Fiscal Year Ended June 30, 1918
SECRETARY OF T H E TREASURY.
77
The occasion for the issue of these interim certificates was the vast
volume of work thrown suddenly on the Bureau of Engraving and
Printing by the first Liberty loan. At the time of the issue of these
regulations the engraving of the definitive bonds had, many months
before, reached the point at which deliveries could be made immediately on presentation of the interim certificates. Consequently,
there was incorporated in the regulations a statement that a reasonable time had elapsed for the presentation of such certificates, and
authority was given to the Federal reserve banks to reiquire holders
presenting certificates thereafter to establish identity with the original subscriber or title from the original subscriber. This notice was
publicly given in order to protect those who might otherwise be
moved to purchase these overdue obligations from a thief or finder. •
PAYMENT OF SPANISH-AMERICAN WAR BONDS.
The 3 per cent loan of 1908-1918 matured on August 1, 1918.
Public notice inviting attention to the fact that such bonds were
payable on that date was given on April 15, 1918, in Department
Circular No. 113 (Exhibit 54). I n accordance with the terms of
their issue and the provisions of the circular, the outstanding bonds
ceased to bear interest on August 1, 1918, when the bonds became
payable.
For the convenience of the public, owners of coupon bonds of this
loan were permitted to present them for payment at any Federal
reserve bank. This action applied to the payment of long-term
bearer obligations of the United States the precedent established
with respect to the payment at Federal reserve banks of short-term
bearer obligations.
The 3 per cent loan of 1908-1918, popularly termed the SpanishAmerican W a r loan, was issued in June, 1898. Subscriptions were
invited for $200,000,000 and in response to that invitation 320,226
subscriptions were received, amounting to more than $1,500,000,000.
Bonds to the amount of $198,792,660 were allotted and of this original issue $132,449,900 were refunded into the 2 per cent consols
of 1930, and $2,397,300 were purchased, the balance, $63,945,460,
maturing on August 1, 1918. To and including October 31, 1918,
$60,878,560 of such bonds had been paid.
RETIREMENT OF ONE-YEAR TREASURY NOTES.
Section 18 of the Federal reserve act provides for'the retirement of
bond-secured circula:tion of the national banks and the refundi»ng of
2 per cent bonds bearing the circulation privilege into one-year 3 per
cent Treasury notes and thirty-year 3 per cent bonds. That provision
of law became operative at the close of the calendar year 1915, and on
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Fiscal Year Ended June 30, 1919
Si:CRETARY OF T H E TREASURY.
113
The necessity for depositing income and profits taxes in special
depositary banks during the fiscal year 1919 was obviated by two
factors:
(1) Such taxes were permitted by law to be paid in four quarterly
installments instead of having to be made in one payment as heretofore.
.
(2) Treasury certificates of indebtedness receivable in payment
of income and profits taxes were sold in advance to taxpaj/^ers. By
this method the financial problem had adjusted itself before the
taxes were due and no shifting of large sums of money resulted.
By Department Circular No. 144 (Exhibit 72, page 438) collectors of
internal revenue are required to deposit their entire receipts i n Fed. eral reserve banks or branch banks where such banks are located in
the headquarters city of the collector. Where the collector is not
located in a Federal reserve or branch Federal reserve city, he deposits cash and checks drawn on local banks (other than checks
received exclusively in payment of income and profits taxes in the
months of March, June, September, and December) with local
national bank depositaries. AU out-of-town checks (and checks in
payment of income and profits taxes in the months of March, June,
September, and December) are forwarded to the Federal reserve
bank or a branch of the Federal reserve bank in the district in which
the collector's office is located. This use of the coUection system of
the Federal reserve banks permits the Treasury to obtain earlier
credit for checks received in payment of internal-revenue taxes and
obviates the necessity of maintaining larger public balances in
depositary banks to enable them to carry the float resulting from the
. immediate credit to the Government's account of the amount of.the
. great number of checks received on account of taxes.
UNITED STATES DEPOSITARIES I N FOREIGN COUNTRIES.
Depositaries of public moneys of the United States were appointed
in Belgium during the fiscal year 1919, and in addition the Treasury
continued such depositaries in France, Great Britain, Italy, Spain,
Switzerland, Argentina, and Canada. These depositaries were
designated under the authority vested in the Secretary of the Treasury
by section 8 of the act of September 24, 1917, as amended. They
were of great service to disbursing officers of the Government, particularly those of the Army and Navy, in making prompt payments and
transacting public business in foreign countries.
PAYMENT OF SPANISH-AMERICAN WAR BONDS.
Additional bonds of the 3 per cent loan of 1908-1918, popularly
known as the Spanish-American war loan, which matured and ceased
to bear interest on August 1, 1918, were presented to the '.Freasury
140325—EI 1919
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Fiscal Year Ended June 30, 1919
114
REPORT ON T H E FINANCES.
for payment during the fiscal year 1919. On the date of maturity
there were $63,945,460 of these bonds outstanding.. During the first
moiith after maturity $55,414,960, of the securities were presented for
payment. Other amounts have been presented from time to time
until on June 30, 1919, $936, 000 were outstanding, and on October 1,
.1919, $858,600 were outstanding. Thus during the period of the
creation of a new war debt—the greatest in the history of America—
the debt remaining from- the last previous war in which the United
States was engaged has been virtually extinguished. While the
amount is relatively small when measured 3y the standards of these
record-breaking days, its payment, particularly in the circumstances,
reflects the policy of the United States in promptly discharging its
obligations
BOND-SECURED CIRCULATION OF THE NATIONAL BANKS.
The situation with respect to operations under section 18 of the
Federal reserve act in connection with the retirement of bond-secured
circulation of the national banks and the refunding of 2 per cent
bonds bearing the circulation privilege into one-year 3 per cent Treasury notes and 30-year 3 per cent bonds remained unchanged throughout the fiscal year 1919., Owing to the demands for currency, applications from member banks for the sale of bonds securing circulation
were negligible and no 2 per cent bonds bearing the circulation privilege were retired during the year. I t should be pointed out, however, t h a t the amount of bonds available for securing circulation Was
reduced during the year by $63,945,460 by reason of the maturity of
the Spanish-American war 3 per cent bonds which became due and
payable on August 1, 1918.
On January 1, 1919, the balance of $9,301,000 one-year 3 per cent
Treasury notes then outstanding matured, were paid, and the optiori
held for their renewal was not exercised by ihe Secretary. With this
payment the total amount of one-year 3 iper cent Treasury notes,
aggregating $27,362,000, issued under section 18 of the Federal reserve act in lieu of retired 2 per cent boniis having the circulation
privilege has been retired and no longer appears as an item of thc
public debt.
j
United States bonds bearing the circulation privilege were outstanding on October 31, 1919, as follows:
4
2
2
2
per
per
per
per
cent
cent
cent
cent
loan of 1925
consols of 1930
Panamas of 1916-1936
Panamas of 1918-1938
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J
$118,489,900
599,724, 050
48, 954,180
25, 947, 400
793,115, 530