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DECJ3jIBER; 1913
The Commoner
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the series of necessary regulations, tiamely,
those governing -the collection of the tax, at the
source, on coupon and registered interest pay
ments on bonded debts of corporations, etc.
Supplementary regulations are being issued from
time to time, relating to -other features and
phases of the law. The additional organization
required for the administration of this law is
being created as rapidly as possible. A certain
amount of confusion and inconvenience at the
beginning is unavoidable, but every effortof the
department will be exerted fairly and justly to
Interpret, elucidate, and administer the law in
a reasonable spirit.
It is estimated that there are 425,000 indi
viduals subject to the income tax. The number
of corporations making returns to the depart
ment for the calendar year 1912 was 3 05,33 G,
but of these, 244,220 claimed no income or a
net income of less than $5,000 and were, there
fore, not subject to taxation. Under the new
law, all corporations having any net earnings
whatever are subject to the payment of an in
come tax, whether their earnings be more or less
than $5,000. It is expected, therefore, that ap
proximately 150,000 corporations which have
heretofore been exempt will now be required to
pay -an income tax.
"The tariff act, materially reducing the rates
of duty," adds the secretary, "went into effect
on October 4, 1913, without any delays or in
convenience to business, other than the slight
delay occasioned by the large volume of ware
house withdrawals, due to the congestion of
merchandise which had been stored in bonded
warehouses, pending the passage of the new act,
and the natural rush to withdraw the same im
mediately after the act became effective. While
the new act will be simpler of application than
the act of 1909, the present indications are that
the volume of imports will largely increase, and
that the, change from specific to ad valorem rates
will require considerable adjustment in the cus
toms force to meet the new conditions. The
measure has not been in force for a sufficient
length of time to make possible an accurate esti
mate of its ultimate revenue-producing powers."
APPROPRIATIONS AND ESTIMATES OF RE
CEIPTS AND. EXPENDITURES .
The secretary recommends generous, but not
prodigal, appropriations for the public health
service; the constuction of four new revenue
cutters; the consolidation of the revenue, cutter
and life saving services into one organization to
be known as tlie "Coast Guard," for the purpose
of increasing the efficiency of these two kindred
branches of the government; continuation of the
patrol of the ice fields of the North Atlantic
ocean, or other means of protecting vessels
against the danger of icebergs during the ice
season of April, May and June; an,d the building
of three river steamers, equipped as revenue
cutters, for life saving service on the Mississippi
and Ohio rivers during the flood' periods of each
year.
The estimates of government receipts and ex
penditures by the secretary of the treasury for
the fiscal years of 1914 and 1915, indicating a
prospective liealthy condition of the federal
finances, are as follows:
The ordinary receipts for the fiscal year 1914
are estimated at $730,000,000 and the ordinary
disbursements at $701,900,000, showing an esti
mated surplus of ordinary receipts over ordi
nary disbursements of $34,100,000 for the year
ending June 3b, 1914. Payments which may be
made for the Panama canal during the year
from the general fund, in the estimated sum of
$41,000,000, would, however, absorb the excess
of ordinary receipts and show an excess of dis
bursements of $'6,900,000.
With, a new tariff and income- tax law in
operation under the act of congress approved
October 3, 1913, it is evident that the annual
revenues to be received under its provisions can
not be approximated for the fiscal year ending
June 30, I9'l5, as closely as would be the case
if comparisons could be made with the opera
tions of this law for three-quarters of a preced
ing year. However, it is estimated that, for the
fiscal year 1915, the ordinary receipts of the
government will be $728,000,000.
The estimates for the ordinary and extraordi
nary appropriations for 1915 payable from the
general fund of the treasury, as submitted by the
several executive departments and offices, are
$714,G84,G75.02; which would indicato on the
basis of estimated receipts an excess of ordinary
Teceipts over ordinary expenditures of $13,315,
324:98, but as the appropriations for public
'W-orks can not be expended In full during the
year, it is estimated that the ohargo upon the
general fund for 1915 for ordinary purposes will
not exceed $702,000,000, and that the ordinary
receipts will therefore probably exceed tho ordi
nary expenditures by tho Bum of $20,000,000.
The estimated expenditures for tho Panama
canal to bo paid from .the general fund without
sales of bonds are estimated at $26,320,985,
and the excess of ordinary receipts should there
fore practically meet tho payments which may
bo made for tho canal under tho appropriations
as submitted for the year 1915.
NO GROUND FOR APRI3HENSION OVER RE
QUIREMENTS OF NEW CURRENCY LAW
Responding to complaints to the treasury de
partment that banks wore restricting credits in
anticipation of a possible tension and stringency
as a result of tho prospective enactment of a
currency law, Secretary McAdoo, on November
2Sth, issued the following public statement of
reassurance to allay unjustifiable fears and to
indicate that the treasury possesses tho power,
resources and willingness to aid tho banks to
accommodate themselves to new condition
whenever necessary:
"Senator Pomerene today sent to the sccre
tary a letter from a prominent manufacturer In
Ohio, in which he says:
" 'It has, of course, been quite as apparent to
you as to those of us who' are trying to manu
facture and market commodities, that during the
past summer and fall business in all lines has
been considerably inconvenienced by the dis
position on the part of many bankers to refuse
to handle commercial paper in anything near
the usual volume, even when according .o all
indications idle funds were available.'
"A prominent note broker advised the Ohio
manufacturer as follows:
" 'The largo banks in the large cities have not
been buying any paper since March and have ad
vised their country correspondents to make
themselves just as liquid as possible and stay
so, in order to meet the provisions of the bill.
In consequence we are absolutely at a stand
still. "
The secretary said "that similar complaints
had como to him from other parts of 1 lie coun
try, and that" if the banks are rcstrictng'credifs
to the extent indicated, on the ground ihat it is
necessary to enable them to meet the require
ments of the pending currency bill, they arc act
ing from a wholly mistaken point of view.
' The secretary expressed the conviction that
the new law will impose no hardships on the
banks, and that the transfers of capital and re
serves to the proposed federal reserve banks will
be accomplished with little or no inconvenience
to tho banks and to general business. The secre
tary said that the treasury department had large
available resources at its command; that he
should not hesitate to use them for the purpose
of aiding the banks to comply with the new
law, and that, in his opinion, the banks could
with perfect safety proceed with the granting
of accommodations to their customers in "the
normal and usual way. The secretary said that
ho did not, of course, assume to advise the
banks he only wanted them and the business
public to know that there is no ground for ap
prehension and that the attitude of the treasury
department is to be helpful, and that he thought
it could be effectively helpful. He said that if
any banks are laboring under the impression
that the new law will necessitate or occasion a
restriction of credits, they are controlled by
error, as no such thing will result.
The secretary stated that up to date the banks
had called upon the treasury for only $34,061,
000 for crop-moving purposes; that these de
posits were, under the arrangement, to be re
turned in four Installments beginning December
loth and ending March 1st.
The secretary said that he would consider
favorably and upon its merits, the application of
any national bank holding crop-moving deposits
for a postponement, for thirty days, of tho time
for beginning repayments, so that payments may
commence on the 15th of January, 1914, instead
of on the loth of December, next, as now provided.
WAR DEPARTMENT
Secretary Garrison's first annual report, ac
cording to the Associated Press dispatches,
makes no recommendations for the generally ex- '
pected rearrangement of army posts to distribute
troops In mobile units. The, secretary says that
other things of immediate importance, "par- '
ticularly an adequate supply of field artillery," '
will postpono his recommendations to congress,
but In tho nioantlmo the troops will be garri
soned in as' practical n manner for mobilization
as in possiblo.
Mr. Garrison discusses the mllltla at some
longth. Ho sayn In part:
"The national Importance of a roHorvo system '
for tho organized militia, can not bo questioned.
The minimum strength at which mllltla organ
izations aro maintained In tlmo of poaco "WlU
rondor nocossary a groat and Immediate Increase
in a national omorgency, and this fact demands
the presence of n system of rosorves from which
trained men may bo secured for this Increase,
Without some such system, not only will such in
crease bo rondered exceedingly difficult, but oVon
when accomplished tho efficiency of tho organ
ization will have been reduced to a minimum
by tho Introduction of an untrained olomont
double in number the trained personnel.
ORGANIZATION IMPERATIVE
"Proper organization as required by tho law
Is absolutely necessary if the organized mllltla
is to bo counted on as a dependable military.
Federal asset In time of national nood, and the
organizations existing as such in name only will
bo roqulrod to complete their component ele
ments or loso federal recognition of their char
acter as such organizations.
"While there has been a small decrease In
officers and enlisted men in the organized mllltla
during the past year, tills decrease has occurred,
in groat part, as the rosult of the elimination. of
organizations found hopelessly Inefficient and. Is
compensated for by an Increase In genoral effi
ciency. It ia rogrettod that In target practice tho
reports show but alight progress during the year.
This fact ig the more serious, as rifle practice Iff
recognized as one of tho most vital elements. In
tho training of the Infantry soldier. The pres
ent tendency to develop teams, composed mostly
of commissioned officers, at the expense of targot
practice for tho enlisted man Is opposed to the
federal policy In this matter and should bo dis
continued." Discussing the army reserve, the secretary
says:
"The adjutant general reports that approxi
mately 21,000 mon enlisted in the army between
November 1, 1012, and August 31, 1013, and. of
this number sixty-one, made application to .bo
furloughed to tho reserve at the expiration' of
throe years' service, and that on tho date last
. named the reserve consisted of eight men.'
WORK OF STAFF COMMENDED
Commending the work of the general staff,
the army war college and officers generally for
their establishment of a definite national military
policy and the encouragement of military train
ing, tho secretary says:
"As a peaceful and unmflltary people en
grossed in the settlement and upbuilding of our
vast territory, and in the development of the
wonderful resources with which it abounds, we
are but dimly impressed with tho fact that just
as agriculture and commerce arc tho founda
tions of our great national prosperity, so with
equal truth our military and naval forces are
its bulwark and defense. While I believe there
is a worldwide and growing sentiment for the
settlement without bloodshed of all disputes be
tween nations, just as even now there is pro
vision of law Tor such settlement of difficulties
between individuals, I recognize the fact that the
time has not yet come when a nation can wisely
disarm or slacken Its efforts for preparedness in
case of war. The army Is not a luxury It is a
public necessity."
'The Mexican border patrol the secretary dls
. cusses at some length:
"At the date of tho last annual report thero
were on d,uty in connection with the patrol of
the Mexican border approximately C,754 officers
and enlisted mQn, The present strength Is about
the same, but largely composed of different or
ganizations." The joint encampments of the army and col
lege students were highly successful. It Is said
that they foster a patriotic spirit and spread
-among tho citizens a more thorough knowledge
of military history, policy and needs, all nece
sary to the complete needs of a well-equipped
citizen jn order that he may himself form cor
rect opinions on military topics.
Mr. Garrison recommends that In justice to
the "hundreds of eager boys" who can not get
appointments now, West Point should be opened
to the widest competition so that any boy may
take the examinations with the condition that if
- no candidate from the particular congressional
' district In which there Is a vacancy should qual
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