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The Commoner.
JUNE fl, 113
general's office was found to have a force of
employees at all times of the year sufficient to
handle rushes of business which como infre
quently. "There Is a Chinese wall built around
the office, which makes it Impossible for the
secretary of war or anybody olse to use any
clerks of that organization for any other work,"
was tho statement of the commission chairman
at a senate committee hearing. He Illustrated:
"They are organized yery much liko a street
department would be If it had a large enough
force continuously to handle a snowstorm over
night."
This conspicuous inefficiency was found to be
but one of five general causes. While the com
plete correction of these conditions Is tho work
of a generation, tho list of causes is significant
to every business man. Money now wasted in
every business as well as in the government
might be saved if these causes for wastes wero
eliminated. Substitute management for con
gress and business for government, and the
causes for wastes underlie the losses of the
corner store and riverside shop as well as our
billion-dollar government. And tho Immediate
steps urged by the commission would not only
save the business man's tax money but point
the chance of further study of his individual
business.
Translate tho "changes in personnel of the
government service," the first of the commis
sion's suggestions for economy, into "adjust
ment of employees of a business," and you sug
gest the possible application of their work to
individual businesses. Principles worked out
from such a government study might easily bo
applicable in many lines of trade and industry.
Thus the work of the government might serve
as an experiment in the handling of clerical
forces.
Similarly in the uniform classification of ex
penditures, the establishment of standards and
specifications, the recasting of contract forms
and surety bonds, inspection methods and tests,
auditing claims and accounts and the detail
handling of disbursements, all of which wero
definitely put forward by the commission to de
crease the waste and inefficiency within one
year, may serve as starting points for investiga
tions in any office, factory or store.
On standardization, it was shown that gov
ernment travel expenditures amount to $12,
000,000 a year, but there wero no standard ex
pense accounts.- Each branch of the govern
ment service was found to be working out its
own specifications for materials and supplies.
In contracts and surety bonds, there was no
standardization, though it appeared that equal
or better security for the government at much
less cost could be obtained.
Probing into navigation services, pertinent
examples were found of waste through dupli
cating and overlapping operations. The light
house service of the department of commerce
and labor, and the life-saving service of tho
department of the treasury, and the revenue
cutter service were all related to the protection
of persons and property at sea, and tho enforce
ment of the navigation regulations. To com
bine the first two would reduce cost of opera
tion at least $100,000 a year and to co-ordinate
all three of these services would result
in a saving of $1,000,000 a year, with increased
efficiency. It was shown that the bureau of
navigation and the steamboat Inspection ser
vice were two differont bureaus whose work du
plicated and overlapped to such an extent that
the two should be consolidated.
The weather bureau in the department of
agriculture was found to be publishing certain
charts of the ocean. The hydrographic office of
the navy department was found to be making
the same kind of charts. To stop this duplica
tion would stop a waste of $10,000 a year.
Business men who have installed new de
partments without reference to or co-ordination
with other similar departments, find their paral
lel inefficiencies in government bureaus. One
of the most striking examples of this is a num
ber of different bureaus, all separately organized
and all under separate authority, yet all or
ganized, primarily, to promote public health.
The bureau of public health and mai-ine hos
pital service Is under the treasury department.
The bureau of chemistry Is under the depart
ment of agriculture. The division of vital sta
tistics, bureau of the census, is under the de
partment of commerce.
The commission made no criticism of the
special work of these bureaus. It merely pointed
U uat a11 are concerned with public health
ana should be co-ordinated Into one organiza
tion. These are cited as instances of how govern-
Operation of the Income Tax
There has been widespread doubt all over tho
United States In reference to tho mothod of col
lecting an incomo tax "at the source." Moro
than 1400 trust companies havo taken up this
question In protest against their being forced
to collect from all bond coupons deposited with
them a national incomo tax.
Tho wording of tho congressional bill Is such
that taxing incomes "at tho source" might pos
sibly moan that before any debt wore paid tho
debtor might first bo compelled to retain for the
United States government the tax and only re
turn it if tho owner's yearly incomo wero under
$4,000.
THE QUERY
In order to clear up any doubt about tho
meaning of the new law, tho Public Ledger ad
dressed tho following question to Cordell Hull,
the father of the bill, in congress:
"In tho application of law to collect incomo
tax at tho source, docs this mean a client re
tains tho government tax from lawyers' fees,
a patient from a doctor's fee, a tenant a' tax on
his house rental, as well as a bank retains the
Incomo tax on coupons accepted for deposit?"
MR. HULL'S LETTER
Mr. Hull, in reply, has sent to tho Public
Ledger, tho following very Instructive letter,
which explains in detail tho method of collect
ing tho now incomo tax at tho source:
"To the Editor of the Public Ledger: Sir-
I am in receipt of your letter in which you make
Inquiry as to tho operation of the proposed in
como tax bill with respect to collection at tho
source.
"I beg to say in reply that it Is proposed only
to collect certain portions of tho normal tax of
ono por cent imposed upon individuals at the
eourco of tho Incomo. This method would
apply to annual Individual incomes of profits
arising from a business connection or relation
ship extonding through tho year, nuch an annual
rents, annual interest, annual salaries, etc., oven
though tho samo should bo payablo In part at
stated porlodu during tho year.
"Individual income accruing to tradesmen,
professional men, etc., at irregular times and in
different amounts would bo ombracod in a per
sonal return of tho taxpayer.
"In each lnstanco savo ono no tax would bo
withhold and paid at tho sourco of tho incomo
unless the samo exceeded $4,000; tho ono ex
ception rolates to interest upon corporato and
United States bonds. By reason of tho fact that
such interest is gonorally roprosontod by coupons
payablo to bcaror and current In trado, it would
bo Impossible to apply tho method of collection
at tho sourco along with tho $4,000 exemption.
"When tho owner of tho bonds parts with
tltlo to tho coupons in trade or business they
become capital or principal instead of incomo
in tho hands of each succosslvo purchasor. Tho
debtor corporation alono Is theroforo required
to withhold tho tax when the coupons aro pre
sented for payment, and if tho bondholder has
failed to present them or havo them presented
for payment for hlmsolf as owner, and honco
recolve tho bonofit of tho $4,000 exemption, ho
would later apply to tho internal rovonuo de
partment by filling out a blank availablo for
such purpose for abatement of assessment or
refund of tax, on account of exemption or de
ductions. Very respectfully,
"CORDELL HULL."
Philadelphia Public Ledgor.
ment business has grown, spread, sprawled, bo
cause the government, the general management,
has not collected and analyzed certain important
information.
For gathering knowledge and making analy
ses, technical experts were engaged for each
special task. Here again the close relation be
tween the government and tho average busi
ness is apparent. Engineers who had given
special study to the effect of the lightning of
buildings on the efficiency of employees were en
gaged. They went to nine cities and investi
gated post offices, court and custom houses. On
the basis of their reports, tho estimate was
made that at least twenty-five per cent of the
cost of lighting federal buildings can be saved,
this amounting to $150,000 a year.
Again, the commission pointed a way for the
government to cut tho cost of paper for money,
of which It buys about five hundred tons a year
at $800 a ton. Canceled bank notes, cooked
and macerated, bring at sale $31.50 per ton.
The commission's experts, after investigating,
recommended a process which raises tho sale
value of pulp to $200 a ton and will save, it has
been conservatively estimated, $100,000 a year.
How the government was paying one 'clerk
$493 a year less than this work was actually
worth, was found In a study of efficiency records
In the national bank redemption agency of tho
treasury department. Commission experts found
that the conditions were such that tho clerks
who count the most money render the most
valuable service and therefore entitled to the
highest pay, while thoso who count the least
money render the least valuable service and aro
entitled to tho lowest pay.
A method of keeping records established in
1892 was analyzed. By this method it was
shown possible "for a clerk's output to be prac
tically negligible in quantity and. poor In quality,
and that clerk, by reason of the weights assigned
to the social virtues of punctuality, attendance
and attention to duty (designated as 'industry')
to have a very fair standing in tho office. The
result is that promotions In salary based on tho
efficiency records of this office aro recognition
of irreproachable conduct rather than meri
torious work. Fairness in distribution of salaries
Is due to the good judgment of tho office chief
rather than to the scientific construction of the
efficiency record.
Forty-six employees by the new system were
found to be earning more than their salaries.
Seven employees were found to be earning less
than sixty per cent of their salaries. This was
on a basis of studies during May, 1912. A plan
was recommended by which thoso who earn less
than sixty per cent of their salaries be reduced
to the next lower grade of pay and their salaries
bo given to the clerks earning tho greatest
amounts In excess of their present salaries.
Each of these waste-saving investigations of
the commission simply piles up tho reasons for
tho continuance of its work and the possibili
ties of the broad development of a government
department of commerce which shall bo to tho
business man what tho dopartmont of agricul
ture is to tho farmer. If tho government can
save and utilize five thousand tons of waste
paper, does not the detailed study by experts of
tho possibility of this saving have results sug
gestive to every business? If tho government
can learn how much it costs to buy and main
tain typewriters in hundreds of offices, would
not its study to reduce costs and the results
achieved help tho business man to economize
in his own offices?
JUSTICE TO SENATOR MYERS
A republican paper printed in Missouri, pub
lished a Washington dispatch containing this
paragraph:
"Senator Myers of Montana, a democrat, an
nounced that ho would 'stand-pat' for a proper
protective tariff on sugar and wool, despite the
attitude of his party."
The St. Louis Republic was misled by this dis
patch and so it printed an editorial paragraph
criticising Senator Myers. As a matter of fact
the dispatch printed in the republican paper
presented a garbled report of Senator Myers'
remarks. Tho Congressional Record of May
ICth, gives the accurate report of tho Montana
senator's speech, and it will be seen that there
is marked difference from that speech and the
report of the same printed In the republican
newspaper. Following is the extract from the
Congressional Record:
"Senator Myers: I will stand pat
for protection of the masses. The time has
come when the people need protection from
special Interests. I now announce that I am for
free wool and free sugar. Tariff reform, like
charity, should begin at home. Let us first
strip our own protected interests of special privi
lege. Then wo aro in a position to demand
that others be required to do likewise."
Promptly correcting the injustice it was led
to do the Montana senator, tho St. Louis Re
public adds:
"Tho Republic Is almost tempted to forego
Tegret that It was misled by the republican
paper's dispatch, for the need of correction gives
us an opportunity to call to the special attention
of our readers an exhibition of patriotism and
independence on the part of a democratic sena
tor which is worthy of the bi-'t days of the
upper house of congress."
W')4