7 iiyi$fimywm'wm DECJ3jIBER; 1913 The Commoner & "M 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 V 1 ti 4 HI . bti J A4 A s. - wfe 4 . fc-Wtn- Viw w. wtlj-fcat m&t ; fk,