banking associations, and,
with an exception not material to your first question,
requires that such notes shall be issued in accordance
with and subject to the conditions under which are issued
circulating notes secured by 2 per centum gold bonds of
the United States*

One of the conditions under which

the latter notes are issued is that prescribed by Sec­
tion 13 of the Act of March 14, 1900, c* 41, 31 Stat*
45, 49 (U*S.O., Title 12, Sec* 542), as follows:
That every national banking association hav­
ing oh deposit, as provided by law, bonds of the
United States bearing interest at the rate of two
per centum pei annum, issued under the provisions
of this Act, to secure its circulating notes, shall
pay to the Treasurer of the United States, in the

- 3 -

months of January and July, a tax of one-fourth of
one per centum each'half year upon the average
amount of such of its notes in circulation as are
based upon the deposit of said two per centum
bonds? and such taxes shall be in lieu of exist­
ing taxes on its notes in circulation imposed by
section fifty-two hundred and fourteen of the
Revised Statutes.
Section 13 of the Act of March 14, 1900,.
just quoted, reduced the tax imposed by Section 5214
of the Revised Statutes on the average amount of notes
which each national banking association has in circula­
tion secured by 2 per centum gold bonds of the United
States from one-half of 1 per centum to one-fourth of
1 per centum semi—annually.

Since Section 29 of the

Federal Home Loan Bank Act provides that, with an excep­
tion not material here, the notes issued pursuant to .that
statute are to be issued upon the same conditions as are
provided by law in the case of 2 per centum gold bonds
ef the United States bearing the circulation privilege,
and since it is clear that the tax upon notes based
upon the deposit of said 2 per centum bonds is now onefourth of 1 per centum semi-annually, it seems entirely
clear that this is the rate of tax applicable to notes
issued pursuant to the provisions of the Federal Home
Loan Bank Act*-, “While the provisions of Section 29
which bear upon this question are so clear that re­
sort to the legislative history as an aid to construe-

- 4 -

tion seems to be unnecessary, I have examined the
legislative history, and while there is very little
material which bears upon this particular question,
such as there is clearly supports my construction of
the statute.

(See Congressional Record, Vol. 7 5 , Ho.

169, p. 15380, 72d Cong., 1st Sess.)
Your second question involves particularly
the construction of the following portion of Section

29 of the Federal Home Loan Bank Act:
* * * for a period of three years from the
date of enactment of this Act all outstanding
bonds of..the United States heretofore issued or
issued during such period, bearing interest at
a rate not exceeding 3 3/8 P er centum per annum,
shall be receivable by the Treasurer of the
United States as security for the issuance of
circulating notes to national banking associa~
tions, and upon the deposit with the Treasurer
of the United States by a national banking as­
sociation of any of such bonds, such associa­
tion shall be entitled to receive circulating
notes * * *.
The provision which excepts the bonds of the United
States

»to which the circulation privilege is extended

by this section and which are held as security for such
notes'» from the limitations contained in Section 9 of
the Act of July 12, 1882, as amended, with respect to
the amount of lawful money which may be deposited with
the Treasurer for the purpose of withdrawing bonds held

- 5 as security for their circulating notes must also he
considered in connection with your second question.
The problem presented appears to me to be
whether the provisions of Section 29 require that the
circulation privilege of bonds deposited pursuant to
that section shall cease three years after the date of
the enactment of the Act or whether the Act merely means
that after three years no more of such bonds may be de­
posited and accorded the circulation privilege without,
however, affecting the circulating privilege of bonds
deposited within the three-year period, leaving such
circulation privilege outstanding during the entire
remaining life of the bonds deposited.

The effect of

the first construction is, of course, to permit a tem­
porary expansion of the currency which is to terminate
at the end of three years, while the effect of the latter
construction would be to effect an expansion of the
currency which would be permanent during the life of
the bonds to which the circulation privilege was ac­
corded.
It must be admitted that the language of the
statute is not entirely free from ambiguity, and, in
order to determine the intent of Congress and construe
the language of the statute so as to effectuate that

0
~

6

~

intent, it seems to me proper and necessary to resort
to the legislative history of this provision*

The only

committee report which deals with the section is the
Report of the Conference Committee, in which the fol­
lowing statement is made hy the managers on the part
of the House with respect to the provisions of Sec­
tion 29 (H. Rep. No* 1775, 72d Cong., 1st Sess.):
Amendment No. 46ï This amendment author­
izes United States bonds bearing interest at
a rate not in excess of 3 3/8 per cent to
bear the circulating privilege for a period of
three years after the enactment of this act** * *
A careful examination of the debates in the Senate and
House dealing with this provision has also been made.
Several statements in the course of such debates by
those who may be regarded as sponsors of this legisla­
tion and others throw light on the intention of Congress.
The provision for the extension of the circulation
privilege to the bonds mentioned in Section 29 is referred to as not a permanent proposition1, as *a
temporary expedient1, as *a sound way of expanding the
currency to meet the exigencies of this particular
time1, as *a temporary arrangement*.

It is said that

the provision *expires by limitation of law*•

It is

also said that *The whole thing terminates at the end

- 7 -

of five years * *

#

{[Changed, later to three years in

the provision as passed/]

(Por the foregoing, see

Congressional Record, Vol. 75, No* 168, p.* 15301, 72d
Cong., 1st Sess.)
Reference is also made to the three-year
provision "by a mamber of the House Banking and Currency
Committee, who was also one of the House conferees on
the Bill, as follows (Congressional Record, Vol. 75,
No* 175, p. 16113, 72d Cong., 1st Sess.):
* * * Suppose they issue $900,000,000 of
national bank notes under this provision.
It is for three years. At the end of three
years what will happen? You will find an in­
flation up to that.time, and at the end of
three years it has got to end, and they have
got to be called in, and the contraction of a
billion dollars, in round numbers, in the
currency in this country in 1935 will be upon

us, * * *.
A member of the House, speaking against the Bill, and
referring to the circulation privilege afforded to cer­
tain bonds by its provisions, said (Congressional Rec­
ord, Yol. 75, No* 175, p. 16111, 72d Cong., 1st Sess.):

* * * they would lose their circulation
privilege automatically in three years, and
thus all circulation would be retired * * *•
I find nothing in the legislative history which indicates
that it was the purpose of Congress in adding Section 29

to the Federal Home Loan Bank Act to provide for a per­
manent expansion of the currency Beyond the three-year
period.
Heading the provisions of Section 29 in an
effort to carry out the intent of Congress as disclosed
By the legislative history of the measure, it is my
opinion that the three-year period prescribed By Sec­
tion 29 means that the Bonds referred to in said section
lose the circulation privilege at the end of the threeyear period and the notes issued upon the deposit of
such Bonds must Be retired in an appropriate manner.
Respectfully,

(Signed) WILLIAM D. MITCHELL,
Attorney General.

The Honorable
The Secretary of the Treasury H

r

*r

TREASURY DEPARTMENT
OFFICE OF COMPTROLLER OF THE CURRENCY
Address reply to
COMPTROLLER OF THE CURRENCY

WASHINGTON

Section 29 of the Federal Home Loan Bank Act, approved July 22, 1932, provides
as follows:
"That notwithstanding any provisions of law prohibiting bonds of the United
States from bearing the circulation privilege, for a period of three years
from the date of enactment of this Act all outstanding bonds of the United
States heretofore issued or issued during such period, bearing interest at
a rate not exceeding 3-3/8 per centum per annum, shall be receivable by the
Treasurer of the United States as security for the issuance of circulating
notes to national banking associations, and upon the deposit with the Treas­
urer of the United States by a national banking association of any such bonds,
such association shall be entitled to receive circulating notes in the same
manner and to the same extent and subject to the same conditions and limita­
tions now provided by law in the case of 2 per centum gold bonds of the United
States bearing the circulation privilege; except that the limitation contained
in section 9 of the Act of July 12, 1882, as amended, with respect to the
amount of lawful money which may be deposited with the Treasurer of the United
States by national banking associations for the purpose of withdrawing bonds
held as security for their circulating notes, shall not apply to the bonds of
the United States to which the circulation privilege is extended by this
section and which are held as security for such notes. Nothing contained in
this section shall be construed to modify, amend, or repeal any law relating
to bonds of the United States which now bear the circulation privilege.
As used in this section, the word "bonds" shall not include notes,
certificates, or bills issued by the United States.
There are hereby authorized to be appropriated such sums as may be
necessary to carry out the provisions of this section."
You are informed that if the bank is not already a bank of issue but intends
to avail itself of the circulation privilege, it will be necessary that it order a
plate bearing the signature of the president and the cashier, to be used in printing
its currency. A form upon which to furnish the required signatures is enclosed.
Three autograph signatures of each officer whose name is to appear upon the bank’s
circulating notes must be furnished and each signature must in its entirety be con­
fined to the spaces provided in the form by impressed lines.
It will require from fifteen to thirty days to prepare the plate and print
the notes.
If a bank does not have a plate an order for currency can not be acted
upon until a draft in payment of the cost of the plate is received.
The cost of

Si

0
-

2

-

the original plate is $46.00 andyour draft for that sum should accompany your appli­
cation.
If a hank already has a
plate and wishes to increase its circulation, an orderfor currency will he given upon receipt of additional bonds or receipt of advice of the
amount of new bonds to he deposited.
No Special blanks upon which to announce an in
tention to deposit bonds are either required or furnished by this office. A letter
addressed to the Comptroller explaining the plans will be all that is necessary.
National bank notes are printed in denominations of $5, $10, $80, $50, and
$100, but since all surface printing is done with the same plate only one plate is
necessary for each bank. Bonds to be deposited as security for circulation should
be assigned to the Treasurer of the United States in trust for the bank and sent to
the Comptroller of the Currency.
Only the following bonds, all obligations of the
United States,are now eligible as security for national bank note circulation:
2% Consols 1930
2% Panama Canal Loan of 1916-36
2%
"
"
"
" 1918-38
Postal Savings Bonds
3% Panama Canal Loan of 1961
3% Conversion Bonds of 1946-47

3% Treasury Bonds of
3 1/8%
"
l "
3 3/8%
"
* M
3 3/8%
"
'i "
3 3/8%
"
" "

1951-55
1946-49
1943-47
1940-43
1941-43

Should additionalbonds bearing interest at 3-3/8% or less per annum be issued by the
United States prior to July 22, 1935, they in addition to those listed above will
also be eligible as security for circulating notes. Until July 22, 1935, any bonds,
including 2% Panamas and the 2% Consols, deposited as security for circulation may
be withdrawn if a bank desires and in their place any bonds eligible as security at
the moment of withdrawal may be substituted.
Registered bonds of the descriptions eligible as security for circulation
may be forwarded to the Comptroller of the Currency, properly assigned to the
Treasurer of the United States in trust for the depositing bank.
Coupon bonds
should be forwarded with proper instructions to the Division of Loans and Currency
of the Treasury Department, where they will be reissued in registered form, pay­
able to the Treasurer of the United States in trust for the depositing bank.
After having been reissued in registered form the bonds will be delivered by the
Division of Loans and Currency to the Comptroller of the Currency, who will then
deposit them with the Treasurer of the United States.
The Comptroller is frequently asked as to his policy with reference to re­
quiring additional security should tho market price of bonds deposited to secure
circulation decline below par.
It has never been the policy of the Comptroller’s
office to require additional security in such cases and no change is anticipated.
It will be recognized, however, that no binding statement as to future policy is
possible.
In any emergency that might arise, consideration would, no doubt, be
given to the additional security afforded by the 5% redemption funds maintained
by issuing banks and to the further fact that to reimburse it for amounts expend­
ed in paying their circulating notes the United States under Section 5230 U.S.R.S.
has a paramount lien upon the assets of the issuing banks.

- 3 -

An "original issue" is an issue of currency against a new deposit of bonds
Such an issue when shipped is sent by mail direct to the issuing bank with postage
registration and insurance prepaid.
A bill for the charges is forwarded at the end
of each month.
In those cases where the amount of bonds deposited is so large that
all the currency to be issued against them cannot be promptly printed and shipped at
one time, various shipments are made as the currency is printed. Each shipment is
an original issue and a separate bill for each is forwarded at the end of the month.
New notes for replacement of unfit notes redeemed and destroyed as well as
notes fit for circulation redeemed and not destroyed, are also forwarded by re­
gistered mail direct to the issuing banks with postage, registration and insurance
prepaid.
The amount expended for postage, registration and insurance on such notes
is not billed to the banks at the end of each month but is included in the annual
assessments for expenses incident to redemptions made by the Treasurer of the
United States upon all national banks of issue at the close of each fiscal year.
No new currency, constituting either an original issue or that replacing notes
destroyed, and no redeemed notes fit for circulation, will be delivered to agents
of issuing banks.
The law requires that a bank shall verify annually the bonds held by the
Treasurer of the United States to secure payments of its notes but the bank may
appoint an agent to verify them.
The law requires also that the bank designate
an agent to witness the destruction of its unfit notes.
Circulation issued against all United States bonds, including those bear­
ing a rate of interest higher than 2% will be subject to a semi-annual tax of 1/4
of 1 per cent. The Attorney General has alo rendered an opinion, the substance
of which is contained in the following paragraph!
"Reading the provisions of Section 29 in an effort to carry out the in­
tent of Congress as disclosed by the legislative history of the measure,
it is my opinion that the three-year period prescribed by Section 29
means that the bonds referred to in said section lose the circulation
privilege at the end of the three-year period and the notes issued upon
the deposit of such bonds must be retired in an appropriate manner,"
All national banks issuing circulation are required to keep a complete
and generally uniform record of their transactions with this bureau and of their
transactions with the office of the Treasurer of the United States relating to
. ®,ir circulatm g notes and to their 5% redemption funds. Accordingly there is
enclosed a copy of a form showing in detail the several items that enter into13
these accounts.
You are requested to install these forms as a part of your
records immediately after you receive new notes from this bureau.
The form
it enables t h ™ f 6/ abl® f0r banks taklnS out circulation for the first time as
(
?
d ®Very transaction from the date of receipt of an original
issue of circulating notes. The difficulty of tracing notes reported as missine
s greatly increased when such a record is not kept by the bank. This office has
no supply of this form for distribution.

7

- 4 Immediately after new notes have been received from this bureau, the con­
tents of the package should be counted and any discrepancy in the amount, or hiatus
in the bank numbers of the notes, should be reported at once to this office. The
bank numbers are printed on the lower left-hand and upper right-hand corners of the
notes and it is essential that a complete record be kept of these numbers.

c

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS
Tuesday, August 16, 1932.

STATEMENT BY ACTING SECRETARY BALL ANT INS

Acting Secretary of the Treasury Ballantine announced to-day
that the tenders for $75,000,000, or thereabouts, of 91-day Treasury
Bills, dated August 17, 1932, and maturing November 16, 1932, which
were offered on August 11th, were opened at the Federal Reserve Banks
on August 15th.
The total amount applied for was $333,747,000.

The highest

bid made was 99.831, equivalent to an interest rate of about 0.47
per cent on an annual basis.

The lowest bid accepted was 99,869,

equivalent to an interest rate of about 0.52 per cent on an annual
basis,

.

The total amount of bids accepted was $75,016,000.

average price of Treasury Bills to be issued is 99.878,

The

average rate on a bank discount basis is about 0.48 per cent. .

The

EOR RELEASE, MORNING PAPERS,
Thursday, August 18, 1932.

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY OE THE TREASURY BALL-MINE

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills -to the amount of $60,000,000, or thereabouts*
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o fclock p. m . , Eastern Standard time,
on Monday, Auigust 22, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated August 24, 1932, and will mature
on November 23, 1932, and on the maturity date the face amount will be
payable without interest.

They will be issued in bearer form only, and

in amounts or denominations of $1,000, $10,000, $100,000, $500,000, and
$1,000,000 (maturity value).
It is urged that tenders be made oil the printed forms and for­
warded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100. with not more than three decimal places,
e* g , , 99.125.

Fractions muslt not be used.

Tenders will be accepted without cash deposit from incorporated
banks and trust companies and from responsible and recognized dealers
in investment securities.

Tenders from others must be accompanied by

a deposit of 10 per cent of the face amount of Treasury bills applied

- 2for, unless the tenders are accompanied by ah express guaranty of
payment by an incorporated bank or trust company.
Immediately aftdr the closing hour for receipt of tenders on
August 22, 1952, all tenders received at the Federal Reserve Banks
or branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
tliorcr.fter,probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

P ay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on August 24, 1932.
The Treasury bills will be exempt, as to principal and interest,
arid any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtcined~£rom

any Federal Reserve Bank or „branch thereof.

TREASURY DEPARTMENT

FOR RELEASE AT 10:15 A, M. ,
FRIDAY, AUGUST 19, 1932,

ADDRESS TO BE DELIVERED BY HON. OGDEN L. MILLS,
SECRETARY OF THE TREASURY,.
AT THE COMMENCEMENT EXERCISES OF BRYANT-STRATTON COLLEGE
OF BUSINESS ADMINISTRATION,
AT THE ALBEE THEATRE, PROVIDENCE,. R.. I.,
FRIDAY MORNING-, AUGUST 19, 1932.
--------------- 0 ---------------

THE FINANCIAL CRISIS AND THE RECONSTRUCTION FINANCE CORPORATION.

I appreciate the honor you have conferred upon me to-day, and am
gratified at the opportunity of participating in the Commencement exercises
of this College, which for almost a quarter of a century has fitted men
to make their contribution to the solution of our economic problems*

It

is of some of these problems that I wish to speak to-day.
By virtue of an Act of Congress, based upon the recommendations
of the President, there came into being on January 22, 1932, the
Reconstruction Finance Corporation, one of the most powerful and wellconceived instrumentalities ever devised to meet the greatest financial
crisis that ever confronted this Nation,

This institution, directly and

indirectly, has been of greater benefit to more individuals in the United
States than any institution I can name.
In order to understand the nature of the organization, the charac­
ter of its service and the magnitude of its task, it is necessary to review
briefly the series of events that led to its creation, and the background
against which it has operated.
well-defined phases*

This depression divides itself into two rather

With the first we are„not concerned this morning.

During

the second, financial and credit elements thrust themselves violently into the

-

2

-

picture and have until very recently wholly dominated it.
Curiously enough, just as in the case of the Great War, the initial
incident occurred in Austria*

It gave rise to a series of dramatic events

which followed each other with extraordinary rapidity* and which eventual-'
ly circled the globe*

A critical situation developed in that- country

following the disclosure in May, 1931* of the insolvent condition of its
largest bank.

It soon spread to Germany*

Already serious and increasing

apprehension regarding the economic and budgetary situation in Germany had
led to a steady outward movement of funds*

What, up to that time, had

been a gradual seepage became so severe a drain upon that country's bank­
ing resources as to threaten the entire German banking and credit struct
ture.

Within a comparatively short period the gold and the foreign ex-

change of the Reichsbank had been reduced by $250,000,000* bringing the
reserves close to the minimum required by lawi
Recognizing the imminence of a financial crash, which would involve
all of Europe* the President attempted to avert this disaster by a one-year
suspension of all inter-governmental debt payments.
as if this remedial action would save the situation*

Por d time it appeared
But the forces of

destruction were too powerful, and eventually the German credit machinery
was, for all practical purposes, taken over by the Government.

In the mean­

while, the evidence became clearer and clearer that there was widespread
apprehension and fear as to the strength of Great Britain's financial situa­
tion*

Here, as in the case of Germany, fear took the form of a rapid with­

drawal of foreign balances held in London.

In spite of liberal assistance

in the way of outside credits, the drain continued*

Prom the middle of July

to September 19th, almost a billion dollars of funds were withdrawn from the

7¿

rf 3 *London Markets

Finally, Great Britain, no longer able to withstand the

strain., suspended the operation of the gold standard, and the world stood
aghast.#

Parenthetically,

I may say that by the end of 1931, in eighteen

other countries the gold standard had become substantially inoperative*
The destructive wave of fear which had swept Europe next reached our
own shores#

In our Market, as in the London Market, there were immense

balances held for foreign accounts#
rapidly increasing pace#

These began.to be withdrawn at a

Between September 21st and the end of

October,

we lost, about $750,000,000 of gold, representing about 15 per cent of
our monetary gold#

It was openly stated in the foreign press that we

would soon be driven to following the same course as England#

Many of

our own citizens, actuated by blind fear, began hoarding currency#

By

November 7th nearly half a billion dollars of currency had gone into
hiding#

Foreign withdrawals and domestic hoardihg threw an unparalleled

strain on our banking and credit structure#
There began at that time a forced liquidation and contraction of credit
which proceeded for some months with growing inteiisity and with a most
dreadful effect on all values, business, employment and coranodity prices,—
a forced contraction and liquidation which was all the more desperately
damaging following, as it did, the more gradual liquidation and contraction
of credit that had been taking place since the autumn of 1929#
Though it is not directly relevant to this part of our story, the fact
is that before these forces had fairly spent themselves, foreign balances,
which at one time amounted to as much as three billion dollars, had been

- 4 reduced to approximately $600,000,000.

Though at no time did our monetary

gold stock fall below $3,900,000,000, we had lost over a billion dollars in
gold which I am glad to say is now steadily returning and the domestic
hoarding *f currency had reached the peak of approximately a billion and a
half dollars.
We have reason to feel proud that we have met in full every demand made
on us from abroad, and that our financial strength has been adequate to
withstand the shocks coming both from within and without our borders.
But last fall, under the double impact \7hich I have described, many
banks, unable t* meet unusual cash withdrawals, were forced to close.
Bank failures reached the very high figure of 305 in September, and the
unprecedented total of 522 in October.
To stem the tide of failures, the banks of the country, under the
leadership of the President, created the National Credit Corporation, a
voluntary organization empowered to make loans to banks on security, much
®f which at that time could not be used to obtain funds elsewhere.

While

this organization performed a splendid service, and succeeded in arresting
bank suspensions temporarily, a new wave of bank failures set in in December,,
and in that month and in January no less than 358 and 342 banks closed.
In the meanwhile, as credit contraction and forced liquidation continued,
and business everywhere slackened, the area of the new depression grew in
ever-widening circles.

Many of our railroads, whose underlying securities

had been looked upon as prime investments for all our great fiduciary insti­
tutions, ceased to earn even their full fixed charges.

As the price of their

bonds depreciated from this cause and from the forced sales which were con-

- 5stantly taking place, the secondary reserves of many institutions were
threatened.

Loans were called, new credit became unavailable, and mort­

gages were not renewed.

Mortgagors in urban and rural communities found

it increasingly difficult to me. t their obligations as industrial activity
became Stagnant, unemployment grew, and agricultural prices fell, and the
savings of many communities were wiped out or frozen by bank suspensions.
4

It i s n ‘t too much to say that every home in the land, in greater or less
degree, felt the tremor of these shocks.
There were, of course, many fprces at work.

But the outstanding

fact is that the credit structure of the country, upon which these
hammer blows had fallen, was the center of the disturbance.
It was to underpin our credit structure and to save many millions of
our people from disaster that the Reconstruction Finance Corporation was
created, with total resources of $2,000,000,000, including capital of
$500,000,000 , and authority to make loans on proper security to building
and loan /associations, insurance companies, mortgage loan companies,
credit unions, agricultural credit corporations, live stock credit corporar
tions, Joint Stock Land Banks, Federal Land Banks, Federal Intermediate
Credit Banks, railroads, and banks and trust companies.

Of the funds avail­

able to the Corporation, it was authorized to use not more than $200,000,000
to aid in the reorganization or liquidation of closed banks, including the
payment of dividends to depositors; and it was required to allocate a maxi­
mum of $200,000,000 to the Secretary of Agriculture for loans to farmers in
connection with crop production.
The first important fact to be noted is that practically all of the
institutions authorized to borrow from the Corporation, are either subject to

* ft;-

régulation or supervision by Government.

In the second place, all may

fairly he said to he closely related to the public interest.

In the third

place, they are distinctly service institutions, devoted to the essential
financial needs of practically our entire population.

And, finally, the

group is sufficiently inclusive to reach nearly all of our people.
We all know the place that building and loan associations and insurance
companies occupy in our national economy.

There are approximately 11,500

building and loan associations in the country, having something like
12.000. 000 members, and life insurance policy holders alone number nearly
70.000. 000; our insurance companies are the largest lenders on farm mortgages.
The activities of these institutions, therefore, touch directly a very large
percentage of our people.

The maintenance of their integrity and adequate

functioning is of supreme importance to the Nation.

Mortgage loan companies

extend loans on real estate and help to finance real estate transactions in
other ways, thus reaching millions of home dwellers throughout the land.

The

Federal Land Banks and the Joint Stock Land Banks, as well as the insurance
companies, are the mediums through which our agricultural population obtains
its long-term credits, while agricultural credit corporations, live stock
credit corporations and Federal Intermediate Credit Banks are of particular
importance to-day in meeting the current financial requirements of the farmer.
Again, consider the case of the railroads.

Some gentlemen apparently

visualize the railroads of the United States as the private property of a
limited number.of stockholders.
are widely distributed —

Leaving aside the fact that their stocks

and that I have the greatest sympathy for the stock­

holder, considering the pp|ces at which equities are selling to-day —
are the railroads?

what

They are the backbone of the transportation system of the

- 7country.

They are among the largest employers of labor.

They are one of the

largest purchasers of raw and fabricated materials of all kinds.

Their

underlying securities, to the extent of many billions of dollars, are held
by the great fiduciary institutions such as insurance companies and savings
banks, which means that indirectly there is invested in them a large part of
the savings of the .American people.

In the face of these facts, can anyone

question the national necessity of maintaining the credit of the railroads,
not only in the interest of our commerce and industry, but for the sake of
the thousands of men whom they employ and the millions of individuals whose
savings are deposited in savings banks or invested in that most sacred form
of family investment, the life insurance policy? When a railroad goes into
receivership, men are discharged, capital improvements are suspended,
purchases decline, the value of its underlying securities is severely
depreciated, and service to the public is curtailed.

These are the funda­

mental reasons why railroads were included in reconstruction legislation
intended to strengthen and protect our national economy.
Finally, we come to banks.

In this connection, I trust you will bear with

me while I make a few elementary observations which seem necessary owing to the
fact that some people seem unaware that the saving of banks frequently means
the saving of communities.

Banks, in the first instance, are institutions

which receive for safe-keeping the funds of others, and in turn employ those
funds in satisfying the credit needs of the community.

The farmer goes to the

bank to obtain the funds necessary to plant, harvest and carry his crop until,
through the sale of his products, he can reimburse the bank and satisfy his
own requirements..

The merchant borrows from the bank to finance the goods

-

8

-

which he carries on his shelves» the manufacturer, to finance himself until
raw materials can "become finished products; the home "builder obtains through
mortgage the funds which enable him to erect his home? and the depositor has
in the "bank an institution in which he can deposit his savings, on which he
can receive a moderate return, and which are withdrawable to meet his current
and emergency needs.
I have caused to be examined the records of three typical banks in cities
of less than 50,000,^and it is the banks in cities of less than 50,000 that
constitute the overwhelmingly large majority of borrowers from the Reconstruc­
tion Finance Corporation.

I find that in one there were 200 industrial loans,

aggregating $1,350,000? in another, 83 agricultural loans, aggregating $80,000;
in another, 135 real estate loans, aggregating $493,000, and 1,527 loans to
other borrowers, covering presumably commercial and collateral loans, aggre­
gating $2,368,000.
$5,000,000.

The deposits in these banks a-veraged approximately

There you have the picture, farmers, manufacturers, merchants,

home owners, as borrowers, and as depositors these and many others all with
a vital stake in the banks.
When a bank such as these closes, approaching it, first, from the stand­
point of the depositor, it means that the wage earner may be unable to meet his
bills or even to provide for such emergencies as sickness; that the housewife
cannot secure cash for daily necessities, or the householder for taxes; that
instalment payments fall far behind; that the merchant cannot collect, and
/

consequently cannot meet his obligations to the middle-man and the manufacturer;
and that these, in turn, who may be located in entirely different communities,
find their operations hampered.

It means that the farmer, if he be a borrower,

has no place to turn to finance his crop, and if he he a depositor, may find
himself deprived of the funds set aside to pay interest or taxes.

It means

that the manufacturer is unable to buy and carry his necessary materials un­
less he can obtain credit in some other community.
be a depositor, that he cannot meet his payroll.

It may well mean, if he
It means, in short, that

unless help comes from outside, the normal economic activities of that com­
munity may well be paralyzed and terrible hardships suffered by the individuals
that compose it.
The services which one or two banks perform for a given community are
typical of the services which our entire banking system performs for the
Nation.

If that credit system ceases to function adequately, industry,

business and commerce stagnate, unemployment increases, suffering comes
to millions of people, and many of the effects which I have described in the
small community take place on a larger and national scale, though perhaps not
in a form so clearly defined and readily distinguishable.
There are 20,000 banks in the United States, and no less than 40,000,000
depositors.

Leaving aside the functioning of our entire economic machine,

which would be dead and inert unless credit flowed through its cylinders, the
40,000,000 depositors in the United States have a direct and vital interest
in the history and activities of the Reconstruction Finance Corporation.
With the signing of the Act on January 22, the directors were confronted
with the gigantic task of quickly organizing the central office and setting up
various.agencies in the field adequate to take care of the needs of the entire
ceuntry.

Competent personnel had to be selected, policies formulated, forms

prepared, procedure for making loans established, and all of the multitudinous
details involved in launching this immense undertaking worked out.
might mean calamity.

Delay

By Herculean efforts, the Corporation opened for

-

■business on February 2nd.

10

~

Actual lending operations commenced almost

.Immediately, and the work of the Corporation went forward with un­
paralleled speed.
I desire to take this occasion to pay tribute to the members of the
Board, of which I am an ex officio and of necessity but a part-time member,
and to the personnel of the Corporation for their unfailing willingness to
work night and day in order promptly to set in motion the task of reconstruc­
tion assigned to them, and to carry forward with sureness, precision and
judgment their manifold duties.
Some idea of the scope of the Corporation’s operations may be gained
from the figures covering the first six months of its business.

From

February 2nd to July 31st, inclusive, the Corporation, under the original
Act, authorized 6,345 loans to 4,947 institutions, aggregating $1,219,000,000.
Of this amount, $736,000,000 was authorized to 4,190 banks and trust com­
panies (including $30,000,000 to aid in the reorganization or liquidation of
346 closed banks), $68,000,000 to 541 building and loan associations,
$67,000,000 to 73 insurance companies, $81,000,000 to 60 mortgage loan
companies, $767,000 to 10 agricultural credit corporations, $8,000,000 to 14
live stock credit corporations, nearly a million and a half to five v>oint
Stock Land Banks, $26,000,000 to eight Federal Land Banks, $405,000 to three
credit unions, and $230,000,000 to 43 railroads and railroad receivers,

Of

the $1,219,000,000 authorized, $976,000,000 had actually been disbursed on
July 30, of which $110,000,000 had been repaid,

In addition to the above,

500,000 individual loans to farmers, aggregating $65,000,000, have been
made by the Secretary of Agriculture out of the $97,000,000 thus far
allocated to him,
It has been said that the Reconstruction Finance Corporation benefits only

- l i ­
the great city hank and other large institutions, ' The contrary is true.

The

great majority of "banks which have "borrowed from the Corporation are located in
sma}.! towns.

Specifically, on July 30, seventy per cent of the banks to which

loans had been authorized were in towns of less than 5,000 population; eighty-six
per cent were in towns of less than 25,000, and ninety per cent were in towns
of less than 50,000.

Looking at it from another angle, we find that loans

have been authorized to more than twenty per cent of all the banks in the
country, these banks having about 15,000,000 of the 40 million bank depositors
in the United States.

These have been directly affected by the Corporation^

loans to banks, while the other 25,000,000 have benefited indirectly by the
Corporations activities in preventing the fire from spreading.'
But if we limit our survey solely to what the Corporation has accomplished
in the way of prevention and saving, we only get half of the picture.

Its very

existence and the cumulative effect of its activities, embracing a field as wide
as the country itself, have tended more and more to dispel the atmosphere ox fear
and panic, and to restore confidence in our financial and fiduciary institutions.
The shrinkage in bank deposits and bank credits which had been proceeding at a dis­
astrous rate for months has been partially checked, and since the end of March the
volume of bank deposits has been maintained.
there has been'an actual increase in deposits.

In some Federal Reserve Districts
So that when a short time ago it

became clearly evident that the outward movement of funds to foreign countries
had of necessity come to an end, that not only was there nothing more to fear
from this quarter, but that in all human probability a reverse movement had set in*
it is no wonder that the blind fear which has characterized so many of our actions
during the last eight or nine months lifted.

From June 15th to

the return flo?7 of gold has amounted to ov^r $100,000,000'#

middle,

august

Men may not look to

the immediate economic future with complete assurance, but to-day they are at

12
least facing it unafraid.

-

Our ship has come through a financial hurricane

with much suffering, some hrol^n spars, torn sails and wreckage on deck, hut
the hull is sound, and neither crew nor passengers doubt that we shall come
safely to port.
The time would seem to be opportune, then, for carrying out the new
activities entrusted to the Reconstruction Finance Corporation by recent
legislation, which, outside of the $300,000,000 made available to States for
relief purposes, is intended primarily to stimulate employment and industrial
activity.
of

Under the provisions of the Emergency Relief and Construction Act

1932 » the

maximum lending capacity of the Corporation is increased by

$1,800,000,000, making $3,800,000,000 in all.

Of this, $300,000,000 is to be

made available to States and territories for relief purposes under the condi­
tions prescribed in the Act.

In addition, the Corporation may (1) make loans

to, or contracts with States or other political bodies or agencies thereof to
aid in financing authorized projects which are self—liquidating in character;
(2) make loans to corporations formed wholly for the purpose of providing
housing for families of low income, or for reconstruction of slum areas, which
are regulated by State or municipal law as to rents, charges, capital
structure, rate of return, and areas and methods of operation, to aid in
I
financing housing projects which are self-liquidating in character; ( 3 )
make loans to private corporations for the construction, replacement or
improvement of bridges, tunnels, docks, viaducts, water works, canals and
markets devoted to public uso which are self-liquidating; (H) make loans to
private limited dividend corporations to aid in financing projects for the
protection and development of forests and other renewable natural resources
which are self—liquidating; and (5 ) make loans to aid in financing the con­
struction of publicly owned bridges for railroad, railway and highway uses,

«

- 13 -

tile construction cost of which will be returned in part by means of tolls,
fees, rents or other charges, and the remainder by means of taxes imposed by
State law enacted before the date of enactment of the Emergency Relief and
Construction legislation.
The Corporation is also authorized to make loans for the purpose of
financing sales of surpluses of agricultural products in the markets of
foreign countries which cannot be financed in the normal course of commerce;
to make loans to bona fide institutions having resources adequate for their
undertakings for the purpose of enabling them to finance the carrying and
orderly marketing of agricultural commodities and livestock produced in the
United States; and to create in any Federal Land Bank district a regional
agricultural credit corporation.

Such credit corporations may make loans

or advances to farmers and stockmen for agricultural or livestock purposes.
Thus, the Corporation is to enter into a new field of constructive
assistance which should help in tiding us over the latter phases of the
economic depression proper, and perhaps prove immediately effective in
bringing about a more prompt recovery.

But this is another story, the first

chapter of which is only beginning to be written.
The story which I have attempted to relate to you this morning is that
of the Reconstruction Finance Corpora.tion as an agency to meet and overcome
the perils incident to a financial panic of the first magnitude—

the

greatest responsibility ever imposed upon a peace-time organization in the
history of the Nation.

It is a dramatic story, it is an intensely human

story, if time permitted to relate individual incidents.

It is the tale of

a great undertaking, soundly conceived in an emergency, and well-conducted,
which has fully met the expectations of those responsible for its launching
and which has been of immeasurable benefit to our people in a great national
crisis

FOR RELEASE, MORNING PAPERS
Tuesday, August 23, 1932.

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY BA1LANTINE

Acting Secretary of the Treasury Ballantine announced
today that the tenders for $60,000,000, or thereabouts, of
91-day Treasury Bills, dated August 24, 1932, and maturing
November 23, 1932, which were offered on August 18th, were
opened at the Federal Reserve Banks on August 22nd.
The total amount applied for was $347,816,000.

The

highest bid made was 99.897, equivalent to an interest rate
of about 0.41 per cent on an annual basis.

The lowest bid

accepted was .99.894, equivalent to an interest rate of about
0,42 per cent on an annual basis.
accepted was $62,350,000.
Bills to be issued is 99.894.

The total amount of bids

The average price of Treasury
The average rate on a bank

discount basis is about 0,42 per cent.

TREASURY DEPARTMENT

FOR RELEASE, MOILING PAPERS,
Thursday, August 25, 1932,

STATEMENT BY ACTING SECRETARY OF THE TREASURY R/T.T.ANTTNFl

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $100,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o’clock p. m . , Eastern Standard time,
on Monday, August 29, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated August 31, 1932, and will mature
on November 30., 1932, and on the maturity date the face amount will be
payable without interest.

They will be issued in bearer form only, end

in amounts or denominations of $1,000, $10,000, $100,000, $500,000, and
$1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and for­
warded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e» g . , 99.125.

Fractions must not be used..

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and.recognized
dealers in investment securities..

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-

2-

applied for, unless 'the lenders are accompanied by an expiess guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
August 29, 1932, all tenders received at the Federal Reserve Banks
or branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders cr
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final*

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Bonks in cash or other immediately available funds
on August 31, 1932.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No, 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bonk or branch thereof.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE,
THURSDAY, AUGUST 25, 1932.

Statement by the Secretary of the Treasury made on
Behalf of the Conference of the Banking and Industrial
Chairmen, held in the Treasury Department on Thursday,
August 25, 1932.

A meeting was held today in the Treasury Department, at­
tended Toy the following gentlemen, and presided over hy Mr. Henry
M. Robinson:

)

Secretary Mills,
Secretary Chapin,
Secretary Doak,
Governor Meyer,
Governor Harrison, of the New York
Federal Reserve Bank,
Mr. Atlee Pomerene, Chairman, R. F. C.,
Mr. C. H. Miller, President, R. F. C.,
Mr. Franklin Fort, Chairman Federal Home
Loan Bank Board,
Mr. Carl Williams, of the Federal Farm Board,
Mr. Owen D. Young,
Mr. L. B. Williams, Cleveland,
Mr. G. H. Houston, Philadelphia,
Mr. Sewell Avery, Chicago,
Mr. A. W. Robertson, Pittsburgh,
Mr. J. E. Reynolds, New York,
Mr. C. P. Dennett, Boston,
Mr. E. C. Graham, Washington,
Mr. G. S. Harris, Atlanta,
Mr. R. E. Maddox, Atlanta,
Mr. J. W. Harris, St. Louis,
Mr. G. D. Dayton, Minneapolis,
Mr. J, F, Porter, Kansas City,
Mr. Frank Kell, Dallas,
' Mr. K. R. Kingsbury, San Francisco,
Mr. Walter Teagle, New York,
Mr. Daniel Willard, Baltimore,
Mr. T. N. Perkins, Boston.

At that meeting a full report was submitted by each of the
twelve Chairmen of the Banking and Industrial Committees of the sev­
eral Federal Reserve districts as to the work of their Committees,

the problems dealt with and the general conditions existing in their
districts.
In addition to these reports statements were made by the
President and Chairman of the Reconstruction Finance Corporation,
the Governor of the Federal Reserve Board, the Governor of the Fed­
eral Reserve Bank of New York, Mr. Willard, Mr. Teagle and Mr.
Robertson.
For some weeks past informal meetings have been held,
attended by members of the Banking and Industrial Committees and
Government officials, at which the possibility of setting up a
Central Committee of the Banking and Industrial Committees was dis­
cussed, such a committee to act as a central point of contact in
those matters regarding cooperation between various public and semi­
public agencies and the several Banking and Industrial Committees,
and to be of assistance to voluntary committees formed for the purpose
of carrying out^definite undertakings.

Those attending these informal

meetings had also considered some definite proposals looking to the
stimulation of business activity and of employment»

A full report

was submitted to the Conference today covering the discussions of and
recommendations made by the informal group.
At the conclusion of the session it was the sense of those
present that they would recommend to the Conference that is to meet
tomorrow the setting up of a Central Committee of the Banking and
Industrial Committees to meet the purposes above described and would
submit as well a/.definite program of activities that might be under­
taken either through the Banking and Industrial Committees proper, or
through sub-committees to be appointed with their cooperation.

TREASURY DEPARTMENT

FOR RELEASE UPON DELIVERY

Statement “by Secretary Mills before the Presidents Conference of
Banking and Industrial Committees, Friday, August 26, 1933»

Some four months ago at a time when the Reconstruction Finance
Corporation was already actively engaged in ilie protection and strengthen­
ing of our tanking structure and the Federal Reserve System, with its vast
resources made fully available by the Glass-Steagall Bill, was, through a
vigorous policy, stemming the tide of deflation and credit contraction,
but when dark clouds still hung heavily over our financial horizon, there
came into being in each of the twelve Federal Reserve districts a banking
and industrial committee composed, generally speaking, of six leading
bankers and six leading industrialists and business men.

The first one

of these was created in the New York District under the leadership of Mr#
Owen Young.

This Committee served as a model for the committees sub­

sequently organized in the other districts.

In the words of Mr. Young,

the objective of these committees was "to discover ways and means of
putting excess banking credit to work affirmatively to stimulate employ­
ment and business recovery,'1

Mr. Young is here to tell you in person

how the New York Committee has been organized, how it has tackled the prob­
lems in the Second Federal Reserve District, and what it has been able to
accomplish.
The chairmen of the committees in the other districts are also
present, but for the purpose of discussion this morning the story of the
New York Committee may be taken as typical of the work and purposes of
all of these voluntary and cooperative organizations.

- 2 -

Since the creation of the Banking and Industrial Committees the
powers of the Reconstruction Finance Corporation have "been vastly increased
so that whereas in the first instance its primary duty was to support our
general credit structure by loans to certain specified institutions, its
new functions so broadened the scope of its activities as to enable the
use of its credit facilities to stimulate industrial activity and to pro­
mote employment*

Both the Chairman, Senator Pomerene, and the President,

Mr. Charles Miller, of the Reconstruction Finance Corporation, are here to
explain the scope of the task assigned to the Corporation and to make
clear to you all in what manner it may be helpful to solve some of the
problems of your communities and States.
Since April the authority of the Federal Reserve Banks has been
extended so as to include certain emergency powers intended to provide more
adequately for credit needs.

Governor Meyer will explain to us the

character of the legislation extending the powers of the Federal Reserve'
System, enacted at the last Session of the Congress, and will, I b^pe, de­
scribe in a general way the great part the System has played and is play­
ing today in helping us weather our financial difficulties.
The Congress at the last Session enacted a law providing for the
creation of a number of so-called Home Loan Banks, intended to afford to
the great agencies that make loans in urban communities, principally for
home construction, central reservoirs of credit.

Mr. Franklin Fort,

Chairman of the Home Loan Bank Board, which is now engaged in the work of
organization, is prepared to describe the contemplated organization and
functions of these new banking institutions.
We have then available for meeting some of the extraordinary
problems arising from this depression two new Government agencies,—one
of them with tremendous resources and authorized to carry on its

- 3 -

operations on a very "broad, front, our great central "banking system with
new emergency powers, and in each of the twelve Federal reserve districts
voluntary organizations of "bankers and business men ready to give their
time and "best efforts to the problems of their communities and to the
nation-wide problem of stimulating the revival of industrial activity and
increased employment#
That is the picture which, after the adjournment of Congress,
presented itself to those of us who have lived with all phases of the
manifold difficulties with which we have wrestled these many months.
In a sense the picture was complete.

In so far as providing the neces­

sary instrumentalities all that was essential seemed to have been made
available.

Yet one element appeared to be lacking.

Though the Recon­

struction Finance Corporation has done a magnificent job in setting up
country—wide agencies, and though ovr Federal Reserve Banks are in the
several Federal reserve districts the central points through which credit
policies can be initiated and coordinated, and though the Banking and In­
dustrial Committees in the several districts are the logical agencies
through which contact can be established for the more effective and wide­
spread use of available facilities, the element of coordination and of
adequate exchange of information on the entire front was lacking, and
this was particularly true of the Banking and Industrial Committees, which,
I think, it will be admitted, have not been developed hithereto up to the
maximum point of usefulness.
It seemed to some of us, a month or so ago that there was a truly
useful purpose to he served, - first hy promoting a more general understand­
ing throughout the country of -what agencies are actually available and the
character of service they are prepared to render, and xn the second place

■by creating a central point of contact which might serve as a means of
interchange of ideas, suggestions and experiences.
With that in view an informal conference was held attended hy
some of the members of the Banking and Industrial Committees, the Governor
of the Federal Reserve Board, the Governor of the Rew York Federal Reserve
Bank and the Secretary of the Treasury, at which the above-mentioned ob­
jectives were discussed.

It was the unanimous opinion of those present

that the purposes outlined were not only entirely desirable, but wholly
feasible, that the time was opportune for such an effort, and that, in
addition to bringing into being a central clearing organization, it might
be possible to develop a definite if in the first instance limited program
to stimulate employment and possibly to move forward the gradual resumption
of business activity for the consideration of the Banking and Industrial
Committees and the creation of certain subsidiary committees to carry out
on a purely voluntary basis these lines of activity.
As a result of those preliminary discussions a memorandum was
prepared which may be said to present the basis for the movement which has
been initiated and which has led to the calling of this general conference,
composed for the most part of the members of the Banking and Industrial
Committees of the twelve Federal reserve districts, together with repre­
sentative groups from all sections of the country who can render invaluable
assistance in strengthening the hand of existing organizations and in the
development of such programs as may be undertaken.

It will be of in­

terest to you, therefore, to have me summarize the preliminary memorandum
prepared under date of July 27, 1932:
“For nearly three years the economic curve has moved precipitously
downward; prices have fallen steadily; industrial activity has become more
and more restricted; bank deposits and credits have shown the greatest

- 5 -

shrinkage in our history.

We have sought through the creation of emer­

gency organizations to protect the key points in our economic structure.
We have succeeded in doing so.

But for over twenty-four months now we

have Been in full retreat all along the line.
"More recently, the economic curve has shown a tendency to
flatten out.

Commodity prices have steadied and shown a moderate advance

over the period of the last several weeks.

The shrinkage in "bank deposits

and hank credits which had heen proceeding at a rapid rate, has been par­
tially checked and in some districts there has heen an actual increase in
deposits,-

The hond market has shown a steady and consistent rise for a peri

od ‘of five weeks.

The stock market for a shorter period has shown a

tendency to move upward,

Perhaps most significant of all, large short­

term foreign balances, which were a subject of anxiety and constituted more
or less of a threat to confidence in our credit system have been reduced
from a high of three billion dollars to less than six hundred million
dollars, which is probably a su^)—normal average.

The- huge gold outflow

which we have witnessed since September, aggregating over one billion dollars,
has ceased, and it appears that from now on the gold movement will be de­
cidedly in our fawor.

A steady gold inflow, apart from its direct monetary

effects, will probably have a psychological effect reflected in a return of
currency now hoarded, especially by large hoarders.
ment seems to have had a profound effect.

The Lausanne Agree­

In spite of the necessity of

financing the Reconstruction Finance Corporation, the credit of the Federal
Government stands high, as witness the success of the last offering of
Government notes^

The powers of the Reconstruction Finance Corporation

have been extended so as to make it a more potent agency for usefulness,
and the authority of the Federal Reserve Banks has been extended so as to
permit'them to take a more active and direct part in stimulating the use
credit.

of

-

6

-

"All of these circumstances justify the conclusion that the
time has come to make a definite and concerted effort to use the present
low plateau upon which we now stand as a base for the beginning of an up­
ward movement that will make for increased employment and the betterment
of business*
"The most effective way to bring about this result would seem
to be to concentrate our efforts at those points which can be most ef­
fectively attacked.
"The agencies immediately available for use are the Reconstruc­
tion Finance Corporation, the Federal Reserve System, the Banking and In­
dustrial Committees formed in each Federal Reserve District under the
auspices of the Federal Reserve Banks of the respective Districts and the
Home Loan Banks.

It is essential that the efforts of these organizations

in their respective fields should be coordinated with a view to becoming
part of a general program, and that in addition our banking and industrial
organizations should be appealed to and so organized as to supplement the
efforts of the above-mentioned institutions, as well as to make more ef­
fective use of the facilities furnished them by these institutions.
"Such a program presupposes the creation of a small central
group charged with the preparation of the general program and the creation
of sub-groups responsible for the carrying out of specific tasks.

The

central group should be an informal and voluntary organization built around
the Reconstruction Finance Corporation and the Federal Reserve System, for
the general purpose of assisting both of these great organizations in mak­
ing their work more effective.
"The central committee should proceed at once to set up working
sub-committees to deal with the various phases of programs agreed upon.

-

7

-

The most practical way to do this is to select one or two men for each
sul^-committee and ask them to organize their own sub-committee and staff
in the field assigned to them for action*1'
The memorandum then went on to outline a tentative program of
possible activities which has since in modified form been considered and
approved at the meeting of the Banking and Industrial chairmen held yesterday-)
and which it is hoped can be fully discussed before the close of this
Conference.
This meeting further decided to recommend to you the creation of
a Central Committee,

The function of this Committee is to act as a central

point of contact in those matters regarding cooperation between the various
agencies and the committees.

In addition) it can be of assistance to

voluntary committees formed for the purpose of carrying out definite under­
takings*

For example) at our first meeting Mr. A. W,.Robertson suggested

that some of the strong industries of the country as part of a general
movement in the interest of increased employment and possible stimulation
of business activity might find it advantageous to make capital expenditures
postponed up to the present time because of existing financial conditions and
including the replacement of worn out equipment) or the substitution of
modern equipment for that which had grown obsolescent*

He stated that he was

prepared to approach other industrial leaders with a view to the development
of such a program and the organization of a committee.
approval of all of us.

His idea met with the

He has lost no time in carrying it out and at the

meeting yesterday reported real progress.

I think that this general group

will be glad to hear from him later in the day*

What can be accomplished

along these lines is indicated by the statement of Mr. Myron Taylor, made on

- g Wednesday morning on behalf of the United States Steel Corporation,
It must be apparent that in the carrying forward of such a
program not only can a Central Committee be helpful in enlisting support,
but the chairmen and members of the individual committees can perform a
tremendous service in establishing contacts and in promoting the work of
organization.
Other lines of endeavor which the Banking and Industrial chairmen
had presented to them yesterday, and which it believes are, worthy of consider­
ation are as follows:

1 . The problem of making available credit affirmatively useful
to business;

2 . To increase employment by the railroads and stimulation of
.industry through expansion of

maintenance of equipment and purchase of new

equipment in cooperation with the Interstate Commerce Commission and the
Reconstruction Finance Corporation;

3.

Increased employment through the sharing work movement;

U.

The stimulation of the repair and improvement of home movement;

5.

Assistance to home owners with maturing mortgages;

6 . Active cooperation of all Banking and Industrial Committees
with Reconstruction Finance Corporation in working out the problems incident
to the making of self-liquidating loans for public and semi-public projects,
and for slum clearance and housing projects as provided in the Emergency
Relief Act; in the aiding of livestock

loans by the Reconstruction

Finance Corporation and Agricultural Credit Corporations; in assisting the
establishment of Agricultural Credit Corporations provided for in the Relief
Act, and in facilitating the adequate functioning of the new Home Loan Banks.

-

9

-

Since the initiation of informal discussions real progress has
been made, and some of the programs discussed are already well under way,
For instance our efforts definitely contributed to the creation of the
Commodity Finance Corporation; to the capital expenditure movement which
Mr, Robertson has under way; to bringing the question of increased employment
and stimulation of industrial activity by the expansion of maintenance work
and the purchase of new equipment to the attention of the railroad executives,
the Interstate Commerce Commission and Reconstruction Finance Corporation,
and to the development of a plan which would make this feasible. Already
with the cooperation of the New York Banking and Industrial Committee the
American Securities Corporation had come into being which made a real
contribution at a time when there was no real market for bonds and where
sound securities were being offered at destructive prices.
In order to avoid any possible misconception let me conclude by
stating that we are not setting up an economic council to endeavor to direct
the economic policies of the country.

We are creating a central organ­

ization for the purpose of contact and cooperation to assist in the task
to be performed by the Reconstruction Finance Corporation, Federal Reserve
Banking System, the Home Loan Banks, the Banking and Industrial Committees
and such voluntary groups as may associate themselves with the latter with a
view to developing helpful steps looking to gradual economic rehabilitation
and more immediately an increase in employment.

The usefulness of the

Central Committee will depend in large measure on the degree to which you
gentlemen turn to it for cooperation and for the interchange of ideas.

-

10

-

Aside from the work to be carried on by the Government agencies, the major
part of the task and the real field for usefulness of the Banking and Indus­
trial Committees is in developing means and methods for solving the problems
arising in their own districts*

This meeting will have fulfilled a major

purpose if each of you carries away with him a more complete understanding
of the agencies that are available for the work of rehabilitation, the
fields in which they can cooperate, and the knowledge that you business men
have available in your own districts voluntary organizations of cooperation
and contact, which, in turn, will now furnish you with a channel through
which what may in the first instance be a purely local program can be
developed into one national in scope.

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS*
Tuesday, August 30, 1932.

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced today that the tenders
for $100,000,000, or thereabouts, of 91-day Treasury Bills, dated
August 31, 1932, and maturing November 30, 1932, which were offered on
August 25th, were opened at the Federal Reserve Banks on August 29th.
The total amount applied for was $463,281,000*

The highest bid

made was 99.922, equivalent to an interest rate of about 0*31 per cent
on an annual basis.

The lowest bid accepted was 99.915, equivalent

to an interest rate of about 0*34 per cent on an annual basis*
part of the amount bid for at the latter price was accepted.
total amount of bids accepted was $100,500,000«
of Treasury Bills to be issued is 99.918.
bank discount basis is about 0.32 per cent.

Only
The

The average price

The average rate on a

3P0R RELEASE WHEN DELIVERY IS
COMMENCED WHICH WILL BE AT
2:00 P. M., WASHINGTON TIME,
FRIDAY, SEPTEMBER 2, 1932.

TREASURY DEPARTMENT

Address of
HONORABLE ARTHUR A. BALLANTINE
Under Secretary of the Treasury,
at the Exercises at
Federal Hall, New York,
as a part of the
GEORGE WASHINGTON BICENTENNIAL CELEBRATION
of the One Hundred and Forty-Third Birthday
of the
UNITED STATES TREASURY DEPARTMENT
on Friday, September 2, 1932.

In 1789 the first Congress of the United States, assembled
in the City of

New

York, began the task of building a government

under the Constitution which had just been adopted by the thirteen
states.

The creation of a Treasury Department on September 2,

1789, one hundred and forty-three years ago to-day, was one of
the chief initial steps.

None has more thoroughly proved the

wisdom of the founders of our Government.

This anniversary date,

commemorated as part of the George Washington Bicentennial
celebration, finds the Treasury discharging its historic functions
on a scale which the fathers could have nardly conceived, and
bearing a vital part in defeating the depression.
One hundred and forty-three years ago the new nation, shortly
emerged from the war of independence, was suffering from lack of
any adequate central government.

Failure had threatened throughout

the Revolution because of the difficulty —

almost the impossibility

of securing financial support, either from the colonies or abroad*
The central government had no public credit.

The first Congress

did not know the amount of the war debt to be paid, if assumed.
They did come to tha realization that the survival of the Govern­
ment provided for by the Constitution depended largely on prompt
and adequate solution of the Governments financial problems.
The compelling perception of the necessity for sound public
finance for the United States was that of Alexander Hamilton, the

first Secretary of the Treasury.

Within three years after the

creation of the Department, Hamilton had. secured legislation looking
to the refunding of the public debt and establishing both at home
and abroad confidence in the financial integrity and capacity of
the new government, which has ever since been maintained.

It was

the first Secretary who also secured provision for our sound decimal
currency system, replacing the confusion of the English, French and
Spanish coins previously in circulation.
Other secretaries, in difficult periods, have carried on the
early traditions of the Treasury.

The work of Secretary McCulloch

after the Civil War is seen in the refunding act of 1870, passed
after he had left office, under which the management of the great
Civil War debt proceeded in an orderly manner.
The period following the Civil War saw the Treasury struggling
with the problem of irredeemable paper currency, the greenbacks,
which were issued under the financial stress of the war.

In terms

of irredeemable paper currency, prices thereafter rose sharply..
Many commodities were offered at one price in gold and a much higher
price in the paper currency.

Thus to buy $1.00 of gold it took $2.85

of paper money in 1864 when the gold premium was highest, and $1.23
of paper money as late as 1870.

The postwar depression of the

seventies brought suggestions for relief through further increases
of the irredeemable paper money.

Proposals for making paper

currency redeemable in gold met much opposition.

-

3

-

One of the early steps toward restoring the currency was
accomplished by President Grant in preventing permanent increase in
this fiat money in 187^- when he vetoed a bill passed by Congress
and stated, ’’Paper money is nothing more than promises to pay, and
is valuable exactly in proportion to the amount of coin that it can
be converted into.”

The tide was turned, and on January lU,

1875»

another impprtant step was taken with the passage of the resumption
act providing a program for retirement of paper currency and that
redemption in gold should begin January

1 , 1879-

This disastrous

experiment with fiat money should prevent this country from ever
resorting again to such a dangerous expedient.
The development of the Treasury saw the addition of many
functions which increased the variety and importance of its work.
The Coast Guard, one of the oldest services, established in 1790
as the Revenue Cutter Service, patrols the entire coast line day
and night, bringing help to vessels in distress and saving life and
property at sea, as well as protecting the customs revenues through
the prevention of smuggling.

Coast Guard seaplanes and radio com­

munications now play an important part in this work.
manned by a force of about twelve thousand, —
men.

The service is

officers and enlisted

The high standards of service discipline, on which the splendid

record of the Coast Guard has been built, are a long-established
tradition, continuously protected by careful
selection of applicants for service at recruiting stations, and the
training of cadets at the Coast Guard Academy.

The Public Health Service was established in 1798 as the
Marine Hospital Service for the maintenance of hospitals to provide
medical care for sick and disabled .American merchant seamen#

This

service continues today and includes more than one hundred and fifty
hospitals and relief stations at ports of the United States, territories
and possessions.

Medical assistance is now rendered to other Government

agencies as well, such as the Coast Guard, the Lighthouse Establishment
and the Immigration Service.

The Public Health Service has developed

into an organization which protects the health of the nation, not
merely by administering the national quarantine laws, but also by its
studies for the prevention and cure of diseases, and through its
cooperation with the states, in improving local health conditions and
in health educational services.
Through the office of the Supervising Architect, the Treasury
constructs and operates most of the public buildings of the Federal
Government.

Over sixteen hundred Federal buildings scattered

through­

out the United States are in the custody of the Treasury Department;
these include courthouses, postoffices, customs houses* marine hospitals
and other structures*
Through this office the Treasury is now carrying out the great
public building construction program accelerated for the relief of un­
employment, involving total expenditures of some $ 70 0 ,000*000 and eighteen
hundred building projects in Washington and throughout the country.

Out­

standing architectural firms are employed to design some of the larger
and more monumental buildings.

On August 1st, 2l6 buildings had been

completed, 3^7 projects were under contract, plans for 13 *+ projects

’5—

had been completed, which will shortly he placed under contract,
and plans were under way for 80 additional projects which will he
placed under contract during this fiscal year.

When present build­

ing plans for Washington have heen completed, the general arrange­
ment of our National Capital will have heen carried out according
to the plans which were made with such skill and foresight hy
L*Enfant under the direction of our first President, whose
Bicentennial we are celebrating.
Time is too limited for appropriate comment on the activities
of all important organizations in the Department.

The Bureau of the

Mint, which had its beginning in 1792, has general supervision over
the assay offices and the mints where the gold, silver and other
coins of our currency system are struck.

The Office of the

Comptroller of the Currency, established in 1864, supervises our
national hanking system.

The Bureau of Engraving and Printing,

also established during the Civil War, now designs, engraves and
prints money, postage stamps and securities for the Government.
More than four billion dollars of paper currency are printed each
year, in large part to replace worn out money.

A secret service

division guards continuously against counterfeiting of money and
forgery of checks and securities, and provides special protection
for the President of the United States.

The Bureau of Customs and

the Bureau of Internal Revenue play vital parts in the finances of
the Government, one in administering the tariff laws and the other,
the internal revenue laws.

- 6Never has intelligent administration of the principal
function of the Treasury, the management of the finances, been more
important than it is today*

In the first years of the new Government,

total annual expenditures were about five million dollars and the
total funds handled by the Department each year were about twenty
millions; today annual Federal expenditures are about four billion
dollars and the total funds handled each year by the Treasury
Department have grown to the tremendous sum of twenty billion dollars*
The Treasury handles the funds of the Government so well and faithfully
that we seldom realize that the collecting, disbursing and accounting
of billions of dollars each year require

the never failing services

and attention of a large group of highly trained officers*
Internal revenue collected in each of the sixty-four collection
districts by Government officials acting under the Commissioner of
Internal Revenue, and customs collected at each of the two hundred
and ninety-nine ports of entry under the administration of the
Commissioner of Customs, are deposited daily in a Federal reserve
hfiBit or other designated depositary*

Daily these institutions

report to the Treasury all receipts and disbursements on Govern­
ment account and in the office of the Treasurer a highly efficient
staff analyzes the reports*

The summary of their work is published

as the Daily Statement of the United States Treasury, which shows
in detail current receipts and expenditures with totals for the
fiscal year to date together with specification of the amount and
location of the funds on hand*

The daily report which the Treasury thus

makes available to the public is a unique practice in Government finance.

-

7

-

Collecting the Federal revenues today brings Treasury official?
into direct contact with millions of citizens of the country, largely
through the administration of the income tax.

Prior to the World War

when receipts were derived primarily from indrect taxes, that is
duties on imports and the internal revenue taxes on distilled spirits,
fermented liquors and tobacco, the average citizen was little aware of
his contribution to the Federal Government.

Today the income tax has

become the principal source of our revenues and four millions of
individuals and hundreds of thousands of corporations file returns
each year.

Next year, under the Revenue Act of 1932. no less than

eight million income tax returns are espected to be filed.
The magnitude of the task of administering the Federal income
tax may be judged by the fact that in the fifteen years from 1917 to
1931» inclusive, the Treasury collected more than thirty-three
billion dollars in income and profits taxes; it had to deal with
not less than 35»000,000 returns, showing tax liabilities ranging
from nothing to hundreds of millions of dollars.

All returns had to

be checked and those of any size or calling for special attention
had to be investigated in the field.

All indicated changes in the

liabilities reported had to be taken up with the taxpayers and
settled.

That great task has been faithfully and impartially

performed.
Sound management of the finances of the Government according to
the traditions established in the early days of its history was never
more evidenced than during the eleven years following the World

War and

prior to the depression, the greater part of the period having been under

the leadership of Secretary of the Treasury Mellon.

The Treasury

Department recommended prompt action for reduction in expenditures,
payment of the great war debt and revision in the emergency tax
system.

During this eleven-year period expenditures were reduced

from the high war level of nearly $19,000,000,000 for the fiscal year
1919 to an average of less than $3,700,000,000 for the eight years
ended with the fiscal year 1929.

Four revenue acts were passed,

those in 1921, 1924, 1926 and 1928, through which the elaborate:
war-time tax system was converted into the comparatively simple
and less onerous system adapted to a period of peace and prosperity.
The great war debt was reduced from over twenty— five billion on June
30, 1919 to sixteen billion dollars on June 30, 1930, or by about onethird.

The reduction in debt and the refunding operations Effected

during this period brought about a decrease in annual interest charge
amounting to $448,000,000.
One of the functions of the Secretary of the Treasury which
calls for the soundest financial judgment is deciding when and on what
terms government issues shall be placed.

Management of the public

debt was very important during the postwar period.

Refunding opera­

tions which so reduced interest charges, involved the substitution
for outstanding obligations of other obligations carrying lower
rates of interest.

Terms of the new debt thus issued were planned

with a view to maintaining a distribution of maturities convenient
for the use of funds available for debt retirement and also for the
accomplishment of future refunding operations when market conditions
were advantageous •

- 9 Daring the depression responsibilities of the Treasury
Department have been no less serious than during the days of the
World War.

With decreasing volume of business, revenues declined

while Government expenditures increased in response to the demand
for outlays for relief of the depression.

Federal finances for

the fiscal year 1930 were not affected perceptibly and the year
showed a surplus of $184,000,000.

In the latter part of the fiscal

year 1 9 3 1 » tb.e finances reflected the depression i:i marked degree,
and the year closed with a deficit of $9 0 3 *000,000 and an increase
in the public debt of $ 616 ,000 ,000 .
In the eleven-year period ended June 30, 1930» the public debt
had been reduced in an amount which exceeded statutory requirements
by $3,460,000,000.

This acceleration of the debt retirement program

might be considered to have created something in the form of a reserve
upon which the Government was justified in drawing during lean years.
In the fall of 1931 when it was clear that owing to the continuance
and intensification of the depression, continued and larger deficits
were in prospect unless decisive steps were taken, the Secretary of
the Treasury urged immediate action for regaining a balanced budget and
retaining the public credit unimpaired.

He declared:

11If the public credit is to be maintained, there are certain
basic principles that must be observed in the conduct of
national finances.

First, the sinking fund assigned to

gradual retirement of the public debt must be maintained
......

Second, over a period of years revenues must be

equal to expenditures.

Deficiency in revenue for a time

may be inevitable, owing to operation of the emergency

conditions, but must not be allowed to continue,

observance

of these principles in the conduct of our Federal finances
requires, in addition to continued effort to reduce expenditures,
a very substantial increase in the revenues through taxation.n
Definite taxes were proposed to meet this urgent situation.
During the anxious months that followed, the Secretary of the
Treasury was continuously engaged in the campaign to secure from Congress
and from the people throughout the country support of this fundamental
policy, a balanced Federal budget.
During the winter and into the summer of 1932 the Department coopera­
ted continuously with committees and members of Congress on the detailed
work which resulted in the revenue act of 1932, signed June 6th.

This

act, it is estimated, will raise more than $1,100,000,000 of additional
revenue including postal receipts during the fiscal year 1933«

The

Treasury stressed continuously throughout this period the importance
of its fiscal policy with particular reference to reduction in expenditures
over which it had no immediate jurisdiction except for its own Department.
Important steps for reduced expenditures were taken by Congress in the
so-called Economy Act, signed June 30» 1932.
The provisions for additional revenue and steps taken for
reduction in Government expenditures have constituted the first major
step in the reconstruction program to meet the depression.

The public

credit, which is the particular charge of the Treasury Department, has
been put on an unquestioned basis.

It is the keystone of the arch

supporting the entire business structure of the country.
In this emergency period it has b 6en necessary to bring the
public credit of the United States to the support of the entire credit
and financial structure of the country.

This has been accomplished

1

///

-

11-

through the Reconstruction Finance Corporation, of which the
Secretary of the Treasury is a Director*

This organization, with

its great reservoir of credit supplied through public issues, was
created to combat the depression, and the assistance it has given
to institutions, such as banks and railroads, has made secure to
millions of our people their savings in the form of bank deposits
and insurance policies*

Loans made in the first five months of

its operation totaled more than one billion dollars and reached
over 4,000 financial institutions*

Seventy per cent of the 3,600

banks receiving loans were located in towns with less than 5,000
population*

Loans thus made have brought relief affecting the savings

of many millions of individuals throughout the country.

All this has

been possible primarily as a result of prompt steps taken to safeguard
the public credit.
On its birthday celebration today the Treasury represents a
great and vital department of your Federal Government.

Established

by Hamilton on sound lines, the development of the Department has
responded to the changing needs of the country.

Through the passing

years since the date of its foundation, it has built up a notable
tradition and esprit de corps, carried on and maintained by a body
of civil servants whose devotion to thej.r work is nowhere surpassed.

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS,
Tuesday, September 6 , 1932.

STATEMENT BY SECRETARY MILLS

The Treasury is today offering for subscription at par and
accrued interest, through the Federal Reserve Banks, $750,000,000,
or thereabouts, 3-1/4 per cent five-year Treasury notes of Series
A-1937, and $400,000,000, or thereabouts, 1-1/4 per cent one-year
certificates of indebtedness of Series TS-1933.
The Treasury notes will be dated September 15, 1932, and
will bear interest from that date at the rate of 3 -l /4 per cent per
annum, payable semiannually.

They will mature on September 15, 1937

and will not be subject to call for redemption prior to that date.
The certificates of indebtedness will be dated September 15,
1932, and will bear interest from that date at the rate of 1-1/4 per
cent per annum, payable semiannually.

They will mature on September

15, 1933.
The principal and interest of the Treasury notes and Treasury
certificates of indebtedness will be payable in United States gold
coin of the present standard of value.
The Treasury notes and Treasury certificates of indebtedness
will be exempt, both as to principal and interest, from all taxation
(except estate or inheritance taxes) now or hereafter imposed by the
United States, any State, or any of the possessions of the United
States, or by any local taxing authority.

Applications will be received at the Federal Reserve Banks.
The Treasury will accept in payment, for the new Treasury notes and
certificates of indebtedness, at par, Treasury certificates of indebted­
ness of Series TS-1932 and TS2-1932, both maturing September 15, 1933,
and subscriptions in payment of which such Treasury certificates of
indebtedness are tendered will be given preferred allotment.
The Treasury notes will be issued in bearer form only, in
denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000,
with interest coupons attached payable semiannually on March 15 and
September 15 in each year.

The certificates of indebtedness will be

issued in bearer form only, in denominations of $500, $1 ,000 , $ 5 ,000 ,
$ 1 0 ,000 , and $100 ,000 , with two interest coupons attached, payable
March 15, 1933* and September 15, 1933.
About $712,504,500 of Treasury certificates of indebtedness and
about $50,000,000 in interest payments on the public debt become due
and payable on September 15, 1932.
The texts of the official circulars follow:

'»

ijjg

-sTREASURY NOTES., SERIES A-1937

The Secretary of the Treasury offers for subscription, at par and
accrued interest,

through the Federal Reserve Banks, $750,000,000, or

thereabouts, three and one-quarter per cent Treasury notes of Series
A-1937, of an issue of gold notes of the United States authorized by the
Act of Congress approved September 24, 1917, as amended.
DESCRIPTION OF NOTES
The notes will be dated September 15, 1932, and will bear interest
from that date at the rate of three and one-quarter per cent per annum,
payable semiannually on March 15 and September 15 in each year.

They

will mature September 15, 1937, and will not be subject to call for
redemption prior to maturity.
The principal and interest of the notes will be payable in United
States gold coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in
denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000.

The

notes will not be issued in registered form.
The notes shall be exempt, both as to principal and interest,
from all taxation (except estate or inheritance taxes) now or hereafter
imposed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority.
The notes will be accepted at par, during such time and under
such rules and regulations as shall be prescribed or approved by the
Secretary of the Treasury, in payment of income and profits taxes
payable at the maturity of the notes.

-4-

The notes will be acceptable to secure deposits of public moneys,
but will not bear the circulation privilege.
APPLICATION AND ALLOTMENT
Applications will be received at the Federal Reserve Banks.
Subscriptions for which payment is to be tendered in Treasury
certificates of indebtedness of Series TS-1932 and TS3-1932, both matur­
ing September 15, 1932, will be given preferred allotment.
The Secretary of the Treasury reserves the right to reject any
subscription, in whole or in part, and to allot less than the amount
of notes applied for and to close the subscriptions at any time without
notice; the Secretary of the Treasury also reserves the right to make
allotment in full upon applications for smaller amounts, to make reduced
allotments uj)on, or to reject, applications for larger amounts, and to
make classified allotments and allotments upon a graduated scale; and
his action in these respects shall be final.

Allotment notices will be

sent out promptly upon allotment, and the basis of the allotment will
be publicly announced.
PAYMENT
Payment at par and accrued interest for notes allotted must be
made on or before September 15, 1932, or on later allotment.

Any

qualified depositary will be permitted to make payment by credit for
notes allotted to it for itself and its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so
notified by the Federal Reserve Bank of its district.

Treasury certi­

ficates of indebtedness of Series TS-1932 and TS2-1932, both maturing
September 15, 1932, will be accepted at par in payment for any notes of
the series now offered which shall be subscribed for and allotted, with

an adjustment of the interest accrued, if any, on the notes of the
series so paid for.
GENEEa L PROVISIONS
As fiscal agents of 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
of the Treasury to the Federal Reserve Banks of the respective districts.
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive notes.

CERTIFICATES OF INDEBTEDNESS. SERIES TS-1933

The Secretary of the Treasury, under the authority of the Act
approved September 24, 1917, as amended, offers for subscription, at
par and accrued interest, through the Federal Reserve Banks, $400,000,000,
or thereabouts, Treasury certificates of indebtedness of Series TS-1933.
DESCRIPTION OF CERTIFICATES
The certificates of this series will be dated September 15, 1932,
and will bear interest from that date at the rate of one and one-quarter
per cent per annum, payable semiannually.

They will be payable on

September 15, 1933.
The principal and interest of the certificates will be payable
in United States gold coin of the present standard of value.
Bearer certificates will be issued in denominations of $500,
$1,000, $5,000, $10,000, and $100,000.

The certificates will have two

interest coupons attached, payable oh March 15, 1933, and September 15,
1933.

The certificates cf this series shall he exempt, hoth as to
principal and interest, from all taxation (except estate and inheri­
tance taxes) now or hereafter imposed by the United States, any State,
or any of the possessions of the United States, or "by any local taxing
authority.
The certificates of this series will he accepted at par, during
such time and under such rules and regulations as shall he prescribed
or apx^roved hy the Secretary cf the Treasury, in payment of income and
profits taxes payable at the maturity of the certificates.
The certificates of this series will he acceptable to secure
deposits of public moneys, hut will not hear the circulation privilege,
APPLICATION AND ALLOTMENT
Applications will he received at the Federal Reserve Banks,
Subscriptions for which payment is to he tendered in Treasury
certificates of indebtedness of Series TS-1932 and TS3-1932, hoth
maturing September 15, 1932, will he given preferred allotment.
The Secretary of the Treasury reserves the right to reject any
subscription, in whole or in part, and to allot less than the amount
of certificates applied for and to close the subscriptions at any time
without notice; the Secretary of the Treasury also reserves the right
to make allotment in full upon applications for smaller amounts, to make
reduced allotments upon, or to reject, applications for larger amounts,
and to make classified allotments and allotments upon a graduated scale;
and his action in these respects shall he final.

Allotment notices will

he sent out promptly upon allotment, and the basis of the allotment will
he publicly announced.

PAYMENT
Payment at par and accrued interest for certificates allotted
must be made on or before September 15, 1932, or on later allotment.
Any qualified depositary will be permitted to make payment by credit
for certificates allotted to it for itself and its customers up to any
amount for which it shall be qualified in excess of existing deposits,
when so notified by the Federal Reserve Bank of its district.

Treasury

certificates of indebtedness of Series TS-1932 and TS2-1932, both matu 3>
ing September 15, 1932, will be accepted at par in payment for any
certificates of the series now offered which shall be subscribed for
and allotted, with an adjustment of the interest accrued, if any, on
the certificates of the series so paid for.
GENERAL PROVISIONS
As fiscal agents of the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make allot­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks of the respective districts.
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive certificates.

FOR RELEASE, MORNING PAPERS,
Wednesday, September 7, 1932,

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS.

Secretary Mills to-day announced that the subscription books for
the current offering of one-year 1—1/4 per cent Treasury Certificates
of Indebtedness, Series TS-1933, maturing September 15, 1933, and
five-year 3—l/4 per cent Treasury Notes of Series A—1937, maturing
September 15, 1937, closed at the close of business to-day, Tuesday,
September 6 , 1932.
Subscriptions placed in the mail before 12;00 o*clock mid—night,
Tuesday, September 6 , 1932, as shown by Post Office cancellation,
will be considered as having been entered before the close of the
subscription books.
Announcement of the amount of subscriptions and the basis of
allotment will be made on or about Saturday, September 10th.

TREASURY DEPARTMENT

THE FOLLOWING SPEECH WAS DELIVERED BY
HONORABLE OGDEN L. MILLS, SECRETARY
OF THE TREASURY, AT PORTLAND, MAINE, ON
SATURDAY, ,SEPTEMBER 10, 1932.

Note
For full text of speech see Subject File

Secretary1s Speeches

FOR RELEASE, MORNING PAPERS,
Saturday, September 10, 1932.

treasury department

STATEMENT BY SECRETARY MILLS

Secretary Mills today announced the subscription figures and
the basis of allotment for the September 15th offering of five-year
Treasury notes of Series A—1937, 3—l/4 per cent, maturing September 15,
1937, and of one—year Treasury Certificates of Indebtedness of Series
TS-1933, 1-1/4 per cent, maturing September 15, 1933.

3-1/4 PER CENT TREASURY NOTES, SERIES A-1937.
Reports received from the Federal Reserve Banks snow that for
the offering of 3-l/4 per cent Treasury hates of Series A-1937, matur­
ing September 15, 1937, which was for $750,000,000, or thereabouts,
total subscriptions aggregate over $4,351,000,000.

Of these sub­

scriptions, $408,639,000 represent exchange subscriptions, in payment
for which Treasury Certificates of Indebtedness maturing September 15th
were tendered.

Such exchange subscriptions were allotted in fuli.

Al­

lotments on cash subscriptions for 3-1/4 per cent Treasury notes of
Series A-1937 were made as follows:

Subscriptions in amounts not ex­

ceeding $1,000 were allotted 50 per cent, but not less than $100 on any
one subscription;

subscriptions in amounts over $1,000 but not exceeding

$10,000 were allotted 30 per cent, but not less than $500 on any one sub­
scription;

subscriptions in amounts over $10,000 but not exceeding

$100,000 were allotted 20 per cent, but not less than $3,000 on any one
subscription;

subscriptions in amounts over $100,000 but not exceeding

$500,000 were allotted 15 per cent, but not less than $20,000 on any one
subscription;

subscriptions in amounts over $500,000 but not exceeding

) **

■* 2 ••

$1,000*000 were allotted 10 per cent, but not less than $75,000 on any
one subscription;

subscriptions in amounts over $1 ,000,000 but not ex­

ceeding $100 ,000,000 were allotted 8 per cent, but not less than $100,000
on any one subscription;

and subscriptions in amounts over $100 ,000,000

were allotted 4 per cent, but not less than $8 ,000,000 on any one sub­
scription*

1-1/4 PER CENT TREASURY CERTIFICATES OF INDEBTEDNESS,
SERIES TS-1933
Reports received from the Federal Reserve Banks show that for the
offering of 1-1/4 per cent Treasury Certificates of Indebtedness of
Series TS-1933, maturing September 15, 1933, which was for $400,000,000,
or thereabouts, total subscriptions aggregate over $3,069,000,000*

Of

these subscriptions, $195,157,000 represent exchange subscriptions, in
payment for which Treasury Certificates of Indebtedness maturing September
15th were tendered*

Such exchange subscriptions were allotted in full*

Allotments on cash subscriptions for 1—1/4 per cent Treasury Certificates
of Indebtedness of Series TS—1933 were made as follows;

Subscriptions in

amounts not exceeding $10,000 were allotted 50 per cent, but not less
than $500 on any one subscription;

subscriptions in amounts over $10,000

but not exceeding $100,000 were allotted 20 per cent, but not less than
$5,000 on any one subscription;

subscriptions in amounts over $100,000

but not exceeding $1 ,000,000 were allotted 10 per cent, but not less
than $20,000 cn any one subscription;

subscriptions in amounts over

$1,000,000 but not exceeding $10,000,000 were allotted 7 per cent, but
not less than $100,000 on any one subscription;

subscriptions in amounts

over $10,000,000 but not exceeding $100,000,000 were allotted 5 per cent,
but not less than $700,000 on any one subscription;

and subscriptions in

~ 3 ~

amounts over $100,000,000 were allotted 3 per cent, but not less than
$5,000,000 on any one subscription*

Further details as to subscriptions and allotments will be announced
whan final reports are received from the Federal Reserve Banks*

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS
Tuesday, September 13, 1932

SPEECH DELIVERED BY HON. PERRY K. HEATH,
ASSISTANT SECRETARY OF THE TREASURY ~

In The National Radio Forum, arranged
by the Washington Star and broadcast over
the nation-wide network of the National
Broadcasting Company.

Monday, September 12th,
9:00 P.M., Eastern Standard Time.

SUBJECT:
"UNEMPLOYMENT RELIEF BY PUBLIC BUILDING CONSTRUCTION"

LADIES AND GENTLi&EN OF THE RADIO AUDIENCE:

Last October, through the courtesy of the Washington Star, the
Treasury Building Program was described in detail.

Time is not avail­

able, nor would your patience stand a repetition of that information.
Tonight I will attempt to acquaint you with the actual progress of the
work and the plans the Department is making to carry out the provisions
of the Emergency Construction and Relief Act passed by the last Congress
and becoming a law July 21, 1932.
In the days before the great war, federal buildings were the recog­
nized means of exchange in Congress.

They were the rewards granted sena­

tors and congressmen for services rendered for various forms of coopera
tive action in other legislation.

They were the scalps brought back by

the returning senator or congressman to prove to his tribe what a ¡^reat
warrior he was in Washington.

The whole system was the opposite of busi­

ness-like and orderly procedure, and often-times a pure waste of public
funds.
Then came the war.

Throughout its duration, and for ten years

thereafter, no public buildings were built.

The business of the country

grew enormously and with it the needs for federal housing.

It was ap­

parent the old procedure could never produce the required relief and,
in 1926, Congress passed the first comprehensive building legislation
which authorized an expenditure of $175,000,000 over a period of ten
years and called for a nation-wide survey to disclose just what the
situation demanded by way of relief.

A report under this Act was su

mitted in 1927, which indicated that $175,000,000 would fall far short
of requirements.

On March 5, 1928, the first installment of the build­

ing program was approved by Congress and $21,390,000 appropriated to
begin the acquisition of land and start construction.

-

2

-

As a result of this first and nation-wide survey of Federal "building
conditions, Congress in 1928 increased the authorization for public build­
ings by $125,000,000.

A final and more complete survey was made during the

years 1929 and 1930 for the purpose of ascertaining the postal needs for
the next twenty-five years at all important mail centers.

It was at these

plades that the advent of parcel post had necessitated the rental of space
provided by private capital at a time when building costs were at the peak.
It was during this rental period between 1913 and 19^6 that the Federal govern­
ment had ceased authorizing the construction of new buildings.
To meet the needs at these larger places, the President strongly recom­
mended to Congress the enlargement of the Public Building Program and Congress,
by Acts approved during 1930 and 19 3^» authorized an additional expenditure of
$330,000,000 to carry out the recommendations of the President.
Millions of dollars will be saved the Government when the construction of these
large working post.., offices is completed and all business interests will shortly
appreciate the improved efficiency to be provided at these gateways of mail
distribution.

Thousands of men are now employed on a number of these large

post offices located at Boston, Hew York, Philadelphia, Cincinnati, Cleveland,
Atlanta, Ft. Worth, Jacksonville, Chicago, Albany, Newark, Kansas City,
Minneapolis, St. Paul, Detroit, and so on.
While Secretary of Commerce, President Hoover had recognized the great
lack of facilities everywhere in the way of adequate housing for federal ac­
tivities.

Always having been an advocate of advanced planning for governmental

work, he as President immediately urged the legislation that was finally
passed, enlarging the scope of building activities and providing methods for
expediting the work.

The wisdom of his course is strikingly in evidence today.

Without the Acts of 1930 and 1931 the benefits I will describe would have
been impossible.

- 3 Following the first shock of "business depression, the President
directed that the public building program be accelerated to the extent
possible under the legislation.

Immediately this Department availed

itself of the legislation permitting the employment of private archi­
tects, and contracts have been made since that time with 26U firms for
plans for buildings representing over $200 ,000,000 in cost - which ac­
tion increased the progress of the program by more than 100 percent.
As private construction faded, public construction took its place
insofar as it could, preventing the complete demoralization of the build­
ing trades.

It is conceded that construction of much-needed public work

during periods of business depression is a wise course of action, assum­
ing that the financial burden is not too great.

Building costs are

lower, building trades need the business, and the procedure is useful
in every way.
During the last ten months 105 federal buildings have been com­
pleted, at a total cost of about $ 3 1 ,000 ,000 .

130 projects have been

placed under contract, totaling $125,000,000.

During the next six

months 150 additional buildings will be placed under contract, rep­
resenting in value at least $75»000>000.

For two years the contract

obligations under the Public Building Program sponsored by the Admin­
istration have averaged $1 0 ,000,000 per month and, for the twelve
months ending June 3 0 , 1933» the expenditures will total $123,000,000.
Practically all of this huge expenditure for federal buildings will be
applied to construction, which means that labor in all its branches will
directly benefit by almost every penny of it.

The status of the author­

ized Public Building program, and by that I mean everything contemplated

- 4 -

prior to the Bnergency Relief Act of July 21, 1932, indicates that 98$
of the $496,000,000 so authorized is represented hy projects completed —
under contract - on the market for bids, or on drawing boards nearing com­
pletion of plans#

There are over 390 buildings now under construction with

contract lettings averaging two a day#

Federal construction activities in

all departments have been enlarged wherever possible, and the work expedited.
Including the Treasury building program, the expenditures for
public works of the Federal Departments during the fiscal year 1929 approxi­
mated $261,000,000.

This total was increased to $536,000,000 during the

fiscal year 1932 and will be further increased to nearly $600,000,000 during
the current fiscal year.

In addition to this amount the proposed expendi­

tures under the Relief Act of 1932 will represent the maximum amount to be
expended under plans which are well under way in the several departments
concerned.

The largest classes of construction under the Federal Works Pro­

gram relate to national defense, hospitals for veterans, road, river and
harbor work, flood control and the Hoover Dam.
By the end of the fiscal year 1933, the Government will have under
contract practically 90$ of all public works coming within the scope of
present plans, and the taxpayers of the country may well expect the budget
for the fiscal years 1934 and 1935 to show a considerable reduction in the
abnormal expenditures required during the present and preceding fiscal
years which were brought about to provide better government facilities
and aid the unemployment situation during the period of the depression.
Through these trying years, wherever Government could help un­
employment without a waste of the taxpayers 1 money, the Government has helped.
Never were such preparations made for stemming the tide of economic reaction.

- 5 Never in all the history of organized society have such efforts "been put
forth to ward off the effects of grim economic adversity.

Building public

buildings, building roads, dredging rivers and harbors, constructing

great

public works - none of these activities, even though all the present re­
quirements are met and

future requirements anticipated, can cure the

unemployment situation as it has developed during the depths of post-war de­
pression,

All possible forces in times such as we have been going through

must be marshaled.

All the reserves must be called up, as they have been.

Nothing has been left to chance.

The magnificient work of the Reconstruction

Finance Corporation is perhaps the greatest example of organizing the resources
of a nation, that they may be made available for the assistance of a people
as they march through the valley of distress.
The wisdom of the President in providing the agencies which
made possible all that has been done and all that is being done is becoming
more apparent each day.

The employment of 100,000 men on federal buildings,

with perhaps 300,000 more employed in fabricating and material plants, will
not cure the unemployment in the building trades*

But certainly the 2,000

men working today on the huge new post office at Chicago, and the 6,000 men
engaged in fabricating materials for that building, and the families of all
these men, and the purveyors of food and clothing and other necessities
for these people, must be grateful for this federal expenditure.

And so

in equal proportion are the benefits spread through every state in the Union.
During periods of depression, it is too often the case that
the worker suffers through a reduction of wages.

Under the Federal Building

Program the worker has been protected to the utmost and in every contract
let since the Bacon—Davis law, the contractor is required to pay the prevail-

-

ing rate for wages.

6

-

This policy has been of inestimable benefit to the

worker throughout the country, and it is hoped that the attitude taken by
the President and Congress in this respect will be of lasting help in the
present situation.

Both the manufacturer and his factory help have also

benefitted by the policy of the Government which favors the use of local
materials wherever possible on the projects to be constructed in that locality.
While this enormous building program has come at a time when labor
and industry will derive the most good, we must not overlook the fact that
the government will likewise benefit in many ways.

Federal building con­

struction, delayed for thirteen years after the World War, will be current
within the next few years.
far below normal.
bly improved.

Construction will have been accomplished at prices

Unsatisfactory working conditions will have been considera­

Hew and modern buildings will have been built providing better

working facilities for many years to come.

The aost of renting commercial

space for Government activités will have been reduced to a minimum.

Through

the construction of large working post offices at the principal railroad
terminals throughout the country, thousands of dollars will be saved by the
elimination of motor vehicle services between depots and terminals and by im­
proved operating facilities planned by the most expert technicians employed
by the Government.
On July 3 1 » 1932. the Emergency Construction and Relief Act be­
came a law.

This legislation, building on a foundation already established

by some of the activities I have just mentioned, provides among other things
that $100,000,000 is appropriated for the use of the Treasury Department in
prosecuting the Federal Building Program.

It provides that this $100,000,000

shall be applied to projects which were recommended under legislation pre­
viously mentioned, and places the responsibility for the choice of location
of projects on the Secretary of the Treasury and the Postmaster General,

This program should not be confused with the pork barrel legislation proposed
in one. of the Relief bills which was opposed by the President.

The President»

action in this case undoubtedly prevented an unjustifiable expenditure of
public money.
There has been no delay by the Government in inaugurating the construc­
tion program authorized by the Relief Act.

I can assure you that since the

date of the passage of the Act, Treasury and Postoffice officials have been
working night and day analyzing the 900 projects which are eligible for
consideration.

Every Department in the Government has been called upon to

furnish justification for space requests in these buildings.

New estimates

of cost have been prepared In all of these cases, based upon current prices
iii order that excessive limits of cost will not be authorized by the Secretary
and the Postmaster General.

In some cases the Office of the Supervising

Architect of the Treasury has already started plans for additions to build­
ings where land is owned and where space requirements have been fully jus­
tified.
Having accomplished all of the preliminary restudy and surveys necessary,
the two Departments are now prepared to assign all available experienced
site agents to the task of inspecting sites offered in response to advertise­
ments, which action is required by law.

These advertisements will be sent

out as rapidly as possible, and within 30 days it is expected that proposals
for sites at over 3 OO places will be printed in the respective local papers.
As I have told you what has been accomplished, and is being accomplished
under the old program, I will tell you how the additional $1 0 0 ,000,000
will be utilized.

It will build upwards of UOO federal

buildings., comprising postoffices, courthouses, marine hospitals and office
"buildings.

These will be placed where the governmental needs are greatest,

or where leases expire prior to July 1, 1934, and the benefits of the ex­
penditure will appear in every part of the United States,

With the con­

tracts already in force, and with those about to be let, plus this additional
federal expenditure, we are assured of a hopeful beacon for the building
trades for the next two years,
The much needed housing of executive departments in the District of
Columbia, planned for many years, is fast becoming a reality.
*

The steel

for the great structures to house various departments is now being placed,
and soon the unsanitary temporary buildings, crowded almost to the point of
suffocation, will give way to this beautiful group aoout to adorn the
Nation1s Capital,

Within two years the rental cost of commercial space in

the District of Columbia will .be reduced by more than one million dollars
per annum.

This construction has been done at the most fortunate time for

the Government, both because of the cost and because of the assistance to
labor scattered throughout the country.

As the President has said - "We

cannot squander ourselves into prosperity".

The Treasury Department is en

deavoring in all its building activities to see to it that the taxpayers*
money is spent for the benefit of the taxpayer.
None of the buildings which have been erected or are being erected, or
will be built, owe their position in the building picture to political pull
or partisan politics.
Democrats.

Building legislation was passed by Republicans and

Buildings themselves are erected in every state in the Union.

No preference has been shown, North or South, East or West,

The need of

the Government has been the principal measuring rod and the deciding factor
in the whole program.

That Congress is convinced of the fairness of the

Departments is evidenced by the lack of criticism of the activities

-

9

-

the federal building legislation.
The example of the man in the White House, indefatigable in his hours
of labor, unsparing of himself day after day, month after month, has been an
invaluable inspiration to the thousands of governmental employees engaged
in these activities.

These men and women represent every political faith.

They are a cross-section of the United States of America.

The buildings

they are designing and supervising, as I have said, are scattered everywhere.
And these men and women have been working unselfishly to the limit of their
endurance for two years, strengthened in the thought that their efforts
would provide relief for many of their fellow-citizens in need.
Those listeners who‘happen to live in communities where the results
of these activities are in evidence, will see there a building of archi­
tectural beauty carefully planned for the convenience of the activities
housed, as well as for the benefit of the owners of the building - the
American people.

And that building for many years will be the outward

and visible sign of the power and strength of the nation - our common
count ry

FOR IMMEDIATE RELEASE,
Wednesday, September 14, 1932,

TREASURY DEPARTI,TENT

Secretary Mills today announced the final subscription and allotment figures
with respect to the September 15th offering of 3-l/4 per cent Treasury Notes of
Series A-1937, maturing September 15, 1937, and 1-1/4 per cent Treasury Certifi­
cates of Indebtedness of Series TS-1933, maturing September 15, 1933,
Subscriptions and allotments were divided among the several Federal Reserve
districts and the Treasury as follows:

3~l/4$ TREASURY NOTES OE SERIES A-1937
Federal Reserve
District

Total Cash
Subscriptions
Received

Total Exchange
Subscriptions
Received

Total Subscriptions Received

Total Subscriptions
Allotted

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

$ 241,225,600
2,023,551,300
282.852,400
216,797,000
96,410,100
124.260.500
407,485,800
54 , 367,200
26,581,800
52,091,900
89,189,500
328.463.500
34,300

$ 20,473,500
232,108,000
14.335.000
6.139.500
2.515.000
3.130.500
69,852,500
17.674.000
4.391.000
11.652.000
639,000
19.569.000

$

5 960.000

261,699,100
2,255,659,300
297 ¡,187,400
222.936.500
98,925,100
127,391,000
477,338,300
7 2 ;041,200
30,972,800
63,743,900
89,828,500
348.032.500
5,994,300

$ 57,947,500
426,997,900
46,200,000
30,719,700
18.075.200
22.787.200
115,858,400
25.343.300
7,953,000
17.828.300
15.400.200
43,319,600
5,971,200

$3,943,310,900

$408,439,000

$4,351,749,900

*$834,401,500

Total

.

^Includes $408,439,000 exchange
subscriptions, which were
allotted in full.

l~l/4f0 CERTIFICATES OF INDEBTEDNESS OF SERIES TS-1933

Total Exchange
Subscriptions
Received

Federal Reserve
District

Total Cash
Subscriptions
Received

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

$ 153,577,000
1,652,058,500
196,107,000
164,475,000
47,860,500
113,058,500
169,398,500
32,067,500
9,289,000
27,620,000
48,955,500
259,825,000

$

$2,874,292,000

Total

Total Sub­
scriptions
Allotted

Total Subscrip­
tions Received

45,205,000
583,000
644,000
1,408,500
41,000
6,906,000
36,500

155,218,000
1,786,936,500
199*247,000
164,920,000
48,089,500
113,058,500
214,603,500
32,650,500
9,933,000
29,028,500
48,996,500
266,731,000
36,500

$ 20,889,000
266,166,500
21,550,000
16,963,000
8,616,500
15,787,000
63,315,000
4,291,500
1,518,000
3,910,500
8,878,500
19,525,000
36,500

$195,157,000

$3,069,449,000

*$451,447,000

1,641,000
134,878,000
3,140,000
445,000
229,000

$

♦Includes $195,157,000 exchange
subscriptions, which were
allotted in full.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Thursday, September 15, 1932,

Secretary Mills made the following announcement:

The following governments have advised the Treasury that they
will take advantage of the options granted to them in the respective
debt funding agreements by postponing for a period of two years from
December 15, 1932, the payment of the principal of the bonds first
issued under the funding agreements due on that date:

Estonia • • • • • • • • $

90,000

Latvia, . . . « • • * •

37,000

Poland.................

1,125,000

In accordance with the terms of the agreement the amount of
the payments so postponed will bear interest at the rate of 3 - 1 /2 per
cent per annum, payable semiannually.

FOR IMMEDIATE RELEASE,
Friday, September Ì6* 1932*

TREASURY DEPARTMENT

The Secretary of the Treasury announces that Mr. H. F.
Mires, who resigned the office of Assistant to the Commissioner
of Internal Revenue August 8 , 1931, after many years of
service, has expressed a willingness to returh to the service
in that position*

he is expected to ¿assume his duties as

Assistant to the Commissioher on October 1st 4
Mr* Ralph U. Smith, Assistant to the Commissioner, who
before succeeding Mr. Mires in that office was Head of the
Civil Division of the General Counsel*s office, has resigned
as Assistant to the Commissioner, his resignation to take
effect September 30th.

He will return to the General

Counsel*s office where he will take up his duties on important
legal work in the Bureau.

POR IMMEDIATE RELEASE

TREASURY DEPARTMENT

Tlic Secretary of the Treasury today sent the following
letter to Honorable John W. Pole,
September 20, 1932.

My dear Mr, Pole:
You are today terminating your many years of service
in this Department,

I do not want you to leave without,

on behalf of my predecessors and myself, recording the high
-character oT public service which you have at all times ren­
dered.
During the recent period of terrific strain to which-- our National banking structure has been subjected,your courage,
your broad vision, and your knowledge and experience have been
of inestimable value to the country,

I wish'you all future happiness and success in the
days that are to come.
Sincerely yours,

(Signed)
OGDEN L, MILLS
Secretary of the Treasury,

Hon. John W. Polo,
Comptroller of the'Currency,
Washington, D. C,

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Thursday, September 22, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $100,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o*clock p.m., Eastern Standard time.,
on Monday, September 26, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated September 28, 1932, and will
mature on December 28, 1932, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $ 1 ,000 , $1 0 ,000 , $ 100 ,000 ,
$500,000, and $1 ,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will bo supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 10 0 , with not more than throe decimal places,
e.g,, 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

2

applied for, unloss the tenders are accompanied by an express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tcndors on
September 26, 1932, all tondors received at the Federal Reserve Banks
or branches thereof up to the closing hour will bo opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Troasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot loss than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will bo advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must bo made at
the Federal Reserve Banks in cash or other immediately available funds
on September 28, 1932.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, excopt estate and inheritance taxes.

No loss

from the sale or other disposition of the Troasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter inposed by the United States or any of its possessions.
Troasury Department Circular No.' 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may bo obtained from

any Federal Reserve Bank or branch thereof•

FOR RELEASE, MORNING PAPERS,
Tuesday, September 27, 1932.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced today that the
tenders for $100,000,000, or thereabouts, of 91-day Treasury bills,
dated September 28, 1932, and maturing December 28, 1932, which
were offered on September 22nd, were opened at the Federal Reserve
Banks on September 26th.
The total amount applied for was $412,510,000.

The highest

bid made was 99.958, equivalent to an interest rate of about 0.17
per cent on an annual basis.

The lowest bid accepted was 99.940,

equivalent to an interest rate of about 0.24 per cent on an annual
basis.
accepted*

Only part of the amount bid for at the latter price was
The total amount of bids accepted was $100,665,000.

The average price of Treasury bills to be issued is 99.941*
average rate on a bank discount basis is about 0.23 per cent.

The

%

TREASURY DEPARTMENT

EOR IMMEDIATE RELEASE
September 28, 1932*

STATEMENT 3Y THE SECRETARY OF THE TREASURY

Paragraph 5 of the Debt Funding Agreement dated June 23, 1930, between
Germany and the United States, requires in connection with the postponement
of the payment of any installment "not less than ninety days! advance notice
in writing," and paragraph 8 provides that "the United States in its discretion
may waive any notice required hereunder."
Accordingly, as to the September 30th payment., a ninety-day notice would
have been given by Germany on or before July 2., 1932,

On June 30, 1932, the

German Ambassador stated to the Secretary of the Treasury that the German
Government desired to make the payments due September 30, 1932, to the United
States on account of the mixed claims and army costs., but that in view of
exigencies which might arise making it impossible for the German Government to
pay, he would be obliged to give notice of postponement then and there, unless
he could have some assurance from the Secretary .of the Treasury that the ninetyday notice weald be waived if the German Government should find it impossible
to make the payment,
In order to prevent such a premature decision and in the hope that post­
ponement would not prove to be necessary, the Secretary advised the Ambassador
that If Germany delayed its decision, the ninety-day notice would later be
waived if the German Government should decide before September 30th that it
must give notice of postponement.
Such notice of postponement, as provided in the original debt agreement,
has now been received, and the Secretary of the Treasury has waived the ninetyday notice in accordance with his assurance to the German Ambassador,

CREDIT AGENCIES IN THE EIGHT AGAINST DEPRESSION

An address delivered
"by

HONORABLE JAMES H. DOUGLAS,
ASSISTANT SECRETARY OE THE TREASURY,
Before the
Philadelphia Connty Medical Society,
Philadelphia, Pa.

Wednesday,
September 28, 1932,

It was suggested that I describe to you the several great credit agencies
of Government that have "been created and expanded to meet the changing problems
of depression, and that are today exerting their force to promote recovery.
In his speech of acceptance the President referred to the discussion of
problems of economic life and of Government as often seeming abstract and cold,
but called attention to the fact that "within their right solution lies the
hapoiness and hope of a great people."
interest to our subject*

A realization of that fact gives vital

The economic problems of the last three years have

been those of a great depression.

The Reconstruction Finance Corporation

represents one of the great efforts of Government to meet these problems.
Through it Government credit has been made available to protect the savings
of the people, and to reopen the normal channels of credit essential to industry.
To understand its operations and accomplishments, and those of the other
Governmental agencies arrayed against depression, we must review briefly the
events which account for the new interest we all have today in Government, and
in these agencies.
During the first two years of the depression prices and industrial activity
declined; unemployment increased; the burden of debt grew heavier, but our
financial structure had not been seriously threatened.
of 1931, however, the depression entered a new phase.

During the latter half
A credit crisis having

its origin in the financial collapse of Austria, spread through Germany to
England, and then moved on to threaten our economic structure.

There xrcro added

to the difficulties of a world wide depression, the strangling fears of financial
panic.
On September 21, 1931, England suspended gold payments, and within a week
ten other Nations took similar action.

This disaster contributed to the pre~

cipitate withdrawal of foreign balances from the United States.

Between the

middle of September and the end of October we lost $750,000,000 gold by export
and close to $500,000,000 of currency through hoarding.

This loss of gold

and currency hoarding measured by millions is an adequate statistical comment
on what was happening.
its consequences?

But what did this run on the dollar mean, and what were

It meant bank failures with the loss of savings to

hundreds of thousands of depositors;

it meant further drastic liquidation of

credit, rapidly declining commodity prices, further falling off in industrial
activity, increased unemployment and in short constituted a threat to our
whole economic structure.

In October bank failures reached the unprecedented

total of 522.
To resist the first shock of this new phase of the depression, the President
■urged and, through the coopération of the banks, accomplished the organization
of the National Credit Corporation«

By making liquid funds available to the

weaker banks, the corporation was successful in stemming the tide of bank
failures, but the toll continued heavy.
The Country was confronted with the distress of the third winter of de­
pression, unemployment, an increasing Federal deficit, and a loss of confidence
in our financial structure.

The President, in his message to Congress on

December 7th, offered a broad affirmative program.

Important in the program

was his insistence upon:
1.

A balanced Federal budget to be accomplished by a reduction in ex­

penses and an increase in taxes.
2.

Additional capital for the Federal land banks.

3.

The establishment of a system of home loan discount banks.

4.

The creation of an emergency Reconstruction Corporation.

5.

A broadening of the Federal Reserve Act, and the improvement of our

banking laws

This program was devised to maintain the National credit unimpaired and
to make available that credit to protect the savings of the Country, whether in
the form of bank deposits, insurance policies, or securities, and to counteract
the destructive forces of deflation.

On January 4th the President again ap­

peared before Congress and repeated his recommendations.

The Act creating the

Reconstruction Finance Corporation was signed January 22nd, and on February 2nd
the Corporation was organized, ready for business, with resources of $2,000,000,000
Thus Government credit was made available to our pivotal institutions.

The

task remained to maintain the national credit unimpaired, and this became the
primary task of the administration.

Federal revenues, based in large part on

an income tax peculiarly sensitive to declining prices and diminishing profits
showed an alarming shrinkage.

Emergency appropriations, —

for example

$500,000,000 capital for Reconstruction Finance Corporation, and $125,000,000
additional capital for Federal land banks, —

largely increased expenditures.

This double effect of depression on Government finances made imperative the
prompt enactment of a revenue bill, and the reduction of ordinary expenditures.
The seriousness of the situation forbade delay and reckless experimentation, but
when in March a well devised and long considered Revenue Bill was reported out
of the Committee on Ways and Means it was torn to pieces on the Floor of the
House.

An economy bill met the same fate in April.

It was June before the

Revenue Bill became law, and July before an economy bill was enacted.
Aside from the effect of these delays, public confidence had been xurther
shaken by the reckless panaceas proposed and passed by the House of Represen­
tatives.

The two proposals which most seriously threatened the National credit

were the immediate cash payment of the bonus and the squandering of one billion
dollars to litter the Country with new post offices.
Had it not been for the fact that, during May and June, credit was avail­
able to banks, insurance companies and railroads through the Reconstruction

Finance Corporation, and that the Federal Reserve Act had been liberalized to
permit a great expansion of Reserve Bank credit through the purchase of Govern­
ment obligations, the destruction wrought, in what we have reason to bcliovc
were the last months of the financial panic, would have been immeasurably greater.
When Congress adjourned in July, although economies effected were disappoint­
ing, the main features of the Presidents program had been enacted, and the
principle of the balanced budget had been definitely established.

None of the

irresponsible measures which had been before the Congress had become law.
Federal Home Loan Bank Act had been passed.

The

The powers of the Reconstruction

Finance Corporation had been broadened by the Relief and Construction Act, so as
to make it definitely an offensive as well as a defensive weapon against de­
pression, the Federal Reserve Act had been liberalized, and new capital had been
supplied to the Federal Land Banks.
Lut us turn our attention now to the Reconstruction Finance Corporation.
What are its powers?
of the Country?

How have they been used to underpin the credit structure

Under the original Act the Corporation was authorized to make

loans on adequate security to building and loan associations, insurance companies,
mortgage loan companies, agricultural credit corporations, joint stock land banks,
Federal land banks, intermediate credit banks, railroads and banks and trust com­
panies.

Of the funds available to the Corporation it was authorized to use

$200 ,000,000 to aid in the reorganization and liquidation of closed banks, and
there was made available to the Secretary of Agriculture $200,000,000 for loans
to farmers.

Let us see to what extent loans to this group of institutions might

benefit people of the United States,

There are approximately 11,000 building and

loan associations in the country, having some 12,000,000 members.

Our insurance

companies are the largest lenders on farm mortgages and approximately 70,000,000
of our people hold life insurance policies.
40,000,000.

Our bank depositors number some

The railroads are one of our largest employers of labor, and

l

o

- 5 «

railroad securities are held by our tanks and Insurance Companies to an amount
in excess of $5,000,000,000.

There has been some effort to create the imr*

pression that loans to banks have been to big banks, and that the benefits have
been to the banker; that loans to railroads have been in the interest of a small
group, which doesnft exist, but which is represented as controlling the railroads^
Nothing could be farther from the fact.

Banks are the first concern in time of

crisis as they hold the savings of the people, and are the sources of credit
essential to the economic life of the Nation.
Under the original Act up to September 1st, Reconstruction Finance Corpora—
tion had authorized loans to 4715 banks totalling $824,000,000; loans to 643
building and loan associations totaling $80,000,000; loans to 79 insurance con>panies totaling $72,000,000; loans to 68 mortgage loan companies totaling
$83,000,000; loans to 49 railroads totaling $243,000,000, and loans to Federal
land banks and various farm credit agencies totaling $43,000,000.

The total

of loans authorized amounts to $1,412,000,000, of which $1 ,122 ,000,000 had been
disbursed.

Of this amount nearly $150,000,000 had been repaid.

By the

Secretarjr of Agriculture $65,000,000 had been loaned direct to more than
500,000 farmers*
made.

It is interesting to note where the loans to banks have been

Of the total number of loans made to banks 70$ has been made to banks

in towns of less than 5,000 population, and only 10 $ in cities of more tuan
50,000.

It is estimated that depositors in banks that have received loans

number 15,000,000 or close to 40$ of all the bank depositors of the Nation.
And by these loans all depositors have benefited, for the assistance given has
maintained confidence in the whole banking system.
I should like to discuss in further detail the accomplishments of Recon­
struction Finance Corporation in saving banks, and in assisting in the reorgani­
zation and reopening of closed banks, and to further consider what this work
has meant to communities and to the whole Country.
permit it.

I regret that time does not

We mast turn to the new functions of the Corporation..

>
-

6

-

The severity of the decline during the first six months of 1932, with -un­
employment increasing, made clear the need for new powers being granted to the
Reconstruction Finance Corporation.

Itwas apparent that a number of States

would not be able to raise funds to

care for those in actual distress during

the coming winter, and to meet this

need the Corporation was authorized to ad­

vance $300,000,000 to States for "furnishing relief and work relief to needy
and distressed people and in relieving the hardship resulting from unemployment."
To maintain the fundamental responsibility of the States the President insisted
that this fund should be available to States by way of loans made according to
the needs of the States, and not by way of gift in proportion to the populations
of the several States.

Loans are made upon application of the governor on his

certificate to the necessity of such loans, and as this Federal aid is intended
only to supplement State and local funds and private contributions, the governor
in securing a loan must also certify that the resources of the State then avail­
able, and which can be made available are inadequate to meet its relief needs.
These loans to States bear interest at 3$ and must be reimbursed commencing with
July 1, 1934.
$21,460,000.

Up to September 19th nineteen States had secured loans totaling
Since that date a loan of $2,500,000 has been authorized to

Pennsylvania.
The other new powers of the Corporation found in the Emergency Relief and
Construction Act of 1932 were devised to promote employment and industrial
activity.

For this purpose the resources of the Corporation were increased by

$1,500,000,000, now making its total resources $3,800,000,000.

These new

offensive powers given to the Corporation authorize:
1.

Loans to States and municipalities to aid in financing self-li qui dating

projects.
2»

Loans to Corporations formed wholly for the purpose of providing housing

for families of low income; for reconstruction of slum areas, where such
corporations are regulabed by State or municipal law.

- 7 -

3*

Loans to private corporations for the construction of "bridges, tunnels,

and certain other public facilities where the loans are self-liquidating«
The corporation is also authorized within certain limits to make loans to
finance the sale of surplus agricultural products abroad; to make loans to bona
fide institutions having resources adequate for their undertakings to enable them
to finance the orderly marketing of agricultural commodities and live stock pro­
duced in the United States; and to create agriculture credit corporations.
The loaning powers for construction purposes are limited to self-liquidating
projects.

Under the Act these are defined as projects that will be self-

supporting and financially solvent, and provide for the repayment of the construe-?
tion cost within a reasonable period of time by the collection of tolls, fees,
rents, or other charges other than taxation.
The importance of the self—liquidating feature of these loans lies simply
in the fact that they provide employment and stimulate industry without increas­
ing the burden of taxation.

For example, in the case of a loan made for build­

ing a bridge, it would be on a basis assuring repayment out of the tolls collected.
Although the loan may in the first instance result in increased Federal borrowing,
such increase in the debt will be repaid from the earnings of the particular
project, or in other words, from voluntary payments of those who receive direct
benefits.

It will not have to be paid by increased taxation.

In the case of

loans to States for nonproductive public works, the burden of State taxation is
increased.

If we provide employment by building post offices and other non­

productive works they must eventually be paid for by taxation.
The first loan for the construction of a public self—liquidating project was
authorized on September 13th for the Los Angeles water project in the amount of
$40,000,000.

Two loans were granted in the last two weeks to the Denver and

Rio Grrande Western, and the Pennsylvania Railroad in the amount of $4,150,000 and
$2,000,000.

The Pennsylvania loan will provide immediate sbAp employment for

-

8

-

500 men and employ indirectly four times that number.

The employment afforded

directly hy these projects is small in relation to the -unemployment that exists,
"but the cumulative effect in employment created indirectly, and hy the fact that
people are being employed instead of being laid off, must soon make itself felt.
One of the most shocking aspects of the credit liquidation, the decline in
prices,, reduced wages and unemployment, is the position the small home owner
finds himself in.

His income reduced, mortgage payments due, and practically

no mortgage money available.

The Reconstruction Finance Corporation nas

rendered assistance in this situation by loans to the mortgage money institutions:
the savings banks, building and loan associations, insurance companies, and
mortgage loan companies.

On October 15th the Home Loan Bank system will open

its doors, making available a new fund of mortgage capital.

The system was de­

vised as a permanent institution to fill a need in our Rational economy.
by law on July 22nd, its task today is one of emergency.

Created

The system will con­

sist of 'twelve Federal home loan banks, which, although empowered under certain
conditions to make direct loans, will function as banks of discount for members
of the system*

Building and loan associations, insurance companies and savings

banks are eligible for membership.

The system is still in process of organiza­

tion, but the Home Loan Board already has to its credit two accomplisjiments in
the battle against depression.

At its request the Comptroller of the Currency

ordered every national bank receiver to suspend mortgage foreclosures for a
period of sixty days, and at its suggestion every State supervising authority
having control of State bank receiverships has done likewise.

Also where the

mortgagor whose mortgage is eligible for discount under the Act, has requested
a loan to prevent foreclosure, the Board has communicated with the nolder of the
mortgage and requested that foreclosure be postponed until the banks are open
for business and in a position to render assistance.

The Board reports a large

measure of cooperation from mortgage holders so approached.

~ 9 ~

The position of the farmer is perhaps more distressing than that of the
small home owner.

The level of agriculture commodity prices makes his "burden

of debt almost unbearable.

One of the large sources of farm mortgage capital

is tho federal land banks which form the central structure of the Federal farm
loan system.

Tho system was created in 1918 under the Federal Farm Loan Act,

and today the Federal land banks hold outstanding farm mortgages in the amount
of $1 ,140,000,000.

To assure the ability of tho land banks to continue to

provide credit on farm mortgages, upon the recommendation of the President,
Congress provided for the subscription of $125,000,000 additional capital.

This

new capital not only makes new mortgage credit available to the farmer, but what
is more important, it has permitted a liberal policy in attempting to work out
delinquent mortgages without foreclosure.

In this way the expectation expressed

by the President at the tine of signing the Bill that it would t!bring relief and
hope to many borrowers from tho banks who had done their honest best but because
of circumstances beyond their control had been unable to make the grade,” has
been realized.

As of July 31st, only 5 per cent of the total delinquent loans

were in foreclosure.

The new capital also strengthened the obligations of the

banks themselves which are outstanding in the amount of nearly $1 ,200 ,0 00 ,000 .
As an essential part of the economic life of the Nation the Federal reserve
system has played an essential part in the battle against depression.

It is the

business of a central banking system to meet emergencies and adjust itself to new
conditions, and this the Federal reserve has effectively done.

During the few

weeks following the suspension of the gold standard in England it was through
the extension of Federal reserve credit, by the purchase of bills in the open
market and discount^ for member banks to the extent of more than $1 ,000 ,000 ,000 ,
that our banks were able to meet the foreign withdrawals and domestic hoarding.
TThen the Reconstruction Finance Corporation was created the Federal reserve
banks in the several districts made available their facilities, and as a result

-

10

-

"branches of the Corporation throughout the Country were organized and ready for
business within two weeks from the date of signing the Act,
I have referred to the temporary liberalization of the legal requirements
relating to Federal reserve notes.
Before the adoption of the Glass— Steagall Bill in February, Federal reserve
notes required a backing of a minimum of 40$ in gold, and eligible commercial
paper equal to the excess of notes outstanding over and above the actual gold
coverage.

Under conditions in which reserve bank holdings of eligible paper are

low, gold in excess of the 40$ minimum reserve requirement was not free for export
or to meet demands of our own citizens, but was frozen as a necessary backing
for the reserve notes outstanding.

The Glass-Steagall Act, permitting the use

of Government securities in addition to commercial paper as security for reserve
notes, had the? immediate effect of freeing gold in excess of the 40$ minimum re­
quirement, and thus made available about $1 ,000 ,OOof^of gold to meet any demands
that might arise.
The confidence resulting from this step, and the eligibility of Government
securities as a backing for reserve notes made feasible the adoption by the
Federal reserve system of a program of open market purchases of Government
securities.

These purchases poured money into the market and steadily reduced

member bank borrowing.

As the banks get free of debt, the pressure on them

to liquidate commercial loans and investments is reduced, and as excess re­
serves are built up at the Reserve Banks an incentive is created for the member
banks to make loans to commercial borrowers.

Today the member bank borrowing

at reserve banks is down to less than $360,000,000 from a high of $840,000,000,
Excess reserves have been increased to around $360,000,000,

The benefits of

this liberal credit policy are becoming apparent.
Federal reserve banks may now lend direct to commercial borrowers within
certain limitations when the credit sought cannot be secured from commercial banks,.

-

11

-

Few direct loans have been made by the reserve banks, but the authority to make
such loans has created a direct contact on the part of reserve banks with ccmr*
mercial borrowers, and has stimulated careful study into credit needs*

This

direct contact and study has been helpful in reestablishing normal channels of
%
commercial credits that have been closed by bank failures and the forces of
deflation*
The picture I have given is not quite complete without reference to the
Banking and Industrial Committees.

The first of these voluntary organizations,

formed in Hew York under the Chairmanship of Owen D. Young, grew out of a meeting
of bankers and business men held at the invitation of the Secretary of the
Treasury.

There are now Committees in each of the Federal reserve districts,

and a Central Committee which acts as a point of contact and clearing house of
ideas and information between the District Committees.
i

The Committees are actively engaged in seeking to make available credit af­
firmatively useful to business; to stimulate industry and employment by the ex­
pansion of railroad maintenance and replacement expenditures in cooperation with
Reconstruction Finance Corporation; to extend capital expenditures of industry;
to increase employment through work sharing; to stimulate the repair and moderni­
zation of homes, and to assist home owners with maturing mortgages.

They are

also assisting in the establishment of the new agriculture credit corporations
and the Home Loan Banks.

Here we have the representatives of private enterprise

supplementing and helping make effective the efforts of Government.
One great test of our system is its adaptability to violent changes in con­
ditions.

The creation of the Reconstruction Finance Corporation, its broad

powers and their successful employment; the creation of the Home Loan Bank system;
now capital for the Federal land banks; the operations of the Federal reserve
system; all these are reassuring evidence of adaptability.

The attack has

-

centered on our credit structure.
structure is intact#

12

Much damage has been suffered but the

We have met the test of financial panic.

There remains

before us the test of solving the problem of unemployment and restoring to the
country that condition of economic security and reasonable plenty which we
have come to regard as our normal condition of life*
construction.

This is the task of re­

The agencies that have conquered financial panic, and those

now becoming effective, will play a leading part in its accomplishment.

TREASURY DEPARTMENT

FOR RELEASE, THURSDAY,
SEPTEMBER 29, 1932, 11:30 A.M,

THE PUBLIC CREDIT
Its Protection and Utilization

Remarks
of
HONORABLE ARTHUR A, BALLANTINE,
Under Secretary of the Treasury.

Before the
Annual convention of
Morris Plan Bankers Association,

Thursday Morning,
September 29, 1932,
at
The Shoreham Hotel,
Washington, D.C.

THE PUBLIC CREDIT:
Its Protection and Utilization

Every banker knows that the economic life of the nation depends
upon the maintenance and flow of credit.

Curtailment of credit has oeen

a cause as well as an effect of the curtailment of business and employment.
It is part of the vicious circle only now being broken.
The foundation of all credit is the credit of the Federal Govern—
/
ment.

In the unprecedented depression the credit of the Government has

been subjected to severe strain.

That strain has been endured and in spite

of every shock the credit of the United States remains unimpaired.

How

the finances of the Government have been handled in these times is a story
of great interest.

It can only be sketched here.

As the depression not only continued but intensified,

revenues

of the Government, derived largely from the income tax, were cut almost by
half, while because of emergency needs Government expenditures mounted.
Inevitably, this double effect of the depression threw the budget out of
balance.
It was necessary for those charged with the responsibility for
the national finances to strive for the regaining of a balanced budget.
At the assembling of Congress last December the President declared;
“The first requirement of confidence and of economic
recovery is financial stability of the United States
Government.n
The meeting of that requirement was pushed with unflagging determination.
The financial goal necessarily involved reduction of Federal ex­
penditures.

The proposed Economy Bill, - the thorniest legislative measure,-

was twice torn to shreds in the mesh of debate and conference; but under
insistent leadership there finally emerged a measure which turns tne tide and
offers at least a beginning of real retrenchment.

In this field, I may add,

the fight is by no means over, for while we are encouraged by the substantial

2
gains made, we are far short of the ultimate objectives#
The struggle for a balanced budget necessitated also a heavy increase in
Federal taxes.

The Secretary of the Treasury in his annual message to Congress

last December stated:
nIt is not easy for any people to determine to assume a
large additional tax burden at a time when their resources are
depleted through business depression, but in the long run they
will best serve their own interests by doing whatever is re­
quired to maintain the finances of their Government on a sound
basis. * * * n
The Secretary, moreover, did not hesitate to propose specific taxes to produce
the needed increase in the revenue.
This phase of the struggle in Congress lasted many months.

The platform

of the balanced budget received support which was patriotic rather than partisan,
but the particular taxes to be utilized were a matter of much debate.
sult was long delay, ended by compromise.

The re­

There finally emerged a revenue

measure calculated, with the increased postal rates, to increase Federal revenues
by more than a billion dollars in the ensuing fiscal year.

The new income taxes

will not affect the revenue until about March 1933, but the new miscellaneous
taxes are already beginning to have their effect.

Miscellaneous taxes are

yielding about twice as much as they were a year ago, prior to the increases under
the new revenue law.

For example, in the first three weeks of September mis­

cellaneous internal revenue receipts aggregated about $57,000,000 as compared
with $29,000,000 for the corresponding period of last year.
For the most part the people of the country have loyally accepted the
increased taxation, notwithstanding, the burden it places upon them.

They are

vitally interested, however, in the question of the intelligent further adjust­
ment of that burden.
The fight for sound finance has necessitated stern resistance to repeated
attempts to make unnecessary and unjustifiable drains upon the Federal Treasury.
To preserve the financial strength of the Government, it was vital to fight that

- 3 measure which, without regard to needs, would have authorized the construction
of numerous small postoffices and other structures at a total cost of
$1,200,000,000.

It was vital to fight that measure which passed the House and

which if finally enacted into law would have authorized payment in full of the
outstanding veterans adjusted service certificates, —
expenditure of over $2,000,000,000.

involving an immediate

Even more disturbing to confidence in

the financial integrity of the Government was the plan to effect the payment
of the bonus by the issue of fiat currency.

That fight against the bonus is

still on, and but recently the President had occasion to state:
11For many months the right-thinking men of both parties
have been engaged in organizing and mobilizing the resources
of the nation to promote the economic recovery which is the
one sure and effective means of restoring the standard of liv­
ing of all of our people and rescuing millions of them from
suffering and misery".
The proposal to levy over two billions
of dollars and to pay it to a particular group constitutes a
fatal threat to the entire program of recovery, to the success
of which all must look for their well-being, security and hap­
piness.
In my judgment the enactment of any such proposal into
legislation would be a deadly blow at the welfare of the nation.
I was elected to protect and promote the interests of all of the
people.
As long as I am President I shall continue to do so and
to oppose with all of the strength and influence at my command
any demand that runs counter to the common welfare.11
That is a statement to be remembered.
The campaign for protecting the public credit of course included the protection of the dollar.

In the intensity of the foreign financial crises, with

their severe repercussions here, the belief was frankly expressed that the safety
of our dollar was threatened.

Foreign balances which at one time reached as

much as $3,000,000,000 were reduced to $600,000,000, and a raid on the dollar was
accompanied by a reduction of more than one billion dollars in our gold stock
between the end of September 1931 and the middle of June.

During this period

our bank resources were also burdened by heavy domestic hoarding.
So great is our inherent financial strength that those shocks could be
withstood, but not without the employment of wise financial measures.

Gold and

currency were kept available for every demand.«

As part of the Presidents

program presented to Congress last December, increased power was granted to
the Federal Reserve system to free the resources of Federal Reserve Banks,
not only that they might withstand the extraordinary outward movement of
gold and the domestic hoarding of currency, but that they might function more
effectively in making credit more readily available to agriculture, trade and
industry.
Tp.e times called for the utilization of the credit of the United States,
so vigorously maintained, in the fight to stem the depression.

The

President

urged that the public credit be mobilized in support of the great structure of
private credit and this emergency plan received the support of Congress.
As part of the plan fo*r the protection of credit, $125,000,000 was added
to the capital of the Federal Land Banks.

This reinforcement not only forti­

fied the outstanding obligations of these important institutions, but enables
the barks to function more actively in making new loans to farmers and in ex­
tending old loans to those borrowers who offered reasonable prospect of being
able to adjust their difficulties with additional time.
The plan included the creation of Home Loan Banks to provide adequate
rediscount facilities for institutions taking home mortgages, and to make
credit available to individual home owners unable to obtain funds elsewnere.
Under the

Home

Loan Bank Act there will be twelve of these banks, supervised

by a Federal Board, and with the right to call upon the Government for capital
up to a maximum of $125,000,000.
Any building and loan association, savings and loan association, co­
operative bank, homestead association, insurance company, or savings bank ,
may become a member or a non—member borrower

from a Home Loan Bank.

These

institutions will be in operation next month, making additional credit available
to home owners and home builders and assisting in the relief of unemployment

- 5 and the stimulation of home construction.

To many an owner they will he

the means of preserving the home which, hut for this help, might he sacri­
ficed, with disruption to the family life.
The program for needed assistance to institutions, upon which all business
depends, provided for the setting up of the Reconstruction Finance Corporation.
This great agency has a capital of one-half billion dollars and total potential
resources now amounting to $3,800,000,000.

Ihen ordinary sources of credit

have been insufficient it has furnished needed assistance to railroads, banks,
savings banks, mortgage companies, insurance companies and the like.

Part of

its resources were assigned to aid in the reorganization or liquidation of
closed banks, and part were allocated to the Secretary of Agriculture for as­
sistance to farmers in connection with crop production.
The invaluable assistance which the Reconstruction Finance Corporation
has rendered to the entire public has become well recognized.

Up to September

1st it had authorized 7,500 loans to 5,609 organizations, aggregating
$1,412,000,000.

Of this amount, $824,000,000 was authorized to 4,715 banks

and trust companies (including about $32,000,000 to aid in the reorganization
or liquidation of 376 closed banks), $80,000,000 to 643 building and loan as­
sociations, $72,000,000 to 79 insurance companies, $83,000,000 to 68 mortgage
loan companies, $12,125,000 to live stock and agricultural credit corporations,
over thirty millions to Joint Stock Land Banks and Federal Land Banks, and
$243,000,000 to 49 railroads and railroad receivers»

Relief loans, aggregating

$17,000,000 were made to eight States, and loans aggregating $50,000,000 had
been authorized under the relief act provision for advances to finance the
carrying and orderly marketing of agricultural products.

Of the $1,412,000,000

authorized, $1,122,000,000 had actually been disbursed on August 31, of which
nearly $150,000,000 had been repaid.

In addition, more than 500,000 in­

dividual loans to farmers, aggregating nearly $65,000,000 have been made Dy the

6
Secretary of Agriculture out of the $107*500,000 thus far allocated to him»
The benefit brought about by these loans is all pervasive.

Railroads

are not simply the backbone of the transportation system, but also directly
and indirectly the largest employers of labor, and their obligations con­
stitute the largest item in the portfolios of savings banks and insurance
companies.

Tiding over the railroads is part of the protection of our people

in their savings and the security of their families.

Of the 4715 banks and

trust companies to whom loans were made, 3296, or 70 per cent, of the in­
stitutions were located in towns with a population of less than 5000, and
1419, or 30 per cent, were located in towns and cities with a population of
5000 and over.

The number of depositors in the borrowing banks is estimated

at upwards of 15,000,000.

‘The averting of the failure of any bank which had

assets which were sound unless subjected to forced liquidation was an es­
sential part of stopping economic deterioration.

The loans to insurance

companies have made it possible for such companies to refrain from throwing
over securities at panic prices, while continuing to meet the payments called
for by their policies.

The provision of credit through the Reconstruction

Finance Corporation means an earlier return to normal living, normal spending
and normal business.
I have only outlined the story of the protection of the public credit and
the utilization of that credit in the fight to protect the people of this
nation from the effects of the depression and to promote recovery.
story which should be known and understood by all.

It is a

The success of that effort

is being reflected to— day in increased bank reserves, larger bank deposits, the
return of gold and currency, increased prices of commodities and securities,
and, beginning in certain lines, an upturn of employment and business activity.
It might be asked, with respect to the measures involving the use of the
public credit, whether they are not putting the Government into business.

So

}c
- 7 they do* in a limited sense«

It should "be understood, however, that no

agency other than the Federal Government could render the powerful help needed
in this time, and that the help is designed tp supplement our financial in­
stitutions, not to constrain or supplant them.

The aim of the credit

utilization plan has been to preserve and reinvigorate our financial and
industrial structure, to restore to it the strength "by which it has in the
past sustained our people in the highest standard of living that the world
has ever known.

It is essential that these protective activities of the

Government should continue to he administered in accordance with that vision.
They should not he used as an opening wedge for regimenting, under Government
discipline, the economic life of the country.
In this period of trial «you have seen the credit and strength of the
Federal Government maintained and applied to the preservation of the general
economic life.

The preservation of that power demands constant watchfulness

and often sacrifice on the part of the individual citizen.

That power, widely

utilized, has carried us to firmer ground and nearer to the time of full
recovery of normal financial and economic processes.

FOR IMMEDIATE RELEASE
Octoter 3, 1932.

Statement ty Acting Secretary of the Treasury, Arthur A. Ballantine.

Policy of Federal Land Banks

The attention of the Treasury has teen called to a statement issued
Octoter 1 ty the Democratic National Committee in which Congressman Steagall,
of Alabama, is^ quoted as saying that the administration of the Federal Land
Bank Law has teen marked ty wholesale foreclosures of hundreds of thousands
of families. The Secretary of the Treasury, as Chairman of the Federal
Farm Loan Board, is constantly advised as to the operations of the Federal
Land Banks. There has teen no such policy of foreclosure. On the contrary,
the Federal Land Banks have dealt with delinquent borrowers with the utmost
consideration.
The $125,000,000 of additional capital provided for ty the Act
passed at the last session of Congress as a result of the recommendation
of the President, was made available to the Federal Land Banks with all
promptness and has teen utilized both to provide for extensions and for
new loans.
Reports from the twelve tanks show that as of August 31 existing
extensions to borrowers numbered 57,637. Foreclosures pending as of that
date totaled 4,728, which was tut 3$ of the total number of delinquent loans
including extended loans. Many of the farms now being foreclosed had teen
abandoned, leaving the tank no choice tut to acquire title.
A majority of the Directors of each Federal Land Bank is named ty
the borrowers, or representatives of the borrowers. Reflecting the atti­
tude of their Directors, as well as of the Farm Loan Board, it has teen
the policy of the tanks to extend or defer action in the case of all
delinquent borrowers who desire to remain on their farms and have any
chance of working out their problems with the help of additional time.
Representation that additional capital for the Federal Land Banks
was provided for over the oppostion of the President is contrary to the
fact. Additional capital for the Federal Land Banks was initiated as part
of the President's Non-Partisan Program developed in Octoter of last year
and urged ty him upon Congress at the opening of the last session.
In
signing the Bill making this provision, the President stated that it was
expected the measure would ’’above all bring relief and hope to many
borrowers from the tanks who have done their honest test tut because of
circumstances beyond their control have teen unable to make the grade.”

!

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Tuesday, October 4, 1932.

STATEMENT BY ACTING SECRETARY OF THE TREASURY B ALLANT INE

The Secretary of the Treasury gives notice that tenders are
invited for Treasury hills to the amount of $75,000,000, or thereabouts*
They will be 92-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o !clock p, m . , Eastern Standard time,
on Friday, October 7, 1932,

Tenders will not be received at the

Treasury Department, Washington.
The Treasury*bills will be dated October 11, 1932, and will
mature on January 11, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than throe decimal places,
e. g . , 99.125.

Fractions must not be used.

Tenders will bo accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities*

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-

2

-

applied for, 11111083 the tondors are accompanied "by an express guaranty
of payment by an incorporated "bank or trust company*
Immediately after the closing hour for receipt of tenders on
October 7, 1932, all tenders received at the Foderal Rosorvo Banks or
branchos thereof up to tho closing hour will bo oponed and public
announcement of tho acceptable prices will follow as soon as possible
thereafter, probably on tho following morning.

The Secretary of tho

Treasury expressly reserves the right to rojoct any or all tenders or
parts of tondors, and to allot loss than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tondors will be advised of the acceptance or rojection thereof,.

Pay­

ment at the prico offered for Treasury bills allotted must bo made at
tho Federal Rosorvo Banks in cash or other immediately available funds
on October 11, 1932.
The Treasury bills will be oxompt, as to principal and intorest,
and any gain from tho sale or other disposition.thoroof will also be
exempt, from all taxation, except estate and inheritance taxes,. No loss
from tho sale or other disposition of tho Treasury bills shall be allowed
as a doduction, or otherwise rocognizod, for the purposes of any tax now
or hereafter imposod by the United States or any of its possessions#,
Treasury Department Circular No, 418, as amondod,. and this
notico proscribo tho terms of tho Treasury bills and govern the con­
ditions of their issue#-

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof*-

FUTURE
TREASURY DEPARTMENT

RELEASE

’EOR RELEASE, MORNING PAPERS,
Wednesday, October 5, 1932.

OBSERVE DATE
SPEECH TO BE DELIVERED BY
HON. OGDEN L. MILLS,
SECRETARY OF THE TREASURY,
BEFORE THE ANNUAL CONVENTION OF
THE AMERICAN BANKERS* ASSOCIATION
AT LOS ANGELES, CALIFORNIA,

October 4, 1932,

THE FINANCIAL PANIC AND PROGRAM OF RECONSTRUCTION.

In meeting with the members of the American Bankers1 Association on
this occasion, I am addressing veterans fresh from the front-line trenches
of this economic war.

You gentlemen, at least, have no illusions as to

the character of the attacks we have withstood, the nature of the crisis,
and the formidable dangers that have been averted.

It is too early to

claim victory, but our banicing and credit structure has been made secure,
and a non-partisan program, broad and comprehensive in its scope, has been
gradually

evolved, to lay the foundation for and to promote recovery.’

The cooperating groups have been the Administration, the Congress,
the Federal Reserve System, the Banking and Industrial Committees, and
private business and business men.
The program has included: •
(l)

In the field of legislation, the maintenance of the
national credit by drastic steps intended to bring our

- 2 budget into balance; the creation of the Reconstruction
Finance Corporation for the purpose, first, of assistance
to our credit and other specified institutions, and later
for the promotion of employment and stimulation of industry
through construction loans; the creation of a $300,000,000
relief fund; the passage of the Glass-Steagall Act, granting
greater freedom to the Federal Reserve Banks; the bringing
into being of the Home Loan Bank System; the increase of
the capital of the Federal Land Banks, and the establishment
of Agricultural Credit Corporations under Government auspices,
(2)

The purchase by the Federal Reserve System of more than
a billion dollars of Government securities,

(3)

The voluntary organization of the Banking and Industrial
Committees in each of the Federal Reserve Districts, which
have more recently taken steps to coordinate their acti­
vities and adopted a definite program of assistance in the
work of recovery,

(4)

The organization of private business to promote a nation­
wide work-sharing movement, and otherwise to stimulate em­
ployment.

Because of its magnitude, the program is a bold one.

But it follows

unswervingly the principle of individual initiative and enterprise, and
there is no element of artificiality or unsoundness about it.
rather than supplants existing agencies and institutions.

It supplements

Unlike some sug­

gested expedients, it does not impair their normal functioning now, nor will
it in the future.

There is all the difference in the world, for example,

between extending credit to banks and other similar institutions, and a
Government agency entering directly into the commercial banking field.

The

program was devised to meet extraordinary conditions, and to avert extraordinary

-

dangers.

3

-

Once they are over, it will-automactically come to an e-nd.

short, there is nothing of the "hat and rabbit" act about it.
is known as a "managed recovery."

And it is not inflation.

In

It isn’t what
Replacing pri­

vate credit, which panic has destroyed, with public credit, is not inflation
any more than is restoring bank reserves, depleted by hoarding, through the
use of Federal Reserve credit.
The basic thought which underlies this program is that prosperity is
the normal condition of American economic life.

We have the resources* the

intelligence, the industry, and the necessary machinery and organization to
make it so.

After drastic readjustments had taken place following the col­

lapse of the great inflation, the pendulum should have begun to swing back
to normal.
the way.

The reason it did not is that certain major obstacles stood in
These obstacles were too strong, and the forces which created them

too powerful, to be dealt with by our normal mechanism.

Under the circum­

stances, it was clearly the duty and business of Government to cooperate with
business in their removal.
The very magnitude of the forces that were operating, .and the scale of
the resulting difficulties, demanded a correspondingly large effort on the
part of Government.

This has led to some misconception as to the character

of Government activities.

But those familiar with the mechanism that has been

set up, and the relief processes that have been evolved, understand that the
danger of impairing individual initiative, resourcefulness and responsibili­
ty by too great an assumption of authority by the Government has been avoided.
Our sole purpose in the development of the reconstruction program has been to
set free the recuperative and constructive forces within business itself by
removing the pressures which were stifling them--to clear away major obstacles
so that the nation*s business might have an opportunity to do for itself what

the Government cannot hope to do for it, and so that the normal vigor of our
economic life might again assert itself,

I, for one, reject completely the

conception of a national economic life directed from Washington as impracticable
in practice, incompatible with American character, and inconsistent with the
structure and spirit of our institutions,,
Now, what were the adverse factors w h i c h we have sought to overcome in the
course of the last year?

In order to describe them,

I must refer briefly to

the financial and credit conditions w h i c h p r e c e d e d the great collapse.

You will

not expect of me an exhaustive analysis of the causes w h i c h led up to the de­
pression,

They were many, complicated, a n d are b o u n d to be a source of disagree­

ment for years to come.

B u t certain facts stand out with unmistakable clearness.

From 1S22* 1929 there was a credit e x p ansion in the United States, based on a
large increase of our gold holdings during the War and post-war periods up to a
peak of $5,000,000,000a

The earlier stages were healthy and were productive of

genuine prosperity and sound industrial development.
inflationary movement developed.

Gradually a speculative and

Most people were deceived as to the extent of

the inflation because of the relative stability of commodity prices, a rise in
commodity prices being looked upon as the neoessary and inevitable accompaniment
of inflation.

The reasons for this relative stability are probably many, but,

as far as manufactured articles were concerned, the steadily decreasing cost of
production and the keen competition for the patronage of the consumer were
probably adequate to offset the upward tendency in prices, while agricultural
commodities probably failed to respond, owing to increased efficiency and the
coming into production of new and constantly increasing areas the world over*.
But whatever be oneTs analysis of the commodity price situation, it is
evident that during the later years there was a vast speculative boom in real

- 5>
estate values and in securities.

There was a further expansion of industrial

activity, supported "by a purchasing power upheld in part "by credit flowing through
speculative channels and a willingness to spend, "based psychologically on paper
profits, present and anticipated.

Above all, there was a huge creation of new

indebtedness, the inevitable accompaniment of periods of expansion and rising
values, which tempt men to borrow and to buy constantly for the rise.
At the same time, the United States was being glutted with funds which poured
in from all over the world,— capital fleeing for greater security, investment funds'
attracted by better prospects, speculative funds attracted by our rising security
markets, short-time money seeking a market where it could be converted into gold at
any time.

At one time foreign short-time money in the American market amounted to

as much as $3*000,000,000.
Here was an immense movement, embracing a number of countries, and derived
from a great variety of causes having their origin in many quarters, acting on and
supplementing each other, and carried forward by the imponderable factors in human
nature itself, which impel millions of human beings suddenly freed from the crushing
and destructive influences of a great war, first to give full freedom to their
creative and constructive impulses, and from that safe ground gradually to drift on
into the area of speculation.and unsound practices.
There prevails throughout most of the world to-day a competitive economic order
in which men engage freely in a wide variety of specialized activities for a money
income which is spent by them also quite freely upon a wide variety of commodities
and in response to frequently unstable preferences.

When you take into considera­

tion the immense importance of the psychological factor, the tendency of human
beings to move all together in one direction or the other at the same time, in
mass movements, made up of the actions of countless individuals, each acting in

- 6 *
accordance with his own impulses and with that freedom which is assured him, you
have a problem as baffling and profound as human nature itself.
:No ope disputes the all too evident evils resulting from a speculative mania
which-affected the entire nation.

No one disputes thé fact that the events which

took place exposed practices which cannot he tolerated, and no thoughtful man can
help hut question whether there are not real weaknesses somewhere when the vast
credit machinery of the country can he made so readily available for speculative
purposes.
These are questions which require serious thought and dispassionate study.
It is to he hoped that, with the accumulated knowledge that comes from care­
ful analysis and continuous study, the day may come when, through the concerted
action of the business and hanking community, these movemdnts may he arrested at
the inception of the dangerous phase.
that call for correction.

And certainly evils have been disclosed

But, in the meanwhile, any man who attempts to speak

dogmatically or with finality deals with these problems either from a wholly
theoretical standpoint or with the valor of ignorance.
There are two main phases of the depression problem,-the business phase and
the financial phase.

For business it has been a time of readjustment, of cutting

costs, of improving efficiency, of cooperative efforts to avoid overproduction.
I shall not attempt to deal with these business problems.

I propose with this

audience to deal with the financial aspects of the depression, which until recently
have interposed a barrier to recovery.
With the major financial movements of the depression you are, I am sure,
generally familiar.

To begin with, we have experienced the largest decline in

prices the country has ever experienced, except immediately following great wars.
Wholesale commodity prices declined 33$* bond prices 17$ stock prices 76 $, and
rents, wages, and other prices to a somewhat lesser extent.

With this shrinkage

/

-

7

-

in values, the value of hank assets was impaired; 13^5 hanks failed in 19 30 , and
2298 in 1931*
the hanks.

As hanks failed, depositors became alarmed and withdrew cash from

This hoarding of money prohahly reached $1,500,000,000 and further

accentuated the difficulties of the hanks.

The hanks in their turn, facing the

loss of cash, sought hy every means in their power to realize upen their assets and
improve their liquid position to meet any demands upon them.

Under this urge,

together with the fall in prices, there was a deflation of hank credit of unpre­
cedented size.

Loans and investments of all hanks of the country declined between

October, 1929» end June, 1932, nearly $15,000,000,000, or about 25$, and loans and
investments of member hanks alone declined about $8,000,000,000.

Luring this period

foreigners who had placed more than $3*000,000,000 of funds in our money market
Withdrew those funds rapidly,:partly from need .and partly from fear.

So that the

total amount was reduced from about $3,000,000,000 in the autumn of 1929 , to
$600,000,000 in June, 1932.

The latter part of this movement caused a tremendous

gold drain from the United States of over $1,000,000,000.

These were the main

outlines of the financial disturbance.
Liquidation is always characteristic of periods of business readjustment and de«r
pression.

It serves to eliminate points of weaknesses and maladjustments which in­

evitably develop in periods of unhealthy expansion.
which this process is purely destructive.

But there is a point beyond

That point was reached many months ago.

During the two years following the peak reached in the autumn of 1929» loans
and investments of member banks declined by about- $3*000,000,000.

In the short pe­

riod *f nine months which followed the European collapse, they fell by not less than
$5*000,000,000.

Fear was the impelling force that carried contraction and depression

to new depths; fear first as to the soundness of our banks manifested in the hoard­
ing of currency, which buried hundreds of millions of dollars .and paralyzed the
rest; and fear for the ability of our credit structure to withstand the blows from
abroad.

- s The effect of extreme liquidation on the "business situation is increased by
another sort of fear; the fear on the part of the business man that credit facili­
ties which arc- essential to his operation will not be available.
.credit' is essential to the commencement of recovery.

Ample and active

When purchasing power has been

depleted by declining business and. employment, and markets and values have contracted,

:

V■

..;

■

I I

I credit is the. primer needed to set t,he wheels of industry again in motion.
In the autumn of last year, a.?ter 'almost overpowering difficulties attending
more than two years of contraction in industry, agriculture and trade, a third fear
confronted us— fear for the dollar itself.
possible had happened.

Germanyfs credit had collapsed.

England had gone off the gold standard.

The im­

By the end of 193^

|he gold standard had become inoperative in eighteen other countries.

In some quar­

ters the belief was frankly expressed that, under the double impact of foreign with­
drawals and domestic hoarding, the United States too would be forced to follow England
with literally incalculable consequences.

Here was a situation that called for prompt

vigorous and decisive action.
We are now in a position to turn to the program itself.

It divided itself,broad«?

ly speaking, in two main lines of endeavor; First, to underpin the credit structure
df the country, and, secondly, to counteract the fearful contraction of credit occa­
sioned by the drain of gold and the ho veling of currency.
The first part of the program was made effective by making available the credit ;
of the Federal Government, through the medium of the Reconstruction Finance Corpora­
tion, to all of the great credit-giving institutions of the country,such as insurance
companies,joint stock land banks, Federal Land Banks, intermediate credit banks,agri­
cultural credit associations, Building and Loan Associations, mortgage companies, and,
above all, to the banks;the progressive failure of which it was imperative to arrest.
The organization of the Corporation followed upon that of the national Credit Associa-

tion , which had home the f i r s t impact of the b a ttle .

The magnitude of the task,

and the v it a l need fo r a ssista n c e , i s indicated by the following fig u re s:
As of September 1 s t, the Reconstruction Finance Corporation had authorized
7,500 loans to 5,609 organizations, aggregating $1,412,000,000.

Of th is amount,

$824,000,000 was authorized to 4,715 banks and tru st companies (including about
$32,000,000 to aid in the reorganization or liq u id ation of 376 closed banks),
$80,000,000 to 643 building and loan a sso c ia tio n s, $72,000,000 to 79 insurance
companies, $83,000,000 to 68 mortgage loan companies, $1,361,000 to 10 a g ri­
cu ltu ral cred it corporations, $11,000,000 to 17 liv e stock cred it corporations,
nearly a m illion and a h a lf to six Jo in t Stock Land Banks, $29,000,000 to nine
Federal Land Banks, $405,000 to th^ee cred it unions, and $243,000,000 to 49 r a i l ­
roads and railro ad receiv e rs.

R e lie f loans aggregating $17,000,000 were made to

eight S ta te s, and loans aggregating $50,000,000 were made under the r e l i e f act pro»?
vision fo r advances to finance the carrying and orderly marketing of ag ricu ltu ral
products.

Of the $1,412,000,000 authorized, $1,122,000,000 had actu ally been d is­

bursed on August 31, of which nearly $150,000,000 had been repaid.

In addition to

the above, more than 500,000 individual loans to farm ers, aggregating nearly
$65,000,000, have been made by the Secretary of Agriculture out of the $107,5O0,0OQ
thus fa r allo cated to him.
I t has been said that the Reconstruction Finance Corporation b en efits only the
great c ity banks and other large in stitu tio n s.

The contrary i s true.

The great

m ajority of banks which have borrowed from the Corporation are located in small
towns.

S p e c ific a lly , on August 31, seventy per cent of the banks to wnich loans

had been authorized were in towns of le s s than 5,000 population; eigh ty -six per
cent were in towns of le s s than 25,000, and ninety per cent were in towns of le s s
than 50,000.

Looking at i t from another angle, we fin d that loans have been

authorized to nearly twenty—fiv e per cent of a l l the banks in the country, these
banks having about 15,000,000 of the 40 m illion bank depositors in the United

States*

These have been directly affected, by the Corporation's loans to banks,,

while the other 25 million have benefited indirectly by the Corporation1s
•

'■ 'i f >'."V

activities in preventing the fire from spreading.
There is no need to emphasize what this assistance meant, not only to the
25 per cent of the banks which received advances, but to all of the banks of the
country, their 40 million depositors, the communities which they served, and ]
indeed.,^ the entire economic life of the nation.
Without the Reconstruction Finance Corporation, I think all of you gentlemen
will agree that there is grave doubt whether our banking system could have sur~
vived the terrible strain of this financial panic? and had our banking system gone
under,then indeed would the process of building up from chaos have been a long
and distressing one.
But, standing alone, even the efforts of the Reconstruction Finance Corporation
would have been insufficient*

During the period beginning with the abandonment of

the gold standard by Great Britain, and ending in June of this year, the commercial
l*ahks of the country sustained unprecedented losses of reserve funds through the
withdrawal of foreign balances in gold, as well as through the withdrawal of currency
by domestic depositors.

From the middle of September, 1931, to the end of February,

1932, the losses of funds thus sustained amounted to approximately $1,000,000,000,
During this period, member banks were forced rapidly to increase their indebtedness
at the Reserve Banks, and in their efforts to obtain a more liquid position, reduced
their loans and investments at a disastrously rapid rate.
From the end of February to the end of June, the banks sustained a further loss
of nearly $500,000,000, due principally to a heavy gold outflow.

But, during this

second period, the Federal Reserve Bahks purchased more than $1,000,000.,000 of Govern­
ment securities.

This had an all~important effect* not only on the situation of the

banks,but on the volume of available credit.

By the end of February,the member banks

-

11

-

were indebted to the federal Reserve Banks by over $800,000,000*

Without these

purchases of Government securities by the federal Reserve Banks, discounts would
have increased to well over a billion*

I need not tell you gentlemen that when

the banks are heavily in debt they restrict credit*

If the whole of the gold and

currency loss had had to be met by borrowing, restriction would have reached the
point of disaster*

The open market policy of the federal Reserve System made this

borrowing unnecessary*

It did more*

It permitted the member banks not only to

meet the heavy drains upon them, but to decrease their borrowings from the federal
Reserve Banks by $365,000,000 and to increase their reserves by $150,000,000*
The effects which this had on the general credit situation are reflected
by the following figures:

Whereas reduction in loans and investments of all

member banks for the six months ended June 30 last aggregated two and a half
billion dollars, weekly reports from member banks indicate that two-thirds of
the reduction occurred during the first quarter, and only one-third during the
second quarter*

Loans and investments of Rew York City reporting banks showed

no net reduction between the end of February and the end of June, and the de­
posits in Hew York City member banks showed an actual increase in that period,
as compared with a reduction of more than $1,300,000,000 between September of
last year and February of this*

In all other member banks throughout the country,

shrinkage in deposits from February to June was reduced to $800,000,000, as com­
pared with a decline of almost three and a half billion from September to February*
To anyone who understands the problem, these figures spell out the indispen­
sable character of the service rendered by the federal Reserve System through its
open market policy in arresting the contraction of credit which was bringing dis­
aster all along the line, and in meeting demands which not only threatened the
integrity of our banking system but imperiled the maintenance of the gold standard
itself,

181

c ■ |$ ■
,

-

Then, suddenly, the tide turned.

12

-

The day came when there was a definite

realization that those large short-time foreign balances which had been the
subject of greatest anxiety, and which had constituted such a severe drain,
had reached a subnormal level, with the result that not only had the outflow
definitely ceased, but there was every prospect of a large gold movement in our
favor*

The cumulative effect of all of our efforts at last began to tell#

strain under, which all have labored for many long months was relieved.
fear which had led men to doubt our ability to survive disappeared#

The

The blind

Whatever dis­

appointments and set-backs might be experienced in recovery from the business de­
pression, the financial panic had been definitely overcome#

The national credit

had been made secure, the integrity of the dollar was no longer open to question.
From the low point in June to the third week in September, our monetary gold
stock increased by about $250,000,000*

From July 20th to September 24th, the

return flow of currency adjusted for seasonal change amounted to approximately
$225,000,000.

The indebtedness of the member banks was reduced by a further large

(
sum to the lowest level since last September#

During the month of August tnere

was a continued strengthening of the general banking situation throughout the
country, and bank failures showed a further sharp reduction#
chases are no longer necessary and have been discontinued#

Open market pur­
Excess reserves

aggregated about $360,000,000,
\

I desire to stress the importance of the last-named factor#

If we study the

history of previous business depressions, we find that during the latter phases
there was a tendency for funds to pile up in the money centers, and this piling
up of funds was followed by higher bond prices and then by a resumption of business
activity#

In 1885, the excess reserves of New York City banks, computed as

percentages of required reserves, reached a figure in excess of 60 per cent

- 13 -

immediately preceding the upturn in business activity; in 1894, nearly 70 per
cent; in 1908, 20 per cent; and 1915, 40 per cent.

By September 15th last,

excess reserves reached a figure of 20 per cent.
The effect of an accumulation of large excess reserves is to relieve the
banks of pressure, to assure business that a shortage of credit will not be an
obstacle to recovery, and, finally, after these un-earning assets have lain
idle long enough, to begin to exert an influence on the banks to put them to
work,
I started out by saying that it was our duty to remove those obstacles which
stood in the way of economic recovery, and to relieve the forces that were working
for betterment from the pressures that were holding them back.
said.

Three great obstacles have been removed.

This much can be

All doubts as to the credit of

our Government and the integrity of our currency are gone.

Fears as to the

strength and ability of our banks to withstand unusual demands have been greatly
lessened.

The anxiety lest needed credit be unobtainable is beginning to dis­

appear.
A major task still remains before the country.
is still to be overcome.

We shall succeed.

The depression proper

I trust that as a next step we shall

see an increase in credit, then in business activity, a further general rise in
prices, and, above all, a- sure, if necessarily slow, correction of the maladjust­
ment in the price levels, which, until it is cured, presents a formidable barrier
to recovery.

And this applies particularly to the disparity in the price of the

products of the farm, and of raw materials in terms of the goods for which they
are exchanged.

The surest means of assuring the restoration of national purchasing

power is through the maintenance of a proper price relationship so that the ex-

- 14-

change of goods can proceed on such a basis as will insure a steady and normal
increase of production.
In this process of recovery and readjustment it "behooves the members of this
Association, the hankers of the country, to play an important role,

Freed from

the fear of collapse, often caused by no fault of his own, but by the repercussiops
from the difficulties of other institutions, the banker mast take stock of his
resources and his responsibilities, and make a fresh start in his all-important
function of providing credit, up to the measure of his ability, for the use of
the productive elements of the population,

Nineteen-twentieths of this country’s

business is transacted on credit, and when the sources of credit dry up, our
economic machine becomes stalled.

It is the responsibility of the bankers, as

dispensers of credit, to encourage the return of a normal volume of business
activity by resuming their normal attitude of sympathetic cooperation with those
who are their customers, whose prosperity means the prosperity of the banks
themselves as well as of the nation,— the producers and distributors of this
country’s wealth, the farmers, manufacturers, and merchants of America,

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Thursday, October 6, 1932*

STATEMENT BY ACTING SECRETARY BALLANTINE

The Treasury is today offering for subscription at par and
accrued interest, through the Federal Reserve Banks, $450,000,000, or
thereabouts, 3 per cent four and one-half year Treasury notes of
Series B-1937*
The notes will be dated October 15, 1932, and will bear
interest from that date at the rate of 3 per cent per annua, payable
semiannually.

They will mature on April 15, 1937, and will not be

subject to call for redemption prior to that date*
The principal and interest of the notes will be payable in
United States gold coin of the present standard of value*
The notes will be exempt, both as to principal and interest
from all taxation (except estate or inheritance taxes) now or here­
after imposed by the United States, any State, or any of the possess­
ions of the United States, or by any local taxing authority.
Applications will be received at the Federal Reserve Banks,
The Treasury will accept in payment for the new notes, at par,
Treasury certificates of indebtedness of Series T)-1932, maturing
October 15, 1932, and subscriptions in payment of which such Treasury
certificates of indebtedness are tendered will be given preferred
allotment*

- 2 -

The notes will he issued in hearer form only, in denomina­
tions of $100, $500, $1,000, $5,000, $10,000, and $100,000, with
interest coupons attached payable semiannually on April 15 and October
15 in each year.
About $533,492,500 of Treasury certificates of indebtedness
and about $155,000,000 in interest payments on the public debt become
due and payable on October 15, 1932.
The text of the official circular follows:

/ rA

- 3 -

Ike Secretary of the Treasury offers for subscription, at
par and accrued interest, through the Federal Reserve Banks, $450,000,000,
or thereabouts, three per cent Treasury notes of Series B-1937, of an
issue of gold notes of the United States authorized by the Act of Congress
approved September 24, 1917, as amended*
DESCRIPTION OF NOTES
The notes will be dated October 15, 1932, and will bear
interest from that date at the rate of three per cent per annum, payable
semiannually on April 15 and October 15 in each year.

They will mature

April 15, 1937, and will not be subject to call for redemption prior
to maturity.
The principal and interest of the notes will be payable in
United States gold coin of the present standard of value.
Bearer notes with interest coupons attached will be issued
in denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000*
The notes will not be issued in registered form.
The notes shall be exempt, both as to principal and interest,
from all taxation (except estate or inheritance taxes) now or hereafter
imposed by the United States, any State, or any of the possessions of the
United States, or by any local taxing authority.
The notes will be accepted at par, during such time and under
such rules and regulations as shall be prescribed or approved by the
Secretary of the Treasury, in payment of income and profits taxes payable
at the maturity of the notes.
The notes will be acceptable to secure deposits of public
moneys, but will not bear the circulation privilege.

- 4 -

APPLICATION AND ALLOTMENT
Applications will be received at the Pectoral Reserve Banks*
Subscriptions for which payment is to be tendered in Treasury
♦

certificates of indebtedness of Series TO-1932, maturing October 15» 1932»
will be given preferred allotment*
The Secretary of the Treasury reserves the right to reject any
subscription, in whole or in part, and to allot less than the amount of
notes applied for and to close the subscriptions at any time without
notice; the Secretary of the Treasury also reserves the right to make
allotment in full upon applications for smaller amounts, to make reduced
allotments upon, or to reject, applications for larger amounts, and to
make classified allotments and allotments upon a graduated scale; and
his action in these respects shall be final*

Allotment notices will be

sent out promptly upon allotment, and the basis of the allotment will
be publicly announced*
PAYMENT
Payment at par and accrued interest for notes allotted must
be made on or before October 15, 1932» or on later allotment*

Any

qualified depositary will be permitted to make payment by credit for
notes allotted to it for itself and its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so
notified by the Pederal Reserve Bank of its district*

Treasury certi­

ficates of indebtedness of Series TCX-1932, maturing October 15, 1932,
will be accepted at par in payment for any notes of the series now
offered which shall be subscribed for and allotted, with an adjustment

of the interest accrued, if any, on the notes of the series so paid
for.
GENERAL PROVISIONS
As fiscal agents of the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make allot­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks of the respective districts.
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive notes.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS7
Friday, October 7, 1932,

STATEMENT DY ACTING- SECRETARY BALLANT INE

Acting Secretary Ballantine today announced that the
subscription books for the current offering of four and one-half year
3 per cent Treasury notes of Series Brl937, maturing April 15*
1937, closed at the close of business today, Thuraday, October 6th,
Subscriptions placed in the mail before 12 o*clock
midnight, Thursday, October 6th, as shown by the post office
cancellation, will be considered as having been entered before ~
the close of the subscription books.
Announcement of the amount of subscriptions and the
basis of allotment' will be made on or about Tuesday# October 11th*

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Saturday, October 8, 1932.

STATEMENT BY ACTING SECRETARY BALLANTINE

Acting Secretary of the Treasury Ballantine announced today that
the tenders for $75,000,000, or thereabouts, of 92-day Treasury Bills,
dated October 11, 1932, and maturing January 11, 1933, which were
offered on October 4th, were opened at the Federal Reserve Banks on
October 7th.
The total amount applied for was $259,468,000.

The highest

bid made was 99.955, equivalent to an interest rate of about 0.18 per
cent on an annual basis.

The lowest bid accepted was 99.950,

equivalent to an interest rate of about 0,20 per cent on an annual
basis,.

The total amount of bids accepted was $75,954,000.,

average price of Treasury bills to be issued is 99.951.,
rate on a bank discount basis is about 0.19 per cent.

The

The average

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Tuesday, October 11, 1932,

STATEMENT BY ACTING SECRETARY BA1LANTINE

Acting Secretary Ballantine today announced the subscription
figures and the basis of allotment for the October 15th offering of
four and one-half year Treasury notes of Series B-1937, 3 per cent,
maturing April 15, 1937,
Reports received from the Federal Reserve Banks show that for
this offering, which wa,s for $450,000,000, or thereabouts, total sub­
scriptions aggregate over $8,368,000,000,

Of these subscriptions,

$318,162,000 represent exchange subscriptions, in payment for which
Treasury Certificates of Indebtedness maturing October 15th were
tendered.

Such exchange subscriptions were allotted in full.

lotments on cash subscriptions were made as follows:

Al­

Subscriptions

in amounts not exceeding $1,000 were allotted 10 per cent, but not
less than $100 on any one subscription; subscriptions in amounts over
$1,000 but not exceeding $50,000 were allotted 5 per cent, but not
less than $100 on any one subscription;

subscriptions in amounts

over $50,000 but not exceeding $500,000 were allotted 3 per cent,
but not less than $2„5CQ on any one subscriptionp

and subscriptions

in amounts over $500,000 were allotted 2 per cent, but net less than
$15,000 on any one subscription.
Further details as to subscriptions and allotments will be
announced when final reports are received from the Federal Reserve
Banks

FOR RELEASE, MORNING PIPERS,
Thursday, October 13, 1932*

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRET ‘
JRY OF THE TREASURY BALLANTINE

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $75,600,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders;

Tenders Will be received at the Federal Reserve Banksf

Ir the branches thereof> up to two (Mclodk p. m . , Eastern Standard time,
on Mondayj October 17, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills ?/ill be dated October 19, 1932, and will
mature on January 18, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, ^100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than ^1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g , , 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-

2-

applied for, unless the tenders are accompmied by an express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
October 17, 1952, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public announce ment of the acceptable prices will follow as soon as possible thereafter,
probably on the following morning.

The Secretary of the Treasury expressLy

reserves the right to reject any or all tenders or parts of tenders, ana
to allot less than the amount applied for, and his action in any such
respect shall be final.

Those submitting tenders will be advised of the

acceptance or rejection thereof.

Payment at the price offered for

Treasury bills allotted must be made at the Federal Reserve Banks in
cash or other immediately available funds on October 19, 1952.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or othop disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No, 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

FOR IMMEDIATE RELEASE,
Thursday, October 13, 1932,

TREASURY DEPARTMENT

Acting Secretary Ballantine today announced the final subscription and
allotment figures on the October 15th offering of 3 per cent Treasury Notes of
Series B-1937, maturing April 15, .1937.
Subscriptions and allotments were divided among the several Fedexal Re—
serve Districts and the Treasury as followsr

Total Exchange
Subscriptions
Received

Total Subscrip­
tions Received

Total Sub­
scriptions
Allotted

Federal Reserve
District

Total Cash
Subscriptions
Received

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

$ 459,682,100
4,176,672,800
627,775,200
387,394,800
162,089,800
302,087,000
844,037,500
85,570,300
43,599,100
107,773,500
98,732,400
753,536,700
1,230,500

$ 14,572,500
232,151,500
6,682;,500
850,000
2,221,500
694,000
40,402,000
4,858,000
1,016,500
3,156,500
154,000
11,304;000
99,000

$

474,254,600
4,408 s824,300
634,457,700
38.8,244,800
164,311,300
302,781,000
884,439,500
90,428,300
44,615,600
110,930,000
98,886,400
764,840,700
1,329,500

$ 28,294,100
325,373,000
21,050,000
9,816,800
7,201,800
9,888,600
60,486,000
7,139,500
2,219,200
5,806,700
3,617,300
27,319,000
126,600

$8,050,181,700

$318,162,000

$8,368,343,700

*$508,338,600

Total

^Includes $318,162,000
exchange subscriptions,
which were allotted in full,

FOR RELEASE, MORNING PAPERS,
Tuesday, October 18, 1932*

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS.

Secretary of the Treasury Mills announced today that the
tenders for $75,000,000, or thereabouts, of 91-day Treasury Bills,
dated October 19, 1932, and maturing January 18, 1933, which were
offered on October 13th, were opened at the Federal Reserve Banks
on October 17th.
The total amount applied for was $252,465,000.

The highest

hid made was 99.967, ‘equivalent to an interest rate of about 0.13 per
cent on an annual basis.

The lowest bid accepted was 99,960,

equivalent to an interest rate of about 0.16 per cent on an annual
basis.
accepted.

Only part of the amount bid for at the latter price was
The total amount of bids accepted was $75,110,000.

The average urice of Treasury Bills to be issued is 99,965.
average rate on a bank discount basis is about 0,14 per cent.

The

EOR RELEASE, MORNING PAPERS,
Thursday, October 20, 1932.

TREASURY DEP.OTMENT

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $80,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o ’clock p. m . , Eastern Standara time,
on Monday, October 24, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated October 26, 1932, and will
mature on January 25, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be suppliée, by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered..
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g . , 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

/if

\

-

2-

applied for, unless the tenders are accompanied by can express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
October 24, 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or ell tenders or
parts of tenders, and to allot less than the amount applied for, end
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on October 26, 1932.
The Treasury bills will be exempt, as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

FOR RELEASE. THURSDAY,
OCTOBER 20, 1932, upon
delivery, which will
probably be 10:30 A.M*

TREASURY DEPARTMENT

FEDERAL TAXATION TODAY
Address of
Honorable Arthur A. Ballantine
Under Secretary of the Treasury,
Before
Annual Meeting of
Associated Industries of Massachusetts,
Boston, Massachusetts,
October 2©, 1932.

FEDSRAL TAXATION TODA.Y

Address o f
Hon, Arthur A, B allan tin e, Under Secretary of the Treasury,
Before Annual Meeting of A ssociated In du stries of Massachusetts
Boston, M ass,, Oct, 20, 1932,

The great objective in taxation i s to reduce the tax
burden.

The depression makes that objective fa r more d esirable

and at the same time fa r

more d iff ic u lt to r e a liz e .

The

estim ate i s fa m iliar that in 1930 about 14J# o f every d o llar
of national income went to governments, about 5# to the
Federal Government and lQi# to S tate and lo c a l governments.

In

1931 and 1932, when income had su ffered much more from the de­
p ression , the percentage so absorbed was undoubtedly la rg e r.
This tax drain must be lessened.
l

Accomplishment of r e lie f

c a lls fo r informed and unrelenting p a rticip atio n of taxpayers
and sound national leadership.
The basic remedy fo r high taxes i s to lower the cost of
government.

On th is point the President has declared:

«The f i r s t n ecessity o f the Nation, i s to
reduce expenditures of government, N ational,
S tate, and l o c a l ,”
That declaration expresses the b a sis upon which the President has
proceeded and i s actin g today.

I t i s well to understand certain

stubborn obstacles to reduction and be able to appraise and
a s s i s t adm inistrative guidance.

Reduction i s fa r from simple

and mere l ip service to the idea i s of l i t t l e value.

Pf
-

2

-

The war made a l i f t in the le v e l of Federal expenditures
which cannot he overcome for many many years*

I t l e f t us with

public debt expenditures and provisions fo r veterans amounting
each year to more than twice what i t used to cost before the war
to meet a l l expenses of maintaining the Federal government*

For

the fiv e years ending in 1915, annual expenditures of the Federal
Government averaged about $720,000,000; fo r the war years 1917
to 1919, they averaged nearly $11,070,000,000*

Post-war re­

duction could not carry expanses down to anything lik e the pre­
war le v e l and fo r eight years — 1922 to 1929 — they remained
re la tiv e ly sta b le and averaged about $3,640,000,000*
The p rin cip al items o f post-war expenditures can be i l l u s ­
trated by turning to the expenditures fo r the f i s c a l year 1929®
Of the $3,848,000,000 t o ta l, about $1,228,000,000, or nearly
one-third, was fo r service of the public debt, including the
payment of in te re st and repayment of prin cipal required by law.
$771,000,000, or about o n e-fifth was expended fo r veterans*
About $676,000,000, or about 18 per cent, was fo r national defense.
The most strik in g fa c t about these Federal expenditures i s that
nearly 70 per cent goes for the service of the debt fo r veterans
and fo r defense*

The balance fo r a l l other expenditures of the

Government amounted to about $1,173,000,000*
Even from these few fig u re s i t appears that the problem of
reducing Federal expenditures i s fa r from the simple task of
e ffe c tin g the curtailment of a vast to ta l of expenditures, a l l
of su b sta n tially the same c la s s *
cannot be

reduced,

In fa c t, some expenditures

others can be reduced only with great d iffic u lty

and general expenditures are a comparatively small percentage
and are made up of a great aggregate of items each presenting
d istin c tiv e considerations and questions of p o licy .

When any

one declares that Federal expenditures can he cut in some impress*
sive percentage, he should he c alle d upon to sp ecify where and how.
A general reduction i s l i t t l e more p racticah le than a general sur­
g ic a l operation.

Reduction i s a matter of intensive concentration

and struggle on d e t a ils , as to every one of which dispute and d is—
sention must he reso lu tely overcome.
The depression in evitably gave a further l i f t to Federal
expenditures, although in th is case the l i f t w ill he temporary.
In the case of a b u sin ess, hard times can u su ally he promptly
met, a t le a st in p a rt, by reducing c o sts.

The situ atio n of the

Government, p a rtic u la rly of the Federal Government, i s d iffe re n t.
Even while reductions are being made in ordinary expenditures,
emergency and r e l i e f needs spring from the depression and neces­
s it a t e unusual expenditures.
Emergency expenditures began in 1930 and increased in 1931,
hut showed th eir re a l increase in 1932, when the to ta l of a l l
expenditures reached the high fig u re of fiv e b illio n d o lla rs.
This represented an increase of $1,500,000,000 from the f i s c a l
year 1927, which was the recent year showing lowest expenditures.
This increase has sometimes been erroneously discussed as i f i t
represented a mere sw elling of the cost o f usual Federal a c t iv it ie s
The fa c t i s that emergency expenditures d ire c tly and in d irectly
attrib u ted to the depression more than account fo r the in crease.

Comparing expenditures of the Federal Government fo r the
f i s c a l year 1932 with those for the f i s c a l year 1927, there w ill
be found in the 1932 year the wholly new expenditure for the
c a p ita l stock of the Reconstruction Finance Corporation and for
addition al c a p ita l stock of Federal Land Banks together amounting
to $625,000,000.

Increase due to loans from the A gricultural

Marketing Fund accounts fo r $136,000,000 of the excess, and ac—
celeratio n of work-making a c t iv it ie s on the Government’ s construc­
tion program fo r another $400,000,000.

There must be added an

increase of about $250,000,000 in the charges on the Budget fo r
veterans of the World War, and $176,000,000 fo r an increase in
the p o stal deficiency due to the depression.

These items, which

by no means cover a l l of the unusual expenditures, aggregate more
than the net increase in to ta l expenditures from 1927 to 1932.
Without here attempting a d etailed an aly sis or a complete d efin i­
tio n of what co n stitu tes the unusual and what the normal function
of government, i t i s clear that apart from these sp e cial items of
in crease which I have in dicated, the net expenditures of the
Federal government were no more in 1932 than fiv e years e a r lie r .
In the main, the extraordinary expenditures fo r 1932
were part of a comprehensive program of constructive national
actio n , designed to fig h t the depression and to la y the foundation
fo r broad recovery in business and employment.

The nation w ill

-1

- 5 -

be repaid many times over fo r the cost of placin g the strength
of the Federal Government behind our whole business and c re d i|
structure a t the time when i t was subjected to unparalleled
stra in .

Acceleration of recovery w ill r e su lt not merely in

the elim ination of emergency expenditures; i t means also easing
the tax burden through increase o f a b ility to pay.
While convinced of the wisdom of carefu lly conceived
emergency expenditures, the Administration has fought for the cur­
tailment of expenditures where curtailment was p o ssib le.

The

Budget submitted to Congress by the President l a s t December was
n ecessarily planned so as to provide for carrying on the Government
according to e x istin g le g al requirements.

Nevertheless that

Budget showed reductions in expenditures of $370,000,000 below
1932 expenditures.

The President in siste d on further economy through changing
the law so as to bring about curtailment of certain functions and
reduction in the cost of estab lish ed serv ice s.

Following the

general lin e of h is recommendations, an Economy B i l l was introduced
into the House which i t was estimated would re su lt in a saving of
upwards o f $200 , 000 , 000 , including $ 90 , 000,000 from reduction in
personnel and compensation of employees, savings from compulsory
retirement, and the lik e ; $17 , 000,000 from miscellaneous savings;
$^9 , 000,000 from rev isio n of veterans le g isla tio n , and large savings
from the reorganization and consolidation of bureaus and d iv isio n s.
When the B i l l fin a lly passed the House on May 3rd» however, the

- 6 -

prospective savings had been squeezed, down to from th irty to f i f t y
m illion d o lla rs.
As reported to the Senate, savings through the measure were
restored to above $200,000,000, but again the B i l l seemed doomed.
I t was only a fte r the most urgent personal appeal by the President
in the Senate at the end of May, for the protection of the finances
of the Government through the enactment of economy measures among
other means, that the B i l l was fin a lly passed, with estimated
savings of some $150,000,000.

Taking into account th is saving

and the fa c t that many of the emergency expenditures o f 1932
did not have to be again provided for in 1933 » to ta l appropriations
fo r the 1933 year, while greater than the amount which was rec­
ommended by the Administration, w ill be le s s than expenditures for
1932 by an amount of approximately one b illio n d o lla rs.

That

i s a t le a s t a s ta r t in the r i ^ i t direction .
During th is period the hard-pressed taxpayer has needed
zealous protection from unwarranted burdens upon the Treasury.
Such a burden would have been involved by the project which passed
the House o f Representatives, but was th ereafter defeated, for
expending well over $1 , 000 , 000,000 for a miscellaneous improvised
program of minor public works scattered throughout the land,
without reference to real needs.

I f the House had had i t s way,

the Government would have had to make immediate cash payment of
the maturity value of the Adjusted Service Compensation C e rtific a te s
held by veterans, which would have required an expenditure o f over

- 7 $2,000,000,000.

I t was proposed that th is payment be effected ,

not through funds obtained in the ordinary way through taxation
or borrowing, but by the issue of f i a t currency, a course which
would be calcu lated in the end to confront the taxpayer not only
with addition al tax burdens, but with the d isastrou s co n scien ces
of an unsound currency.

Such p ro jects s t i l l have to be fought, for they

would destroy any hope for r e l i e f of the burden of Federal ex­
penditures.
The Administration has not relaxed i t s p e rsiste n t e ffo rts
for further reduction of Federal expenditures.

Steps are under

way for further reductions fo r the f is c a l year I 93I+.

A concrete

plan for reduction i s now being formulated and w ill be presented
to Congress in December.

These plans include not merely d rastic

reductions in appropriations for expenditures on establish ed
lin e s, but a sp e c ific plan fo r reorganizing the adm inistrative
structure of the Government.

On the President’s insistence
*\
this was finally authorized by the Economy Act, although with
the limitation that reorganization cannot be put into effect
until after it is reported to Congress,

1

Increases in taxes are always hard to bear, not merely
because they a tta c k the pocketbook, but also because they are a
burden upon busin ess.

When the depression was in i t s e a rlie r

phases i t was hoped that no new tax burden would have to be
imposed.

Acceleration of debt retirement beyond the rate called

fo r by sinking fund and other statutory provisions had given what

Av Ct

- 8 -

was in a sense a reserve of some $3,460,000,000 which in a lean
period might he drawn upon through debt replacement«

I f the

depression had followed the pattern of 1921, or i f the an ticipated
recovery which sta rte d early in 1931 had not yielded to new
adverse developments in Europe, business might have been spared
from the scourge of tax in creases.
The f i s c a l year 1930 showed a surplus of $184,000,000
and the f i s c a l year 1931, p a rtly a s a re su lt of increase in
emergency and r e l ie f expenditures, showed a d e fic it of $903,000,000,
of which $440,000,000 was accounted fo r by debt retirement.
This was of course a matter of concern, but in view of the fin an cial
accomplishments in prosperous years, i t was not in i t s e l f alarming.
In the f a l l of 1931, a f t e r the depression had entered upon
i t s second and fa r more intensive phase, i t became c le a r that
the reduction in revenue and the increase in emergency expenditures
would create d e fic it s so large as to use up the th eoretical
reserve, and th at, notwithstanding the hardship which i t involved,
a determined upward revision of the tax structure must be urged.
In fa c t, Federal tax revenues were about halved a s a re su lt
of the depression, the to ta l declining from about $3,630,000,000
in 1930 to le s s than $1,890,000,000 in 1932.

In the post-war

years our main relian ce had been upon the income tax which provided
about two—thirds of the revenue from taxes.

The other third was

divided roughly in equal proportions between customs and miscellaneous

x c7

- 9 tax es.

The m iscellaneous taxes included the tax upon e sta te s,

those co llected by the sa le of documentary stamps, and a number
of le s s e r importance, but the p rin cip al tax was that collected
on tobacco products, which amounted to a s much a s $450,000,000
a year.

The e ffe c t of the depression was re g iste re d in re­

ductions of a l l three major sources of revenue, even those which
in the p ast had been most dependable.

The major decline was,

however, in the income taxes which alone showed a reduction
of about $1,350,000,000 during the two-year period.
When i t became cle ar that new tax burdens must be
imposed in the la rg e r in terest of taxpayers and of a l l of our
c itiz e n s, the Administration acted with vigor.

In h is message

to Congress when i t assembled l a s t December the President declared:
“ The f i r s t requirement of confidence and of
economic recovery i s fin an cial s t a b ilit y of the
United S tate s Government. 11
He pointed out that the preservation of that s t a b ilit y demanded
not merely a l l p o ssib le reduction of expenditures but a ls o , fo r a
time, increase in taxes.

The Secretary of the Treasury in h is

Annual Message to Congress l a s t December stated :
“ It i s not easy fo r any people to determine
to assume a large additional tax burden a t a time
when th eir resources are depleted through business
depression, but in the long run they w ill best
serve th eir own in te re sts by doing whatever is re­
quired to maintain the finances of th eir Government
on a sound b a s is . * * * * “

-

10

-

The Secretary proposed sp e c ific taxes to prodace the needed increase
in the revenue.

These recommendations included increase in income

tax ra te s so that the higher surtaxes would have been about doubled,
the increase to apply upon incomes fo r 1931, a s well a s th ereafter;
increase in e state taxes; new miscellaneous excise taxes, selected
c h ie fly with a view to obtaining from each a larg e amount of
ad d ition al revenue with re la tiv e ly l i t t l e adm inistrative cost and
d iffic u lty and without undue interference with busin ess.
The Ways and Means Committee of the House undertook reso lu tely
to formulate a program of i t s own and with the cooperation of the
Treasury drew up a b i l l which, in a general way, followed the lin e s
of the Treasury* s proposal except that the Committee su bstitu ted fo r
most of the Treasury* s miscellaneous tax proposals a general
manufacturers* excise tax a t <$4 per cent.

As o rig in a lly proposed

th is tax was estim ated to y ield approximately $595,000,000 in a
f u l l year.
The Committee*s proposed manufacturers* excise tax was
based la rg e ly on the Canadian model and was the re su lt of carefu l
and thorough study by the Committee working with the cooperation
of the Treasury and with the advice
by the Canadian Government.

of an expert made av ailab le

This tax was framed so as to impose

the levy upon a p a rtic u la r a r t ic le only at the point of sa le a s i t
l e f t the la s t stage of manufacture and entered into the channels
of d istrib u tio n , thus avoiding pyramiding.

The measure a s fin a lly

prepared was fre e of many featu res of the Canadian tax which had

previously led the Treasury to the conclusion that the Canadian
ta x would "be unsuited to conditions in th is country.

The

Secretary o f the Treasury immediately gave to the Ways and Means
Committee h i l l h is en tire support and urged i t s adoption.
The House o f Representatives permitted the carefu lly
devised measure of i t s Ways and Means Committee, unanimously
reported, to he torn to p ie c e s.

The h i l l was not referred hack

to the Committee hut was w ritten on the flo o r o f the House.

The

re su lt was a period o f great uncertainty and long delay which
further undermined confidence, aggravating and prolonging the
depression.
In the Senate the h i l l was long under discussion with much
difference o f opinion as to what plan should he followed in
elim inating undesirable featu res o f the h i l l as i t fin a lly passed
the House and obtaining the necessary revenue.

Although the

need fo r sta b iliz in g the finances of the Government was most pressin g
and was constantly urged upon Congress by the Administration, i t
was not u n til June 6th, a fte r the P residen t’ s direct appeal, that
a revenue h i l l was fin a lly enacted.

That was an act which did

not accord either with the Treasury program or the Ways and Means
Committee program.

I t s virtu e was that i t provided fo r budget

needs on a scale which overcame grounds fo r concern fo r the public
c re d it.

The new m iscellaneous taxes were lim ited in application

to Ju ly 1, 1934, with the exception o f the tax on gasolin e which
was put on fo r only one year.

- 13 Under the new revenue act individual income taxes were
d r a stic a lly increased so that combined normal and maximum surtax
reached 63 per cent.

The new ra te s are indeed severe and place

the income taxpayer upon a war b a s is .

In the emergency these

ra te s may help, but they are much above the point at which the
Treasury b elieves income taxes to be most productive in normal
times*
The ta x base to which individual income tax ap p lies was
broadened by reduction in personal exemptions ¡mo that i t i s
estimated i t w ill increase the number of in dividuals paying
taxes

by

about 85 per cent, and also increase the amount o f income

to which the tax w ill apply for individuals already in the taxpaying group.
The main increase in the y ie ld o f individual income taxes
w ill come from the very d ra stic increase in surtaxes and from
the operation o f the new provision which, except in the case
o f se c u ritie s held fo r two years or more, lim its the deduction
o f lo sse s on sa le s of se c u ritie s to income derived from gains
from such s a le s .

This i s a d ra stic change.

U ntil the enactment

o f the l a s t revenue act there was no lim itatio n on lo s s e s from
sa le s o f se c u ritie s within a two-year period which the taxpayer
might deduct from h is income from any source.

In the p ast many

taxpayers have been able to o ffs e t lo s s e s from the sa le o f se­
c u r itie s against business p r o fit s , in te re st, dividends, s a la r ie s ,
and the lik e , which c le a rly represent taxpaying a b ility in a

X11

- 13 given year.

The new act makes no change in the provision

lim itin g the tax on so -called cap ita l gains to 12| per cent, or
lim itin g the righ t to deduct c a p ita l lo sse s, that i s , lo s s e s on
sa le s o f se c u ritie s held for two years or more.

Other changes

were made in structure and the adm inistrative provisions o f the
income tax designed to clo se loopholes, as fo r example, through
the use of foreign corporations as a medium fo r the re a liz a tio n
o f p r o fits without l i a b i l i t y fo r fed eral tax.
The income tax ra te on corporations was increased from
12 per cent to 13| per cent, with an additional tax o f 3/4 of
1 per cent on corporate income reported on consolidated returns.

The exemption previously allowed for corporations with small
incomes was elim inated.

The Treasury f e l t that the increase

in the corporation rate was too la r g e .

Increasing the f l a t rate

upon corporations works in ju stic e in that the f l a t increase does
not and cannot take into account a b ility o f the corporation to pay.
I t i s the w ell-estab lish ed policy of the Treasury to
favor perm itting the determination o f taxable income to be made
in accordance with sound business p ra c tic e s.

The Treasury,

therefore, opposed the ap plication o f an additional rate to
income reported upon consolidated returns o f a f f i l i a t e d corpora^tio n s.

To have the income o f a f f il ia t e d corporations reported

in a sin gle return i s not to extend a p riv ile g e ; i t i s to recognize
fo r tax purposes the same b a s is o f reporting income which i s used
alik e for stockholders and fo r fin an cial statements.
E state taxes were very sharply increased through the medium
of an additional tax which c a rrie s the graduated ra te up to 45 per

4

cent of net e sta te s in excess of $10 , 000 , 000 , with a minimum ex­
emption of $50,000, as compared with a maximum rate of 20 per cent
and a sp e c ific exemption of $100,000 under the previous law,

A

fundamental d iffic u lty with high e sta te tax rate s has been
abundantly illu s tr a te d by the condition of e sta te s tran sferred in
1929 and 1930, when security values were comparatively high, now
confronted with taxes which, even under the moderate rate s of the
p rio r law, may in some instances .amount to more than the present
value of the se c u r itie s.

The b i l l provided fo r a cumulative g i f t

tax with ra te s designed to be about three-fourths of the estate
tax r a te s.
The excise taxes provided fo r under the b i l l are a somewhat
miscellaneous group, many of them yieldin g comparatively small
amounts and re stin g upon in d u stries which have no sp ecial taxpaying
a b ilit y .

The miscellaneous taxes do include an important 1^ tax

on gasoline and taxes of 3 per cent on sa le s of automobiles, and
of 2 per cent on trucks, and on p arts and a c c e sso rie s.
upon checks at

2<p

The tax

each was a re la tiv e ly important new levy.

Miscellaneous taxes under the new b i l l are yieldin g sharply
increased amounts of revenue as compared with l a s t year, notwith­
standing the decline in business during the year.

For example,

fo r the month of September and the f i r s t two weeks of October
m iscellaneous internal revenue re ce ip ts aggregated about
$120 , 000,000 as compared with $ 68 , 000,000 for the corresponding
period of l a s t year*

The y ie ld of the new check tax increased

up to more than $3,787,000 for the month; documentary stamp tax
receip ts rose to over $7,569,000, and the y ie ld on the gasoline
tax to over $11,410,000.

- 15 Accumulated data as to the operation of the new act will
form the basis for estimates as to the full revenue effect of the
measure during a period including the fiscal year

1934,

which will

"be submitted by the Secretary of the Treasury to Congress when it
convenes in December.

It should be remembered that the complete

effect of the new revenue act will not be gained until the fiscal
year 1934, partly for the reason that the new income tax rates
were not made to apply on incomes for 1931, as the Treasury recom­
mended, but begin to apply with incomes of 1932.
In the year in which the enactment of any new revenue
measure presented almost overwhelming difficulties, the placing
upon the statute books of a revenue measure so substantial in
its scope as the Revenue Act of 1932 was an impressive accomplishment.
The defeat of unsound financial proposals and the enactment of
improved budget legislation carried assurance of the financial
integrity of our Government.

This was immediately shown by the

dissipation of fear and the development of confidence.
The new measure is in many respects temporary and there are
many points which are subject to improvement and inequities which
call for remedy.

Revision of the tax law in substance, involving

inevitable disturbance of business, should never be undertaken
until the necessity and wisdom of that course are established
beyond doubt.

Ultimate development of the Federal tax system must

include the harmonizing of Federal tax policy and procedure with
those of the states so as to render the whole tax burden less and
more fairly distributed

-

16

-

There imist be sound and constructive national leadership
in this field.

Adequate leadership toward progress in taxation

must today take in a far broader field than that of the im­
mediate problem of expenditure and taxation.

Satisfactory taxation

requires sound and satisfactory business activity.

Progress toward

the great objectives in taxation necessitates leadership in promoting
business recovery and full resumption of normal economic activities.

\

EOR RELEASE, MORNING- PAPERS
Friday, October 21, 1932, >

TREASURY DEPARTMENT

STATEMENT BY SECRETARY OP THE TREASURY MILLS

Governor Roosevelt told an amazing story in Pittsburgh, last
night.

If it represents his conception of recent financial history

and of our present problems, then I can only express surprise that a
candidate for the Presidency, should have such a complete lack of un­
derstanding of the realities.

If he does know the facts, then the

American people must draw their own conclusions from the extraor­
dinary inaccuracies and distortions contained in his statements and
conclusions.
The story, as he tells it, runs as follows:

that the Federal

Government, along with State and local governments, vastly increased
its expenditures during the post-war period; that there was terrible
extravagance and waste, particularly from 1927 to 1931; that the
Treasury failed to correctly appraise the situation in the fall of
1929 and 1930 and as a result large deficits were incurred; that
these were concealed; that the Federal credit became impaired, that
the hidden news leaked out during the summer of 1931; that as a re­
sult

foreign nations which had been forced off the gold standard by

our withdrawing gold from them, now panic-stricken at the situation
of our national credit, withdrew their balances with us and that the
panic was on; that the Administration failed to tell the truth to the
Congress and that, as a result, the present budget is unbalanced,
What are the facts?
First:

Federal expenditures did not increase rapidly during

the post-war period.

When the Republicans took control of the Gov

ernment in 1921, two and a half year;s after the War was over, Federal

- 2 -

expenditures aggregated five billion and a half dollars*

During

the course* of the next year they were reduced by approximately
$1,700,000,000.

Prom 1922 to 1930 they showed remarkable stability,

increasing by about 5 per cent, or two thirds of one per cent per year.
In the meanwhile the National debt was being reduced at the rate of ap­
proximately $900,000,000 a year, naturally resulting in decreased debt
service charges, for which the Administration responsible for reduction
of the debt is entitled to full credit.

It represents a real saving.

In contrast to the accomplishments in Washington, I submit
the record of what was going on in the State of New York under Demo­
cratic Administrations, including that of Governor Roosevelt, in the
form of a letter from the Majority Leader of the State Senate.
Second:

Governor Roosevelt says that the administrative costs,

of the Federal Government increased a billion dollars in four years.

He

obtains these figures by comparing the fiscal year 1927, in which Federal
expenditures reached their minimum with the fiscal year 1931, a depression
year, in which there were a number of emergency items.

For instance,

public construction work of all kinds was increased by approximately
$300,000,000 to relieve unemployment; aids to agriculture by $254,000,000;
the postal deficiency, owing to the depression,increased by $118,000,000;
there was a census that yoar, involving $13,000,000 extra; $285,000,000
additional was expended on behalf of veterans, practically all of which
was due to legislation passed over the vetoes of Presidents Coolidge and
Hoover by Democratic votes.

As a matter of fact, if you compare expendi­

tures for 1927 and 1931, excluding these items and the charges on the
public debt, all other expenditures showed an increase for the period of
a little over $10,000,000.

*?/Ill
- 3 ~

The Governor presents the same distorted picture by the use
of the same methods when he criticizes the Treasury Department for its
failure in December, 1930, to forecast the size of the deficit for the
fiscal year 1932.

He led his audience to believe that we under­

estimated the deficit by over $3,000,000,000, due entirely to our over­
estimating the revenue.

Yet everyone must know that the deficit in

1932 was due in large measure to the huge sums that had to be appro­
priated as late as last winter for emergency relief of all kinds.
Could the Treasury Department, in making its estimates in
December, 1930, have foreseen, for example, that in February, 1932,
it would be necessary to bring into being the Reconstruction Finance
Corporation, entailing a charge of half a billion dollars on the
Treasury?

Could it have foreseen that the Congress would find it

necessary to appropriate $125,000,000 to increase the capital of the
Federal Land Banks?

In addition there was an increase of expenditures

for employment-making construction activities of some $300,000,000 over
normal, and an increase of about $250,000,000 in expenditures for veterans,
due to legislation, a large part enacted over the President's veto, after
the budget estimates were made.

Governor Roosevelt knows that these

emergency items could-not all have been forseen a year and a half in
advance.
Third:

Why then does he present any such distorted picture?
He says that taxes should have been raised in 1929 and in 1930.

There was no occasion to raise taxes in the fall of 1929«
we closed the fiscal year 1930 with a deficit.
it with a surplus of $184,000,000,

We did not.

He says
We closed

He says that taxes should have been ra ise d in December, 1930,
fo r “ vast declines in every form of business a c tiv ity were now
c r y sta lliz e d and c e rta in .“
Again he i s wrong.

Every business index in dicates that from

December through A pril there was a sharp business recovery, which was
V

only terminated by the beginning of the European catastrophe..

The volume

o f a l l in d u strial production rose ste a d ily , showing an increase of 16
per cent.
The Treasury believed that th is business recovery was about to take
p lac e , as it did.

I t did not desire to throw in i t s way the obstacle

of increased taxation .

During the course of the years of prosperity we

had re tire d three and a h a lf b illio n d o llars of debt from surplus funds
in excess of le g a l requirements.

This con stituted a reserve which any

wise government would have drawn on in a period of depression,, rather than
rush a t once into additional taxation at the very time when business needed
r e lie f,
Fourth:

Up to th is point the Governor was merely jugglin g figu res

to try to prove a case.

But we now come to the most extraordinary sta te ­

ment, coming as i t does from a supposedly responsible source, that the
panic which began in th is country simultaneously with the suspension of
gold payments in England was due to the leaking out during the summer of
1931 of disquietin g revelations re la tin g to our national fin an ces, and
that the immense withdrawal of gold by foreign countries which began the
day a fte r Great B ritain went o ff the gold standard was the in ev itab le
re su lt of these disqu ietin g rev elatio n s.

- 5 Vftiat were they?

I f these statements mean anything at a l l they mean

that the panic was induced because both at home and abroad i t was f e l t that
the cred it o f the United S tate s Government had been impaired, and that th is
had been concealed.
The record w ill show that the credit of the United S tate s Government
stood high.

There were no mysterious le ak s.

I t was a matter o f public

record that we had closed the f i s c a l year which ended on June 30* 1931,
with a d e fic it of approximately $900,000,000,

The Daily Statement published

by the Treasury Department, showing expenditures and re ce ip ts, indicated
that there would be an even larg e r d e fic it in 1932.
conceal,

Nothing had been concealed,

There was nothing to

Nothing could be concealed.

The charge that the Federal Government cred it had become impaired
i s undiluted nonsense.

On June 30, 1931, our public debt stood approxi­

mately ten b illio n d o llars below i t s peak.
In March, 1931, the Treasury sold about $600,000,000 of 3-3/8 per
cent long-term bonds.

On June 15, 1931, with the existence o f the current

d e fic it public property, the Treasury sold over $800,000,000 of long-term
bonds at 3-1/8 per cent.

They were over-sub scribed almost eight times.

On September 15, 1931, a fte r Governor R o o se v e lts alleged leak and ju st one
week before the panic began, the Treasury flo ate d $800,000,000 of long­
term bonds at 3 per cent, the lowest rate of in te rest at which Government
bonds had been sold on public subscription since 1911,
And the man who asp ire s to the Presidency of the United S tates t e l l s
the American people that the fin an cial and cred it panic which was actu ally
brought on by the suspension of gold payments by Great B ritain on September
21, 1931, had been brought on by the impairment of the cred it o f the
Federal Government

-

6

-

Doesn*t the Governor know —* and i f he doesn*t know, I*XI t e l l him
|

that from May, 1931, right up to September 21st, our fin an cial p o sitio n
was so strong that, both our Federal Reserve Banks and our p rivate banks
were extending credit to European countries in order to avert the
European co llap se.
Every man with a rudimentary knowledge of the fin an cial h istory of
the l a s t twelve months knows that the immense run which took place on
th is country, beginning in September, 1931, wa3 due to the events in
Europe’.which culminated in the suspension of the gold standard in Great
B ritain , and which prompted those who held short-time funds in th is
country to withdraw them, actuated by the panic and fear engendered
when the world* s citad el of fin an cial strength went down.

I to ld th is

story in d e ta il at Baltimore l a s t night.
Fin ally we come to the statement that the Administration didn*t submit a ll
of'-the facta to the Congress l a s t .fa ll,-a n d that, .as a r e su lt, -the'present
budget i s unbalanced.

All of the fa c ts were submitted.

we estimated the revenue fo r 1932 at $2,359,000,000.

In December

We actu ally collected

$2,121,000,000, or a margin of error of a l i t t l e over 10$.

All of the

Treasury estim ates of future revenue were thoroughly in vestigated by
both Committees of both Houses.

The Democrats of the House, including

the Speaker, claimed that the Treasury estim ates o f revenue were too
conservative; that we were underestimating rather than overestimating
the revenue.

The estim ates of the s ta ffs n f the Senate Finance Committee

and the Ways and Means Committee were higher than the Treasury estim ates.
The Speaker of the House accused me of undue pessimism.
These are a l l matters of record that the Governor could have ascer­
tained i f he was in terested in f a c t s .

- 7He says that I stated to the Congress that i f they would im­
pose certain additional taxes, the budget would he balanced.

1 told

them on May 31st what additional taxes were needed, but with the
.proviso that they would have to reduce expenditures by $350,000,000
below those already proposed in the P re sid e n ts Budget Message.
did not make these economies.

They

On the contrary, due to the in sisten ce

of the Democratic lead ers in both Houses, they increased appropriations
by approximately $322,000,000 for additional roads and public construc­
tio n .
Balancing a budget i s not ju st a matter o f increasing tax es.
i s such a thing as reducing expenditures.
refused to do in adequate amount.

There

That, the Democratic House

What the policy of the Democratic

Party i s i s indicated by the action of the Democratic House o f Represent­
ativ e s in actu ally voting to increase expenditures by $3,400,000,000
over and above the budget presented, which would have almost -doubled the
cost of government.

These are the men that Governor Roosevelt would

have the American people put in charge o f the Government in order to
reduce i t s c o sts.
I f space permitted, I would lik e to deal with the further fa n ta stic
statement that Government f i s c a l p o lic ie s have contributed to the
contraction of c re d it.

Every student of finance knows that Government

d e fic its tend to expand rather than contract c re d it.
The Governor complains o f the Republicans* seeking to arouse fear
among the people as the resu lt o f h is electio n .

But how can he expect

anything but fear in the face of the fin an cial record of the Democratic
House of Representatives?

How can he expect that that fe a r w ill do any-

-

8

-

thing tut grow when he himself, in discussing the fiscal policy of the
Federal Government deals in terms of fiction rather than fact, and worst
of all, when, for campaign purposes, he seeks to cast doubt as to the
credit of the National Government?
I can assure the country that there need be no concern on that
score

(COPY)

THE SENATE OE
THE STATE OE NEW YORK
ALBANY

October 19, 1932*

The Honorable
Ogden L. Mills,
Secretary of the Treasury,
Washington, D. C.
Dear Mr. Secretary:
I have been much interested in Governor Roosevelt*s attack upon the Republi­
can Administration for supposed increased public expenditures.
I happep to know
that federal expenditures have decreased during President Hoover*s administra­
tion, except for the burdens imposed upon him to care for the depression.
But as the Democratic candidate has set himself up before the American
people as one who will bring about reduction in federal expenditures it would
seem desirable for the public to know something of his record as Governor of
New York*.
More especially is this true when the Federal Government has been
making every effort to reduce expenditures and thereby relieve the taxpayer, the
State of New York has steadily increased those expenditures.
Between 1918, the last year of the Whitman Republican administration, and
1931, appropriations increased from $81,000,000 to $328,000,000, or 305 per cent.
During this period, the only decrease in the state budget occurred during the^
administration of Governor Nathan L. Miller, the last Republican Chief Executive
in 1921 and 1922.
During the two years of Democratic administration 1919-1920,
the budget increased from $81,000,000 to $145,000,000, or 79 per cent.
Erom
1920 to 1931 appropriations increased from $145,000,000, to $328,000,000, or
about 130 per cent..
Under the preceding Democratic administration, appropriations mounted at a
rate of $14,500,000 a year.
Under Governor Roosevelt the yearly increase was
just double that, or $29,000,000 a year.
While appropriations have been mount­
ing, the net state debt, due to various bond issues, also increased from
$169,000,000 to $327,000,000, or 93 per cent..
It should be borne in mind that under the Constitution of^the State of New
York, the governor submits to the legislature a budget containing a comple e p an
of proposed expenditures and estimated revenues, and that the legislature canno
increase items.
To be fair to Governor Roosevelt it must be stated that included in the ap­
propriations for the fiscal year ending June 30, 1932, there was included
$20,000,000 for unemployment relief, and in the fiscal year to end on June 30,
1933, there is included $5,000,000 for like purposes.-

-

2

-

On the other hand, in order to he fair to the federal administration it
mast he pointed oat that to the amoont of these appropriations should he added
the farther sum of $30,000,000 for constraction items paid oat of bond monies,
inasmuch as the. federal government pays for such expenditures oat of current
revenue.
Bat it should also he h o m e in mind that the expenditures of New York
State on public works, through bond issues were not in relief of unemployment,
as these bond issues were initiated long before the depression began.
When Governor Roosevelt sent in his executive budget in January, 1932, there
was abundant evidence of the necessity for drastic cuts in appropriations.
As
shown by the Governor's message to the legislature of January 12th, the state was
faced with a deficit of $124,418,729.21.
The revenues of the state had
materially fallen off.
The usual cash surplus of from $25,000,000 to $75,000,000
had disappeared and there was not sufficient money on deposit to the credit of
the state to meet its obligation of $50,000,000 due on January 15th, and a like
amount due on March 15, 1932, to the Common School Districts of the state for the
payment of teachers and operating expenses.
Raced with these facts, a Republican
Legislature cut the Governor's budget $21,000,000 over his vigorous protest.
As
a matter of fact, he exercised every influence to have the items replaced and it
was only through the votes of Republican members that the reduction in expendi­
tures was accomplished.
Governor Roosevelt should be the last man in the United States to talk about
expenditures or balanced budgets.
The best estimates now available are that,
notwithstanding the imposition of additional taxes recommended by the governor as
late as March, 1932, the State of New York is facing an actual deficit of
$100,000,000 in the fiscal year ending June 30th next.
He and his party are on
record in New York State as opposing every effort of the Republican legislature
to reduce government expenditures.
They even opposed the creation of an
Economy Committee to investigate expenditures of state departments by non—
political engineers and accountants for the purpose of recommending economies.
The creation of this Committee which has already made recommendations for the
saving of an additional $50,000,000 was only accomplished with the aid of Repub­
lican votes.
Mr. Roosevelt has been governor of the greatest industrial state in the
Union, a state which ranks fourth in agriculture, during all the time Herbert
Hoover has been President of the United States.
Within that state resides
substantially one-tenth of the entire population of the nation.
He has had no
complicated national or international problems to distract him from his task at
home, and yet I say to you very frankly that I know of no single constructive act
on his part either in aid of industry or agriculture during his term of office to
relieve the distress of people suffering from the economic depression.
Very respectfully,
(Signed)

GEROGE R. PEARON
Temporary President,
New York State Senate.

Honorable Arthur A. Ballantine,
Under Secretary of the Treasury,
SJK
New

England

Before the
Council Bank Management Conference,
Boston, Massachusetts,
October 21, 1932.

THE SERVICE OF THE RECONSTRUCTION FINANCE CORPORATION
Address of
Hon. Arthur A. Ballantine, Under Secretary of the Treasury,
"before New England Council Bank Management Conference,
Boston, Mass«, October 21,^1932«

It is through the Reconstruction Finance Corporation that the
credit of the Government has been made to serve vital industrial,
agricultural, and financial needs of our people, which private credit
has for the time been unable to meet.

The benefits of its operations

have extended to every phase of our economic life.
the bank, the railroad.* the insurance company,

They reach beyond

beyond the merchant

and the manufacturer to the salaried employee, the wage-earner, and
the farmer.

Tens of thousands of home owners* more than fifteen

million depositors in our banks, and many of the seventy million
holders of life insurance policies have shared in this timely aid.
The need for this emergency credit service grew out of the
unexampled drying up of customary credit in the months of trial and
trouble that followed after England was forced off the gold standard
in September of last year.

That culmination of financial and trade

reversals abroad found our country suffering from the business
depression but with its credit structure ample, resting upon a base
of over five billion dollars of gold.

While business activity was

decidedly sub-normal, there was here no element of financial panic
or paralyzing credit contraction.

Beginning in the fateful month of Septembert 1931* with
the departure of England from the gold standard, we were con-»
fronted, as the Secretary of the Treasury has said, with "a
credit and financial panic of the first magnitude, superimposed
upon a major business and agricultural depression”*

In October

of last year bank failures moved up to the threatening total of
522.

Gold was pouring out of this country to meet frenzied

foreign demands.

By the ènd of October we had lost gold to the

amount of $750,000,000, and the drain continued until it had reached
$1,000,000,000.

Domestic hoarding of currency set in and by

November nearly one—half billion dollars had disappeared from banks
and circulation and gone into hiding.

Before it was brought to a

stop currency hoarding had probably reached a billion and a half
dollars.
These movements greatly accelerated the vicious spiral of
liquidation with which we became so painfully acquainted.

Frightened

withdrawals of deposits from banks meant the sacrifice of bank
assets to gain cash.

Forced selling depreciated security prices

and this led to further withdrawals and further depreciation.
Banks ceased to be able to perform their normal functions of
supplying the varied credit needs of industry.

There was a drying

up of the great stream of investment in mortgages from real estate
and insurance companies which normally nourishes the building
industry and the extension of home ownership.

From September

to May 1932 contraction of resources of banks which were members
of the Federal Reserve System reduced their loans and investments
by five billion dollars.

- 3 - >•

The tremendous contraction of credit "beginning in the fall of
last year, of course, had a paralyzing effect upon finance, business,
industry, and employment.

The Administration "believed that this

attack upon the well-being of every individual should "be resisted
and overcome, and formulated and initiated a comprehensive campaign:
for relief and recovery*

As a temporary help the President initiated

in October, 1931, the organization of the National Credit Corporation
with a capital supplied by the banks to assist in protecting endan­
gered but essentially sound institutions.

That organization, conducted

with determination and efficiency, rendered effective help, but greater
assistance was necessary.
The creation of the Reconstruction Finance Corporation was the
result of recommendations made by the President in his message to
Congress when it convened last December, as part of his far-reaching
non-partisan emergency program.

He well described the recommended

agency as a bulwark to build confidence, to strengthen ^eak spots, and
thus liberate the full strength of the nation* s resources.

What the

President was determined to save were not banks and credit agencies
in themselves, but jobs, savings against sickness and old age, insurance
policies and homes.

These could be and have been protected by pro­

tecting the financial agencies on which they depend.
By the Reconstruction Finance Corporation Act, passed by patriotic
support from both parties, approved by the President on January 22d,
the Corporation was established, with a capital stock of one-half

*« •

4

—

billion dollars and authority to borrow up to two billion dollars#

The

capital was, of course, supplied by the Treasury of the United States,
and was part of the expenditures of the Government} in the last fiscal
year#

The additional funds which the Corporation has from time to time

required have been loaned to it by the Treasury#

The Corporation has

authority to issue and publicly sell its own debentures, but this course
has not been followed*
The Corporation is managed by a bi—partisan Board of seven Directors#
The Governor of the Federal Reserve Board and the Farm Loan Commissioner
were originally ex—officio members, but under the amended Act the Secretary
of the Treasury, or his substitute, is the only ex—officio member#

The

other six members of the Board, appointed by the President with the advice
and consent of the Senate, were drawn from different sections and
activities of the country#

Bringing to bear a wide range of experience,

they have united in whole—hearted labor for the full realization of the
purposes of reconstruction#
Its first loan was made on February 11th#

The promptness with which

it was able to begin its work was due in no small measure to the fact that
it had the Federal Reserve Banks as its fiscal agents and was able to draw
upon their highly trained personnel, as well as that of the Comptroller of
the Currency#

The Federal Reserve Banks are the custodians of all notes

and collateral of the Corporation and all funds are handled through these
banks

- 5 -

The direct recipients of loans under the original Act are
financing institutions from which the life-giving stream of credit
flows to all "business and industrial activities, and they include
any bank, savings bank, trust company, building and loan association,
insurance company, mortgage loan company, credit union, Federal land
bank, joint stock land bank, livestock credit corporation, including
loans secured by the assets of any bank in the process of liquidation,
or to aid in the reorganization of such bank«
finance exports*

The Corporation may

A vital part of its service is extending financial

assistance to interstate railroads and receivers of railroads«
$50,000,000 of the original capital, and any expansion of that amount
through notes and debentures, was made available to the Secretary of
Agriculture for the purpose of making emergency loans to farmers for
crop production«
The Act did not authorize grants or gifts*

The money of the

Government is not to be given away by the Corporation — it is to be
put to work at points where it is most needed for the protection of
our people, but later to be returned to the Treasury«

The Act

requires that all loans other than advances to states for relief shall
be fully and adequately secured«

The Directors are not required to

confine themselves to looking at collateral from the standpoint of
its forced sale value, but may take into account all pertinent con­
siderations»

The Board of Directors is authorized to fix the terms

and conditions of the loans*

Each loan under the original Act may

be made for a period of not exceeding three years and the Corporation
may extend the time of payment, through renewal or otherwise, up to
a total period of not exceeding five years«

/

-

6

-

The Emergency Relief Act of July added to the powers and resources
of the Corporation.

$300,000,000 was authorized for safe-guarding

advances hy the Corporation to States to he used in furnishing relief
and work relief.

Provision was made for the establishment of regional

agricultural credit corporations in the 12 Federal land hank districts,
with power to make loans to farmers and stoclsmen for agricultural pur­
poses and for raising, fattening and marketing cattle.

It is from the

billion and a half of additional funds for the Corporation provided for
1

.■

hy this Act that loans may he made to finance self—liquidating projects
of states, municipalities, or other authorities and also in some cases
projects privately owned hut devoted to public use or regulated by
public authority.
The Corporation has 32 agencies throughout the country, each in
charge of a salaried manager who operates with the assistance of a
representative volunteer advisory committee.

Managers and committees

alike have served with the utmost energy and devotion.

Applications for

loans are made at the agencies and there carefully examined as to collat­
eral and other features.

At the headquarters in Washington they are

passed upon hy competent examiners and reviewers before being placed
before the Board for action.

A General Counsel with a well-qualified

staff acteupon all legal matters.

For assistance with the self-liquidat­

ing loans the Corporation has added a group of engineers and financial
advisers of high qualifications.

Advisory engineers are being appointed

in the field in aiding applicants, particularly those for the financing
and construction of small projects,

in preparing their applications.

These services will be rendered by leading engineers without cost to
applicants.

The law prohibits the payment of fees of any sort in con­

nection with the procurement of loans.

- 7 '*
The amount of loans authorized from February 2, to September 30,
19f2, was $1,514» 631,518,02, and the number of borrowers was 5,975.
$44,609,161.60 of the loans authorized had been cancelled by borrow^ers through withdrawal of applications; $289,580,373,74 had not been
drawn by the borrowers but remained at their disposal; $185,035,489.15
had been repaid by borrowers.

The net amount outstanding in the hands

of borrowers on September 30, 1932, was $995,406,493.53,
Far the largest group of loans authorized was made up of the
loans to banks.

On September 30th these aggregated $853,496,289.00,

and had been made to 4,973 institutions, including receivers of
closed banks.

Much the largest portion of these loans was made to

institutions in small centers of population.

About 70 per cent of

the bank borrowers were in towns of less than 5,000 population, and
slightly less than 2 per cent were in cities of more than a million
population.

The service of the Corporation has been utilized by

nearly 25 per cent of the banks of the country, having altogether
more than fifteen million depositors.

The twenty-five million of

depositors in non«borrowing banks were also benefited through the
relief of the great pressure upon banks,
A m o m e n t a thought shows how wide-spread is the benefit of the
timely help to the banks of the country which has been thus provided.
The public has become sadly familiar with what happens when a bank
closes - the salaried man may be unable to pay his bills; the wageearner loses his provision for sickenss; the householder may be
unable to meet his taxes; the merchant cannot collect and hence
cannot meet his obligations to middleman and manufacturer.

From the

-

8

-

standpoint of borrowers from the banks, bank closings mean that the
farmer may be unable to obtain the funds to plant, harvest and market
his crop; the manufacturer may be unable to lay in his raw materials, or
the homebuilder the mortgage money to enable him to erect his house.
The services of the bank go to the very roots of the life of the whole
community and what has helped the banks in. this time of need has helped
all the people.
The purpose of making public credit available to banks and other
financing institutions, generally subject to public supervision, has
been to keep available to the public the sources for supplying the
financial requirements of commerce, industry and agriculture.

Those

multitudinous needs mast necessarily be met by a vast number of
different institutions.

It was utterly impossible for the Government

to meet them directly; this would involve an inpossible administrative
task and the supplanting of existing private agencies.
Government was to make the existing agencies function.

The task of the
Through the

operation of abnormal conditions many financing institutions which were
essentially sound had found part of their assets temporarily frozen.
The loans from the Corporation have substituted liquid assets pending
revival of normal conditions»

Banks which have suffered from this

condition should have no hesitation in utilizing the facilities of
the Corporation, and the customers of such banks should realize the
soundness of this course.
Loans have been authorized to 736 building and loan associations
in the aggregate amount of $87,638,738,

These associations have

played an important part in the providing of homes and the strengthening

- 9 of the associations has operated to preserve the homes of many
thousands of families.

This is also true as to the $83,816,000

loans to 68 mortgage loan companies.
Insurance company loans up to September 30th were iOQ
in number and aggregated $75,193,200.

These loans have enabled

these agencies of the protection of families to continue to meet
policy maturities and policy loans —

now sharply decreasing —

without sacrifice of their assets.
Loans to agricultural credit corporations, livestock credit
corporations, Federal land banks and joint stock land banks
aggregate $42,599,501.45.

Further help to agriculture is being

extended through the provision of the Relief Act authorizing loans
to bona fide institutions for the purpose of financing the carrying
and orderly marketing of agricultural commodités and livestock.
Under this section loans of $50,000,000 have been authorized for
cotton cooperation and cotton stabilization corporations to enable
them to hold their cotton until 1933.

Loans are also authorized

to be made for the purpose of financing the sale of surpluses of
agricultural products.
Under the Relief Act regional agricultural credit corpora­
tions, each with a capital of not less than $3 ,000 ,000 , have
been set up in ten of the twelve additional Federal land bank
districts.

These corporations will be of particular value to

farmers and stockowners in making feeder loans for the raising,
fattening and marketing of livestock.

These institutions have

"been provided local Boards of Directors and managers, and are
energetically beginning their service.
The loans to railroads (including receivers) aggregate
$264,366,933, and were made to 53 railroads.

All railroad loans

require the approval of the Interstate Commerce Commission.

These

loans have served to protect the operation of railroads, not only
as the backbone of the transportation system of the country, but as
the largest employers of labor and purchasers of raw materials.
They serve to maintain employment and to keep the wheels of the
factories turning.

They have served to assist in meeting maturing

obligations, both as to principal and interest, and have thus
strengthened railroad credit and particularly railroad bonds and
other obligations held to the extent of as much as $6 ,000 ,000*000 by
banks, insurance companies, and other reservoirs of the people*s
savings.

So-called work loans being made to railroads for repairs

to equipment and construction of new equipment provide for employment
of substantial numbers of men.
Payments to the states and political subdivisions for the purpose
of furnishing relief, and work relief to distressed people, have been
authorized up to October 1st in the amount of $35,455,171.22, and
have been made available in twenty-five states and one territory.
The bulk of this money was provided under the section which requires
for reimbursement to the Federal Government by deductions from
future Federal authorizations to states to aid in the construction

-

of roads#

11

-

These payments for relief are a protection against

human distress in the coming winter* yet they do not violate
the principle of local responsibility.

They can be made only

where the Governor certifies that the resources available to
the state for relief are inadequate, including private contribu­
tions as well as available public funds#
Loans for self-liquidating projects are a means of increas­
ing employment without ultimate cost either to the Federal Govern­
ment or State Governments*

Many works of a public or semi-public

character — tunnels, bridges, waterworks, and the like — have
been projected and even fully planned which could not be brought
into construction' at this time for the reason that they could
not be financed through the usual channels#

It was believed by

the President and by Congress that where the projects were such
that their construction cost will be paid within a reasonable
time by earnings of the project, they might well be financed
by Government loans.

This sound means of increasing employment

was provided for in the Relief- Bill of last June #

It has been

found that self-liquidating projects present great variety, and
that the forming of satisfactory judgment upon their selfliquidating character as well as on engineering and legal
questions is not easy and requires continuous study by the
experts and members of the Board#
Loans for self—liquidating projects authorized up to October
1st total $53,105,000, while action taken by the Board looks to
the beginning of projects upon which ultimate expenditures will probably
reach not less than $400,000,000.

The loans authorized or agreed

to include the purchase of "bonds of the Metropolitan Water
District of California which will mean "beginning the construction
of a vast project for "bringing the needed supply of water from
Hoover Dam, 265 miles, to the cities of Southern California*
This development had "been projected for many years, and engineering
plans had "been completed*
at Hew Orleans

A bridge across the Mississippi

which will enable the railroads to dispense

with the ferries and also servo highway purposes is another project
for which the Corporation has agreed to provide funds*

The

basis of the agreement has been reached looking to the financing
of the construction of a long dreamed of vehicle bridge across
San Francisco Bay, connecting San Freuicisco with Oakland and
the mainland* Loans for smaller projects include conservancy
districts, additions to public lighting plants, water districts,
and the like.

These projects will create employment for many

thousands of men upon construction sites and in mills, shops,
quarries, mines, and other lines of industry, and will
operate to provide traffic

for railroads*

- 13 -

It was in connection with the provisions which finally took
shape as authorizing the financing of self-liquidating projects that
the sharpest issue was presented as to the proper scope of the Corpora­
t i o n ^ activities.

The Belief Bill, as it passed the House, would

have authorized loans to any corporation or individual.

As you know,

the position of the Administration was that such a plan would have
plunged the Government into private hanking on an enormous scale;
would have involved it in functions utterly impossible to administer
with success, and leading to destructive competition with private
hanking.

Putting the Corporation into the general banking business

all over this country was defeated.
A second controversy related to the publicity of loans by the
Corporation.
in June.

This arose at the time when the Belief Bill was enacted

It was the position of the Directors that publicity of the

loans was likely to interfere with the full utilization of the relief
agency and the most effective accomplishment of the intended help to
industry and agriculture*

There was included in the Belief Bill a

provision entirely free from objection requiring the corporation' to
report its operations in detail each month to the Clerk of the House
and to the Secretary of the Senate.

The Clerk of the House at first

interprets that section as authorising him to give full publicity to
the report.

It is the opinion of the Board and its counsel that such

publication is not authorized and is no more in accordance with sound
business practice than for a bank to publish a list of its loans.
The service of the Beeonstruction Finance Corporation is conceived
and planned as of a strictly emergency character*

Advances rta states

and political subdivisions thereof for'relief ‘
p urposes may be made up to
July 22, 1934«

Loans may be made under the' Emergency Belief

and Construction Act of 1932 for self-liquidating projects and for
agricultural and livestock purposes at any time prior to January 22,
1934*

Loans may be made under the original Reconstruction Finance

Corporation Act to designated financial institutions and to railroads
lap to January 22, 1933,

The President, however, has the authority to

extend the period in which the Corporation may make loans beyond that
date, for such period as he may deem necessary, not however beyond
January 22, 1934,

The plan has not been to create a credit agency

which will in any way supplant the normal agencies of the country, but

rather that of furnishing needed help to tid e over a peripd when the
normal agencies were unable to render their usual service.

It is

e sse n tia l that the work of the Reconstruction Finance Corporation, be
confined to this temporary emergency service.
That the Corporation has been accomplishing its purpose is attested

by the decreasing number of ap p lication s fo r aid from the Corporation by
financial institutions.
In April applications from banks aggregated .
number
1269; in August the/ciad fallen to 899, and in September
fell to 515,
Loan applications from other financial institutions fell from 239 in
April to 171 in September,

The aid which it has rendered is further
reflected
reflected in improvement in, business activity and employment/ in reports
of August, September, and for this month.
For the first time in our history our nation has come to the com­

prehensive support of our economic machinery through the use of public
credit.

That effort has cushioned the blows of the depression and

checked the rigors of liquidation with its resulting distress, has

warded

off disaster, and has brought nearer the time of the resumption of normal
business and employment.

It was a plan boldly conceived, which is being

- 15 -

earnestly and carefully executed, and if completed according to the
vision under which it was undertaken it will constitute the greatest
assistance ever provided for our people in saving them from unnecessary
fosses and restoring to them the benefits of normal business and em­
ployment.

EOR IMMEDIATE RELEASE,
Friday, October 21, 193

TREASURY DEPARTMENT

Remarks of
HONORABLE JAMES H. DOUGLAS,
ASSISTANT SECRETARY OE THE TREASURY
before the
Eastern Regional Conference of
Bank Auditors and Comptrollers,

Washington, D.0.
October 21, 1932,

It was my intention in attending your conference to-day
to discuss some aspects of the ever changing and "broadening contacts
and relations that exist "between the Treasury Department and "banks.
I had in mind the new relationship that has "been created through the
Reconstruction Finance Corporation, which up to September 30th had
authorized loans to over 4,900 banks and trust companies totaling
approximately $850,000,000.

I hoped to give some consideration to

the problem which lias arisen in allotting recent Treasury issues.
I would also have ventured to discuss the check tax imposed by the
Revenue Act of 1932, a matter of concern to all of you, and one on
which we might have an enlightening interchange of views.
Night before last, however, I listened to Governor Roosevelt

II reduce the problem of our national finances to the terms of a family
budget”.

This concerns the Treasury, and when anyone explains

the national finances to the country at large in a way likely to result
in serious misunderstanding, it is Treasury business, in the interest
of public confidence, to call attention to the facts.
I shall discuss briefly the matter of Federal Government expenditures;
■

I shall refer to Treasury estimates, the 1932 deficit, and the deficit
for the first quarter of the present fiscal year.
briefly some aspects of Federal financing.

I shall also mention

I ask your indulgence to

introduce several of Governor Roosevelt’s statements regarding these
matters

Federal expenditures are high, and mast he reduced,

let

us see where we stand by comparing Federal expenditures for the
fiscal year 1931 with those of 1927,

Expenditures in 1927 were the

lowest for any year since before the war.

Governor Roosevelt said:

“On the plain question of frugality of management,
if we want to compare routine government outlay of 1927
with that for 1931 for example, wo must subtract (the)
so-called ’debt service charge* from the total budget
for both years,
“If we do this we find that the expenditure for
the business of government in 1927 was $2,187,000,000,
and, in 1931, $3,168,000,000.
“That, my friends, represents an increase of actual
administrative spending in those four years of approxi­
mately $1 ,000 ,000 ,000 ,“
Let us inquire into what items of increase occasioned this rise
in the cost of Federal Government from the low year to the first fiscal
year of the depression,

It is important to examine them in order

to determine at what points we may best direct the attack to reduce
the costs of Government,

I cannot go into an exhaustive discussion

of both increases and decreases in the various items that make up
our Federal expenditures, but from the statements of expenditures in
the Secretary’s reports for 1927 and 1931, there would appear to be an
increase in Veterans Administration and the Adjusted Service Certificate
Fund of $426,000,000; an increase in the Department of Agriculture
and the Agricultiiral Marketing Fund of $.330,000,000; an increase in
the Postal Deficit of $118,000,000; an increase in the Treasury Department
of $53,000,000; and an increase .in the War Department of $116,000,000.
It would be safe to assume that the increases in Treasury and
War Department expenditures should be attributed Largely to public
building and construction.

These indicated increases total over

- 3 -

11,000,000,000, "but the increase in expense of the Veterans Administration
is exaggerated due to a transfer of functions from the Department of
Interior*

If we have the full benefit of a detailed breakdown of

the figures we find that the increased expenditure on account of
veterans totals $285,000,000; increased aids to Agriculture account for
$254,000,000; all construction more than $300,000,000; and Post Office
deficiency $118,000,000; making a total of some $9 5 7 ,000 ,000 *

If we

add to this two items of increase in the Department of Commerce,
$15,000,000 for the 1930 Census, and $8,000,000 for commercial avia­
tion, we have accounted 100$ for the increase from 1927 to 1931«
Approximately 86$ of the increase is to be found in Agriculture,
Construction and Veterans Administration.

There may well be some

doubt as to what extent these three items represent administrative
spending or usual government expenses.
Treasury estimates are important in advising the Congress as to
what the needed revenues will be.

The task of preparing estimates

and recommendations is a difficult one in times of declining prices and
diminishing incomes, particularly when revenue requirements depend
upon expenditures and expenditures depend upon appropriations made by
Congress.

Estimates made in December 1930 did not contemplate the

cataclysmic decline in prices and business activity that started in
September of 1931 and continued through June of 1932.
made that these developments were not foreseen*

Complaint is

I wonder who did

foresee, in December, 1930, the events that led up to England*s
stopping gold payments in September 1931, and the financial panic
that followed,

Hot only is there complaint about those estimates, "but Governor
Roosevelt finds that in December 1931 nan honest demonstration to the
world’* might have turned the trend of economic events upward.

He

said:
’’All that was necessary to do was finally to
end the two years of vacillation and secretiveness—
to tell the truth to the Congress of the United States—
to rely on it to balance the budget and establish
American credit in the eyes of all the world.”
Apparently he referred to the condition of our revenues*
of the facts were submitted to the Congress.

All

In December, before

consideration of a revenue bill by the Congress, the Treasury estimated
the revenue for the fiscal year 1932 at $2,359,000,000*

There was

actually collected $2,121,000,000, or nearly 90 per cent of the amount
estimated*

"When in February and again on June 1st, as prices and

business activity declined further, the estimates of revenue from
existing and proposed tax measures were revised downward on the initiative
of the Secretary of the Treasury, Democratic leaders complained that
Treasury estimates were too conservative.

Speaker Garner, in April,

was quoted in the press as saying:
”Mr. Mills seems to presnme that things and conditions
in general are going to go down.
I am for levying
the necessary taxes, but I am not one to use my influence
to get more than necessary”.
Representative Ragon of the Ways and Means Committee said:
’’All through our deliberations we have been faced on
the part of the Treasury with estimates that were
ultra— conservative. * * * I think it is utterly
ridiculous to bring in an estimate such as the Secre­
tary brought to the Sub— committee last night. * * * ”
Estimates of revenues from particular taxes made by the special
staff erf the Ways and Means Committee and Finance Committee were
higher than Treasury estimates*

~ 5 -

The deficit for 1932 showed the full double-edged effect of
depression.

The shrinkage of revenues brought receipts down to

$2 ,1 2 1 ,000,000 while expenditures showed an increase of about
$800,000,000 over those of 1931.

This increase is accounted for

by $500,000,000 of capital for Reconstruction Finance Corporation,
and the subscription to stock of the Federal Land Banks in the amount
of $125,000,000, both treated as ordinary expenditures,

The

remaining difference is again found in Veterans Administration;
public building and an increased postal deficit.

I call your

attention particularly to the fact that the subscription to capital
stock of Reconstruction Finance Corporation wa.s charged to ordinary
expenditures.

There was at first some criticism of this treatment

on the ground that on past experience, and under the Act requiring
loans to be made on adequate security, the capital would eventually
be repaid.

Recently, however, some financial writers have

criticized the Department for not treating loans to Reconstruction
Finance Corporation as ordinary expenditures.

This is an amazing

contention in view of the $500,000,000 equity behind Reconstruction
Finance Corporation notes, which has been charged out as an expendi­
ture, and the fact that the law specifically requires Treasury pur­
chases of the corporations obligations to be treated as public debt
transactions.
Let us now turn to the published daily statements of the
Treasury and consider our present position.

On September 30, 1932,

we find that the excess of expenditures over receipts for the first
quarter amounted to $403,000,000.

Governor Roosevelt observes that

’’for the corresponding quarter of last year the deficit was only
$380,000,000, but at the end of the year it was $2,885,000,000.”

-

6

He continues 11there i s t therefore, strong indication that we are
in for another staggering deficit«

If the present rate continues,

the true deficit as of June 30 next year will he over $1,600,000,000«”
I cannot quarrel with his arithmetic, hut when he concludes,
”The budget is not balanced and the whole job must be done over again
in the next session of Congress” , there is occasion to make some
brief observations regarding the $400,000,000 deficit for the first
quarter, and the revenues for the present fiscal year«
In the expenditures which contributed to the deficit was an item
of $100,000,000 for the Adjusted Service Certificate fund which should
not recur during the year and which has no counterpart in expenditures
for the first quarter of the preceding year«

The most important

factor, however, is to consider whether or not the first quarter is
a fair indication of revenues to be received under the Revenue Act of 1932,
A m o m e n t a thought shows it is not.
Returns under the high income tax rates of 1932 will not be
reflected in the revenues until March, 1933«
payable under the new rates until June, 1933«

Ho estate tax will be
The new miscellaneous

taxes, although effective for the most part on June 21, 1932, are
not immediately reflected in the revenues»

Large purchases by

dealers in June, made in anticipation of the tax, cut down manufacturers*
sales in July and August«

Taxes imposed on sales in July were not

due until the last day of August, and in the case of the tax on
electrical energy, and telephone and telegraph, there is a two months*
lag due to the fact that the tax is payable to the Government at the
end of the month following the month in which it is collected by the
company, rather than in the month following that in which the service
is rendered,

The receipts from the new excise and miscellaneous taxes,

- 7 -

although somewhat disappointing, are showing a steady increase.

Total

miscellaneous Internal Revenue amounted to $42,000,000 in July,
$54,000,000 in August, and $73,000,000 in September.

October so far

shows an additional $5,000,000 over the same period of September.
I can see no occasion for alarm in this picture, if the reductions in
expenditures that are reasonably possible are carried out, and the
moderate upturn in business activity continues.
As to Treasury financing, it is pertinent to observe that from the
peak reached shortly after the war the debt was reduced by nearly
$10,000,000,000.

Of this $3,500,000,000 represented an acceleration

of debt retirement from surplus receipts, beyond legal requirements.
Regarding present financing Governor Roosevelt states ’’the truth is
that our banks are financing our stupendous deficits and that the
burden is absorbing their resources.”

This statement is hard to

understand, in view of the decrease of member bank borrowing from a
level of $850,000,000 during February to the present figure of
close to $300,000,000, and in view of the increase in excess reserve
balances of member banks to the unusually high figure of approximately
$400,000,000.
All Treasury bonds, notes and certificates now outstanding are
selling at a premium with the exception of Treasury 3—l/8$ and Treasury
3$ bonds.

The rate of yield to call date on bonds outstanding at

present prices ranges from 3—l/4$ to 3—l/2$.

Rotes maturing in 1937

are selling on a basis to yield about 2-3/4$.

Rotes and certificates

maturing up to March 15, 1933 are selling at a negative yield.

The

Rational credit has been maintained unimpaired through a period of
financial panic, the severity of which could not be foreseen, and un­
impaired was available to protect our credit and fiduciary institutions,
and to meet the extraordinary expenditures occasioned by the depression.
The Treasury Department stands by the record.

FOR RELEASE, MORNING PAPERS,
Tuesday, October 25, 1932.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced today that the
tenders for $80,000,000, or thereabouts, of 91-day Treasury Bills,
dated October 26, 1932, and maturing January 25, 1933, which were
offered on October 20th, were opened at the Federal Reserve Banks
on October 24th.
The total amount applied for was $227,202,000.

The

highest bid made was 99.970, equivalent to an interest rate of
about 0,12 per cent on an annual basis.

The lowest bid accepted

was 99.946, equivalent.to an interest rate of about 0,21 per cent
on an annual basis.

Only part of the amount bid for at the

latter price was accepted.
was $80,295,000.
is 99.951.

0.2 0 per cent

The total amount of bids accepted

The average price of Treasury Bills to be issued

The average rate on a bank discount basis is about

FOR RELEASE, WEDNESDAY,
October 26, 1932, upon
delivery, which will
probably be 11:00 A. M.

ASPECTS OF FEDERAL FINANCE

Address of
Honorable Arthur A. Ballantine,
Under Secretary of the Treasury,
before
Twenty-first Annual Convention of
Investment Bankers Association of America
at
White Sulphur Springs, West Virginia
October 26, 1932

ASPECTS OP FEDERAL FINANCE

The national credit has withstood all of the shocks of
the depression and United States Government obligations remain
the world’s best investment security.

Government offerings

are eagerly taken at interest rates lower than those available
to any other government in the world*

Prospects for the

financial operations of the Government are increasingly
favorable*

What we need to maintain this position is not a

new plan but all around cooperation in adherence to right
principles of public finance.
Sound policies followed in the post-war years helped
in the meeting of the Government’s financial problems resulting
from the depression.

Chief among these was continuous reduction

in the public debt.

On June 30, 1930, the debt was more than

$9,000,000,000 less than on June 30, 1919,

Reducing the debt

by over a third within a single decade was a convincing demon­
stration of fixed determination to provide for the meeting of
our national obligations.

In addition, the fact that nearly

three and a half billion dollars of the reduction was accomplished
by the accumulation and application of surpluses in good years,

2

-

carrying retirement to that extent beyond the amount called
for by sinking fund pro vis ions, furnished in a sense a
reserve which might be drawn upon in lean years.
Debt reduction in any such amount could not have been
accomplished unless Federal expenditures after the war and up
to the depression had been kept well within bounds*

For the

eight years from 1922 to 1929 they averaged $3,640,000,000, in
spite of the fact that expenditures for the service of the
debt, for veterans, and for defense together constituted about
two-thirds of the total expenditures.
The amount of the debt as it stood on October 15, 1932,
had risen to nearly $20,800,000,000, an amount however still some
20 per cent below the war peak.

That total includes a little

less than $6 ,000 ,000,000 short-dated debt, maturing within five
years, which must be reduced or replaced.

It also comprises the

Fourth Liberty Loan of over $6,000,000,000, callable after
October 15, 1933, due October 15, 1938, which must be dealt with by
the latter date.

The amount of refunding in prospect is very large

but the operation can be satisfactorily carried out.
The financial operations of the Government have been and
are facilitated by the development of Treasury methods for
handling Government issues so that they can be made quickly
and with a minimum of a strain upon the market.

On telegraphed

notice from the Secretary of the Treasury the Federal Reserve
Ranks issue the circulars which are sent to all financial in­
stitutions or others who may be interested in subscribing in

- 3 -

the respective districts.

It is thus possible to fix the final

terms of an issue very close to the date of the public offering.
In taking payment for subscriptions the Treasury follows
the helpful practice of permitting accredited banks to make
payments by establishing deposits in favor of the Government.
These are drawn upon by the Government only as funds are about
to be paid out so that they will go back into the market*

In

recent years the Treasury has not employed selling drives such
as were used during the war.

This has been primarily because

financial institutions had sufficient funds to enable them to
become purchasers or distributors of Government issues in
adequate volume and there was, hence, no need to run the risk
of putting pressure upon bank deposits.

To-day banks are

even better able to take care of Government issues as member
banks have decreased their borrowings from Federal Reserve Banks
from $850,000,000 to $300,000,000 and are carrying excess reserves
to the amount of not less than $400,000,000.
Treasury operations are also at all timeb facilitated by
the freedom which the law accords the Secretary of the Treasury
to choose in his discretion the particular kind of security
to be issued, whether bills to be sold on a discount basis,
interest-bearing certificates maturing in not more than a year,
notes of from one to five years, or bonds of any maturity of
not less than five years.

The Secretary is also free to

~ 4 -

choose the tine for any financing.

Quarterly financing on

income tax payment dates is of course customary, but under
the discrétion vested in the Secretary all financing is
timed, so as to take advantage of favorable conditions and best
meet the general situation in the investment and money markets.
The ability of the Government to place and refund its
obligations depends essentially upon continued maintenance of
the merit of the securities and limitation upon their amount.
What gives United Stales Government obligations their dis­
tinctive investment standing is absolute confidence in the
unwavering purpose of the Government to provide for the payment
of principal and interest and in its capacity to do so.

That

purpose must be evidenced by so controlling expenditures and
providing revenues that at least in the long run all of the
Government1s financial requirements, including debt requirements,
will be met from revenues.

It must also be evidenced by re­

stricting the use of Government credit to objects which command
general respect and support.

There is an underlying require­

ment which in ordinary times does not need attention!.but-Whicn
has called for much attention in the days of the depression.
This is the requirement that the measures of tho Government
must be such as to presérve and strengthen the economic
system of the country so as to insure the full't titUilátlon
of our unrivalled resources in production and employment, thus
affording an adequate base for the maintenance of our Govern­
ment as well as of our people.

- 5 -

Under the leadership of the Administration our Govern\

ment has in the main followed these policies in this time of
trial and is making good the fundamentals upon which its
credit depends.

The story of the fight to rescue the Budget

from the clutches of the depression falls at the moment in
the field of political discussion and need not he told here*
The expectation, based upon earlier indications of the effect of
the depression upon Government revenues, that the storm might
he weathered by drawing upon the reserves and without imposing
new burdens upon taxpayers, was swept away by the intensifica­
tion of adverse forces having their main origin abroad*
When the .time came last Ball to call upon the already
harrassed business institutions and all taxpayers of the country
to assume larger burdens for the ultimate financial protection of
the nation, the Administration initiated vigorous action*

In

spite of the vivid clearness of the need it took six months to
secure the enactment of the revenue bill planned to yield over a
billion of new revenue, including the increase in postal revenues*
Notwithstanding the urgency of the need, measures for new economics
in Government expenditures took an even more difficult course and
only some $150,000,000 of prospective additional economies was
ultimately provided for.

Yet the combined effect of reduction

in the Budget as submitted by the President, new savings under
tne Economy Act, and the elimination of large nonrecurrent emer­
gency expenditures of last year,

started us upon the current fiscal

year with a prospect of expenditures which would be less than those
of last year by a billion dollars*

-

6

-

In addition, measures passed “by the House which would have
added as much as three billion and a half to expenditures met
defeat.

The net result when Congress adjourned was that our

financial defenses had held, great forward steps had been taken,
and the program of reconstruction and recovery was under way.
These accomplishments brought relief to the country, the restora­
tion of confidence and hope, and a forward movement in business
and industry that still continues.
From the amount of the deficit for the current year as
appearing on the Daily Statement of the Treasury, it is argued
that the Governments financial position to-day is disturbing.
Ho such inference is warranted,
What the position of the Government will be at the end of the
fiscal year 1933 depends upon the total of expenditures and revenues
for the full twelve—month1s period.

Expenditures so far this year

included an item of $100,000,000 for Adjusted Service Certificates
which was not included in the comparable period of last year.
Expenditures later on in the past fiscal year included many large
emergency items not to be repeated this year, such as expenditures
for the capital stock of the Reconstruction Finance Corporation
and the Federal Land Banks, together amounting to $625,000fOOO.
The full revenue effects of the new tax measure cannot be
judged from its early operation.

New miscellaneous taxes, although

effective for the most part from June 21, 1932, have been slow
in becoming reflected in the revenues.

The large purchases by

dealers in June, made in anticipation of the imposition of taxes,

-

7

-

cut down sales subject to tax in July and August.

In some

cases there was a two-months1 lag in the collection of the
tax.

Receipts from the new miscellaneous taxes are showing

a steady increase.

For September and the first three weeks

of October, they aggregated $131»73^»5&0 as compared with
$76,870,296 in the corresponding period of last year.
In addition it should not be forgotten that returns
under the new income tax rates and provisions will not be
reflected until March 1933>

ibat no estate tax at the

new rates will be payable until June, 1933*

The new revenue

measure will prove increasingly effective as time goes on
and its full benefits will not be realized until next year.
In appraising the financial position of the Government
it should be remembered that as the months pass funds that
have been advanced to the Reconstruction Finance Corporation,
to take the place of private credit for a time, will be
returned to the Treasury,

lip to October 20th, the total of

the amount paid in to the Reconstruction Finance Corporation
for its capital stock and of the net advances to the Corpora­
tion as public debt items in accordance with the law, was in
excess of $1,100,000,000.

The providing of these funds added

a corresponding amount to the public debt, but their esqpenditure furnished the Government with assets in the form of
secured obligations which are already being repaid.

Up to

October 20th repayments of loans made by the Reconstruction
Finance Corporation

had amounted to about $230,000,000.

-

8

-

Calls for funds for advances by the Reconstruction Finance
Corporation to financial institutions have steadily diminished.
In April applications from banks aggregated 1,269,

In August

the number had fallen to 899, and in September fell to 515.

Loan

applications from other financial institutions fell from 239
in April to 171 in September,

Total loans authorized by the

Corporation aggregated $230,000,000 in April and but $138,000,000
in September.

The use of funds for financing self-liquidating

projects will increase, but those loans also will constitute
assets and as normal security markets revive those loans can be
placed in the markets and new projects will again be financed
through private agencies., thus further releasing and reducing
the demand for funds to be supplied by the Government.
During past months the investment demand for United States
Government securities has shown remarkable improvement.

If we

go back as far as the latter part of January of this year we
find that long-term Government bonds were selling in the market
on a basis to yield from 4,20 to 4.75 as compared to yields of
3.24 to 3.57 on October 15, 1932, or about a full point less.
In December 1931, one-year obligations commanded as much as
3-1/8 per cent.

On October 15th they were selling to yield

about three-eights of 1 per cent.

In February 1932 the yield

of 90-day Treasury Bills was upwards of 2 per cent*

On October

15th the yield had receded to the record low of one-fifth of
1 per cent.
In December 1931 it was advisable to provide for Treasury financ­
ing on the basis of issues of not more than a yearns maturity*

In recent

- 9 months it has become possible to increase the maturity of notes offered
up to five years.

It is of interest to trace this progress.

In con­

sidering the amounts of Treasury obligations offered during the period
it should be borne in mind that about two— thirds of the financing was
for meeting debt maturities.
In December 1931 all Treasury bonds bearing less than 4 per cent
were selling at a discount and it seemed clearly unwise to attempt to
sell any long-term offering,

$600,000,000 of 3-1/4 per cent one-year

notes were the longest maturity included in a total offering of
$1,300,000,000, and the amount of subscriptions for these notes was
only $703,000,000.
On February 1, 1932, the Treasury* s requirements were about
$350,000,000.

The situation as regards a long-term offering was

even less favorable than in December and these adverse conditions
continued until June,

On February 1st the Treasury offered a com­

bined total of $350,000,000 in two issues, one 3-1/8 per cent sixmonths certificates and the other 3—3/4 per cent one-year certificates.
Subscriptions for the two issues aggregated $646,000,000, and allot­
ment to each issue was made in the proportion that total subscriptions
for that issue bore to the combined total of subscriptions.

The

six-months issue was allotted $227,000,000 and the one-year issue
$144,000,000.
“
When the time came for the March financing the situation as to
yield on Government issues was practically unchanged.

To meet

maturities and provide new money the Treasury required upwards of
$900,000,000.

It offered $300,000,000, 3-l/8 per cent seven-mouth

certificates, and $600,000,000, 3—3/4 per cent one—year certificates.
Subscriptions for the short-term 3—l/8 per cent certificates aggregated
$952,000,000 and those for the 12-months 3-3/4 per cent certificates
$2,450,000,000.

u ie t
Tftien the Treasury was preparing for its May financing
the situation was beginning to show signs of improvement.

Long-term

bonds had advanced and were selling from 3— 3/8 to 3— 3/4 per cent.
This was the first time since the previous Fall when the Treasury
had felt that it would be justified in offering a security having
a maturity of more than 12 months.

On May 2, 1932, the

Treasury offered $225,000,000, 2 per cent, one—year certificates
and a like amount of 3 per cent two-year Treasury Notes.

The

Treasury1s judgment as to the improvement in the Government
market was confirmed by the fact that while $1,700,000,000
was subscribed for the one—year certificates, subscriptions for
the two-year notes aggregated over $2,496,000,000.
On June 15» 1932, to meet maturities and obtain new funds
the Treasury offered $400,000,000 3 per cent, three—year notes
with $350,000,000 l-l/2 per cent one-year certificates.

Sub­

scriptions for the shorter term issue aggregating $1,653,000,000
ran ahead of subscriptions for the three-year issue which aggregated
$1,143,000,000.

In August the situation was much improved.

The

budget accomplishments which had been achieved, the defeat of
dangerous legislative proposals, and the securing and operation of
the reconstruction program had restored confidence and that con­
fidence was promptly reflected in the Government security market.
On August 1st the Treasury offered $325,000,000 two-year
2-1 /8 per cent notes and a like amount of four—year 3—1/4 per cent
notes.

Subscriptions for the two-year notes aggregated

$1,706,000,000, while subscriptions for the four-year notes were
in excess of $3,800,000,000 clearly reflecting a demand for longer
term issues

11

-

-

Further improvement was registered in September.

Re­

funding and financing needs were provided for by offering
$750,000,000 five-year 3-l/4 per cent notes with $400,000,000
one-year 1-1/4 per cent certificates.

The maturity of the

notes was the longest and the rate on the certificates was the
lowest which the Treasury had felt warranted in offering within
a year.

Subscriptions for the notes were over $4,351,000,000

and for the certificates over three billions.
On October 15th. the Treasury offered $450,000,000 3 per
cent notes maturing in four and one—half years, and subscriptions
aggregated over $8,368,000,000.

Except for the 3 per cent and

the 3-1/8 per cent Treasury bonds, all Treasury bonds, notes and
certificates are selling at premiums.
The financial problems ahead unquestionably require firm
and intelligent handling and do not admit of any weakening in
adherence to sound methods and principles.

Yet the improvement

in the position of Government securities augurs well for the
future and rests upon a solid foundation.

It reflects dangers

avoided, the great progress made in budget legislation of last
year, and draws support from large reduction in Government
expenditure which is in process, and from a lessening of demands
for Government funds.

It rests also upon the substantial

progress which is being reported in business and industry and
which will be augmented as the program of recovery and reinvigoration goes forward.

EOR RELEASE, H O M I N G PAPERS,
Wednesday, November 2, 1932.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $75,000,000, or thereabouts.
They will be 91—day billsj and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Eederal Reserve Banks,

or the branches thereof, up to two o fclock p-. iru, Eastern Standard time,
on Eriday, November 4, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated November 9, 1932, and will
mature on February 8, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g * , 99.125.

Fractions must not be used*

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-2-

applied for, unless the tenders ere accompanied by an express guaranty
of payment by an incorporated bank or trust company*
Immediately after the closing hour for receipt of tenders on
November 4, 1932, all tenders received at the Federal Reserve Banks or
branches thereof up to the closing hour will be opened and public announce­
ment of the acceptable prices will follow as soon as possible thereafter,
probCibly on the-following morning.

The Secretary of the Treasury expressly

reserves the right to reject any or all tenders or parts of tenders, and
to allot less than the amount applied for, and his action in any such
respect shall be final.

Those submitting tenders will be advised of the

acceptance or rejection thereof,

Payment at the price offered for

Treasury bills allotted must be made at the Federal Reserve Bonks in
cash or other immediately available funds on November .9, 1932,
The Treasury M i l s will be exempt., as to principal and interest,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes,

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No, 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof*

EOR RELEASE, MORNING PAPERS,
Saturday, November 5, 1932,

TREASURY DEPARTMENT

STATEMENT BY ACTING SECRETARY BALLANTINE.

Acting Secretary of the Treasury Ballantine announced today
that the tenders for $75*000,000, or thereabouts, of 91-day
Treasury Bills, dated November 9, 1932, and maturing February 8,
1933, which were offered on November 2nd, were opened at the
Federal Reserve Banks on November 4th*
The total amount applied for was $229,939,000,

The

highest bid made was 99,962, equivalent to an interest rate of
about 0,15 per cent on an annual basis.

The lowest bid

accepted was 99,941, equivalent to an interest rate of about
0,23 per cent on an annual basis.

Only part of the amount

bid for at the latter price was accepted*
of bids accepted was $75,056,000*

The total amount

The average price of

Treasury Bills to be issued is 99,945*

The average rate on

a bank discount basis is about 0.22 per cent.

TREASURY DEPARTMENT.

por release, morning papers,
MONDAY, NOVEMBER 7, 1932.

STATEMENT BY ACTING SECRETARY BALLANTINE.

Acting Secretary Ballantine today announced that the Treasury has
directed the Collector of Customs at Seattle, Washington, and the
Collectors at all other ports affected, to suspend compliance with
a recent ruling of the Treasury that the tax on lumber importations
imposed by Section 601 (c) (6) of the Revenue Act of 1932 does not
apply to pieces with dimensions in excess of 6 by 6 inches,

such

pieces having been classified as timber and not lumber.
Within the past few days protests against that ruling have reached
the Treasury from domestic lumber interests of the Northwest.

Modifi­

cation or rescinding of the order has been requested, and in order that
the protests may be fully heard and such action taken as may be found
to be justified,

the Treasury has directed the immediate suspension of

the ruling referred to.

FOR RELEASE, MOILING PAPERS,
Thursday, November 10, 1932.

TREASURY DEPARTMENT

STATEI/TENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $75,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o ’clock p. m . , Eastern Standard time,
on Monday, November 14, 1932.

Tenders will not be received at the

Treasury Department, Y/ashington.
The Treasury bills will be dated November 16, 1932, and will
mature on February 15, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued.in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and

t

forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g . , 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsiblo and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

applied for, unless the tenders are accompanied by an express guaranty
of payment by an incorporated bank or trust company.
Immediately after the closing hour for receipt of tenders on
November 14, 1932, all tenders received at the Federal Reserve Banks
or branches thereof up to the closing hour uill be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of

Treasury expressly reserves the ri^ht to reject any or all tenders or
parts of tenders, and to allot less than the amount applies, for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on November 16, 1932.
The Treasury bills will be exempt, as to principal and interest
and «any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE,
November 10, 1932r

STATEMENT BY THE SECRETARY OF THE TREASURY

There was due and payable today under the terms of
the debt-funding agreement with the Government of Greece oh
account of the 4$ twenty-year loan made oh May 10, 1929.,
the sum of $444,920, of which $227,000 represents an in­
stallment due on account of principal', and $217,920 represents
semiannual Interest,

The payment has not been received.

The Hungarian Government has officially notified the
United States Government that it does not have the necessary
foreign exchange with which to make the payment due the United
States on December 15, 1932, under the debt-funding agreement.
The amount due on December 15, 1932, is $40,729.35, of which
$12,285 represents principal and $28,444.35 represents semi­
annual interest

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Tuesday, November 15, 1932*

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced today that
the tenders for $75,000,000, or thereabouts, of 91-day
Treasury Bills, dated November 16, 1932, and maturing
February 15, 1933, which were offered on November 10th,
were opened at the Federal Reserve Banks on November 14th.
The total amount applied for was $311,766,000.

The

highest bid made was 99,952, equivalent to an interest
rate of about 0,19 per cent on an annual basis.

The

lowest bid accepted was 99.944, equivalent to an interest
rate of about 0,22 per cent on an annual basis.

Only part

of the amount bid for at the latter price was accepted.
total amount of bids accepted was $75,480,000,
price of Treasury Bills to be issued is 99.948.

The

The average
The average

rate on a bank discount basis is about 0,21 per cent.

FOR RE TEASE, MORNING PAPERS,
Thursday,, November 17, 1932

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $60,000,000, or thereabouts.
They will be 92-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o'clock p. m . , Eastern Standard time,
on Monday, November 21, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated November 23,. 1932, and will
mature on February 23, 1933, and on the maturity date the face amount
will be payable without interest.

They will be issued in bearer form

only, and in amounts or denominations of $1,000, $10,000, $100,000,

$500,000, and $ 1 ,000,000 (matur ity value) .
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplieci by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1»000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e. g . , 99.125.

Fractions must not be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

A7/
V

2-

Gpplied for, unless the tenders are accompanied by an express guaranty
of payment by an incorporated bank or trust company..
Immediately after the closing hour for receipt of tenders on
November 21, 1932, all tenders received at the Federal Reserve Banks
or branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

Those submitting

tenders will be advised of the acceptance or rejection thereof.

Pay-

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or other immediately available funds
on November 23, 1932,
The Treasury bills will be exempt, as to principal and interest; ,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shallrbe allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any of its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof

FOR RELEASE, MORNING PAPERS,
Tuesday, November 22, 1932,

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS.

Secretary of the Treasury Mills announced today that the
tenders for $60,000,000, or thereabouts, of 92—day Treasury
Bills, dated November 23, 1932, and maturing February 23, 1933,
which were offered on November 17th, were opened at the Federal
Reserve Banks on November 21st«
The total amount applied for was $270,688,000,

The

highest bid made was 99,962, equivalent to an interest rate of
about 0,15 per cent on an annual basis.

The lowest bid accepted

was 99,957, equivalent to an interest rate of about 0,17 per cent
on an annual basis.

Only part of the amount bid for at the

latter price was accepted.
was $60,000,000,
issued is 99,957.

The total amount of bids accepted

The average price of Treasury Bills to be
The average rate on a bank discount basis

is about 0 .17 per cent.

TREASURY DEPARTMEN

EOR RELEASE,MORNING PAPERS,
Wednesday, November 23, 1932.

STATEMENT BY SECRETARY MILLS

The Secretary of the Treasury gives notice that tenders are
invited for Treasury bills to the amount of $100,000,000, or thereabouts.
They will be 91-day bills; and will be sold on a discount basis to the
highest bidders.

Tenders will be received at the Federal Reserve Banks,

or the branches thereof, up to two o'clock p. m . , Eastern Standard time,
on Monday, November 28, 1932.

Tenders will not be received at the

Treasury Department, Washington.
The Treasury bills will be dated November 30, 1932, and will
mature on March X, 1933, and on the maturity date the face amount will
be payable without interest.

They will be issued in bearer form only,

and in amounts or denominations of $1,000, $10,000, $100,000, $500,000,
and-$1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and
forwarded in the special envelopes which will be supplied by the Federal
Reserve Banks or branches upon application therefor.
No tender for an amount less than $1,000 will be considered.
Each tender must be in multiples of $1,000.

The price offered must be

expressed on the basis of 100, with not more than three decimal places,
e, g . , 99.125.

Fractions must net be used.

Tenders will be accepted without cash deposit from incorpor­
ated banks and trust companies and from responsible and recognized
dealers in investment securities.

Tenders from others must be accom­

panied by a deposit of 10 per cent of the face amount of Treasury bills

-2-

applied for, unless the tenders are a ccompanied b y an express g u a r a n t y
Of payment b y an incorporated ba n k or trust company.

Immediately after the closing hour for receipt of tenders on
November 28, 1932, all tenders received at the Federal Reserve Banks
or "branches thereof up to the closing hour will be opened and public
announcement of the acceptable prices will follow as soon as possible
thereafter, probably on the following morning.

The Secretary of the

Treasury expressly reserves the right to reject any or all tenders or
parts of tenders, and to allot less than the amount applied for, and
his action in any such respect shall be final.

These submitting

tenders will be advised of the acceptance or rejection thereof.

Pay­

ment at the price offered for Treasury bills allotted must be made at
the Federal Reserve Banks in cash or ether immediately available funds
on November 30, 1932.
The Treasury bills will be exempt, as to principal and interest ,
and any gain from the sale or other disposition thereof will also be
exempt, from all taxation, except estate and inheritance taxes.

No loss

from the sale or other disposition of the Treasury bills shall be allowed
as a deduction, or otherwise recognized, for the purposes of any tax now
or hereafter imposed by the United States or any o-f "its possessions.
Treasury Department Circular No. 418, as amended, and this
notice prescribe the terms of the Treasury bills and govern the con­
ditions of their issue.

Copies of the circular may be obtained from

any Federal Reserve Bank or branch thereof.

TREASURY DEPARTMENT

EOR RELEASE, MORNING PAPERS
Tuesday, November 29, 1932*

STATEMENT BY SECRETARY MILLS

Secretary of the Treasury Mills announced today that the
tenders for $100,000,000, or thereabouts, of 91-day Treasury
Bills, dated November 30, 1932, and maturing March 1, 1933, which
were offered on November 23rd, were opened at the Federal Reserve
Banks on November 28th,
The total amount applied for was $302,630,000.

The highest

bid made was 99.975, equivalent to an interest rate of about 0.10
per cent on an annual basis.

The lowest bid accepted was 99.963,

equivalent to an interest rate of about 0*15 per cent on an annual
basis.
accepted.

Only part of the amount bid for at the latter price was
The total amount of bids accepted was $100,000,000.

The average price of Treasury Bills to be issued is 99,966.
The average rate on a bank discount basis is about 0.13 per cent.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
December 1, 1932,

Secretary Mills made the following announcement;
The Treasury was advised, under date of November 30, 1932, that
the Secretary of the Trustees of the Austrian Government Guaranteed
Loan of 1923-1943 has telegraphed the Austrian Finance Minister at
Vienna as follows;
"The trustees of the Austrian guaranteed loan 19231943 acting in virtue of the right conferred upon
them in agreements concluded between Austrian
Government and International Relief Bonds Committee,
dated June 15, 1928, on the one hand, and the United
States of America, dated May 8, 1930, on the other
hand, have the honor to inform Your Excellency that
they oppose payment of all annuities contemplated
in the agreements payable the first of January 1933.
The trustees have taken this measure in the hope
that it will facilitate in the near future the
resumption of the transfer of the service of the
guaranteed loan,”
The lien upon the assets and revenues of Austria pledged for the
payment of the Austrian Relief bonds has been subordinated to the lien
upon such assets and revenues pledged for the payment of the Austrian
Reconstruction Loan of 1923,

The foregoing objection by the Trustees

to the payments due from Austria on account of the relief bonds is in
accordance with the agreements concluded between Austria and the
International Relief Bonds Committee and the agreement of May 8, 1930
between Austria and the United States,

The debt funding agreement

between Austria and the United States provides that;

- 2 -

H * * * the obligation of Austria to pay annuities
during the years 1929 to 1943 will in the case of
each annuity not arise if the trustees of the
reconstruction loan of 1923 prior to the preceding
December first have raised objection to the payment
of the annuity in question on the due date.”
In accordance with the provisions of the debt funding agreement
between the Republic oD Austria and the United States, Bond Ho. 5 in
the face amount of $287r556, due January 1, 1933, will be postponed,
which, together with interest at the rate of 5$ per annum compounded
annually to December 31, 1943, shall be repaid, together with further
interest at 5$ per annum, in twenty-five equal annuities on January 1
of each of the years 1944 to 1968, inclusive.

TREASURY DEPARTMENT

FOR RELEASE, MORNING- PAPERS,
Wednesday, December 7, 1932.

STATEMENT BY SECRETARY MILLS

The Treasury is today offering for subscription at par and
accrued interest, through the Federal Reserve Banks, $350,000,000, or
thereabouts, four-year 2-3/4 per cent Treasury notes of Series B-1936,
and $250,000,000, or thereabouts, one-year 3/4 per cent Treasury cer­
tificates of indebtedness of Series TD-1933.
The Treasury notes will be dated December 15, 1932, and
will bear interest from that date at the rate of 2-3/4 per cent per
annum, payable semiannually.

They will mature on December 15, 1936,

and will not be subject to call for redemption prior to that date.
The certificates of indebtedness will be dated December 15,
1932, and will bear interest from that date at the rate of 3/4 per cent
per annum, payable semiannually.

They will mature on December 15, 1933.

The principal and interest of the Treasury notes and Treasury
certificates of indebtedness will be payable in United States gold coin
of the present standard of value.
The Treasury notes and Treasury certificates of indebtedness
will be exempt, both as to principal and interest, from all taxation
(except estate or inheritan»e taxes) now or hereafter imposed by the
United States, any State, or any of the possessions of the United States,
or by any local taxing authority.

-

2-

Applications will be received at the Federal Reserve Banks.
The Treasury will accept in payment for the new Treasury notes and
certificates of indebtedness, at par, Treasury notes of Series 1932,
maturing December 15, 1932.

Subscriptions for the four-year 2-3/4 per

cent Treasury notes, in payment of which Treasury notes of Series 1932
are tendered, will be given preferred allotment up to not less than
$210,000,000, and subscriptions for the one-year 3/4 per cent Treasury
certificates of indebtedness, in payment of which Treasury notes of
Series 1932 are tendered, will be given preferred allotment up to not
less than $150,000,000.
The Treasury notes will be issued in bearer form only, in
denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000, with
interest coupons attached payable semiannually on June 15 and December
15 in each year.

The certificates of indebtedness will be issued in

bearer form only, in denominations of $500, $1,000, $5,000, $10,000, and
$100,000, with two interest coupons attached, payable June 15, 1933, and
December 15, 1933.
About $600,000,000 of Treasury notes and about $100,000,000
in interest payments on the public debt become due and payable on
December 15, 1932.
The texts of the official circulars follow:

r
•?3~
TREASURY NOTES, SERIES B-1936

The Secretary of the Treasury offers for subscription, at par
and accrued interest, through the Federal Reserve Banks, $350,000,000, cr
thereabouts, two and three-quarters per cent Treasury notes of Series
B-1936, of an issue of gold notes of the United States authorized by the
Act of Congress approved September 24, 1917, as amended.
DESCRIPTION OP NOTES
The notes will be dated December 15, 1932, and will bear interest
from that date at the rate of two and three-quarters per cent per annum,
payable semiannually on June 15 and December 15 in each year.

They will

mature December 15, 1930, and will not be subject to call for redemption
prior to maturity.
The principal and interest of the notes will be payable in
United States gold coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in
.denominations of $100, $500, $1,000, $5,000, $10,000, and $100,000.

The

notes will not be issued in registered form.
The notes shall be exempt, both as to principal and interest,
from all taxation (except estate or inheritance taxes) now or hereafter
imposed by the United States, any State, or any of the possessions of
the United States, or by any local taxing authority.
The notes will be accepted at par, during such time and under
such rules and regulations as shall be prescribed or approved by the
Secretary of the Treasury, in payment of income and profits taxes payable
at the maturity of th,e notes.

_4-

The notes will "be acceptable to secure deposits of public
moneys, but will not bear the circulation privilege«
APPLICATION AND ALLOTMENT
Applications will be received at the Pederal Reserve Banks.
Subscriptions for which payment is to be tendered in Treasury
notes of Series 1932, maturing December 15, 1932, will be given preferred
allotment up to not less than $210,000,000.
The Secretary of the Treasury reserves the right to reject
any subscription, in whole or in part, and to allot less than the amount
of notes applied for and to close the subscriptions at any time without
notice; the Secretary of the Treasury also reserves the right to make
allotment in full upon applications for smaller amounts, to make reduced
allotments upon, or to reject, applications for larger amounts, and to
make classified allotments and allotments upon a graduated scale; hnd
his action in these respects shall be final.

Allotment notices will

be sent out promptly upon allotment,and the basis of the allotment will
be publicly announced.
PAYMENT
Payment at par and accrued interest for notes allotted must bo
made on or before December 15, 1932, or on later allotment.

Any qualified

depositary will be permitted to make payment by credit for notes allotted
to it for itself and its customers,up to any amount for which it shall
be qualified in excess of existing deposits, when so notified by the
pederal Reserve Bank of its district.

Treasury notes of Series 1932,

5-

maturing December 15, 1932, will bo accepted at par in payment for
any notes of the series now offered which shall bo subscribed for and
allotted, with an adjustment of the interest accrued, if any, on the
notes so paid for,
GENERAL PROVISIONS
As fiscal agents of 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
of the Treasury to the Federal Reserve Banks of the respective districts.
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive notes,

CERTIFICATES OF INDEBTEDNESS, SERIES TD-1933

The Secretary of the Treasury, under the authority of the Act
approved September 24, 1917, as amended, offers for subscription, at par
and accrued interest, through the Federal Reserve Banks, $250,000,000, or
thereabouts, Treasury certificates of indebtedness of Series TD-1933*
DESCRIPTION OF CERTIFICATES
The certificates of this series will be dated December 15, 1932,
and will bear interest from that date at the rate of three-quarters of
one per cent per annum, payable semiannually.

They will be payable on

December 15, 1933,
The principal and interest of the certificates will be payable
in United States gold coin of the present standard of value.

Bearer certificates will "be issued in denominations of $500,
$1,000, $5,000, $10,000, and $100,000.

The certificates will have two

interest coupons attached, payable on June 15, 1933, and December 15,
1933.
The certificates of this series shall be exempt, both as to
principal and interest, from all taxation (except estate and inheritance
taxes) now or hereafter imposed by the United States, any State, or any
of the possessions of the United States, or by any local taxing authority.
The certificates of this series will be accepted at par, during
such time and under such rules and regulations as shall be prescribed
or approved by the Secretary of the Treasury, in payment of income and
profits taxes payable at the maturity of the certificates.
The certificates of this series will bo acceptable to secure
deposits of public moneys, but will not bear the circulation privilege.
APPLICATION AND ALLOTMENT
Applications will be received at the Eederal Reserve Banks.
Subscriptions for which payment is to be tendered in Treasury
notes of Series 1932, maturing December 15, 1932, will be given pre­
ferred allotment up to not less than $150,000,000.
The Secretary of the Treasury reserves the right to reject
any subscription, in whole or in part, and to allot less than the amount
of certificates applied for and to close the subscriptions at any time
without notice; the Secretary of the Treasury also reserves the right
to make allotment in full upon applications for smaller amounts, to make
reduced allotments upon, or to reject, applications for larger amounts,
and to make classified allotments and allotments upon a graduated scale;

-7-

and his action in these respects shall he final.

Allotment notices-

will he sent out promptly upon allotment, and the basis of the allot­
ment will he publicly announced.
PAYMENT
Payment at par and accrued interest for certificates allotted
must he made on or before December 15, 1932, or on later allotment.

Any

qualified depositary will he permitted to make payment by credit for
certificates allotted to it for itself and its customers up to any amount
for which it shall he qualified in excess of existing deposits, when so
notified by the Federal Reservo Bank of its district.

Treasury notes

of Series 1932, maturing December 15, 1932, will be accepted at par in
payment for any certificates of the series now offered which shall be
subscribed for and allotted, with an adjustment of the interest accrued,
if any, on the certificates so paid for.
GENERAL PROVISIONS
As fiscal agents of the United States, Federal Reserve Banks
are authorized and requested to receive subscriptions and to make allot­
ments on the basis and up to the amounts indicated by the Secretary of
the Treasury to the Federal Reserve Banks of the respective districts.
After allotment and upon payment Federal Reserve Banks may issue interim
receipts pending delivery of the definitive certificates.

EOR RELEASE, MORNING PAPERS
THURSDAY, DECEMBER 8, 1932.

TREASURY DEPARTMENT

STATEMENT BY SECRETARY MILLS

Secretary Mills to-day announced that the subscription
\

books for the current offering of four-year 2-3/4 per cent
Treasury Notes, ..Series ¿-1936, maturing December 15, 1936,
and one^year 3/4 per cent Treasury1 Certificates of Indebted­
ness, Series TD-1933, maturing December 15, 1933* closed at
the close of business to-day, Wednesday, December 7,
Subscriptions placed in the mail before 12 o'clock
midnight,. Wednesday, December 7th, as shown by the postoffice cancellation, will be considered as having been
entered before the close of the subscription books.
Announcement of the amount of subscriptions and the
basis of allotment will be made on or about Monday,
December 12th,

TREASURY DEPARTMENT

FOR RELEASE, MORNING PAPERS,
Monday, December 12, 1932.

STATEMENT BY SECRETARY MILLS

Secretary Mills today announced the subscription figures and the
basis of allotment for the December 15th offering of four-year Treasury
Notes of Series B-1936, 2-3/4 per cent, maturing December 15, 1936, and
of one-year Treasury Certificates of Indebtedness of Series TD-1933, 3/4
per cent, maturing December 15, 1933.

2-3/4 PER CENT TREASURY NOTES, SERIES B-1936.
Reports received from the Federal Reserve Banks show that for the
offering of 2-3/4 per cent Treasury Notes of Series B-1936& maturing De­
cember 15, 1936, which was for $350,000,000, or thereabouts, total sub­
scriptions aggregate over $6,677,000,000.

Of these subscriptions,

$344,030,500 represent exchange subscriptions, in payment for which Treasury
Notes of Series 1932, maturing December 15, 1932, were tendered.
change subscriptions were allotted 62 per cent.

Such ex­

Allotments on cash sub­

scriptions for 2-3/4 per cent Treasury Notes of Series B-1936 were made as
follows:

Subscriptions in amounts not exceeding $1,000 were allotted 10

per cent, but not less than $100 on any one subscription;

subscriptions

in amounts over $1,000 but not exceeding $10,000 were allotted 5 per cent,
but not less than $100 on any one subscription;

and subscriptions in

amounts over $10,000 were allotted 2-l/4 per cent, but not less than $500
on any one subscription.

3/4 PER CENT TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TD-1933.
Reports received from the Federal Reserve Banks show that for the
offering of 3/4 per cent Treasury Certificates of Series TD-1933, maturing

-

2

-

December 15, 1933, which was for $250,000,000, or thereabouts, total sub­
scriptions aggregate over $4,128,000,000,

Of these subscriptions,

$191,617,000 represent exchange subscriptions, in payment for which Treasury
Notes of Series 1932, maturing December 15, 1932, were tendered.
change subscriptions were allotted 79 per cent.

Such ex-,

Allotments on cash sub­

scriptions for 3/4 per cent Treasury Certificates of Indebtedness of Series
TD-1933 were made as follows:

Subscriptions in amounts not exceeding $1,000

were allotted 50 per cent, but not less than $500 on any one subscription;
subscriptions in amounts over $1,000 but not exceeding $10,000 were allotted
10 per cent, but not less than $500 on any one subscription;

subscriptions

in amounts over $10,000 but not exceeding $100,000 were allotted 4 per cent,
but not less than $1,000 on any one subscription;

subscriptions in amounts-

over $100,000 but not exceeding $1,000,000 were allotted 3 per cent, but not
less than $4,000 on any one subscription;

and subscriptions in amounts

over $1,000,000 were allotted 2 per cent, but not less than $30,000 on any
one subscription.

further details as to subscriptions and allotments will be announced
when final reports are received from the federal Reserve Banks.

TREASURY DEPARTMENT

FOB RELEASE UPON THE APPEARANCE
OF THE SECRETARY BEFORE THE COMMITTEE

.Statement By Secretary of the Treasury Mills
Before the Ways and Means Committee, on Wednesday,
December I4 , 1932, at 10:00 o ’clock a. m.

H. R, 13312 provides for a tax of $5 a barrel on all beer, lager
beer, ale, porter, or other similar fermented liquor, containing one-half
of 1 per cent or more of alcohol by volume, and not more than 2 .7 5 per
centum of alcohol by weight.
It amends the National Prohibition Act, as amended and supple­
mented, by providing that the terms ’’liquor” , ’’intoxicating liquor” , ’’beer” ,
”ale” , and ’’porter” as used in this Act shall not include beer, ale, porter,
or similar fermented liquor, containing 2,75 per centum or less of alcohol
by weight.
The effect of the bill is to make legal the manufacture and sale
of beer, ¿lo,and porter, containing 2,75 per cent or less of alcohol by weight,
and imposes a manufacturers’ excise tax of $5 a barrel on these products.
The bill further makes legal the manufacture, transportation and
sale of nonintoxicating vinous liquors made by the natural fermentation of
grape juice, and without the addition of distilled spirits, and imposes in
lieu of existing internal revenue taxes a tax of 20 cents per gallon.
The Department believes that the administration of the beer tax
would be practicable though it is not clear why the distinction is made be­
tween the fermented liquor covered by the bill and cereal beverages with less
than one-half of 1 per centum '

of alcohol by volume, the tax on the latter

being retained at the rate of l^ cents per gallon.

This seems illogical and may

give rise to difficulties of administration, and I think you should consider
whether tax paid beer should not be distinctively marked by stamp or other­
wise

)
-

2

-

Furthermore, the bill is ambiguous on the question of
whether the license tax imposed on the wholesaler and retailer of
fermented liquors under the internal revenue laws applies to the
seller of the new beverage.
The provision, however, relating to the taxation of vinous
liquors appears to the Treasury Department as impossible of adminis­
tration in that it gives no working definition of what liquors are
subject to the tax.
As to the revenue which might be expected from the proposed
tax on beer at the rate of $5 per barrel the Treasury estimates the
amount at $1 2 5 ,000,000 to $1 5 0 ,000,000 for the fiscal year 193 ^If, however, malt syrup which is taxed at a relatively low rate under
the present law is subjected to compensatory tax, the ultimate yield
of the tax on beer could be increased somewhat.
There is a relationship between tax rates and consumption
of beer, and consumption is affected by economic conditions.

Taking

both of these factors into consideration, and giving due weight to
the increase in population, it was estimated that the consumption
in 193 U might amount to 3 3 »OOOfOOO barrels, or U 2 ,000,000 barrels,
depending on the number of states in which the sale of the new
beverage will be made legal during the coming fiscal year.

Two

tentative lists of sthtes were drawn up which appear in Exhibit A
hereto attached.

These figures are, however, subject to further

revision in order to take account of certain factors which however
difficult they may be to weigh

cannot be ignored.

- 3 It should he remembered that the industry at least as far
as legitimate production and distribution are concerned is not now
established and that home brew and bootleg beer are apparently man­
ufactured on a very considerable scale.

The time which would be

required for the commercial production and normal distribution is
problematical.

Moreover, there is very considerable uncertainty

as to the change which may have taken place in the public taste f o r a
beverage of the alcoholic content provided in the bill, particularly
when consideration is given to the number of younger men from 21 to
35 who have not been accustomed to the use of such a beverage.
After making these further adjustments we estimate the
probable consumption of tax-paid beer in the fiscal year 1934 at
25,000,000 barrels and 30,000,000 barrels respectively for the two
lists of states.

These figures indicate collections in the

amount of $125,000,000 and $150,000,000 respectively.
And now may I turn to the broader aspects of this subject.
This Committee has a major interest and responsibility in maintaining
the finances of the National Government on a sound basis.

I desire,

therefore, to speak briefly to you concerning our major financial
problem.
The time has come to bring the Federal budget into balance
in the sense that there will be no further increase in the public
debt.

Resumption of debt retirement mast unfortunately be post­

poned for another fiscal year.

But in so far as balancing current

expenditures with current receipts is concerned, the goal is definitely
in sight.

We have but to reach out our hand to grasp it.
There
the
is no more valuable contribution that can be made by/Government to

the economic welfare of the Nation.

It is "beyond, question the

most important task to which the Congress should address itself at
this Session.

Both parties unequivocally pledged themselves to
Cognizant as I am

this accomplishment.

of

the facts, I know

of no conceivable excuse for failure to keep this promise and to
act now.

On the other hand, there is every reason why the

leaders of "both parties in "both Bouses should agree on a common
program covering "both necessary economies and needed reforms so
as to "bring next year’s budget into balance before adjournment.
A deficit this fiscal year is inevitable.

But the fol­

lowing figures indicate that it can be eliminated in the fiscal year
ending June 30, 193^.

According to the basic budget submitted by

the President, exclusive of statutory debt retirements, expenditures
will aggregate $ 3 ,^K)»000,000.

Deduct the further economies recom­

mended by the President and the expenditures to be covered will amount
to $3*256,000,000.

Once we face the fact that expenditures must

be drastically cut, the economies suggested are not such as any reason­
able man can object to.
Under existing law it is estimated that there will be avail­
able for this purpose $2 ,9 ^+9 ,000 ,0 0 0 , including $ 329 ,000,000 of foreign
payments,

On the basis of these figures we need to find ^307*000,000,

and if, as now seems probable, foreign obligations under existing
agreements are not to be met in full, a somewhat larger amount.
If the gasoline tax be continued for another year and a
general manufacturers* excise tax along the lines of the measure re­
ported by this Committee at the last Session be adopted, the budget

can be brought into balance, and at the same time a number of the
more inequitable, unproductive, and administratively undesirable
existing excise taxes be repealed.
The me a s u r e n o w u n d e r con s i d e r a t i o n standing alone will
not p r o d u c e the revenue n e e d e d to b r i n g the bud g e t into balance.
But if the Committee

should favo r its adoption,

tion w i t h these other proposals,

it could,

in com b i n a ­

be m a d e to f u r n i s h a base of ta x ­

a t i o n sufficiently b r o a d to give adequate a s s u rance of a b a l a n c e d
budget.

Aside fr o m figures,

the a d o p t i o n of a ge n e r a l m a n u facturers*

excise t a x w o u l d carry wit h it in the pu b l i c m i n d the definite a s s u r ­
ance that any question as to the credit of the F e d e r a l Government h a d
b e e n e l iminated f r o m the picture.

This of itself w o u l d ha v e a n

e n ormous effect b o t h p s y c h o l o g i c a l l y a n d in fact.

The necessities of the situation clearly call for some such
program.

By June 30th, next, we will have closed three successive

fiscal years with large deficits.

While in the years 193^

193^

the Treasury sold substantial blocks of long-term bonds, these deficits
have in the main been financed by certificates and notes, with a ma­
turity of not exceeding five years.
^

With $6,268,000,000 of Fourth

Liberty Bonds maturing by 1938 and callable in 1933 and with

$53^,000,000 of First

Liberty Loan Bonds now callable, a refunding

operation is desirable, providing bonds offered do not carry an interest
rate in excess of that which the high credit of the United States
calls for.

The success of such an operation would be greatly

facilitated by a balanced budget.

It would have, in my judgment,

a most favorable effect on the long-term money market and vitalize

the whole credit structure.

The availability of capital on reasonable

terms would, in turn, create one of the conditions essential to
business recovery.

It would be enormously helpful in stimulating

improvement in the capital goods industries, that is, the heavy
industries.
The market believes the funding of short-term debt into
long-term bonds to be inevitable.

The uncertainty as to the time

and terms of this operation added to the uncertainty as to when the
budget will be balanced and the Government retire from the market
as a borrower of additional funds are disturbing and unsettling
factors.

It is in the power of the Government to remove these un­

certainties and obstacles.

It is the duty of the Government to put

its own house in order, particularly when such action will help restore
confidence and promote recovery.
We hear of all manner of plans and schemes for remedying
defects and maladjustments in our economic life.

Here in the im­

mediate domain of the Government itself is a situation directly
affecting the welfare of the country and calling for remedy.

Ho

one disputes the need for action; all are agreed on the feasibility
of a program and the soundness of the objective.
come for action.

The time has

I feel that this Committee, owing to the position

which it occupies and the direct responsibility which it has in the
matter of Government finances, is the one to take the leadership
in promoting a non-partisan program intended to bring next year>s
budget into balance and to press that program with such vigor as to
assure its adoption prior to March *lth.

A

CLASSIFICATION OF STATES ACCORDING TO LIKELIHOOD OF EARLY AUTHORIZATION
OF PRODUCTION AND SALE OF BEER UPON ENACTMENT OF AUTHORIZING NATIONAL
LEGISLATION.

States in which the immediate sale of beer
is reasonably certain:
Arizona
California
Maryland
Massachusetts
Michigan
Missouri
Montana
Nevada
New Jersey
New York
North Dakota
Oregon
Pennsylvania
Rhode Island
Washington
Wisconsin

States in which the early sale of beer may
reasonably be expected:
Connecticut
Colorado
Indiana
New Hampshire
Delaware
Illinois
Louisiana
Minnesota
Vermont

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
U p o n d e l i v e r y of the a d dress
which will p r o b a b l y be 1 0 :3 0 a.m
Friday, D e c e m b e r 1 6 , 1932.

INDUSTRY A N D THE F E D E R A L T A X PR O B L E M
R e m a r k s of
H o norable A r t h u r A. Bal l a n t i n e
U n d e r S e c r e t a r y of the Treasury,
B e for e the
A n nual M e e t i n g of the
Ame r i c a n M i n i n g Congress,
Washington, D.

C.

D e c e m b e r 16, 1932»

FOR RELEA.SE, MORNING PAPERS,
Friday, December 16, 1932.

TREASURY DEPARTMENT

Secretary Mills today announced the final subscription and allotment
figures with respect to the December 15th offering of 2—3/4 per cent Treasury
Notes of Series B-1936, maturing December 15, 1936, and 3/4 per cent Treasury
Certificates of Indebtedness of Series TD-1933, maturing December 15, 1933.
Subscriptions and allotments were divided among the several Federal
Reserve Districts and the Treasury as follows:

2-3/4$ TREA-SURY NOTES OF SERIES B-1936
Federal Reserve
District

Total Cash
Subscriptions
Received

Total Exchange
Subscriptions
Received

Total Subscrip­
tions Received

Total Sub­
scriptions
Allotted

(Allotted
(Allotted on a
graduated scale) 62 per cent)
Boston ...... .
New* Y o r k .... .
Philadelphia ..
Cleveland ....•
Richmond ••••••
Atlanta .......
Chicago ••••...
St. Louis • • •• •
Minneapolis ...
Kansas City ...
Dallas ••••••••
San Francisco •
Treasury ......
Total

384,361,000
3,162,071,900
554,038,200
364,975,600
143,379,600
330,162,500
425,834,800
84,716,300
18,658,600
57,639,400
141,515,800
664,741,800
1,014,500

$ 11,899,900
193,311,700
14,981,100
11,095,700
7,259,400
2,814,100
60,605,000
8,211,700
1,925,800
6,224,400
1,602,700
23,087,000
1 ,012,000

$

396,260,900
3,355,383,600
569,019,300
376,071,300
150*539,000
332,976,600
486,439,800
92,928,000
20,584,400
63,863,800
143,118,500
687,828,800
2,026,500

$ 16,433,200
191,792,900
21,850,000
15,180,900
8,037,000
10,076,400
47,625,100
7,174,200
1,670,100
5,204,500
5,389,700
29,448,700
651,200

$6,333,110,000

$344,030,500

$6,677,140,500

*$360,533,900

$

* Includes $213,092,600 allotted on
$344,030,500 exchange subscriptions.

A? 7
-

2

-

3I H CERTIFICATES OF1 INDEBTEDNESS OF SERIES TD-1933
Federal Reserve
District

Total Cash
Subscriptions
Received
(Allotted on a
graduated scale)

Total Exchange
Subscriptions
Received

Total Subscrip­
tions Received

Total Sub­
scriptions
Allotted

$

$ 1 3 .5U 2.000
157,202,500
8 ,875,000
5 ,376,500
3 ,999,000
7 ,301,000
3 4 ,333.50 0
1 ,909,000

(Allotted
79 per cent)

2 ,333.500
1 U 3 .65U .000
2 ,187,000
1 ,000,500
1 ,376,000
77,000
3 2 ,689,000

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

$ 3 3 9 ,735,500
1,891,887,000
300,639,000
203 ,*+86,000
84,276,000
1 6 2 ,Ul0,00Q
3 1 9 ,Ho U,o o o
*+0 ,912,000
1 1 ,800,500
5 1 ,152,500
7 8 ,*+12,000
*+0 2 ,l*+2 ,500
1 ,001,000

$

55,000

352,093,000
41,876,500
1 2 ,258,000
5x.u23.500
78 ,*+14,000
*+0 8 ,6*+8,500
1 ,056,000

Total

$3,9 37,31*+. 000

$1 9 1 ,617,000

$U, 12 8 ,931,000

96*+, 500

457,500
265,000
2,000
6 ,506,000

392,169,000

2 ,0 3 5 ,5^ 1,000
302 ,826,000
20 *+,*+86,500
2 5 ,652,000
16 2 ,1+87,000

757,000
i

,5o M

oo

5 ,151,000
1 3 ,8^0,000
7*+.000
*$25M6^,500

♦Includes $151,336,000 allotted on
$1 9 1 ,617,000 exchange subscriptions.

TREASURY DEPARTMENT

FOR IMMEDIATE RELEASE
December 15, 1932.

The Treasury today received payments amounting to $98,685,910»63
from the following foreign governments on account of their funded
indebtedness» to the United States, of which $31,567,200 was on account
of principal, and $67,118,710.63 on account of accrued interest:
GREAT BRITAIN!

The payment received from the Government of

Great Britain amounted to $95,550,000, of which $30,000,000 represented
principal, and $65,550,000 represented semiannual interest.

The payment

was made in gold at the Federal Reserve Bank of New York.
ITALY:

The payment received from the Government of Italy amounted

to $1,245,437.50, and represented semiannual interest due on its
indebtedness to the United States.

As authorized by the terms of the

debt funding agreement, the payment was made in obligations of the
United States which were accepted at par and accrued interest to
December 15.

The obligations were $1,236,100 face amount of 3‘
¡o

Treasury bonds of 1951-55, $9,321,97 was accrued interest on the Treas­
ury bonds, and a cash adjustment of $15.53.
CZECHOSLOVAKIA;

The payment received from the Government of

Czechoslovakia amounted to $1,500,000, and represented semiannual
installment of principal.

As authorized by the terms of the debt funding

agreement, the payment was made in obligations of the United States
which were accepted at par and accrued interest with a small cash
adjustment.

The obligations accepted were $1,488,750 face amount of

-*v

7
3$ Treasury bonds of 1951-55* accrued interest on such bonds amounting
to $1 1 ,227 .3 1 » and a cash adjustment of $22 .69 *
FINLAND:

The payment re c e i v e d f r o m F i n l a n d a m o u n t e d to $186,235»

of whi c h $58,000 repr e s e n t e d annual installment of p r i n c i p a l an d
$128,235 r e p r e s e n t e d semiannual installment of interest.

As aut h o r i z e d
i

.
j
by the terms of the debt funding agreement, the payment was made m
obligations of the United States which were accepted at par and accrued
interest, with a small cash adjustment.

The obligations accepted were

$18U,800 face amount of 3$ Treasury bonds of 1951-55» accrued interest
on such bonds amounting to $1 ,39 3 »66 , and- a cash adjustment of $Ul.3 ^.
LATVIA:

The payment received from the Government of Latvia

amounted to $ 1 1 1 ,852 .1 2 , of which $9,200 represented annual installment
of principal, and $ 102 ,652.12 represented semiannual installment of
interest.

The payment was made in cash at the Federal Reserve Bank of

New York.
LITHUANIA:

The payment received from the Government of Lithuania

amounted to $9 2 ,386.01 and represented semiannual installment on account
of interest.

The payment was made in cash at the Treasury.
— 0O0—

The amounts due today from foreign governments which were not
received are as fellows:
Country
Belgium .............. .... ..
E s t o n i a ......................
France

principal
$ — ---

21,000

Interest
$ 2 ,1 2 5 ,000.00
2^5,370.00

1 9 ,2 6 1 ,1+32,50

................................

Hungary .............. ........

12,285

28,Wi.35

......................

232,000

3 ,0 7 0 ,980.00

$265,285

$ 2 4 ,7 3 1 ,226.85

Roland

$ 2U,996 ,51-1.85

^
s'

'future

r e le a s e

TREASURY DEPARTMENT

{ OBSERVE

FOR RELEASE upon delivery
of the address which will
probably be 1*30 P. M . ,
Monday, December 19, 1932,

DATE

SOME FUNDAMENTALS OF RECOVERY

Remarks of
Honorable Arthur A. Ballantine,
Under Secretary of the Treasury,
at luncheon of the
Bond Club of New York,
Monday, December 19, 1932,
New York City, N, Y,

SOME FUNDAMENTALS OF RECOVERY

Remarks of
Honorable Arthur A. Ballantine,
Under Secretary of the Treasury,
before the
Bond Club of Hew York,
Monday, December 19, 1932,
Hew York City, N. Y.

This is a time when some of the fundamentals of financial
economic order have to be considered and protected.

In most social

thought, the financial integrity of the Government of the United States
is assumed and it is hardly possible to imagine a social structure rest­
ing upon any other base.

Yet vigorous action is called for now to

keep the finances of the Government entirely sound.
Our Government has come through the depression with the best
credit in the world.

Inevitably the debt has been increased from the

low point of $16,185,000,000, as of June 30, 1930, at the end of a
decade of debt reduction, and now stands at $20,806,000,000, as compared
with the high of $25,485,000,000 on June 30, 1919,

Notwithstanding the

increase Government securities are in insistent demand.
That debt structure can of course be sustained.

Every

business man knows, however, that in the long run Government credit,
like private credit, rests upon a flow of current revenue adequate to
meet all current outgo.
budget into balance m
in the public debt.

Steps should be taken to bring the Federal
the sense that there will be no further increase

Both political parties are pledged to this program

and it can and should be carried out in the present session of Congress*

~ 2 ~

The amount of the estimated net deficit, that is, the deficit
exclusive of debt retirement, now being budgeted,is. $307»000,000.
Certain assumptions underlie that estimate and one of them is that the
Government in its provision for expenditures will observe rigid econonqy.
That does not mean that any vital function is to be jeopardized or any
required relief denied.

It means only the determined elimination of

every expenditure not strictly necessary.
In preparing the estimates of expenditures for the fiscal year
1934 the heads of the different departments and the Director of the
Budget, acting under the express direction of the President, brought
every item of expenditure under intensive scrutiny.

Of course it was

clear that the furlough system, operating to decrease the pay of Govern­
ment employees 8-l/3 per cent, had to be continued.
controllable items of expenditure reductions were made.

In almost all
Many of these

expenditures are relatively small items, and the amounts of possible re­
ductions accordingly small, but in the aggregate the savings amount to
many millions of dollars.

It is inevitable that for the coming year

there should be an increase in certain items, such as interest on the
public debt and the care and maintenance of public buildings due to the
increase in their number.

The result of this squeezing process and

the elimination of certain non-recurring emergency items was to show
reduction of expenditures in the basic budget for 1934 as compared to
1933 of Some $294,000,000.
That reduction was not sufficient, and further major items of
economy have been recommended.

They include an 11 per cent reduction

in the pay of civil employees of the Federal Government, showing a net
saving of $57,000,000*

They also include reductions in allowances

to veterans, representing largely reduced military and naval compensation,

W

— .3 -

amounting to $127,000,000,

combined.
The / savings would reduce expenditures.*,

exclusive of debt retirement, for the coming year to $3,256*000,000,
or about $480,000,000 less than the corresponding figure for 1933*
This would leave the net deficit as estimated at $307,000,000*

Heces—

sarily the expenditure figures do not include anything for reducing
the public debt.
In dealing with the subject of economy Congress is under con­
tinuous and severe pressure from organized groups working for their
own ends, usually believed by them to be justified.

The Members of

Congress can be vastly helped in the performance of* their difficult
task by intelligent and firm public support.

Without such support

they are hardly likely to succeed in holding public expenditures to a
minimum.
It is sometimes asserted that material budgetary relief could
be secured by having the Federal Government adopt the practice of
treating as capital items all expenditures for construction and eliminat­
ing such expenditures from the ordinary budget.

In general, the Federal

Government in its accounts treats all expenditures on the ”pay as you go”
basis.

It -docs, not" capitalize

construction.

The Government is

required by law to set up on its books debt increases reflecting amounts
advanced to the Reconstruction Finance Corporation after the original
capital stock of $500,000,000 was paid in, but these advances earn and
draw interest, are protected by a large margin, and will be repaid.
The"suggestion has been made that the Governments method of ac­
counting is antiquated and that the Government should operate on the
basis of a balance sheet similar to that of an industrial concern.

On

the suggested plan certain so-called capital items would be omitted from
the receipts and expenditures statement, except for amortization! and

.carried direct to the "balance sheet*

It is very difficult to "believe*

however, that there would be a n y practical advantage in a Government
accounting system which capitalized post offices, court houses, rivers- .
and harbors, and the like*

In respect to budgetary control the case

of the Government differs radically from that of a business enterprise*
Mere segregation of capital outlays from other outlays would not increase
resources of the Government in any respect; it would merely increase the
temptation to borrow money.
Construction expenditures, it is true, have been very materially
increased in the emergency and that is a somewhat comforting fact to have
in mind in considering the deficits.

This temporary change furnishes no

adequate reason for altering a method of accounting for such expenditures
which, as applied to the case of the Government,is entirely sound.
Government expenditures should continue to be budgeted on a pay
as you go basis.

So far as the amount of the Governments financial

requirements are concerned it makes no difference whether items are
treated as current outgo or capital;

if they cannot be met from current

revenues they have to be met by borrowing.

Continued borrowing adds to

the amount and burden of the public debt and hence to the cost of government.

The government should adhere to methods which tend toward the re­

duction of the public debt rather than resort to methods tending toward
its increase.

The experience of certain foreign countries in the use

of the so-called extraordinary budget is not such as to commend resort
to the suggested device.
Provision should be made in this session of Congress for additional
revenues adequate to balance the budget for 1934 after allowing for maxi­
mum reductions of expenditure.

Unless additional revenue is provided

there will be a deficit of some $307,000,000 next year, even after making
all possible reduction in expenditures.

Estimated revenues include

some $329*000,000 of payments from foreign governments and so far as
those payments are not made in full the deficit will he increased,The net deficit for the current year is estimated at $1,146*000,000,
and that follows a net deficit of slightly under $2,473,000,000 for
1932,

The time is certainly here to put an end to deficits and get

hack to a proper balance of revenues and expenditures,A very substantial effort along this line was made by Congress
in the last session,-.
increased.

The income tax of individuals was most sharply

The combined maximum normal and maximum surtax, reaching

63 per cent, approaches war-time levels,'

(
Making income tax rates

higher would tend against the interests of the revenue and not for it.
The new rates themselves are too high for normal times, particularly
when they are considered in the light of the drastic new prohibition
against the application of losses on securities held for two years or
less to all forms of income other than gains from transactions, in securities
¿ess than two years,
held for/ The difficulty with raising more money from income taxes is
that incomes which can be subject to high rates simply are not there,.
Estate tax rates have been increased so as to reach a maximum combined
rate of 45 per cent,

A heavy cumulative gift tax has been imposed#

No increase in the revenue appears possible in these fields through
increases in tax rates.
The new miscellaneous taxes imposed by the Revenue Act of 1932
are of great help to the revenue,.

They have not only prevented the

decline in miscellaneous revenue but up to December 14, 1932 have added
/
about $112,000,000, or approximately 45 per cent, to the revenues from
miscellaneous tax sources,.

These taxes should continue to show increases*

There can be no doubt whatever about the need of continuing in
1934 the Federal gasoline tax of 1 cent a gallon as recommended by the

Secretary of the Treasury,

It is estimated that this will add to the revenues

for that year approximately $137,000,000,
Adequate provision for revenues requires the adoption of new measures, '
If the "beer hill becomes law the Treasury estimates that it will yiel^.

fcijef

fiscal year 1934 from $125,000^000 to $150,000,000, depending on the states
in which the beverage can be sold*

Aside from that measure it is generally

agreed that a general manufacturers' excise tax on the Canadian model,

imposed

at a low rate*, furnishes the most practicable means for obtaining additional
revenue without undue burdens upon business or consumers.

Such a measure was

worked out in detail in the last session of Congress by the Ways and Means
Committee in cooperation with the Treasury,

It is estimated that suCh a general

tax, with exemptions confined to agricultural products and necessary foods, if
imposed at the rate of

per dent, would yield about $355,000,000*

Such a

tax is not to be confused with the general sales tax for it would apply only
to sales of the completed article by manufacturers or producers and would not
apply eh successive Sales of the same article.

The tax would in no sense be

a substitute for income taxes or estate taxes:

it would be a temporary

supplement to such taxes at a time when revenues from this source cannot be
made adequate |o meet the needs of the government,
Placing upon the books a general manufacturers 1 excise tax would do more
than assure a particular amount of revenue; it would carry general conviction
that the government's revenue problem can and will be met.
a most beneficial effect upon the credit of the government.

This would have
It would greatly

help refunding operations by the government in substituting long-term obliga­
tions for part of the large volume of short-term debt.

The establialiment of

the government long-term bond market would assist in developing the availability
of capital funds for business with resulting increase of activity and employment.
Maintaining the budget in a strong position is in the end a part
pf the operation of maintaining sound currency,

It has been the

~ 7 -

experience abroad, as it has been here, that pressure on the budget
leads toward the use of the device of fiat money.

In the discussions

of the day we find that device spoken of as if it might furnish a way
toward an improved economic condition.
We are rarely aware of the part which sound currency plays in our
economic life.

It is difficult for a people accustomed to that blessing

to picture the ruinous effect of an unstable or depreciated currency.
purchases and sales —

all our daily reckonings —

of a definite standing of the dollar, defined
of gold.

That unit

Our

are placed in terms

in fixed terms of quantity

is a fixed point of reference in

terms of which it is possible to conduct the complicated economic opera­
tions of the present day.
We are witnessing today in the field of international trade the
troubles which arise in part from instability affecting the currencies
of many foreign countries.

The currency uncertainties have added to

the problems of the depression:

we do not have to look far in the

Uuropean' or world experience to find evidence of the importance of main­
taining the country^ monetary system'on a sound basis.
So long as the credit of our Federal Government is maintained, and
so long as we have a sound currency, there is a foundation or framework
upon which to base the whole economic machine.

Whatever adjustments

must take place to meet new conditions can be made with reference to
definite points of departure.

If those foundations should weaken the

entire structure would be shaken, and none can. tell on what basis it
could be rebuilt.

It is of the utmost importance to give to Members of

Cpngrcss at all times the most vigorous support in those measures which
will confine public expenditures within sound limits, furnish adequate
revenue, and promote the maintenance of sound currency.
are required as the fundamental basis of recovery.

Such measures

TREASURY DEPARTMENT

EOR RELEASE, M O R N I N G T A P E R S
Tuesday, D e c e m b e r 20, 1932.

STATEMENT B Y S E C R E T L Y J U L E S

The S e c r e t a r y of the T r e a s u r y gives notice that tenders
invited for T r e a s u r y bills to the amount of $100,000,000,
T h e y wi l l be 91-day tills;
highest bidders.

are

or thereabouts

arid w i l l be sold on a discount basis to the

’Tenders will be r e c e i v e d at the Eeder- 1 R e serve Banks,

or the branches thereof, up to two o ^ l o c k
on Friday, D e cember 23, 1932.

p. m. , Ea s t e r n Standard time,

Tenders will not be received at the

T r e a s u r y Department, Washington.
The T r e a s u r y bills wi l l lie d ated D e c e m b e r 20,
mature

on M a rch 29, 1933,

lie payable without

and y/ill

and on the m a t u r i t y date the face amount wi l l

interest.

T h e y will be issued

in bearer

and in amounts or d enominations o f 01,000, $10,000,
and $1,000,000

1932,

form only,

$100,000, $500,000,

(m-turity value).

It is urged that tenders be made on the printed

forms and

forwarded in the special envelopes w h i c h w $ l l be supplied by the F e deral
Reserve B'nks or branches upon a pplication therefor.
N o tender for -n

mount less than $ 1 , 0 0 0 v;ill be considered.

E a c h tender must be in multiples of $1,000.

The price offered must be

expressed on the basis cf 100, w i t h not more than three de c i m a l places,
e. g. , 99.125.

Fr '.ations must net be used.

Tenders will be accepted without pu s h deposit

from incorpor­

ated banks and trust companies and from res p o n s i b l e and recognized
dealers

in investment securities.

Tenders

fr o m ethers must be accom-

p nied b y a deposit of 10 pet cent of the face amount cf T r e a s u r y bills

V

applied for, unless tho tenders are accompanied b y an express g u a r a n t y
of payment b y an incorporated b a n k or trust company.
I m m e d iately • ftor the closing hour fm? receipt of tenders on
D e c e m b e r 23,

1932,

all tenders r e c e i v e d at the F e d e r a l Re s e r v e B rnks

or branches th e r e o f up to the
announcement of the acceptable
thereafter,

prob ,bly on the

closing hour w i l l be opened ana public
prices w i l l follow as soon as pos s i b l e

following morning.

The S e c r e t a r y of the

T r e a s u r y e x p r e s s l y reserves the right to reject
ports cf tenders,

any or nil tenders or

and to allot less than the amount applied

his action in any such respect sh a l l be final.

for, and

Those s ubmitting

tenders w i l l be advised of the acceptance or r e j e c t i o n thereof.

Pay­

ment at the price offered far T r e a s u r y bills allotted must be made at
the Fed e r a l Reserve Bonks in cash or other imm e d i a t e l y available funds
on D e cember 28,

1932.

The T r e a s u r y bills w i l l b e exempt,

as to p r i n c i p a l and interest ,

and any gain from the sale or ether dis p o s i t i o n the r e o f w i l l also be
exempt,

fr o m all taxation,

except estate and inheritance taxes.

from the sale or other dispositi o n c f the T r e a s u r y bills
as a

deduction,

or otherwise recognized,

No loss

shall be allowed

for the purposes o f any tax now

or hereafter imposed b y the Unit e d States ; r any of its possessions.
Trea s u r y Department Circular No. 418,

as amended,

and this

notice prescribe the terms o f the T r e a s u r y bills and go v e r n the con**
ditiens of their issue.

Copies o f tho circular m a y be obtained from

any F e d e r a l Reserve Bank or branch thereof.

FOR RELEASE, MORNING PAPERS,
Saturday, December 24, 1932,

TREASURY DEPARTMENT

STATEMENT BY' SECRETARY MILLS

Secretary of the Treasury Mills announced today that the tenders
for $100,000,000, or thereabouts, of 91-day Treasury bills, dated Decem­
ber 28, 1932, and maturing March 29, 1933, which were offered on December 20thf
were opened at the Federal Reserve Banks on December 23rd.
The total amount applied for was $319,718,000.

The highest bid

made ras 99,981, equivalent to an interest rate of 0.08 per cent on an annual
basis.

The lowest bid accepted ras 99.976, equivalent to an interest rate ,

of about 0.09 per cent on an annual basis.
the latter price was accepted.
$100,039,000,
j X

£ ;

i

Only part of the amount bid for at

The total amount of bids accepted ’.ras

The average price of Treasury bills to be issued is 99.978.
ft

The average rate on a bank discount basis is about 0.09 per cent.

FOR IMMEDIATE RELEASE,
December 30, 1932,

TREASURY DEPARTMENT

The Secretary of the Treasury to-day made public the following
opinion of the Attorney General with reference to the interpretation
of Section 601 of the Revenue Act of 1932, relating to the excise tax
on imported coal, coke, etc.:

"OFFICE OF THE ATTORNEY GENERAL
Washington,D.C.
December 27, 1932.

The President,
The White House.
My dear Mr. President:
I have the honor to acknowledge receipt of your letter
of December ninth submitting for my consideration the question
as to the proper interpretation of Section 601 of the Revenue
Act of 1932, approved June 6 , 1932, and the correctness of the
ruling of the Treasury Department with respect thereto.
Section 601 is as follows:
*SEC. 601,

EXCISE TAXES ON CERTAIN ARTICLES.

(a) In addition to any other tax or duty imposed
by law, there shall be imposed a tax as provided in sub­
section (c) on every article imported into the United
States unless treaty provisions of the United States
otherwise provide.
(b) The tax imposed under subsection (a) shall be
levied, assessed, collected, and paid in the same manner as
a duty imposed by the Tariff Act of 1930, and shall be
treated for the purposes of all provisions of law relating
to the customs revenue as a duty imposed by such Act, except
that —

-

2

-

(1) the value on 'which such tax shall he based shall he
the sum of (A) the dutiable value (under section 503 of ^
such Act) of the article, plus (B) the customs duties, if
any, imposed thereon under any provision of law;
(2) for the purposes of section 489 of such Act (relating
to additional duties in certain cases of undervaluation)
such tax shall not he considered an ad valorem, rate of
duty or a duty based upon or regulated in any manner by
the value of the article, and for the purposes of
section 336 of such Act (the so-called flexible tariff
provision) such tax shall not be considered a duty,
(3 ) such tax shall not be imposed upon^any^article
imported prior to the date on which this title ta^es
effect;
.
(4 ) no drawback of such tax (except tax paid upon the
importation of an article described in subsection (c)
(4 ) , (5 ), (6), or (7 ) ) shall be allowed under section
313 (a), (b), or (f) of the Tariff Act of 1930 or any
provision of law allowing a drawback of customs duties
on articles manufactured or produced with the use of
duty-paid materials;
(5) such tax (except tax under subsection (c) (4) to
(7 ), inclusive) shall be imposed in full notwithstanding
any’provision of law granting exemption from or reduction
of duties to products of any possession of the United
States; and for the purposes of taxes under subsection
(c) (4) to (7), inclusive, the term ’United States
includes Puerto Hico.
, _
(c) There is hereby imposed upon the following articles
sold in the United States by the manufacturer or producer,
or imported into the United States, a tax at the rates here­
inafter set forth, to be paid by the manufacturer, producer,
or importer;
.
,
(X) Lubricating oils, 4 cents a gallon; but the tax on the
articles described in this paragraph shall not apply wioh
respect to the importation of such articles.
(2) Brewer’s wort, 15 cents a gallon. Liquid malt, malt
syrup, and malt extract, fluid, solid, or condensed, made
from malted cereal grains in whole or in part, unless sold
to a baker for use in baking or to a manufacturer or
producer of malted milk, medicinal products, foods, cereal
beverages, or textiles, for use in the manufacture or
production of such products, 3 cents a pound. ^Por the
purposes of this paragraph liquid malt containing less than
15 per centuia of solids by weight shall be taxable as
brewer’s wort.
(3 ) Grape concentrate, evaporated grape juice, and grape ^
syrup (other than finished or fountain syrup), if containing

- 3 -

more than 35 per centum of sugars by weight, 30 cents
a gallon. Nontax shall he imposed under this paragraph
(A) upon any article which contains perservative
sufficient to prevent fermentation when diluted, or
(B) upon any article sold to a manufacturer or producer
of food products or soft drinks for use in the manufacture
or production of such products.
(4) Crude petroleum, i cent per gallon; fuel oil derived
from petroleum, gas oil derived from petroleum, and all
liquid derivatives of crude petroleum, except lubricating
oil and gasoline or other motor fuel, \ cent per gallon;
gasoline or other motor fuel, 2% cents per gallon;
lubricating oil, 4 cents per gallon; paraffin and other
petroleum wax products, 1 cent per pound. Tne tax on
the articles described in this paragraph shall apply only
with respect to the importation of such articles.
( 5 ) Coal" of all sizes, grades, and classifications (except
culm and duff), coke manufactured therefrom; and coal or
coke briquettes, 10 cents per 100 pounds. The tax on tne
articles described in this paragraph shall apply only with
respect to the importation of such articles, and shall not
be imposed upon any such article if during the preceding
calendar year the exports of the articles described in
this paragraph from the United States to the country from
which such article is imported have been greater in quan­
tity than the imports into the United States from such
country of the articles described in this paragraph.
( 6 ) Lumber, rough, or planed or dressed on one or more
sides, except flooring made of maple (exdept Japanese
maple), birch, and beech, $3 per thousand feet, board
measure; but the tax on the articles described in this
paragraph shall apply only with respect to the importation
of such articles.
(7) Copper-bearing ores and concentrates and articles pro­
vided for in paragraph 316, 380, 381, 387, 1620, 1634,
1657, 1658, or 1659 of the Tariff Act of 1930, 4 cents
per pound on the copper contained therein; Provided, That
no tax under this paragraph shall be imposed on copper in
any of the foregoing which is lost in metallurgical
processes; Provided further, That ores or concentrates
usable as a flux or sulphur reagent in copper smelting
and/or converting and having a copper content of not more

-H-

than 15 per centum, when imported for fluxing purposes,
shall be admitted free of said tax in an aggregate
amount of not to exceed in any one year 15,000 tons of
copper content.
All articles dutiable under the Tariff
Act of 1030, not provided for heretofore in this para­
graph, in which copper (including copper in alloys) is
the component material of fihief value, 3 cents per pound.
All articles dutiable under the Tariff Act of 193°» not
provided for heretofore in this paragraph, containing 4
per centum or more of copper by weight, 3 Per centum a&
valorem or 3/U of 1 cent per pound, whichever is the low­
er.
The tax on the articles described in this paragraph
shall apply only with respect to the importation of such
articles. The Secretary is authorised to prescribe all
necessary regulations for the enforcement of the provisions of this paragraph. *
The question presented is whether coal imported from Great
Britain, Germany, and other countries with which we have most favored
nation treaties will he exempted from the tax provided for in Section

601 (c) (5) of the Revenue Act of 193s because of the existence of
these treaties and because of the provision in Section 601 (a) of
the Revenue Act that the import taxes prescribed by Section 601 shall

be imposed »unless treaty provisions of the United States otherwise
provide. 1
It appears from documents forwarded to me by the Secretary of
the Treasury that during the calendar year 1931 exports of American
coal into Canada were greater in quantity than imports of coal into
the United States, and that the import tax prescribed in the above
paragraph numbered five has not been imposed on imports of Canadian
coal.

-5With respect to Great Britain and Germany, the balance of trade
\

on coal during the calendar year 1931 Y/as not ip favor of the United
States, and therefore coal imported from those countries was, during
several months after the statute became effective, considered subject
to import tax.

Later, upon consideration of protests and diplomatic

representations through the State Department, it was determined by the
Treasury, under date of ITovember 1^, 1932» (T.D, '^5991~6) that coal
imported from Great Britain and Germany is exempt from the import tax
by reason of the most favored nation clauses contained in the treaties
between those countries and the United States,
Pending the submission of the question to me, the Treasury De­
partment under date of December 12, 1932» has directed the suspension
\

of liquidation of entries of coal from those countries.
To support the conclusion reached by the Treasury on November
fourteenth, it is argued that the clause ’unless treaty provisions of
the United States otherwise provide* contained in subdivision (a) of
Section 601, literally construed, includes within its scope most
favored nation treaties, and therefore in effect overrides the pro­
vision in subdivision (5) of subdivision (c) of Section 601 that the
import tax on coal of ten cents per hundred pounds shall be imposed
if there is no trade balance favorable to the United States, and shall
not be imposed if such balance is favorable*

— 6—

The contention to the contrary is supported by arguments to the
effect that Congress made it clear in subdivision (5) of Section (c)
that relief from this import duty on coal was only to be granted
where a trade balance favorable to the United States existed, and
that as we have most favored nation treaties with most, if not all,
of the nations likely to ship coal to the United States, the conclu­
sion reached by the Treasury on November fourteenth would practically
nullify the effort of Congress to impose an import tax on the coal,
with the result that while imposing the tax in one provision of the
law, Congress would have completely withdrawn it by another provision.
This contention is also supported by representations as to the legis­
lative history of this statute from which it appears that the clause
•unless treaty provisions of the United States otherwise provide 1 was
inserted in the Senate because of the treaty with Cuba (33 Stat, 2136 ,
December 17, I9 O 3 ); that the only treaty mentioned or discussed in
Congress in connection with this legislation was the Cuban treaty,
and that the report of the Senate Finance Committee on May 9, 1932»
at page U 3 , explaining the insertion of the clause respecting the
treaty provision, said:
•In order that the imposition of these taxes
shall not operate as an abrogation of the Cuban
reciprocity treaty, subsections (a) and (b) (5 )
are amended so that the tax shall be subject to
the exemption from duty or to the preferential
rate granted Cuban products , 1

/

- 7 -

Indeed, it must be conceded that there is nothing to suggest that
during the consideration of this legislation either House of Congress
had in mind most favored nation treaties or that tne clause in this
statute respecting treaty provisions would operate, because of such
treaties, to prevent generally the imposition of the import tax on
coal.

The Treasury Department itself seems to have had in mind that

only the Cuban treaty was involved, as its first instructions to
Collectors of Customs under date of June 20, 1932,

(T.D. 45751) with

reference to Section 601 of this statute referred only to the Cuban
treaty so the rates imposed by Section 601 (a) are subject to the
provisions of the agreement between United States and Cuba, ratified
on December 11, 1902; and this letter of instruction granted exemption
only to imports from Canada because of the fact tint the exports of
coal to Canada exceeded the imports from Canada during the calendar
year 1931.
If one view is adopted and payment of the import tax is insisted
upon, we may be in the position of committing a breach of international
obligations, while the opposite conclusion operates practically to
nullify the purpose of Congress to levy an additional import tax on
coal and imputes to Congress as the result of the exemption where
favorable trade balances exist an intention to relieve shipments of
all nations from the impost through the operation of considerations
which Congress evidently did not have before it when it passed the

statute.

There is also involved a question which I have not examined,

as to whether the imposition of this tax would amount to a violation
of an.y most favored nation treaty, conditional or unconditional.
Having in mind that the ultimate objective is to ascertain the inten­
tion of Congress, and that on the other hand violation of international
obligations is to be avoided if possible, the questions present serious
difficulties, but for the reasons hereafter given it is unnecessary
for me to attempt to solve them.
The Tariff Act of 1930 (Act of June 17, 1930, c. 497, Title 4,
Section 502;

46 Stat. 731) contains the following provision which

is a reenactment of prior statutes on the subject:
*Ifo ruling or decision once made by the
Secretary of the Treasury, giving construction
to any law imposing customs duties, shall be
reversed or modified adversely to the United
States, by the same or a succeeding Secretary,
except in concurrence with an opinion of the
Attorney General recommending the same, or a
final decision of the United States Customs Court.1
While this section uses the term ''customs duties1* and Congress in
Section 601 of the Revenue Act of 1932 has used the expression 1 import
taxi, nevertheless I think the present case is fairly within the scope
of this statute.
Appeals 8, 12.

Paber vs. United States, 19 Ct. of Customs and Patent
It definitely appears that the Treasury Department

shortly after the passage of the Act of 1932 construed Section 601

-9-

to allow an exemption from the import tax on coal only where the trade
balance favored the United States.
1932, is in substance to that effect.

Treasury Decision 45751, June 20,
That the Treasury so construed

the Act of 1932 is fully evidenced by a letter from the Commissioner
of Customs to the Chief, Division of Foreign Tariffs, Department of
Commerce, dated July 26, 1932, which contained the following statement:
’Section 601 (c) (5) of the Revenue Act
,of 1932, effective June 21, 1932, provides
for the assessment of a tax of 10 cents per
100 pounds on imported coal, (except culm and
duff) coke and briquets, unless during the
preceding calendar year the exports of these
fuels from the United States to the country
from which such fuels are imported have been
greater in quantity than the imports into the
United States from such country of the same
fuels, in which event the fuels are not subject
to the tax.
Importations of the fuels in question during
the calendar year 1931 from Great Britain, Nether­
lands, Belgium, and Germany exceeded the exports
of such fuels from the United States to these
countries.
Therefore, coke imported from the
four countries named will be subject to the tax
of 10 cents per 100 pounds during the calendar
year 1932, beginning with the effective date of
the Act, June 21, 1932,’
and the rulings thus made were applied and enforced until the decision
of the Secretary of the Treasury, dated November 14, 1932, to which
reference has been made, which was followed by the order .of December

-

10-

1 2 , 19 32 , suspending liquidation of entries covering coal imported
from Great Britain, Germany, and other countries.

The fact that

new considerations not "before the Treasury when making the original
ruling, are not adduced to support its reversal, does not take the
case out of the Statute of 193^*
It thus appears that the action of the Treasury Department in
overturning its prior rulings and reaching a conclusion adverse to
the collection of the duties, not having received the concurrence of
the Attorney General, was contrary to the provisions of the Act of
June 17, 1930, above quoted, and inoperative, and the submission of
the matter to me at this time should be treated as if the Treasury
Department were now requesting concurrence by me in the Treasury
Decision of November lh, 1932*
The question I am confronted with is whether I should, under all
the conditions, concur or refuse to concur in the decision holding
these imports are exempt.

Whichever way the question were to be

decided, it is bound to become immediately the subject of judicial
inquiry.

If the rulings requiring the import tax on coal to be paid

are allowed to stand, the importers will promptly protest and carry
the question into the Customs Court for judicial decision.

If the

rulings imposing the import tax are reversed, the American producers
will immediately protest and carry the question into court, claiming

-

11-

to be authorized to do so by the Act of June 1 7 , 193 O, c. U 9 7 , title
U, section 516 ) ^-6 Stat. 735»

An opinion by me on the merits would

bind neither the importer, the American producer, nor the courts, and
would be quite ineffective to settle the controversy.

There is a long

line of opinions of the Attorneys General to the effect that it is not
proper for the Attorney General to express an opinion upon a judicial
question which is pending in or must ultimately be decided by the
courts.

28 Ops. Atty. Gen. 596 ; 19 Ops. Atty. Gen. 5 6 ; 32 Ops. Atty.

Gen. U 7 2 ; 30 Ops. Atty. Gen. 3^1«
It m a y b e that in many instances .my predecessors, have..gone oto 0
far in refusing to give opinions on questions of a judicial nature
which may reach the courts for decision, but giving to this rule its
proper limitations, this case seems clearly within it.

The question

is one about to reach the courts if, indeed, it is not already pending
in the Customs Court.

An opinion of the Attorney General would bind

neither the American producer nor the importer, and since the question
comes to me by virtue of the above quoted provisions of Section 502
of C. ^97 of the Tariff Act of June 1 7 , 1930? as a request for con­
currence in the ruling of the Secretary of the Treasury, dated November
l^j 1932> what I really have to decide is whether the original Treasury
ruling should stand and the importers should be required to institute

-

12-

the litigation to test the question, or whether by administrative
withdrawal of the import tax the American producer should be required
to act.
I am of the opinion that the original ruling requiring the payment
of the import tax on coal, except where a favorable trade balance
exists, should be allowed to stand, so a judicial inquiry may be had
on that basis.

The method prescribed by law for the importer to protest

and litigate is much simpler and more expeditious than the procedure
where the American producer is required to act, and will result in a
speedier determination of the question.

Furthermore, for me to concur

in the action of the Treasury Department of November lU, 1932? reversing
the original rulings, would in itself imply an opinion on the merits
which under the circumstances is not appropriate.
Finally, if it should ultimately be determined that the import
tax is payable, the Government would be left in a more advantageous
position respecting payment of the tax if the earlier rulings imposing
it are adhered to.
Considering all the various factors in the case, I am clearly
of the opinion that the proper course is for me to refrain from
concurring in the action of the Treasury Department reversing its
original rulings and to allow the tax to stand, in order that the
question may be judicially determined on protest and litigation by the

-13~

importers.
This Department will offer every facility to tile importers to
enable them to obtain a speedy .judicial decision of the questions
involved.
Respectfully,

(Signed) William DeWitt Mitchell
Attorney General.V


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102