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L  RY 

" "      9  1963 
TRE/  :]TiVIENT 


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Annual  Report^  lu  i . 


of  the 


Secretary  of  the  Treasury 


on  the 


State  of  the  Finances 


For  the  Fiscal  Year  Ended  June  30,  1962 


LIBRARY 

ROOM  5025 

JUL     91963 

TREASURY  DEPARTMENT 


TREASURY  DEPARTMENT 

DOCUMENT  NO.  3226 

Secretary 


UNITED   STATES  GOVERNMENT  PRINTING  OFFICE,  WASHINGTON  :  1963 


For  sale  by  the  Superintendent  of  Documents,  U.S.  Government  Printing  Office 
Washington  25,  D.C.     -     Price  ?2.75  (paper  cover) 


CONTENTS 


Page 

Statement  by  the  Secretary  of  the  Treasury 1 

REVIEW  OF  FISCAL  OPERATIONS 

Summary  of  financial  operations 21 

Administrative  budget  receipts  and  expenditures 22 

Administrative  budget  receipts  in  1962 22 

Estimates  of  administrative  budget  receipts  for  1963  and  1964 24 

Administrative  budget  expenditures  in  1962  and  estimates  for  1963 

and  1964 26 

Trust  receipts  and  expenditures 28 

Trust  receipts  in  1962  and  estimates  for  1963  and  1964 28 

Trust  expenditures  in  1962  and  estimates  for  1963  and  1964 30 

Receipts  from  and  payments  to  the  public 31 

Investments  of  Government  agencies  in  public  debt  securities  (net) 32 

Sales  and  redemptions  of  Government  agencies  in  the  market  (net) 33 

Corporations  and  certain  other  business-type  activities  of  the  Government.  33 

Account  of  the  Treasurer  of  the  United  States 37 

Public  debt  operations  and  the  ownership  of  Federal  securities 38 

Public  debt  operations 45 

Ownership  of  Federal  securities 55 

Taxation  developments 60 

International  financial  affairs 78 

ADMINISTRATIVE  REPORTS 

Management  improvement  program 101 

Comptroller  of  the  Currency,  Bureau  of  the 104 

Customs,  Bureau  of 108 

Defense  Lending,  Office  of 123 

Domestic  Gold  and  Silver  Operations,  Office  of 124 

Engraving  and  Printing,  Bureau  of 124 

Fiscal  Service 128 

Internal  Revenue  Service 157 

International  Finance,  Office  of 171 

Mint,  Bureau  of  the 173 

Narcotics,  Bureau  of 180 

United  States  Coast  Guard 185 

United  States  Savings  Bonds  Division 195 

United  States  Secret  Service 197 

EXHIBITS 

PUBLIC  DEBT  OPERATIONS,   CALLS  OF  GUARANTEED   OBLIGATIONS,  REGULATIONS, 

AND  LEGISLATION 

Treasury   Certificates  of  Indebtedness,   Treasury  Notes,  and  Treasury  Bonds 

Offered  and  Allotted 

1.  Treasury  certificates  of  indebtedness 205 

2.  Treasury  notes 210 

3.  Treasury  bonds 219 

Treasury  Bills  Offered  and  Accepted 

4.  Treasury  bills 240 

IXI 


IV  CONTENTS 

Guaranteed  Obligations  Called 

Page 

5.  Calls   for   partial   redemption,    before   maturity,    of   insurance   fund 

debentures 252 

Regulations 

6.  Second  amendment,  November  17,  1961,  to  Department  Circular  No. 

418,  Revised,  regulations  governing  Treasury  bills 257 

7.  Third  amendment,  August  2,  1961,  to  Department  Circular  No.  530, 

Eighth     Revision,    regulations    governing    United    States    savings 
bonds 257 

8.  Fourth  amendment,  November  17,  1961,  to  Department  Circular  No. 

530,  Eighth  Revision,  regulations  governing  United  States  savings 
bonds 258 

9.  First  amendment,  August  2,  1961,  to  Department  Circular  No.  905, 

Second  Revision,  regulations  governing  Series  H  savings  bonds 258 

10.  Second  amendment,  November  17,  1961,  to  Department  Circular  No. 

905,  Second  Revision,  regulations  governing  Series  H  savings  bonds.       270 

Legislation 

11.  An  act  to  increase  temporarily  the  public  debt  limit  set  forth  in  section 

21  of  the  Second  Liberty  Bond  Act  (March  13,  1962) 270 

12.  An  act  to  increase  for  a  one-vear  period  the  public  debt  set  forth  in 

section  21  of  the  Second  Liberty  Bond  Act  (July  1,  1962) 270 

FINANCIAL  POLICY 

13.  Statement  by  Secretary  of  the  Treasury  Dillon,  January  30,  1962,  be- 

fore the  Joint  Economic  Committee 270 

PUBLIC  DEBT  MANAGEMENT 

14.  Statement  by  Secretary  of  the  Treasury  Dillon,  February  28,  1962, 

before  the  Senate  Finance  Committee  on  the  public  debt  limit 276 

15.  Statement  by  Secretary  of  the  Treasury  Dillon,  March  14,  1962,  before 

the  Senate  Finance  Committee  on  debt  management  policies 278 

16.  Statement  by  Secretary  of  the  Treasury  Dillon,  June  26,  1962,  before 

the  Senate  Finance  Committee  on  the  debt  limit 290 

TAXATION  DEVELOPMENTS 

17.  Statement  by  the  President,  October  16,  1962,  on  signing  H.R.  10650, 

the  Revenue  Act  of  1962 297 

18.  Statement  by  Secretary  of  the  Treasury  Dillon,  January   18,    1962, 

before    the   Joint    Committee    on    Internal    Revenue    Taxation   on 
depreciation  reform 297 

19.  Address  by  Secretary  of  the  Treasury  Dillon,  March  19,  1962,  before 

the  Tax  Executives  Institute,  Washington,  D.C.,  on  the  role  of  tax 
policy  in  economic  growth 304 

20.  Statement  by  Secretary  of  the  Treasury  Dillon,  April  2,  1962,  before 

the  Senate  Committee  on  Finance  on  H.R.  10650,  the  Revenue  Act 

of  1962 309 

21.  Statement  by  Secretary  of  the  Treasury  Dillon,  May  10,  1962,  before 

the  Senate  Committee  on  Finance  on  H.R.  10650,  the  Revenue  Act 

of  1962 330 

22.  Statement  by  Secretary  of  the  Treasury  Dillon,  July  11,  1962,  on  the 

issuance  of  the  new  Depreciation  Guidelines  and  Rules 335 

23.  Letter  from  Secretary  of  the  Treasury  Dillon,  August  27,  1962,  to  the 

Senate  Majority  Leader  concerning  the  administration's  tax  bill 337 

24.  Remarks  by  Secretary  of  the  Treasury  Dillon,  November  15,   1962, 

before  the  White  House  Labor-Management  Conference  on  fiscal 

and  monetary  policy 338 

25.  Remarks  by  Under  Secretary  of  the  Treasury  Fowler,  October  12,  1961, 

before  the  American  Retail  Federation  on  tax  policy  for  growth  and 
productivity 341 

26.  Remarks  by  Assistant  Secretary  of  the  Treasury  Surrey,  October  25, 

1962,  before  the  Tax  Institute  Symposium  on  the  U.S.  tax  system 

and  international  tax  relationships 349 


CONTENTS  V 

Page 

27.  Individual  income  tax  liabilities  and  effective  rates  under  the  revenue 

acts  of  1913—54-     _  _     _       _  __  355 

28.  Federal  taxes  of  the  United" S"tates7l 950-62 _" "llllllllll"""""       370 

INTERNATIONAL  FINANCIAL  AND  MONETARY  DEVELOPMENTS 

29.  Statement  by  Secretary  of  the  Treasury  Dillon,  August  7,  1961,  at  the 

Special  Meeting  of  the  Inter- American  Economic  and  Social  Council, 
Punta  del  Este,  Uruguay 403 

30.  Statement  by  Secretary  of  the  Treasury  Dillon,  August  23,  1961,  before 

the  Senate  Appropriations  Committee  in  support  of  the  President's 
foreign  aid  program 407 

31.  Remarks  by  Secretary  of  the  Treasury  Dillon,  November  30,  1961,  at 

the  Inter- American  Economic  and  Social  Council  of  the  Organization 

of  American  States 410 

32.  Statement  by  Secretary  of  the  Treasury  Dillon,  February  27,  1962, 

before  the  House  Banking  and  Currency  Committee  on  special 
borrowing  arrangements  of  the  International  Monetary  Fund 411 

33.  Statement   by   Secretary   of  the   Treasury   Dillon,    March   15,    1962, 

before  the  House  Ways  and  Means  Committee  on  the  Trade 
Expansion  Act  of  1962 415 

34.  Remarks  by  Secretary  of  the  Treasury  Dillon,  March  21,  1962,  before 

the  North  Carolina  Citizens  Association  on  the  President's  trade 
program 419 

35.  Report  to  the  President  by  Secretary  of  the  Treasury  Dillon,  March  26, 

1962,  on  the  balance  of  payments 423 

36.  Statement  by  Secretary  of  the  Treasury  Dillon,  April  24,  1962,  before 

the  Economic  Club  of  New  York  on  responding  to  the  challenge  of 

the  Common  Market 430 

37.  Statement  by  Secretary  of  the  Treasury  Dillon  as  Governor  for  the 

United  States,  April  25,  1962,  at  the  third  annual  meeting  of  the 
Board  of  Governors  of  the  Inter-American  Development  Bank 435 

38.  Remarks  by  Secretary  of  the  Treasury  Dillon,  May  18,  1962,  at  the 

monetary  conference  of  the  American  Bankers  Association,  Rome, 
Italy 439 

39.  Statement  by  Secretary  of  the  Treasury  Dillon  as  Governor  for  the 

United  States,  September  19,  1962,  at  the  discussion  of  the  Annual 
Report  of  the  International  Monetary  Fund 445 

40.  Remarks  by  Under  Secretary  of  the  Treasury  Fowler,  June  20,  1962, 

at  the  Commerce  Department  Regiozial  Conference  on  business  and 

the  balance  of  payments 449 

41.  Remarks  by  Under  Secretary  of  the  Treasury  for  Monetary  Affairs 

Roosa,  February  7,  1962,  at  the  American  Bankers  Association 
Mid- Winter  Trust  Conference  on  the  balance  of  payments  and 
international  financial  cooperation 456 

42.  Remarks  by  Under  Secretary  of  the  Treasury  for  Monetary  Affairs 

Roosa,  May  17,  1962,  at  the  monetary  conference  of  the  American 
Bankers  Association,  Rome,  Italy 464 

43.  Statement  by  Assistant  Secretary  of  the  Treasury  Leddy,  July  31, 

1961,  before  the  Senate  Foreign  Relations  Committee  on  amendment 

of  the  articles  of  agreement  of  the  International  Finance  Corporation.       468 

44.  Treasury  and  Federal   Reserve  foreign  exchange  operations,  March 

1961-August  1962 469 

45.  Press  release,  July  14,  1961,  announcing  the  signing  of  an  exchange 

agreement  between  the  United  States  and  El  Salvador 480 

46.  Press  release,  September  7,  1961,  announcing  the  signing  of  an  exchange 

agreement  between  the  United  States  and  Costa  Rica 481 

47.  Joint  announcement,   April  3,    1962,   by  Secretary  of  the   Treasury 

Dillon  and  the  Minister  of  Finance  of  BrazU 48 1 

48.  Press  release,  June  7,   1962,  announcing  the  signing  of  an  exchange 

agreement  between  the  United  States  and  Argentina 481 

49.  Press  release,  June  19,  1962,  announcing  the  signing  of  an  exchange 

agreement  between  the  United  States  and  the  Philippines 48 1 

50.  Cuban  import  regulations  and  amendments 482 


VI  CONTENTS 

ORGANIZATION  AND  PROCEDURE 

Paffe 

51.  Treasury  Department  orders  relating  to  organization  and  procedure 485 

ADVISORY  COMMITTEES 

52.  Advisory  committees   utilized   by   the   Treasury    Department   under 

Executive  Order  11007 493 

TABLES 

Bases  of  tables 501 

Description  of  accounts  relating  to  cash  operations 504 

SUMMARY  OF  FISCAL  OPERATIONS 

1.  Summary  of  fiscal  operations,  fiscal  years  1932-62  and  monthly  19(52 _       506 

RECEIPTS  AND  EXPENDITURES 

2.  Receipts  and  expenditures,  fiscal  years  1789-1962 508 

3.  Refunds  of  receipts  and  transfers  to  trust  funds,  fiscal  years  1931-62_  _        516 

4.  Budget  receipts  and  expenditures,  monthly  for  fiscal  year  1962  and 

totals  for  1961  and  1962 518 

5.  Interfund  transactions  excluded  from  both  net  budget  receipts  and 

budget  expenditures,  fiscal  years  1952-62 554 

6.  Public  enterprise  (revolving)  funds,  receipts  and  expenditures  for  fiscal 

year  1962,  and  net  1961  and  1962 556 

7.  Trust  account  and  other  receipts  and  expenditures,  monthly  for  fiscal 

year  1962  and  totals  for  1961  and  1962 558 

8.  Investments  of  Government  agencies  in  public  debt  securities  (net), 

monthly  for  fiscal  year  1962  and  totals  for  1961  and  1962 572 

9.  Sales  and  redemptions  of  obligations  of  Government  agencies  in  market 

(net),  monthly  for  fiscal  year  1962  and  totals  for  1961  and  1962 574 

10.  Intertrust  fund  transactions  excluded  from  both  net  trust  account 

receipts  and  net  trust  account  expenditures,  fiscal  years  1948-62 576 

11.  Trust  enterprise  (revolving)  funds,  receipts  and  expenditures  for  fiscal 

year  1962  and  net  for  fiscal  year  1961 577 

12.  Budget  receipts  by  sources  and  expenditures  by  major  functions,  fiscal 

years  1954-62 578 

13.  Trust  fund  receipts  by  sources  and  expenditures  bv  major  functions, 

fiscal  years  1954-62 J" 582 

14.  Trust  account  receipts  and  expenditures  by  major  classifications,  fiscal 

years  1938-51 584 

15.  Trust  account  and  other  transactions  by  major  classifications,  fiscal 

years  1952-62 5<S6 

16.  Budget  receipts  and  expenditures,   based  on  existing  and  proposed 

legislation,  actual  for  the  fiscal  vear  1962  and  estimated  for  1963 

and  1964 1 588 

17.  Trust  account  and  other  transactions,  actual  for  the  fiscal  j'ear  1962 

and  estimated  for  1963  and  1964 591 

18.  Effect  of  financial  operations  on  the  public  debt,  actual  for  the  fiscal 

year  1962  and  estimated  for  1963  and  1964 593 

19.  Internal  revenue  collections  by  tax  sources,  fiscal  years  1929-62 594 

20.  Internal  revenue  collections  and  refunds  by  States,  fiscal  year  1962 600 

21.  Customs  collections  and  payments  by  districts,  fiscal  year  1962 602 

22.  Summarv  of  customs  collections  and  expenditures,  fiscal  years  1961 

and   1962 604 

23.  Deposits  by  the  Federal  Reserve  Banks  representing  interest  charges 

on  Federal  Reserve  notes,  fiscal  years  1947-62 606 

24.  Postal  receipts  and  expenditures,  fiscal  years  1916-62 607 

25.  Cash  income  and  outgo,  fiscal  years  1952-62 608 

PUBLIC  DEBT,  GUARANTEED  OBLIGATIONS,  ETC. 

I. — Outstanding 

26.  Principal  of  the  public  debt,  1790-1962 616 

27.  Public  debt  and  guaranteed  obligations  outstanding  June  30,  1934-62_       618 

28.  Public  debt  outstanding  by  security  classes,  June  30,  1952-62 619 


CONTENTS  VII 

Page 

29.  Guaranteed  obligations  issued  by  Government  corporations  and  other 

business-type  activities  and  held  outside  the   Treasury,  June  30, 
1952-62 622 

30.  Interest-bearing  securities  outstanding  issued  by  Federal  agencies  but 

not   guaranteed   by   the   United   States    Government,    fiscal   years 
1953-62 623 

31.  Maturity  distribution  of  marketable  interest-bearing  public  debt  and 

guaranteed  obligations,  June  30,  1946-62 624 

32.  Summary  of  public  debt  and  guaranteed  obligations  by  security  classes, 

June  30,  1962 625 

33.  Description  of  public  debt  issues  outstanding  June  30,  1962 627 

34.  Description  of  guaranteed  obligations  held  outside  the  Treasury,  June 

30,  1962 649 

35.  Postal  savings  systems'  deposits  and  Federal  Reserve  notes  outstand- 

ing, June  30,  1946-62 651 

36.  Statutory  limitation  on  the  public  debt  and  guaranteed  obligations, 

June  30,  1962 622 

37.  Debt  limitation  under  the  Second  Liberty  Bond  Act,   as  amended, 

1917-62 653 

II. — Operations 

38.  Public    debt   receipts   and   expenditures  by  security  classes,  monthly 

for  fiscal  year  1962  and  totals  for  1961  and  1962 656 

39.  Changes  in  public  debt  issues,  fiscal  year  1962 668 

40.  Issues,   maturities,   and  redemptions  of  interest-bearing  public  debt 

securities,  excluding  special  issues,  July  1961-June  1962 690 

41.  Allotments  by  investor  classes  on  subscriptions  for  public  marketable 

securities  other  than  regular  weekly  Treasury  bills,  fiscal  year  1962__       722 

42.  Public  debt  increases  and  decreases,  and  balances  in  the  account  of 

the  Treasurer  of  the  United  States,  fiscal  years  1916-62 724 

43.  Statutory  debt  retirements,  fiscal  years  1918-62 725 

44.  Cumulative  sinking  fund,  fiscal  years  1921-62 726 

45.  Transactions  on  account  of  the  cumulative  sinking  fund,  fiscal  year 

1962 727 

III. — United  States  savings  bonds 

46.  Summary  of  sales  and  redemptions  of  savings  bonds  by  series,  fiscal 

years  1935-62  and  monthly  1962 728 

47.  Sales  and  redemptions  of  Series  E  through  K  savings  bonds  by  series, 

fiscal  years  1941-62  and  monthly  1962 729 

48.  Sales  and  redemptions  of  Series  E  and  H  savings  bonds  by  denom- 

inations, fiscal  years  1941-62  and  monthly  1962 730 

49.  Sales  of  Series  E  and  H  savings  bonds  by  States,  fiscal  years  1961, 

1962,  and  cumulative 734 

IV. — Interest 

50.  Amount  of  interest-bearing  public  debt  outstanding,  the  computed 

annual  interest  charge,  and  the  computed  rate  of  interest,  June  30, 
1916-62,  and  at  the  end  of  each  month  during  1962_ 735 

51.  Computed  annual  interest  rate  and  computed  annual  interest  charge 

on  the  public  debt  by  security  classes,  June  30,  1939-62 737 

52.  Interest  on  the  public  debt  by  security  classes,  fiscal  years  1958-62 —       739 

53.  Interest  on  the  public  debt  and  guaranteed  obligations  by  tax  status, 

fiscal  years  1940-62 740 

V. — Prices  and  yields  of  securities 

54.  Average   yields   of  taxable  long-term   Treasury   bonds   by   months, 

October  1941-June  1962 741 

55.  Prices  and  yields  of  marketable  public  debt  issues,  June  30,  1961  and 

June  29,  1962,  and  price  range  since  first  traded 744 


VIII  CONTENTS 

VI. — Ownership  of  governmental  securities 

Page 

56.  Estimated    ownership    of    interest-bearing    governmental    securities 

outstanding  June  30,  1952-62,  by  type  of  issuer 745 

57.  Estimated   distribution   of  interest-bearing   governmental   securities 

outstanding  June  30,  1952-62,  by  tax  status  and  type  of  issuer 746 

58.  Summary  of  Treasury  survey  of  ownership  of  interest-bearing  public 

debt  and  guaranteed  obligations,  June  30,  1961  and  1962 748 

ACCOUNT  OF  THE  TREASURER  OF  THE  UWTED  STATES 

69.  Assets  and  liabilities  in  the  account  of  the  Treasurer  of  the  United 

States,  June  30,  1961  and  1962 750 

60.  Analysis  of  changes  in  tax  and  loan  account  balances,  fiscal  years 

1952-62 751 

STOCK  AND  CIRCULATION  OF  MONEY  IN  THE  UNITED  STATES 

61.  Stock  of  money,  money  in  the  Treasury,  in  the  Federal  Reserve 

Banks,  and  in  circulation,  by  kinds,  June  30,  1962 752 

62.  Stock   of  money,   money  in  the   Treasury,   in  the   Federal  Reserve 

Banks,  and  in  circulation,  selected  years,  June  30,  1925-62 754 

63.  Stock  of  money  by  kinds,  selected  years,  June  30,  1925-62 755 

64.  Money  in  circulation  by  kinds,  selected  years,  June  30,  1925-62 757 

65.  Location  of  gold,  silver  bullion  at  monetary  value,  and  coin  held  by 

the  Treasury  on  June  30,  1962 758 

66.  Paper  currency  issued  and  redeemed  during  the  fiscal  year  1962  and 

outstanding"  June  30,   1962,  by  classes  and  denominations 759 

TRUST  FUNDS  AND  CERTAIN  OTHER  ACCOUNTS  OF  THE  FEDERAL 

GOVERNMENT 

67.  Holdings  of  Federal  securities  by  Government  agencies  and  accounts, 

June  30,  1952-62 760 

I. — Trust  funds 

68.  Ainsworth  Library  fund,  Walter  Reed  General  Hospital,  June  30, 

1962 764 

69.  Civil  service  retirement  and  disability  fund,  June  30,  1962 764 

70.  District  of  Columbia  teachers'  retirement  and  annuity  fund,  June  30, 

1962 767 

71.  District  of  Columbia  other  funds — Investments  as  of  June  30,  19G1 

and  1962 768 

72.  Employees  health  benefits  fund.  Civil  Service  Commission,  June  30, 

1962 770 

73.  Retired  employees  health  benefits  fund.  Civil  Service  Commission, 

June  30,  1962 771 

74.  Employees'  life  insurance  fund.  Civil  Service  Commission,  June  30, 

1962 772 

75.  Federal  disability  insurance  trust  fund,  June  30,  1962 774 

76.  Federal  old-age  and  survivors  insurance  trust  fund,  June  30,  1962__  776 

77.  Foreign  service  retirement  and  disabilitv  fund,  June  30,  1962 778 

78.  Highway  trust  fund,  June  30,   1962__-' 779 

79.  Judicial  survivors  annuity  fund,  June  30,  1962 780 

80.  Library  of  Congress  trust  funds,  June  30,  1962 781 

81.  Longshoremen's  and  Harbor  Workers'  Compensation  Act,  relief  and 

rehabihtation,  June  30,    1962 782 

82.  National  Archives  gift  fund,  June  30,  1962 782 

83.  National  park  trust  fund,  June  30,  1962 783 

84.  National  service  life  insurance  fund,  June  30,  1962 784 

85.  Pershing  Hall  Memorial  fund,  June  30,  1962 785 

86.  Philippine  Government  pre-1934  bond  account,  June  30,  1962 786 

87.  Public  Health  Service  gift  funds,  June  30,  1962 787 

88.  Railroad  retirement  account,  June  30,  1962 788 

89.  Unemployment  trust  fund,  June  30,  1962 790 

90.  U.S.  Government  life  insurance  fund,  June  30,  1962 796 

91.  U.S.  Naval  Academy  general  gift  fund,  June  30,  1962 797 

92.  Workmen's    Compensation    Act   within    the   District   of   Columbia, 

relief  and  rehabilitation,  June  30,  1962 798 


» 


CONTENTS  IX 

II. — Certain  other  accounts 

Page 

93.  Colorado  River  Dam  fund,  Boulder  Canyon  project,  status  by  oper- 

ating years  ending  May  31,  1933-62 799 

94.  Refugee  Relief  Act  of  1953,  loan  program  through  June  30,  1962 800 

FEDERAL  AID  TO  STATES 

95.  Expenditures  made  by  the  Government  as  direct  payments  to  States 

under  cooperative  arrangements  and  expenditures  within  States 
which  provided  relief  and  other  aid,  fiscal  year  1962 801 

CUSTOMS  STATISTICS 

96.  Merchandise  entries,  fiscal  years  1961  and  1962 819 

97.  Principal  commodities  on  which  drawback  was  paid,  fiscal  years  1961 

and  1962 820 

98.  Carriers  and  persons  arriving  in  the  United  States,  fiscal  years  1961 

and  1962 821 

99.  Aircraft  and  aircraft  passengers  entering  the  United  States,  fiscal 

years  1961  and  1962 822 

100.  Seizures  for  violations  of  customs  laws,  fiscal  years  1961  and  1962..       823 

101.  Investigative  activities,  fiscal  years  1961  and  1962 824 

ENGRAVING  AND  PRINTING  PRODUCTION 

102.  New  postage  stamp  issues  delivered,  fiscal  year  1962 824 

103.  Deliveries  of  finished  work  by  the  Bureau  of  Engraving  and  Printing, 

fiscal  years  1961  and  1962 825 

INTERNATIONAL  CLAIMS 

104.  Awards  of  the  Mixed  Claims  Commission,  United  States  and  Germany,        •. , 

certified  to  the  Secretary  of  the  Treasury  by  the  Secretary  of  State, 
through  June  30,  1962 826 

105.  Yugoslav  claims  fund  as  of  June  30,  1962 828 

106.  Status  of  claims  of  American  nationals  against  certain  foreign  govern- 

ments as  of  June  30,  1962 829 

INTERNATIONAL  FINANCIAL  TRANSACTIONS 

107.  United  States  net  monetary  gold  transactions  with  foreign  countries 

and  international  institutions,  fiscal  years  1945-62 830 

108.  Estimated  gold  reserves  and  dollar  holdings  of  foreign  countries  as 

of  June  30,  1961  and  June  30,  1962 831 

109.  United  States  gold  stock  and  holdings  of  convertible  foreign  currencies 

by  U.S.  monetary  authorities,  fiscal  years  1952-62 833 

110.  U.S.  international  investment  and  gold  position,  end-selected  years.  _  834 

111.  U.S.  balance  of  payments  by  major  components,  seasonally  adjusted.  835 

112.  Assets  and  liabilities  of  the  Exchange  Stabilization  Fund  as  of  June  30, 

1961  and  1962 836 

113.  Summary  of  receipts,  withdrawals,  and  balances  of  foreign  currencies 

acquired  by  the  United  States  without  purchase  with  dollars,  fiscal 

year  1962 838 

114.  Balances  of  foreign  currencies  acquired  by  the  United  States  without 

purchase  with  dollars,  June  30,  1962 840 

INDEBTEDNESS  OF  FOREIGN  GOVERNMENTS 

115.  Indebtedness  of  foreign  governments  to  the  United  States  arising  from 

World  War  I,  and  payments  thereon  as  of  June  30,  1962 842 

116.  World  War  I  indebtedness,  payments,  and  balances  due  under  agree- 

ments between  the  United  States  and  Germany  as  of  June  30,  1962.       843 

117.  Outstanding  indebtedness  of  foreign  countries  on  United  States  Gov- 

ernment credits  (exclusive  of  indebtedness  arising  from  World  War 

I)  as  of  June  30,  1962,  by  area,  country,  and  major  program 844 

118.  Status  of  accounts  under  lend-lease  and  surplus  property  agreements 

(World  War  II)  as  of  June  30,  1962... 846 


X  CONTENTS 

CORPORATIONS   AND   CERTAIN   OTHER   BUSINESS-TYPE  ACTIVITIES   OF 
THE  UNITED  STATES  GOVERNMENT 

Page 

119.  Capital  stock,  notes,  and  bonds  of  Government  agencies  held  by  the 

Treasury  or  other  Government  agencies,  June  30,  1961  and  1962, 

and  changes  during  1962 850 

120.  Borrowing  authority  and  outstanding  issues  of  Government  corpora- 

tions and  certain  other  business-type  activities  whose  obligations  are 
issued  to  the  Secretary  of  the  Treasury,  June  30,  1962 _       852 

121.  Comparative  statement  of  obligations  of  Government  corporations 

and  certain  other  business-type  activities  held  by  the  Treasury,  June 

30,  1952-62 853 

122.  Description  of  obligations  of  Government  corporations  and  certain 

other  business-type  activities  held  by  the  Treasury,  June  30,  1962__       854 

123.  Comparative  statement  of  the  assets,  liabilities,  and  net  investment  of 

Government  corporations  and  certain  other  business-type  activities, 

June  30,  1953-62 858 

124.  Statement  of  loans  outstanding  of  Government  corporations  and  cer- 

tain other  business-type  activities,  June  30,  1962 860 

125.  Dividends,  interest,  and  similar  earnings  received  by  the  Treasury 

from   Government  corporations  and  certain  other  business-type 
activities,  fiscal  years  1961  and  1962 864 

GOVERNMENT  LOSSES  IN  SHIPMENT 

126.  Government  losses  in  shipment  revolving  fund,  June  30,  1962 866 

PERSONNEL 

127.  Number  of  employees  in  the  departmental  and  field  services  of  the 

Treasury  Department,  quarterly  from  June  30,  1961  to  June  30, 

1962 _._ 867 

INDEX.. 869 

Note. — Details  of  figures  may  not  add  to  totals  because  of  rounding. 


SECRETARY,    UNDER    SECRETARIES,    GENERAL    COUNSEL,    AND    AS- 
SISTANT   SECRETARIES    OF    THE    TREASURY    DEPARTMENT    FROM 
JANUARY  21,  1961,  TO  JANUARY  1,  1963  i 


Term  of  service 

Official 

From 

To 

Jan.   21,  1961 

Secretary  of  the  Treasury 
Douglas  Dillon,  New  Jersey. 

Feb.     3,  1961 

Under  Secretary 
Henry  H.  Fowler,  Virginia. 

Jan.    31,  1961 

Under  Secretary  of  the  Treasury  for 
Monetary  Affairs 

Robert  V.  Roosa,  New  York. 

Apr.     5,  1961 
Nov.  16,  1962 

Oct.      6,  1962 

General  Counsel 

Robert  H.  Knight,  Virginia. 

G.  d'Andelot  Belin,  Massachusetts 

Dec.  20,  1957 
Apr.     5,  1961 
Apr.  24,  1961 

Dec.   19,  1961 
Oct.    31,  1962 

Assistant  Secretaries 

A.  Gilmore  Flues,  Ohio. 
John  M.  Leddy,  Virginia. 
Stanley  S.  Surrey,  Massachusetts. 

Dec.  20,  1961 

James  A.  Reed,  Massachusetts. 

Dec.  18,  1962 

John  C.  Bullitt,  New  Jersey. 

June  19,  1955 
June  15,  1962 

Mar.  31,  1962 

Fiscal  Assistant  Secretary 

William  T.  Heffelfinger,  District  of  Columbia. 
John  K.  Oarlock,  Arizona. 

Sept.  14,  1959 

^            Administrative  Assistant  Secretary 
A.  E.  Weatherbee,  Maine. 

'  For  officials  from  September  11,  1789,  through  January  20,  1961,  see  the  1961  annual  report  exhibit  32, 
pp.  389-392. 

XI 


PRINCIPAL     ADMINISTRATIVE     AND      STAFF      OFFICERS     OF     THE 
TREASURY  DEPARTMENT  AS  OF  JANUARY  1,  1963 

SECRETARY 
DOUGLAS  DILLON 

Henry  H .  Fowler Under  Secretary  of  the  Treasury. 

Douglass  Hunt Special  Assistant  to  the  Under  Secretary. 

Robert  V.  Roosa Under  Secretary  for  Monetary  Affairs. 

J.  Dewey  Daane Deputy  Under  Secretary  for  Monetary  Affairs. 

Leland  Howard Director,  Office  of  Domestic  Gold  and  Silver 

Operations. 

Paul  A.  Volcker Director,  Office  of  Financial  Analysis. 

Frank  E.  Morris Assistant  to  the  Secretary  (Debt  Management). 

R.  Duane  Saunders Director,  Office  of  Debt  Analysis. 

G.  d' Andelot  Belin General  Counsel. 

Fred  B.  Smith Deputy  General  Counsel. 

Roy  T.  Englert.- Assistant  General  Counsel. 

Edwin  F.  Rains Assistant  General  Counsel. 

Hugo  A.  Ranta Assistant  General  Counsel. 

George  F.  Reeves Assistant  General  Counsel. 

Harold  R.  Pollak Chief  Counsel,  Foreign  Assets  Control. 

Stanley  S.  Surrey Assistant  Secretary. 

Harvey  E.  Brazer Deputy    Assistant    Secretary    and    Director, 

Office  of  Tax  Analysis. 

David  R.  Tillinghast Special  Assistant  to  Assistant  Secretary. 

Donald  C.  Lubick ^ Tax  Legislative  Counsel. 

Nathan  N.  Gordon Director,  Office  of  International  Tax  Affairs. 

James  A.  Reed_- Assistant  Secretary. 

James  P.  Hendrick Deputy  Assistant  Secretary. 

Commander       Robert       D. 

Johnson,  U.S.C.G Aide  to  the  Assistant  Secretary. 

Arnold  Sagalyn Director,  Office  of  Law  Enforcement  Coordi- 
nation. 

John  C.  Bullitt Assistant  Secretary. 

Vacancy Deputy  Assistant  Secretary. 

Ralph  Hirschtritt Special  Assistant  to  Assistant  Secretary. 

George  H.  Willis Director,  Office  of  International  Affairs. 

^ .     Philip  P.  Schaflfner Assistant    Director,    Office    of    International 

Affairs. 

Charles  R.  Harley Assistant    Director,    Office    of    International 

Affairs. 

John  K.  Carlock Fiscal  Assistant  Secretary. 

George  F.  Stickney Deputy  Fiscal  Assistant  Secretary. 

Hampton  A.  Rabon,  Jr Assistant  Fiscal  Assistant  Secretary. 

Boyd  A.  Evans Assistant  to  Fiscal  Assistant  Secretar.y. 

Frank  F.  Dietrich Assistant  to  Fiscal  Assistant  Secretary. 

Robert  M.  Seabury Director,  Office  of  Defense  Lending. 

A.  E.  Weatherbee Administrative  Assistant  Secretary. 

Carl  W.  Clewlow Deputy  Administrative  Assistant  Secretary  and 

Director,  Office  of  Management  and  Organi- 
zation. 

Paul  McDonald Director,  Office  of  Administrative  Services. 

Ernest  C.  Betts,  Jr Director,  Office  of  Budget  (Designate). 

Amos  N.  Latham,  Jr Director,  Office  of  Personnel. 

Thomas  M.  Hughes Director,  Office  of  Security. 

Joseph  W.  Barr Assistant    to    the    Secretary     (Congres-sional 

Relations) . 

XII 


PRINCIPAL    ADMINISTRATIVE    AND    STAFF   OFFICERS  XIII 

Dixon  Donnelley Assistant  to  the  Secretary  (Public  Affairs). 

Stephen  C.  Manning,  Jr Deputy    Assistant    to    the    Secretary     (Public 

Affairs) . 
Robert  A.  Wallace Assistant  to  the  Secretary. 

Thomas  W.  Wolfe Deputy  Assistant  to  the  Secretary. 

Charles  A.  Sullivan Assistant  to  the  Secretary. 

Bradley  H.  Patterson,  Jr National  Security  Affairs  Adviser. 

Margaret  W.  Schwartz Director,    Office    of    Foreign    Assets    Control. 

Seymour  E.  Harris Senior  Consultant  to  the  Secretary. 

William  N.  Turpin Special  Assistant  to  the  Secretary. 

Edward  L.  Killham Director,  Executive  Secretariat. 

BUREAU  OF  ACCOUNTS  ... ,/ 

Harold  R.  Gearhart Commissioner  of  Accounts. 

Sidney  S.  Sokol Assistant  Commissioner. 

John  H.  Henriksen Assistant    Commissioner    for    Administration. 

George  Friedman Staff  Assistant  to  the  Commissioner. 

Julian  F.  Cannon Chief  Disbursing  Officer. 

Harold  A.  Ball Chief  Auditor. 

Ray  T.  Bath Deputy   Commissioner — Accounting   Systems. 

Sidney  Cox Deputy  Commissioner — -Deposits  and  In- 
vestments. 

Howard  A.  Turner Deputy  Commissioner — Central  Accounts. 

Samuel  J.  Elson Deputy  Commissioner — Central  Reports. 

BUREAU  OF  CUSTOMS 

Philip  Nichols,  Jr Commissioner  of  Customs. 

David  B.  Strubinger Assistant  Commissioner  of  Customs. 

Alfred  F.  Belter Deputy    Commissioner   for    Policy    Planning. 

N.  G.  Strub Deputy    Commissioner    of    Management    and 

Controls. 

C.  A.  Emerick Deputy  Commissioner,  Division  of  Investiga- 
tions and  Enforcement. 

Walter  G.  Roy Deputy  Commissioner,  Division  of  Appraise- 
ment Administration. 

William  E.  Higman Deputy  Commissioner,  Division  of  Classifica- 
tion and  Drawbacks. 

Robert  Chambers Chief  Counsel. 

R.  V.  Mclntyre i-   Deputy    Commissioner,    Division    of    Marine 

Administration. 

Burke  H.  rHnn Deputy    Commissioner,     Division    of    Entry, 

Value,  and  Penalties. 

George  Vlases,  Jr Deputy  Commissioner,   Division  of  Technical 

Services. 

BUREAU  OF  ENGRAVING  AND  PRINTING 

Henry  J.  Holtzclaw Director,  Bureau  of  Engraving  and  Printing. 

Frank  G.  Uhler Assistant  Director.  ,^„ 

BUREAU  OF  THE  MINT  - 

Eva  Adams Director  of  the  Mint. 

Frederick  W.  Tate Assistant  Director. 

BUREAU  OF  NARCOTICS 

Henry  L.  Giordano Commissioner  of  Narcotics.  ,  ,- 

Charles  Siragusa Deputy  Commissioner.  ";? 

George  H.  Gaff ney Assistant  to  the  Commissioner. 

BUREAU  OF  THE  PUBLIC  DEBT 

Donald  M.  Merritt Commissioner  of  the  Public  Debt. 

Ross  A.  Heflfelfinger,  Jr Assistant  Commissioner. 


XIV  PRINCIPAL    ADMINISTRATIVE    AND    STAFF    OFFICERS 

Michael  E.  McGeoghegan Deputy  Commissioner. 

Jack  P.  Thompson Deputy    Commissioner    in    Charge,    Chicago 

Office. 

INTERNAL  REVENUE  SERVICE 

Mortimer  M.  Caplin Commissioner  of  Internal  Revenue. 

Bertrand  M.  Harding Deputy  Commissioner. 

Edward  F.  Preston Assistant  Commissioner  (Administration). 

Vernon  D.  Acree Assistant  Commissioner  (Inspection). 

Donald  W.  Bacon Assistant  Commissioner  (Compliance). 

Harold  T.  Swartz Assistant  Commissioner  (Technical). 

William  H.  Smith Assistant    Commissioner    (Planning    and    Re- 
search) . 

Robert  L.  Jack Assistant  Commissioner  (Data  Processing). 

Crane  C.  Hauser Chief  Counsel. 

Thomas  J.  Reilly Director  of  Practice. 

OFFICE  OF  THE  COMPTROLLER  OF  THE  CURRENCY 

James  J.  Saxon Comptroller  of  the  Currency . 

A.  J.  Faulstich Administrative  Assistant  to  the  Comptroller. 

Clarence  B.  Redman First  Deputy  Comptroller. 

Thomas  G.  DeShazo Deputy  Comptroller. 

William  B.  Camp Deputy  Comptroller. 

Justin  T.  Watson Deputy  Comptroller. 

Dean  Miller Deputy  Comptroller  (Trusts). 

R.  Coleman  Egertson Chief  National  Bank  Examiner. 

Robert  Bloom Chief  Counsel. 

OFFICE  OF  THE  TREASURER  OF  THE  UNITED  STATES 

Kathryn  O'Hay  Granahan Treasurer  of  the  United   States   (Designate). 

William  T.  Howell Deputy  Treasurer. 

Willard  E.  Scott Assistant  Deputy  Treasurer. 

UNITED  STATES  COAST  GUARD 

Admiral  Edwin  J.  Roland Commandant,  U.S.  Coast  Guard. 

Vice     Admiral     Donald     McG. 

Morrison Assistant  Commandant. 

Rear  Admiral  Theodore  J.  Fabik_   Chief,  Office  of  Engineering. 

Rear  Admiral  Oscar  C.  Rohnke. .   Chief,  Office  of  Merchant  Marine  Safety. 

UNITED  STATES  SAVINGS  BONDS  DIVISION 

William  H .  Neal National  Director. 

Bill  McDonald Assistant  National  Director. 

UNITED  STATES  SECRET  SERVICE 

James  J.  Rowley Chief,  U.S.  Secret  Service. 

Paul  J.  Paterni Deputv  Chief. 

E.  A.  Wildy Assistant  Chief. 

COMMITTEES  AND  BOARDS 

A.  E.  Weatherbee Chairman,  Treasury  Management  Committee. 

Amos  N.  Latham,  Jr Chairman,  Treasury  Awards  Committee. 

Amos  N.  Latham,  Jr Chairman,  Treasury  Wage  Board. 

Robert  A.  Wallace Employment  Policy  Officer. 

Robert  A.  Wallace Principal  Compliance  Officer. 


XV 


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ANNUAL  REPORT  ON  THE  FINANCES 

Treasury  Department, 
Washington,  March  29,  1963. 

Sirs:  I  have  the  honor  to  report  to  you  on  the  finances  of  the 
Federal  Government  for  the  fiscal  year  1962. 

The  economy  continued  to  advance  throughout  1962  from  the 
recession  low  of  February  1961,  and  further  economic  gains  extended 
into  1963.  The  Revenue  Act  of  1962  and  appropriate  tax  administra- 
tive measures — including  revision  of  the  guidelines  for  depreciation — 
are  stimulating  the  growth  of  the  economy.  The  President's  tax  pro- 
posals for  1963  are  designed  not  only  to  add  further  impetus  to  that 
trend  but  to  stimulate  long-term  growth  in  the  years  ahead.  Debt 
management  in  1962  substantially  improved  the  maturity  structure 
of  the  debt  and  financed  the  deficit  without  producing  inflationary 
pressures.  Confidence  in  the  international  payments  system  was 
strengthened  by  the  International  Monetary  Fund's  borrowing 
arrangements,  greater  international  cooperation  among  monetary 
authorities,  and  Treasiu"y  and  Federal  Reserve  operations  in  foreign 
exchange  markets. 

Fiscal  Policy 

Federal  Government  fiscal  policy  is  reflected  in  administration 
recommendations  and  policies  and  congressional  enactments  affecting 
expenditures  and  taxation.  Together  with  monetary  and  debt 
management  policy,  fiscal  policy  is  a  key  means  of  fulfilling  our 
national  economic  objectives,  including  the  attainment  of  high 
employment  and  production,  a  rapid  rate  of  economic  growth,  main- 
tenance of  price  stability,  and  equilibrium  in  our  international  balance 
of  pajnnents. 

Neither  expenditure  nor  tax  policy  can  be  formulated  solely  on  the 
basis  of  its  immediate  contribution  to  one  or  another  of  these  broad 
objectives,  for  the  level  and  distribution  of  expenditures  must  reflect 
a  national  judgment  concerning  the  activities  that  properly  should  be 
undertaken  by  the  Government,  and  the  tax  system  must  be  geared 
to  the  needs  for  equity,  efficiency,  and  simplicity.  Used  flexibly, 
however,  in  coordination  with  other  Federal  economic  policies,  fiscal 
policies  can  contribute  to  establishing  a  financial  environment  that 
will  support  and  release  forces  for  economic  progress. 

I 

661496—63—3 


2     196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  overall  fiscal  plans  of  the  Government  must  fulfill  a  number  of 
basic  requirements. 

National  security  and  urgent  nondefense  needs  must  be  provided. 

The  need  of  the  economy  for  appropriate  stimulation  or  restraint 
must  be  considered,  as  well  as  the  means  of  encouraging  balanced 
longer  range  growth. 

International  financial  consequences  of  domestic  economic  develop- 
ments and  policy  actions  must  be  taken  into  account  and  the  various 
policy  alternatives  balanced  to  serve  both  domestic  and  international 
goals. 

Tax  policy  must  be  founded  on  an  adequate  revenue  base,  and  the 
laws  designed  to  meet  the  tests  of  equity,  neutrality,  and  simplicity, 
while  contributing  to  the  encouragement  of  private  initiative. 

Federal  expenditures  must  be  controlled  to  assure  that  outlays  are 
justified  by  current  needs,  and  are  held  to  levels  permitting  the 
application  of  a  substantial  part  of  revenue  increases  generated 
by  satisfactory  growth  to  eliminating  current  deficits  or,  under  boom 
conditions,  to  producing  surpluses. 

The  budgetary  process  requires  the  testing  of  all  programs  against 
a  scale  of  priorities.  Everj^  expenditure  program,  military  or  civilian, 
must  be  subjected  to  a  continuous,  searching  examination  of  needs, 
costs,  and  alternatives.  This  process  permits  reduction  of  expendi- 
tures for  programs  whose  relative  urgency  has  declined  and  makes 
room  for  new  and  expanded  activities  urgent  and  essential  to  the 
well-being  and  progress  of  the  Nation.  Intensive  and  continuous 
efforts  must  be  made  to  effect  savings  by  substituting  private  for 
public  credit;  extending  the  principle  of  user  charges  where  appro- 
priate; and  increasing  efficiency  and  cost  reductions  throughout  the 
Government.  An  across-the-board,  standstill  order  on  expenditures 
would  be  the  negation  of  responsible  budgetary  policy  and  would 
hinder  the  Nation  in  meeting  the  challenge  of  its  unresolved  domestic 
and  international  problems. 

Fiscal  1963 

The  fiscal  1963  budget  was  in  preparation  during  the  final  months 
of  the  calendar  year  1961,  when  it  appeared  that  the  economic  re- 
covery was  well  established  and  would  continue  at  a  satisfactory  pace 
without  need  for  additional  stimulus  from  Federal  fiscal  policies. 
Although  nearly  every  measure  of  economic  activity  had  reached  new 
records  by  the  end  of  calendar  1961  and  prospects  for  further  vigorous 
expansion  appeared  favorable,  unemployment  and  underutilization 
of  productive  capacity  were  continuing  problems.  Moreover,  balance- 
of-payments  problems  were  again  causing  concern. 

For  these  reasons  it  appeared  that  new  measures  were  required  to 
deal  with  the  more  complex  situation  that  was  developing.     While 


ANlSrUAL    REPORT    ON   THE    FINANCES  3 

avoidance  of  the  degree  of  restraint  which  would  choke  off  expansion 
short  of  full  recovery  continued  to  be  important,  it  was  desirable  also 
to  guard  against  excesses  which  might  impede  an  orderly  expansion 
at  stable  prices.  Moreover,  it  was  desirable  to  stimulate  a  higher 
level  of  private  investment  to  increase  the  competitiveness  of  American 
products  at  home,  thus  providing  a  sound  basis  for  eventual  solution 
of  the  balance-of-payments  problems  as  well  as  helping  to  achieve 
faster  economic  growth. 

Under  these  conditions  a  balanced  budget  was  presented  for  the 
fiscal  year  1963,  with  expenditures  held  slightly  below  estimated 
receipts.  It  was  believed  that  only  a  moderate  surplus  should  be 
provided  in  the  administrative  budget  to  avoid  a  repetition  of  the 
pattern  in  the  previous  recovery  period  when  the  Federal  budget 
moved  from  an  administrative  budget  deficit  of  $12.4  billion  in  fiscal 
1959  to  a  surplus  of  $1.2  billion  in  fiscal  1960.  This  shift  of  more 
than  $13}^  billion  was  generally  considered  one  of  the  more  important 
factors  in  the  premature  termination  of  the  expansionary  phase  of  the 
business  cycle  in  the  calendar  year  1960.  In  contrast,  it  was  expected 
that  the  budgetary  swing  from  the  deficit  in  fiscal  1962  to  a  balance  in 
fiscal  1963  would  have  totaled  only  about  $7  billion.  At  the  same 
time  it  was  hoped  that  early  enactment  of  the  investment  credit  and 
administrative  depreciation  reform,  along  with  continued  monetary 
ease  to  the  degree  compatible  with  balance-of-payments  requirements, 
would  contribute  to  a  more  rapid  rate  of  private  capital  formation. 
If  private  investment  could  be  stimulated,  this  would  provide  added 
support  to  the  recovery,  leading  to  a  substantial  reduction  in  the 
unemployment  rate  and  to  a  more  complete  utilization  of  the  Nation's 
productive  potential. 

By  early  June  1962,  however,  there  were  some  indications  that  the 
pace  of  the  recovery  movement  had  slowed  and  achievement  of  the 
projected  level  of  GNP  in  calendar  1962,  on  which  a  balanced  budget 
was  predicated,  seemed  less  probable.  The  economic  outlook, 
however,  was  blurred  by  developments  related  to  an  anticipated 
steel  strike,  particularly  by  the  rapid  build-up  in  steel  inventories  in 
the  first  two  quarters  of  calendar  1962  followed  by  a  rapid  reduction  in 
these  inventories  beginning  in  the  thud  quarter.  This  undoubtedly 
contributed  to  the  unsatisfactory  behavior  of  some  of  the  leading 
economic  indicators,  which  caused  widespread  concern  in  the  sunmier 
about  the  possibility  of  a  recession. 

Early  in  the  fiscal  year  1963,  therefore,  serious  consideration  was 
given  to  an  immediate  tax  cut.  The  final  decision  was  delayed  for 
several  months,  for  a  clearer  indication  of  the  immediate  prospects; 
and  when  signs  of  further  moderate  strengthening  in  the  economy 
were  observed,  the  decision  was  made  to  delay  any  tax  recommenda- 


4    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

tion  until  a  program  for  general  tax  reduction  and  reform  could  be 
thoroughly  reviewed  by  the  next  Congress. 

This  decision  not  to  seek  an  anti-recessionary  tax  cut,  but  to  rec- 
ommend a  major  program  of  basic  tax  reduction  and  reform  to  the 
new  Congress  early  in  calendar  1963,  reflected  confidence  that  an 
early  recession  was  unlikely.  It  reflected  also  belief  that  fundamental 
changes  in  the  tax  system  are  requu'ed  to  increase  incentives  to 
investment,  risk  taking,  creative  effort,  and  initiative,  as  well  as  to 
release  private  purchasing  power  to  overcome  the  drag  on  the  economy 
evidenced  during  five  years  of  slow  growth,  high  unemplo3'ment,  and 
lagging  Federal  revenues.  At  the  same  time,  a  vigorous  program  of 
expenditure  control  was  carried  thi-ough  to  minimize  the  initial  impact 
of  tax  reduction  on  the  budget,  and  to  assure  that  a  substantial  part 
of  the  revenue  increases  which  would  result  from  the  economic  ex- 
pansion induced  by  tax  reduction  would  go  toward  eliminating  budget 
deficits.  This  would  help  to  establish  a  better  financial  environment 
for  private  investment  and  allow  full  advantage  to  be  taken  of  the 
forces  for  economic  progress  at  home  and  abroad.  Fiscal  policy, 
therefore,  was  directed  along  lines  that  would  resolve  the  interlocking 
goals  of  domestic  growth  and  external  stability,  reduce  unemployment 
and  provide  new  opportunities  for  our  expanding  labor  force,  and 
eliminate  the  balance-of-pajmients  deficit. 

Administrative  budget. — Administrative  budget  receipts  in  fiscal 
1963  are  now  estimated  at  $85.5  billion  and  expenditures  at  $94.3 
billion,  resulting  in  an  estimated  deficit  of  $8.8  billion. 

Budget  expenditm-es  are  estimated  to  rise  $6.5  billion  over  expend- 
itures in  fiscal  1962  to  $94.3  billion.  Increased  expenditures  for 
defense,  space,  and  interest  accounted  for  $3.7  billion  of  the  total  rise. 
Expenditures  for  agricultural  programs,  mainly  price  support,  are 
estimated  to  rise  $0.8  billion;  for  commerce  and  transportation, 
$0.6  billion,  of  which  one-half  is  for  area  redevelopment;  and  for 
health,  labor,  and  welfare,  $0.4  billion,  mainly  for  public  assistance. 

Accounting  for  the  $4.1  billion  rise  in  budget  receipts,  individual 
income  taxes  are  estimated  to  rise  $1.7  billion  to  $47.3  billion;  corpo- 
rate income  taxes,  $0.7  billion  to  $21.2  billion;  excise  taxes,  $0.3 
billion  to  $9.9  billion;  and  other  budget  receipts,  $1.4  billion  to  $7.1 
billion. 

Cash  budget. — Payments  to  the  public  are  estmiated  at  $116.8 
billion  in  fiscal  1963,  receipts  from  the  public  at  $108.4  billion,  resulting 
in  an  expected  deficit  in  the  cash  budget  of  $8.3  billion,  substantially 
equal  to  the  deficit  in  the  administrative  budget. 

National  income  accounts. — Federal  receipts  on  the  national  income 
accounts  basis  are  estimated  at  $108.8  billion,  expenditures  at  $113.2 
billion,  resulting  in  a  deficit  of  $4.3  billion. 


ANNUAL    REPORT    ON   THE    FINANCES  5 

Debt  Management 

The  debt  management  problem  in  calendar  1962  was  to  finance  a 
sizable  budget  deficit  in  a  year  of  economic  expansion,  while  sub- 
stantially miproving  the  maturity  structure  of  the  existing  debt;  and 
to  accomplish  this  in  consistence  with  the  Nation's  broad  economic 
goals  and  to  contribute  to  their  realization. 

Fundamentally,  the  primary  aim  of  debt  management  policy  was 
to  assm-e  that  the  1962  deficit  did  not  produce  undesirable  monetary 
consequences;  specifically,  that  it  did  not  foster  an  excessive  growth 
in  the  money  supply,  the  bank  credit  base,  or  the  total  volume  of 
liquid  assets.  As  the  economy  grows,  it  is  essential  that  the  money 
supply  and  the  volume  of  liquid  assets  should  grow  at  a  rate  fast 
enough  to  sustain  a  satisfactory  rate  of  economic  expansion;  but  it  is 
equally  essential  that  the  rate  of  growth  in  liquidity  be  held  to  levels 
compatible  with  a  stable  price  level. 

A  large  deficit  can  be  financed,  even  during  a  period  of  expanding 
economic  activity,  without  producing  monetary  effects  which  sow  the 
seed  for  inflationary  pressures  in  the  future.  If  such  consequences 
are  to  be  avoided,  however,  a  major  portion  of  the  deficit  must  be 
financed  by  tapping  real  savings  rather  than  through  the  expansion 
of  bank  credit.  That  requirement,  in  turn,  necessitates  that  a 
substantial  portion  of  the  deficit  be  financed  through  the  issuance 
of  longer  term  securities.  The  basic  purpose  of  the  debt  managers 
of  the  Treasury  was  so  to  finance  the  deficit  in  1962. 

This  goal  was  realized  in  1962,  and  the  Treasury  is  attempting  to 
finance  the  even  larger  deficit  of  1963  in  the  same  manner.  Our 
national  need  for  price  stability  is  clear;  and  that  need  is  now  also  a 
key  factor  in  the  program  to  restore  our  balance-of -payments  position 
to  equilibrium.  Both  debt  management  and  monetary  policy  must 
be  directed  toward  assuring  that  monetary  forces  do  not  threaten 
price  stability,  now  or  in  the  future. 

The  deficit  of  calendar  1962  was  financed  entirely  outside  the 
Nation's  commercial  banks.  The  Federal  Reserve,  in  pursuing  its 
objective  of  supplying  an  adequate  volume  of  reserves  to  the  com- 
mercial banking  system  and  providing  needed  currency,  added  $1.9 
billion  to  its  holdings  of  Government  securities,  an  increase  that  was 
in  line  with  customary  growth  patterns  in  reserves  to  be  expected 
year  by  year.  These  additional  Federal  Reserve  holdings  were  par- 
tially offset  by  a  decline  of  $700  million  in  the  Government  security 
holdings  of  commercial  banks.  The  balance  of  the  $6.3  billion 
increase  in  the  debt  in  the  year  ending  December  31,  1962,  was 
financed  out  of  savings  and  other  sources.  About  $1.0  billion  was 
taken  by  Government  investment  accounts.     The  remaining  $5.3 


196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


billion  was  divided  among  foreign  and  international  accounts  ($1.9 
billion),  corporate  pension  funds  and  individuals  ($0.9  billion),  State 
and  local  governments  ($0.8  billion),  business  corporations  ($0.7 
billion),  and  other  investors  ($0.9  billion). 

Estimated  ownership  of  Federal  securities 
[In  billions] 


Dec.  31 


1961 


1962 


Increase,  or 
decrease  (—) 


Banking  sector: 

Federal  Reserve  Banks- 

Commercial 

Subtotal 

Nonbank  sector: 

Government  investment  accounts. 

Foreign  and  international  accounts 

Individuals  and  corporate  pension  funds 

State  and  local  governments 

Nonflnancial  corporations 

Insurance  companies 

Mutual  savings  banks 

Savings  and  loan  associations 

AU  other 

Subtotal 

Total 


$28.9 
67.2 


$30.8 
66.5 


$1.9 
-0.7 


96.1 


97.3 


1.2 


54.5 

13.4 

67.8 

18.7 

19.4 

11.4 

6.1 

5.2 

3.8 


55.6 

15.3 

68.6 

19.5 

20.1 

11.5 

6.1 

5.5 

4.4 


1.0 
1.9 
0.9 
0.8 
0.7 
0.1 
-0.1 
0.3 
0.6 


200.4 


206.7 


296.5 


304.0 


6.3 
7.5 


In  calendar  1961  the  increase  in  the  very  liquid,  under-one-year 
debt  substantially  exceeded  the  increase  in  the  total  debt.  The  1962 
experience  was  radically  different.  The  increase  in  the  under-one-year 
debt  in  1962  amounted  to  only  $1.4  billion,  or  20  percent  of  the  increase 
in  the  total  debt.  In  1962,  the  debt  maturing  beyond  five  years 
increased  by  about  $9  billion,  substantiallj'^  more  than  the  increase 
in  the  total  debt.  The  debt  in  the  critical  one-to-five  j^ear  maturity 
sector  was  reduced  by  more  than  $3  billion.  Thus,  not  only  was  the 
deficit  itself  financed  in  a  noninflationary  manner,  but  a  substantial 
improvement  was  produced  in  the  overall  maturity  structure  of  the 
existing  debt.  This  improvement  is  symbolized  by  the  7  percent 
increase  in  the  average  length  of  the  debt  during  the  calendar  year, 
from  four  years  and  seven  months  at  the  end  of  1961  to  four  years  and 
eleven  months  at  the  end  of  1962.  (By  the  end  of  March  1963,  the 
average  length  had  increased  still  further  to  five  years  and  one  month, 
the  highest  level  since  September  1958.) 


ANNUAL    REPORT    ON   THE    FINANCES 


Maturity  distribution  of  the  marketable  debt 
[Dollar  amounts  in  billions] 


Maturity 


Dec.  31 


1961 


1962 


Increase,  or 
decrease  (—) 


Under-one-year 

Weekly  and  one-year  bills  . 

Tax  anticipation  bills 

Other 

Total  under  one-year 

1-6  years ._ 

5  years  and  over 

5-10  years 

10-20  years 

20  years  and  over 

Total  5  years  and  over 

Total  marketable  debt 

Average  length  (years-months) 


$37.4 

6.0 

42.5 


85.9 


64.9 

19.8 
12.0 
13.4 


45.2 


196.0 


4-7 


$45.  2 

3.0 

39.0 


87.3 


61.6 

34.0 

4.6 

15.5 


54.1 


203.0 


4-11 


$7.8 
-3.0 
-3.4 


1.4 


-3.2 

14.2 

-7.4 

2.1 


8.9 


7.0 


4mos. 


Although  the  monetary  impact  of  debt  management  poUcy  is  the 
most  fundamental  concern  of  the  Federal  debt  managers,  it  is  only 
one  of  many  factors  which  must  be  weighed  in  every  debt  manage- 
ment decision.  The  Treasmy  must  always  be  concerned  with  the 
present  and  future  interest  costs  of  carrying  the  debt.  To  the  extent 
consistent  with  its  other  objectives,  debt  management  policy  must  be 
oriented  toward  minimizing  interest  costs  on  the  debt. 

The  Treasury  also  has  a  responsibility  to  promote  an  active  and 
broadly  based  market  in  Government  securities.  Such  a  market  is 
not  only  in  the  interest  of  the  Treasury  as  an  issuer  of  securities,  but 
also  is  in  the  interests  of  investors  in  marketable  Treasury  secm-ities 
and  in  the  interests  of  the  Federal  Reserve  System.  Since  the  day- 
to-day  operations  of  monetary  policy  are  conducted  in  Government 
securities,  a  Government  securities  market  with  a  tradeable  volume  of 
issues  outstanding  across  a  broad  maturity  range  contributes  to  an 
effective  Federal  Reserve  policy.  The  monetary  authorities  need  an 
ample  range  of  alternatives  for  use  in  exerting  those  influences  on  the 
credit  and  capital  markets  which  wUl  best  meet  their  objectives. 

Moreover,  in  placing  new  issues  of  longer  term  securities,  the 
Treasury  must  weigh  carefully  the  impact  of  its  operations  on  the 
markets  for  other  long-term  securities:  corporate  bonds,  municipal 
bonds,  and  mortgages.     It  is  particularly  important  in  a  period  when 


8 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


the  economy  is  expanding  at  a  less  than  desired  rate  that  the  Treasui-y 
give  consideration  to  this  impact,  so  that  Treasury  financing  in  the 
longer  term  area  does  not  disrupt  or  reduce  the  flow  of  funds  into 
these  other  markets.  In  making  judgments,  the  Treasury  must  not 
only  decide  upon  the  amounts  of  longer  term  funds  that  can  appropri- 
ately be  placed  in  Government  securities,  but  must  also  give  con- 
sideration to  the  timing  of  offerings  and  the  techniques  to  be  used. 
In  1962,  while  the  volume  of  other  forms  of  long-term  borrowing  was 
also  increasing  by  a  record  amount,  the  Treasury  increased  the  total 
of  outstanding  Government  securities  maturing  beyond  five  years  by 
almost  $9  billion  and  the  total  maturing  beyond  twenty  ye&TS  by 
more  than  $2  billion,  as  shown  in  the  preceding  table.  Much  of  this 
was  accomplished  through  the  March  and  September  advance  re- 
fundings,  a  technique  which  minimizes  the  strain  on  other  markets 
(see  the  following  table) .  That  this  very  substantial  volume  of  longer 
term  Government  securities  was  placed  in  the  hands  of  investors 
without  disrupting  or  slowing  down  the  flow  of  funds  into  corporate 
bonds,  municipal  bonds,  and  mortgages,  is  demonstrated  also  by  the 
downward  movement  of  interest  rates  on  these  securities  throughout 
the  year  and  which  at  the  yearend  were  generally  lower  than  the  rates 
prevailing  at  the  bottom  of  the  recession  in  February  1961. 

Effect  of  calendar  1962  advance  refunding s  on  the  maturity  structure  of  the  marketable 

debt 


[In  billions] 

Maturity 

Removed 

Added 

Increase,  or 
decrese  (— ) 

Under-l-year 

$7.9 
3.4 

-$7.9 

I  to  3  years ...  .  . ...  . 

-3.4 

3  to  5  years      .      .         .            .      ...      ._      ....      .... 

$5.3 
5.9 
1.8 

5.3 

5  to  20  years 

1.8 

4.1 

20  years  and  over _      _  _  _      _  _      -----         -  -  -  - 

1.8 

Total... 

13.1 

13.1 

If  we  are  to  have  a  cohesive  national  financial  policy,  Treasury 
debt  management  operations  must  be  closely  coordinated  with  the 
monetary  policy  and  operations  of  the  Federal  Reserve.  In  1962, 
monetaiy  policy  actions,  as  independently  determined  by  the  Federal 
Keserve,  and  the  debt  management  decisions  of  the  Treasuiy  were 
closely  and  significantly  integrated  toward  the  achievement  of 
common  goals.  This  coordination  of  policies  reached  a  highl}^  devel- 
oped state  in  the  continuing  effort  to  achieve  the  important  policy 
goal  of  maintaining  short-term  interest  rates  in  the  United  States  at 
levels  which  would  reduce  incentives  for  short-term  funds  to  flow 


ANNUAL    REPORT    ON   THE    FINANCES  9 

abroad  in  response  to  interest  rate  differentials.  Such  flows,  of  course, 
weaken  our  balance-of-payments  position  and  tend  to  lead,  ultimately, 
to  drains  on  our  gold  stock. 

The  role  of  the  Treasury  in  this  common  effort  was  so  to  plan  its 
debt  operations  that  appropriate  amounts  of  new  short-term  securities 
were  placed  in  the  market  at  times  when  upward  supply  pressures 
on  Treasury  bill  jaelds  were  needed  to  keep  our  short-term  rate 
structure  in  appropriate  relationship  with  rates  abroad.  Such 
actions  were  undertaken  on  a  substantial  scale  in  the  spring  and  in 
the  fall  of  1962  through  raising  needed  cash  by  adding  to  the  weekly 
bill  auctions  and  by  the  issuance  of  a  $1  billion  strip  of  bills. 

Partly  because  of  these  tmiely  actions  by  the  Treasury  in  adding  to 
the  supply  of  Treasury  bills,  the  Federal  Reserve  was  able  to  continue 
its  policy  of  fostering  bank  credit  expansion  without  producing  undue 
downward  pressure  on  Treasury  bill  rates.  Such  large  additions  to 
the  supply  of  Treasury  bills,  however,  if  not  offset  m  some  manner, 
could  lead  over  time  to  an  excessive  growth  in  the  volume  of  short- 
term  Treasury  obligations  and  defeat  a  fundamental  debt  manage- 
ment objective  of  helping  to  limit  the  rate  of  growth  of  liquid  assets 
to  the  real  needs  of  the  economy.  The  necessary  offsetting  factor 
was  provided  by  the  introduction  of  the  device  of  "prerefunding",  that 
is,  the  application  of  the  technique  of  advance  refunding  to  securities 
maturing  within  one  year. 

The  prerefunding  device  was  fu'st  used  in  September  1962,  when 
almost  $8  billion  in  securities  maturing  in  eight  months  or  less  was 
exchanged  for  securities  maturing  in  approximately  five  years  and  ten 
years.  It  was  because  of  the  substantial  reduction  in  the  under-one- 
year  debt  produced  by  the  September  prerefunding  that  the  Treasury 
was  able  to  add  almost  $8  billion  to  the  supply  of  Treasury  bills  during 
the  year  and  still  end  the  year  with  a  net  increase  in  the  total  under- 
one-year  debt  of  only  $1.4  billion. 

The  prerefunding  w^as  one  of  two  new  debt  management  tools 
introduced  in  1962.  The  second  newly  developed  technique  was  the 
offering  of  long-term  Treasury  bonds  at  competitive  bidding.  The 
decision  to  try  out  the  competitive  bidding  technique  for  marketing 
long-term  bonds  was  announced  in  September  1962.  The  first 
offering  of  bonds  using  this  technique  was  made  on  January  8,  1963, 
and  was  highly  successful.  The  winning  syndicate  submitted  its 
bid  based  on  a  4  percent  coupon  rate  and  acquired  the  $250  million 
issue  of  30-year  bonds  at  99.85111,  resulting  in  an  interest  cost  to  the 
Treasury  of  4.008  percent.  The  bonds  were  reoffered  at  par  to  yield 
4  percent. 

The  experience  of  the  postwar  years  had  demonstrated  a  clear  need 
to  develop  new  approaches  for  marketing  long-term  Treasury  bonds  if 


10   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

continued  progress  toward  a  more  balanced  maturity  structure  for  the 
Federal  debt  is  to  be  made  in  1963  and  in  the  years  beyond.  As  a 
technique,  competitive  bidding  offers  the  great  advantage  of  employing 
in  a  new  way  tlie  energies  of  the  financial  community  in  selling  long- 
term  Treasury  obligations.  Only  further  experience  can  test,  how- 
ever, whether  it  will  prove  to  be  a  way  of  selling  long-term  Treasury 
bonds  at  lower  interest  costs  and  with  less  disturbance  to  other  sectors 
of  the  capital  markets  than  the  traditional  procedures.  Certainly 
in  the  first  offering,  the  Treasury  succeeded  in  placing  $250  million 
in  thirty-year  bonds  at  a  rate  of  interest  lower  than  the  traditional 
marketing  procedure  would  have  required. 

It  is  only  through  a  willingness  to  seek  out  and  to  experiment  with 
new  methods  and  new  procedures,  such  as  these,  that  the  problems 
of  managing  a  debt  in  excess  of  $300  billion  can  successfully  be  met 
in  a  continuously  changing  economic  environment. 

Tax  Policy 

The  first  step  toward  a  needed  reform  of  our  Federal  tax  sj'stem  was 
taken  during  1962  with  the  enactment  of  the  Revenue  Act  of  1962. 
This  act,  which  was  based  on  the  President's  recommendations  to  the 
87th  Congress,  was  designed  to  stimulate  the  growth  of  our  economy 
and  to  improve  the  U.S.  balance-of-payments  position.  It  also  con- 
tains many  provisions  to  make  our  tax  laws  fairer  and  to  eliminate 
unwarranted  special  tax  treatment. 

The  1962  act  encourages  business  expenditures  on  productive  facili- 
ties by  granting  a  7  percent  tax  credit — 3  percent  for  public  utilities — 
for  investment  in  depreciable  machinery  and  equipment  used  in  the 
United  States.  Another  major  stimulus  to  our  continued  economic 
growth  was  provided  in  1962  by  the  announcement  of  new  guidelines 
and  procedures  for  determining  depreciation  of  equipment  for  tax 
purposes.  The  suggested  new  asset  lives  automatically  permit  a  more 
rapid  writeoff  for  approximately  70  to  80  percent  of  the  machinery  and 
equipment  presently  in  use  for  manufacturing.  They  are  32  percent 
shorter  on  the  average  than  the  old  guidelines.  For  1962  alone  the 
new  li))oralized  depreciation  allowances,  combined  with  the  tax  re- 
duction from  the  investment  credit,  provided  over  $2  billion  of  tax 
benefits  to  industry.  Together,  these  measures  raise  the  rate  of  return 
on  investment,  provide  more  incentives  to  cost-cutting  and  increases 
in  productivity,  and  augment  the  flow  of  internal  funds  available 
for  modernization  and  expansion. 

The  investment  credit  and  the  depreciation  reform  give  V.S. 
industry  tax  treatment  on  new  investment  in  machinery  and  ecjuip- 
mont  approximating  that  of  its  chief  foreign  competitors  in  domestic 
and  foreitrn  markets. 


Annual  report  on  the  finances  11 

The  1962  Revenue  Act  also  stimulates  domestic  investment  by 
removing  unwarranted  tax  inducements  to  investment  in  industrialized 
countries  abroad.  U.S.  shareholders  are  made  taxable  currently  on 
tax  haven  earnmgs  of  foreign  corporations  controlled  by  them.  Divi- 
dends distributed  by  foreign  subsidiaries  of  U.S.  corporations  in  in- 
dustrialized countries  are  made  taxable  at  the  full  domestic  corporation 
income  tax  rates  less  a  credit  for  foreign  taxes.  Profits  from  sales  of 
U.S.  patents  to  foreign  subsidiaries  are  made  taxable  at  ordinary  rates 
rather  than  at  capital  gains  rates.  The  tax  advantages  previously 
granted  to  investment  companies  created  abroad  are  removed.  The 
exemption  from  U.S.  tax  of  earned  income  of  citizens  establishing 
their  residence  abroad  is  restricted. 

The  1962  act  extends  the  reporting  requirements  on  dividend  and 
interest  payments  to  aid  in  disclosing  income  not  reported  for  tax 
purposes. 

It  provides  a  basis  for  greatly  curtailing  abuses  in  the  expense 
account  area. 

It  prevents  the  conversion  of  ordinary  income  into  capital  gain 
tlu"OUgh  the  sale  of  depreciable  personal  property. 

The  tax  advantages  previously  possessed  by  mutual  thrift  associa- 
tions over  competing  financial  institutions  are  substantially  reduced 
with  regard  to  the  tax-free  accumulation  of  earnings  as  bad  debt 
reserves. 

Earnings  of  cooperatives  are  taxed  currently  either  at  the  coopera- 
tive level  or  the  patron  level. 

Disputes  between  taxpayers  and  tax  administrators  are  reduced  by 
permitting  salvage  value  up  to  10  percent  of  the  cost  of  the  original 
asset  to  be  disregarded  in  determining  allowable  depreciation 
deductions. 

Mutual  fire  and  casualty  insurance  companies  are  made  taxable  on 
their  underwriting  income  as  well  as  on  their  investment  income. 

The  substantial  tax  changes  adopted  in  1962  set  the  stage  for  the 
major  tax  reduction  and  reform  program  proposed  by  the  administra- 
tion in  1963.  The  primary  objectives  of  this  program  are  to  restore 
the  Nation's  economy  to  maximum  use  of  its  human  and  physical 
resources  and  to  achieve  a  more  rapid  rate  of  growth,  These  aims 
would  be  attained  by  easing  the  unrealistically  heavy  burden  now 
imposed  by  war-born  Federal  income  taxes.  Proposed  lower  tax 
rates  for  both  individuals  and  corporations  would  enlarge  the  market 
for  consumer  goods  and  services  and  substantially  improve  incentives 
for  risk-taking  and  investment.  In  addition,  the  program  would 
minimize  the  diversion  of  energy  and  resources  from  more  productive 
activities  to  tax  avoidance,  make  the  economy  more  responsive  to 
essential  market  forces,  achieve  greater  equity  and  relieve  the  low- 


12    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

income  and  older  taxpayers  of  hardships  imposed  by  the  present  tax 
system. 

Tax  rates  for  individuals  would  be  lowered  by  an  across-the-board 
average  of  more  than  20  percent,  from  the  present  range  of  20  to  91 
percent  to  a  new  level  of  14  to  65  percent.  To  lighten  the  tax  burden 
of  the  one-third  of  all  taxpayers  whose  entire  taxable  income  falls  in 
the  lower  half  of  the  present  first  bracket,  it  is  recommended  that  this 
bracket  be  split,  with  a  14  percent  rate  for  the  first  half  and  a  16  percent 
rate  for  the  second  half.  When  in  effect  for  a  full  calendar  year, 
lowered  tax  rates  would  reduce  individual  income  tax  liabilities  by 
$11  billion  (at  1963  levels  of  income). 

Corporate  tax  rates  would  also  be  reduced.  A  reduction  of  5  per- 
centage points  in  the  tax  rate  applying  to  large  corporations  would 
supplement  the  investment  tax  credit  and  depreciation  reform  in 
providing  greater  incentives  to  increased  productivity,  modernization, 
and  expansion.  It  is  further  recommended  that  the  first  $25,000  of 
corporate  taxable  income  be  subject  to  a  tax  rate  of  22  percent  rather 
than  the  present  30  percent,  a  reduction  of  almost  27  percent.  This 
change  would  be  particularly  helpful  to  small  corporations  which 
must  depend  on  internall}^  generated  funds  for  their  capital.  These 
reductions  would  reduce  corporate  tax  liabilities  by  $2.6  billion  per 
year. 

Reductions  in  tax  rates  recommended  for  individuals  and  corpo- 
rations, if  unaccompanied  by  structural  reforms,  would  reduce  tax 
liabilities  by  $13.6  billion.  It  is  proposed  that  this  substantial  reduc- 
tion be  approached  in  three  stages.  For  individuals,  one-quarter  of 
the  full  reduction  would  become  effective  in  1963,  three-quarters  in 
1964,  and  the  full  program  in  1965.  The  withholding  rate  would  be 
reduced  twice.  In  1963,  following  enactment  of  the  proposals,  the 
rate  would  drop  to  15.5  percent.  The  permanent  withholding  rate  of 
13.5  percent  would  become  effective  on  July  1,  1964.  There  would  be 
a  three-stage  reduction  in  corporate  income  tax  rates.  For  1963  the 
tax  rate  on  the  first  $25,000  of  corporate  income  would  drop  to  22 
percent,  while  the  rate  applicable  to  income  in  excess  of  $25,000  would 
remain  at  52  percent.  In  1964  the  latter  rate  would  be  reduced  to  50 
percent,  and  in  1965  to  47  percent. 

A  number  of  structural  reforms  are  proposed  for  the  relief  of  indi- 
viduals and  families  at  the  lowest  levels  of  income.  These  reforms 
include  a  minimum  standard  deduction  of  $300  for  single  persons, 
$400  for  a  married  couple,  plus  $100  for  each  dependent  up  to  a  maxi- 
mum of  $1,000.  This  provision  affords  relief  exclusively  to  low-income 
persons  at  a  revenue  cost  far  lower  than  that  which  would  be  entailed 
if  the  personal  exemption  were  increased. 


ANNUAL    REPORT    ON   THE    FINANCES  13 

It  is  also  recommended  that  the  deduction  for  the  care  of  children 
and  disabled  dependents  be  liberalized  to  give  recognition  to  present 
day  income  levels  and  costs. 

The  $300  tax  credit  proposed  for  older  persons  would  reduce  the 
tax  burdens  of  low-income  older  persons,  provide  more  equitable 
taxation  of  income  from  different  sources  and  particularly  of  wage 
income,  and  simplify  the  preparation  of  tax  returns. 

The  proposal  which  would  permit  averaging  of  income  over  a  five- 
year  period  in  cases  where  a  marked  fluctuation  in  income  occurred 
would  provide  fairer  tax  treatment  for  authors,  professional  artists, 
actors,  athletes,  and  all  others  whose  incomes  may  vary  widely  from 
one  year  to  another. 

The  program  would  permit  a  deduction  for  the  moving  expenses 
of  all  employees  and  would  thereby  increase  labor  mobility  and 
achieve  greater  fairness  to  taxpayers. 

Other  proposals  would  simplify  the  upper  lunit  of  the  deduction  for 
charitable  contributions  and  the  computation  of  the  floor  under 
medical  expenses. 

The  following  base  broadening  proposals  would  recoup  revenue, 
making  it  possible  to  achieve  the  rate  reductions  recommended  by 
the  President  and  still  keep  overall  tax  reduction  within  the  limits  of 
prudent  fiscal  policy.  The  base  broadening  reforms  would  also 
achieve  important  equity  objectives.  The  most  important  of  the  re- 
forms in  this  category  is  the  proposed  5  percent  floor  under  itemized 
deductions.  A  separate  floor  equal  to  4  percent  of  adjusted  gross 
income  is  proposed  for  the  casualty  loss  deduction  to  restrict  its  use  to 
cases  that  involve  hardship.  The  unlimited  deduction  for  charitable 
contributions,  which  affects  only  a  small  handful  of  high-income  tax- 
payers, would  be  repealed. 

Kepeal  of  the  exclusion  applied  to  wage  continuation  payments, 
known  as  the  "sick  pay"  exclusion,  is  recommended  except  in  cases  of 
disability. 

Repeal  of  the  dividend  credit  and  exclusion  is  proposed.  They  fail 
either  to  encourage  equity  investment  or  to  provide  a  satisfactory 
partial  offset  to  the  so-called  double  taxation  of  dividend  income,  and 
currently  involve  an  annual  loss  of  $485  miUion  of  tax  revenue.  Other 
proposals  would  require  taxation  to  the  employee  of  the  current 
annual  value  of  employer  financed  group  term  life  insurance,  with  the 
exception  of  the  first  $5,000  of  coverage,  and  would  correct  deficien- 
cies in  the  taxation  of  personal  holding  companies. 

The  reduction  in  corporate  tax  rates  would  be  accompanied  by 
revisions  to  limit  related  corporations  subject  to  80  percent  common 
ownership  and  control  to  a  single  surtax  exemption. 


14   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Proposals  relating  to  the  taxation  of  income  from  natural  resources 
would  limit  serious  defects  which  now  arise  in  connection  with  the 
50  percent  net  income  Imiitation  on  percentage  depletion,  the  grouping 
of  oil  and  gas  properties  for  tax  purposes,  the  deduction  from  ordinary 
income  of  amounts  later  recovered  and  taxed  at  capital  gains  rates, 
and  the  use  of  tax  concessions  on  foreign  mineral  production  to  reduce 
the  tax  liability  that  would  otherwise  be  due  on  income  from  domestic 
and  nonmineral  foreign  sources. 

Revenue  recouped  by  these  structural  reforms  would  be  offset  in 
part  by  repeal  of  the  2  percent  tax  on  consolidated  returns  and  a 
current  expense  deduction  for  capital  expenditures  for  machinery  and 
equipment  used  directly  and  specifically  for  research  and  development 
activities. 

Another  measure,  which  would  affect  neither  the  tax  liabilities  im- 
posed upon  corporations  nor  the  method  of  computing  those  liabilities, 
is  the  acceleration  of  corporate  tax  payments  for  large  corporations 
to  a  more  current  basis  over  a  five-year  transition  period.  This 
measure  would  yield  about  $1.5  billion  in  revenue  during  each  of  the 
years  of  transition. 

Proposed  changes  in  the  taxation  of  capital  gains  and  losses  are 
designed  to  release  growth  stimulating  investment.  The  present 
capital  gains  provisions,  which  have  not  undergone  basic  revision 
since  1942,  are  both  inequitable  in  essential  respects  and  a  deterrent 
to  the  mobility  of  investment  capital  and  liquidity  in  capital  markets. 
The  President  recommended  that  the  50  percent  inclusion  ratio  for 
capital  gains  be  reduced  to  30  percent  and  that  unabsorbed  capi- 
tal losses  be  carried  forward  indefinitely  until  exhausted.  These 
changes  will  increase  taxpayer  willingness  to  realize  capital  gains  and 
stimulate  a  larger  turnover  of  capital  assets.  The  lower  inclusion 
ratio  combined  with  reduced  tax  rates  will  establish  capital  gains  tax 
rates  ranging  from  4.2  percent  to  a  maximum  of  19.5  percent,  compared 
witli  an  existing  range  of  10  percent  to  25  percent.  The  holding  period 
which  defines  long-term  capital  gains  would  be  lengthened  from  6 
months  to  one  year  to  permit  the  more  liberal  treatment  of  bona  fide 
investment  gains  without  applying  unjustified  reductions  to  specula- 
tive profits.  It  is  also  proposed  that  net  gains  accrued  on  capital  assets 
at  the  time  of  their  transfer  by  reason  of  deatli  or  gift  be  taxed  at 
capital  gains  rates.  This  would  not  apply  to  assets  transferred  as 
charitable  gifts  or  bequests.  The  proposal,  which  would  be  accom- 
panied by  several  features  that  would  effectively  eliminate  hardships 
that  might  otherwise  arise,  would  encourage  investors  to  turn  over 
their  assets  during  their  lifetime  rather  than  hold  them  for  eventual 
tax-free  transfer  at  death.  Proposed  changes  in  the  definition  of 
capital  gains  would  restrict  the  use  of  stock  options,  sales  of  mineral 


ANNUAL    REPORT    ON    THE    FINANCES  15 

interests,  sales  of  timber,  and  lump-sum  pension  and  profit-sharing 
distributions,  as  means  of  converting  ordinary  income  into  capital 
gains. 

Structural  reforms  for  the  relief  of  hardship  and  the  encouragement 
of  growth  would  reduce  individual  income  tax  liabilities  by  $740  million 
and  corporate  tax  liabilities  by  $50  million.  Reforms  to  broaden  the 
tax  base  and  improve  equity,  on  the  other  hand,  would  recoup  $3.1 
billion  from  individuals  and  $250  million  from  corporations.  The 
capital  gains  provisions  would  increase  revenues  by  an  estimated  $750 
million,  largely  by  inducing  the  more  rapid  turnover  of  capital  assets. 
Structural  revisions  combined  with  tax  rate  reductions  would  result 
in  net  annual  tax  reductions  aggregating  $10.3  billion  by  1965  when 
the  program  would  be  fully  effective. 

Under  the  three-stage  approach  to  the  implementation  of  the  pro- 
gram, structural  revisions  would  not  become  effective  until  1964. 
The  rate  reductions  effected  in  1963  would  result  in  a  $3.1  billion 
decrease  in  tax  liabilities.  In  1964,  structural  revisions  would  be 
linked  with  three-quarters  of  the  full  tax  rate  reduction.  The  effect 
would  be  a  reduction  in  tax  liabilities  of  $6.3  billion.  In  1965  tax 
reductions  would  total  $10.3  billion. 

International  Finance 

Steps  taken  during  1962  built  upon  the  financial  framework  set  up 
during  1961  and  buttressed  still  further  the  free  world's  international 
payments  system.  During  1961  the  Treasury  undertook  a  more 
active  role  in  the  foreign  exchange  markets  whde  the  Federal  Reserve 
was  deeply  involved  in  establishing  increasingly  close  relationships 
among  the  various  central  banks.  During  1962  the  Treasury  pushed 
fm^ther  its  operations  in  the  foreign  exchange  markets  and  expanded 
its  borrowings  of  foreign  currencies,  enlarging  the  total  and  extending 
the  maturities.  The  Federal  Reserve  undertook  in  February  1962 
to  operate  in  the  exchange  market  for  its  own  account  and  established 
a  circle  of  currency  swap  arrangements  with  central  banks  abroad. 
These  various  measures  were  instrumental  in  strengthening  confidence 
both  in  the  payments  system  and  in  the  system's  key  currency,  the 
U.S.  dollar,  by  providing  a  strong  bulwark  against  speculative  and 
other  pressures  that  might  otherwise  prove  highly  disruptive.  The 
establishment  of  the  Special  Borrowing  Arrangement  added  substan- 
tially to  the  resources  of  the  International  Monetary  Fund  available 
to  deal  with  pressures  threatening  the  international  payments  system. 

At  the  same  time,  the  U.S.  balance  of  payments — the  position  of 
which  in  a  final  sense  shapes  longer  run  market  developments — 
showed  some  further  improvement  over  1961.  Reinforced  U.S. 
governmental  effort  was  pointed  toward  trimming  the  balance-of- 
payments  deficit,   both  directly,   in  so  far  as   the  deficit  reflected 


16    1962  REPORT  OP  THE  SECRETARY  OF  THE  TREASURY 

transactions  on  governmental  account,  and  indii-ectly,  in  the  sense  of 
encouraging  the  private  sector  to  push  imaginatively  and  aggressively 
into  foreign  markets.  Moreover,  coordinated  Treasury-Federal  Reserve 
policies  were  dhected  toward  sustaining  short-term  interest  rates  in 
the  United  States  in  order  to  alleviate  pressures  which  might  other- 
wise be  induced  by  flows  of  capital  triggered  by  significant  spreads 
between  short-term  domestic  and  foreign  interest  rates.  Early  in 
1963  the  President  sent  to  Congress  a  tax  program  designed  to 
improve  fundamentally  and  significantly  the  investment  climate  at 
home  and  thus  to  restrain  outward  flows  of  capital. 

The  combined  impact  of  this  tax  program  and  the  depreciation 
reform  and  investment  tax  credit  of  1962  should  foster  the  greater 
modernization  and  efficiency  vital  to  meeting  international  competi- 
tion. The  overall  program  is  designed  to  stimulate  economic  growth 
in  the  United  States  in  an  atmosphere  of  continued  price  stability 
and  enhanced  competitiveness  in  relation  to  foreign  products,  both 
at  home  and  abroad.  In  this  way,  the  United  States  can  reach  and 
maintain  its  goal  of  reasonable  equilibrium  in  its  balance  of  payments 
and  thus  contribute  to  the  endm-ing  strength  of  the  dollar. 

Export  expansion 

In  more  specific  terms,  the  goal  of  eliminating  the  remaining 
deficit  in  U.S.  international  payments  depends  importantly  on  increas- 
ing the  U.S.  commercial  trade  surplus.  Central  to  this  task  is  the 
need  for  a  continued  and  accelerated  expansion  of  commercial  exports. 
Although  export  expansion  depends  primarily  on  the  competitive 
vigor  of  the  private  sector,  the  Government,  in  addition  to  its  meas- 
ures to  improve  the  basic  economic  framework,  gives  impetus  to  the 
export  drive  through  assistance  in  export  financing  and  through 
export  promotion. 

In  the  field  of  export  financing  the  United  States  has  now  devel- 
oped export  credit  facilities  which  are  the  equal  of  those  anywhere 
in  the  world.  The  Export-Import  Bank  has  improved  its  existing 
facilities  and  in  cooperation  with  a  large  gi'oup  of  private  insurance 
companies  has  formed  the  Foreign  Credit  Insurance  Association 
(FCIA).  The  FCIA  inaugiu-ated  in  Februar}^  1962  a  comprehensive 
program  of  short-term  export  credit  insurance.  In  mid-July  1962 
it  also  began  to  issue  medium-term  export  credit  insurance.  The 
Export-Import  Bank  offers  dhect  exporter  credits  and  provides  me- 
dium-term Bank  guarantees  for  exports  in  addition  to  its  other  finan- 
cial assistance  to  U.S.  exports.  In  January  1963  further  significant 
improvements  were  made  in  the  FCIA-Export-Import  Bank  program, 
and  work  is  going  forward  on  continued  improvement. 

In  addition,  the  general  program  of  export  promotion  is  being 
intensified.     To  spearhead  this  campaign,  a  national  export  expan- 


ANNUAL    REPORT    ON    THE    FINANCES  17 

sion  coordinator  was  appointed  in  July  1962  and  a  series  of  concrete 
U.S.  Government  programs  are  under  way  here  and  abroad  to  pro- 
mote increased  U.S.  business  interest  in  exporting  and  increased  sales 
opportunities  for  U.S.  products  in  potential  markets  abroad.  More 
intensified  efforts  are  planned  for  1963. 

Governmental  expenditures  abroad 

Tighter  scrutiny  and  control  of  foreign  expenditm-es  under  all 
Government  programs  have  been  undertaken  and  will  be  continued. 
During  the  past  year  we  have  had  substantial  further  success  in 
reducing  the  net  impact  of  the  Government's  own  transactions  on 
the  balance  of  payments.  In  particular,  our  net  foreign  expendi- 
tures for  defense  have  been  reduced  tlu-ough  savings  which  do  not 
impau'  our  overseas  military  effectiveness  and  tlu-ough  the  coopera- 
tion of  other  countries  in  accelerating  purchases  of  U.S.  military  equip- 
ment which  is  most  economically  manufactured  in  the  United  States. 

We  must  continue  to  press  ahead  with  these  arrangements,  and 
also  with  our  efforts  to  obtain  a  greater  sharing  of  the  responsibilities 
of  defense  and  of  economic  assistance  to  less-developed  countries  by 
other  industrial  nations.  We  will  continue,  while  our  balance-of- 
payments  situation  requu'es  it,  to  emphasize  policies  designed  to 
assure  that  the  bulk  of  our  foreign  aid  is  given  in  the  form  of  U.S. 
goods  and  services  rather  than  dollars. 

International  movements  of  capital 

The  substantial  volume  of  private  foreign  investment  in  recent 
years  has  enabled  American  business  to  take  advantage  of  growing 
opportunities  in  foreign  countries.  Although  more  vigorous  growth 
at  home  should  reduce  the  movement  of  such  funds  abroad  by  increas- 
ing the  attractiveness  of  investment  opportunities  here  to  both 
domestic  and  foreign  investors,  it  remains  in  our  own  interest  and  in 
that  of  the  free  world  that  the  United  States  continue  to  function 
as  a  major  international  source  of  capital. 

But,  we  should  not  be  alone  in  providing  such  capital.  To  correct 
this  situation  we  have  called  the  attention  of  the  European  countries 
to  the  lag  in  the  development  of  their  own  capital  markets  and  their 
facilities  for  foreign  investment  behind  the  spectacular  growth  of  their 
economic  output  and  their  larger  availabilities  of  savings.  During 
the  past  year  several  European  countries  have  begun  to  devote  increas- 
ing attention  to  their  capital  markets  and  their  potentialities  for 
foreign  investment. 

Pending  the  more  effective  development  of  other  forms  of  foreign 
lending,  several  European  countries  utilized  a  part  of  their  accruing 
dollar  holdings  to  make  advance  repayments  of  intergovernmental 
debt  due  to  the  United  States. 

661496—63 3 


18    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Short-term  capital  movements  and  the  international  monetary  system 

During  the  past  year,  two  broad  types  of  additional  steps  to 
strengthen  the  international  monetary  system  have  been  taken. 
Arrangements  were  completed  under  which  major  financial  countries 
agree  to  make  available  to  the  International  Monetary  Fund  up  to 
$6  billion,  if  needed,  to  avoid  a  threatened  impairment  of  the  inter- 
national monetary  system.  The  existence  of  these  facilities  acts  as 
a  strong  deterrent  to  speculation  against  the  dollar  and  other 
currencies. 

The  United  States  has  also  undertaken,  in  close  cooperation  with 
foreign  financial  officials,  further  significant  improvements  in  meeting 
potential  strains  on  world  currencies,  whether  directed  against  the 
dollar  or  others,  and  in  promoting  the  efficiency  of  the  free  world 
payments  system  and  thereby  of  world  trade.  In  1961,  for  the  first 
time  since  the  thirties,  the  Treasury  undertook  operations  in  the 
foreign  exchange  markets.  These  were  reinforced  by  the  Federal 
Reserve's  own  operations,  inaugurated  in  1962,  as  well  as  its  reciprocal 
currency  agreements  with  the  monetary  authorities  of  other  industrial- 
ized countries. 

The  Treasury  has  also  undertaken  direct  borrowing  arrangements 
at  short-  and  medium-term  from  official  entities  in  other  countries 
which  are  in  a  strong  situation.  All  of  these  operations  and  arrange- 
ments have  been  tested.  Their  effectiveness  in  meeting  potential 
strains  on  currencies  was  demonstrated  at  the  time  of  the  stock  market 
disturbances  in  the  spring  of  1962,  during  the  Canadian  exchange 
crisis,  and  again  during  the  Cuban  showdown.  The  borrowing  and 
exchange  operations  have  enabled  the  United  States  to  provide  a 
further  bulwark  for  the  dollar  and  to  reduce  the  outflow  of  gold, 
while  we  progress  in  om'  program  of  reducing  and  eliminating  the 
deficit  in  the  U.S.  balance  of  pajmients.  They  are  not  intended  as, 
nor  can  tliey  be,  any  substitute  for  the  efforts  we  are  making  to  get 
our  balance  of  payments  in  equilibrium,  an  objective  which  we  continue 
to  pursue  with  vigor  and  determination. 


Douglas  Dillon 
Secretary  of  the  Treasury. 

To  THE  President  of  the  Senate. 

To  THE  Speaker  of  the  House  of  Representatives. 


REVIEW   OF   FISCAL   OPERATIONS 


Summary  of  Financial  Operations 


The  administrative  budget  deficit  for  fiscal  1962  was  $6.4  billion 
as  compared  with  $3.9  billion  in  1961.  Net  administrative  budget 
receipts  increased  to  $81.4  billion,  $3.7  billion  greater  than  in  1961, 
but  less  than  estimated  at  the  midyear  point,  because  of  a  slower 
rate  of  recovery  from  the  1960-61  recession  than  was  anticipated. 
Net  administrative  budget  expenditures  in  1962  totaled  $87.8  billion 
as  compared  with  $81.5  billion  in  1961.  The  major  part  of  the  rise 
of  $6.3  billion  was  the  result  of  increased  outlays  for  national  defense. 


Chart  2. 


The  Administrative  Budget 


$Bil. 


Expenditures s.  ^'^^.^ 


87.8_ 

Deficit      A   \ 
\  / 

81  5  .••■■% 


6.4 

i 


Net  trust  receipts  in  fiscal  1962  totaled  $24.3  billion  and  net 
expenditures  amounted  to  $24.1  billion,  an  excess  of  receipts  of 
$0.2  billion. 

During  1962,  on  the  basis  of  receipts  from  and  payments  to  the 
public  (cash  income  and  outgo)  net  payments  to  the  public  exceeded 
receipts  from  the  public  by  $5.8  billion,  exclusive  of  borrowing 
transactions. 

On  June  30,  1962,  the  total  public  debt  outstanding  amounted  to 

$298.2  billion,  an  increase  of  $9.2  billion  from  the  preceding  fiscal 

yearend.     The  Government's  fiscal  operations  in  1961-62  and  their 

effect  on  the  public  debt  are  summarized  as  follows: 

21 


22 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Administrative  budget  receipts  and  expenditures: 

Net  receipts  (— ) 

Net  expenditures -.- 


Budget  deficit. 


Trust  fund  receipts  and  expenditures: 

Net  receipts  (— ) 

Net  expenditures 


Excess  of  receipts  (— ). 


Net  investments  of  Government  agencies  in  public  debt  securities 

Net  sales  (— ),  or  redemptions  ofobligations  of  Goveniment  agencies  in  market- 
Increase  (— )  in  checks  outstanding,  deposits  in  transit  (net),  etc 

Change  in  cash  balances,  increase,  or  decrease  (— ): 

Treasurer's  account. ._ _ 

Held  outside  Treasury 


Increase  in  public  debt. 


Administrative  Budget  Receipts  and  Expenditures 
ADMINISTRATIVE  BUDGET  RECEIPTS  IN  1962 

Net  administrative  budget  receipts  in  fiscal  1962  rose  $3.7  billion 
above  receipts  of  the  previous  year  to  $81.4  billion,  an  alltime  high. 
The  economy  moved  ahead  strongly  in  the  first  half  of  the  fiscal  year 
1962  and  although  the  rate  of  expansion  slowed  in  the  second  half,  the 
levels  of  income  and  business  activity  were,  for  the  year  as  a  whole, 
substantially  above  1961.  As  a  consequence,  total  tax  revenues 
increased  $4.6  billion  although  collection  lags  for  some  taxes  were 
a  luniting  factor;  a  decline  of  $0.9  billion  in  miscellaneous  receipts, 
primarily  a  nontax  source,  reduced  the  overall  rise  to  $3.7  billion. 

A  comparison  of  net  administrative  budget  receipts  after  refunds 
and  transfers  by  major  sources  for  the  fiscal  years  1961  and  1962  is 
shown  below.  Additional  data  for  1962  on  a  gross  basis  are  presented 
in  table  16. 


1901 

1962 

Increase,  or  de- 
crease (— ) 

Source 

Amount 

Percent 

In  millions  of  dollars 

Internal  revenue: 

Individual  income  taxes .  .          ..... 

41,338 

20, 954 

9,063 

1,896 

45,  571 

20,  5%i 

9,585 

2.016 

4,233 

-432 

523 

120 

10.2 

Corporation  income  taxes 

-2.1 

Excise  taxes. 

5.8 

Estate  and  gift  taxes . 

6.4 

Total  internal  revenue 

73,251 

982 
4,080 

77, 696 
1, 142 
3, 204 

4,445 

160 

-876 

6.1 

Customs. 

16.2 

Miscellaneous  receipts 

-21.5 

Subtotal  receipts 

78,313 

654 

82,042 
633 

3,728 
-21 

4.8 

Deduct: 

Interest  and  other  income  received  by  the  Treasury  from 
Goveriuneiit  agencies  included  above  and  also  included 
in  budget  expenditures.    ..  .  ..    

-3.3 

Budget  receipts 

77,659 

81,409 

3,750 

4.8 

REVIEW    OF    FISCAL    OPERATIONS 


23 


Individual  income  taxes. — In  the  fiscal  year  1962,  receipts  from  in- 
dividual income  taxes  amounted  to  $45.6  billion,  56  percent  of  budget 
revenues.  The  gain  over  1961  in  receipts  from  this  tax  source  was 
$4.2  billion,  $0.5  billion  greater  than  the  rise  in  total  revenues  from 
all  sources.  Receipts  from  both  taxes  withheld  and  taxes  not  with- 
held increased  as  incomes  rose  generally  in  fiscal  1962. 

Corporation  income  taxes. — Although  receipts  from  corporation  in- 
come taxes  are  dependent  prmiarily  on  the  amount  of  corporate  profits 
for  the  calendar  year  which  ends  in  the  fiscal  year,  they  are  also 
affected  by  profits  of  the  preceding  calendar  year.  Thus,  tax  receipts 
in  the  fiscal  year  1962  reflected,  for  the  most  part,  calendar  1961 
profits  and  to  a  lesser  extent  profits  for  1960.  (Similarly,  fiscal  year 
1961  receipts  were  based  mainly  on  1960  profits  and  partly  on  1959 
profits.) 

Profits  in  the  calendar  years  1960  and  1961  were  virtually  equal, 
but  receipts  in  fiscal  1962  were  affected  adversely  by  the  drop  in 
profits  from  1959  to  1960.  Primarily  because  of  this,  receipts  in  the 
fiscal  year  1962  were  $0.4  billion  less  than  in  1961. 

Excise  taxes.- — Receipts  from  this  source  are  shown  in  the  following 
table. 


1961 

1962 

Increase 

Source 

Amount 

Percent 

In  m 

illions  of  d 

Dllars 

Alcohol  taxes -_ 

3,213 

1,991 

149 

4,897 

398 

1,498 

-81 

3,341 
2,026 

159 
5,120 

416 
1,552 

137 

128 
35 
10 

224 
18 
55 

218 

4.0 

Tobacco  taxes 

1.7 

Taxes  on  documents,  other  Instruments,  and  playing  cards 

Manufacturers  excise  taxes 

Retailers  excise  taxes    . ._ .-      .. 

6.7 
4.6 
4.6 

Miscellaneous  excise  taxes 

Undistributed  depositary  receipts  and  unapplied  collections — 

3.7 

Gross  excise  taxes _ 

Deduct: 

Refunds  of  receipts 

12,064 

204 

2,798 

12,752 

218 
2,949 

688 

14 
151 

5.7 
6.9 

Transfers  to  highway  trust  fund 

5.4 

Net  excise  taxes 

9,063 

9,585 

523 

5.8 

'  Percentage  comparison  inappropriate. 


Net  excise  tax  receipts,  after  deduction  of  refunds  and  transfers  to 
the  highway  trust  fund,  rose  $523  million  in  1962  to  $9,585  million. 
Increases  were  spread  generally  through  all  tax  sources  reflecting  the 
general  rise  in  incomes  in  fiscal  1962. 

Estate  and  gift  taxes. — Stock  market  values  rose  sharply  during  the 
fiscal  year  1962.  The  rise  was  not  reflected,  however,  in  fiscal  1962  col- 
lections of  estate  taxes  since  these  taxes  are  not  payable  until  fifteen 
months  after  death  and  the  valuation  of  the  estate  is  the  lesser  of 
the  value  at  time  of  death  or  one  year  later. 


24    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  increase  in  calendar  year  1961  security  values  was  evidenced  in 
gift  tax  collections,  which  rose  more  than  estate  taxes  although  total 
collections  were  much  less.  The  two  taxes  combined  to  lift  receipts 
by  $120  million. 

Customs. — Customs  duty  collections  increased  $160  million,  or 
16.2  percent,  in  1962  as  the  general  advance  in  business  activity 
brought  a  substantial  increase  in  taxable  imports. 

Miscellaneous  receipts. — Miscellaneous  receipts  are  a  nontax  revenue 
source.  Receipts  in  the  fiscal  year  1961  had  been  enlarged  by  sub- 
stantial advance  repayments  of  foreign  loans,  but  there  was  a  sub- 
stantial decrease  in  such  prepayments  in  fiscal  1962.  Total  miscel- 
laneous receipts  in  1962  declined  $0.  9  billion. 

ESTIMATES  OF  ADMINISTRATIVE  BUDGET  RECEIPTS  IN  FISCAL 

1963  AND  1964 

The  Secretary  of  the  Treasury  is  required  each  year  to  prepare  and 
submit  in  his  annual  report  to  Congress  estimates  of  the  public  revenue 
for  the  current  fiscal  year  and  for  the  fiscal  year  next  ensuing  (act  of 
February  26,  1907  (5U.S.C.  265)). 

The  estimates  of  receipts  from  taxes  and  customs  for  the  current 
and  ensuing  fiscal  years  are  prepared  by  the  Treasury  Department. 
In  general,  the  estimates  of  miscellaneous  receipts  are  prepared  by 
the  agencies  depositing  these  receipts  m  the  Treasury. 

The  estmiates  for  1964  assume  that  the  revision  of  income  tax  rates 
and  the  structural  changes  recommended  by  the  President  in  his  tax 
message  of  January  24,  1963,  will  be  enacted.  It  is  further  assumed 
that,  as  recommended  by  the  President,  the  present  excise  tax  rates  on 
alcohol,  tobacco,  passenger  automobiles  and  parts,  and  general  tele- 
phone service  will  be  extended  until  June  30,  1964.  It  is  also  assumed 
with  respect  to  transportation  taxes  that  the  following  proposals 
will  be  enacted:  Extend  the  present  tax  on  transportation  of  persons 
to  December  31,  1963,  to  be  substituted  thereafter  by  a  permanent 
user  charge  of  5  percent  on  transportation  of  persons  by  air;  tax 
transportation  of  freight  by  au*  at  5  percent;  tax  jet  fuel  at  two  cents 
per  gallon  for  airlines  and  three  cents  for  general  aviation;  raise  the 
present  two  cents  per  gallon  tax  on  aviation  gasoline  to  three  cents  for 
general  a\'iation  and  credit  all  receipts  to  the  general  fund  instead  of 
transferring  them  to  the  highwaj^  trust  fund;  tax  fuel  used  on  inland 
waterways  at  two  cents  per  gallon;  and  credit  the  tax  on  gasoline 
used  in  motorboats  at  the  rate  of  four  cents  per  gallon  to  the  general 
fund.  All  of  the  transportation  proposals  are  assumed  to  be  effective 
as  of  January  1,  1964. 

The  estimates  of  revenue  are  based  on  the  expectation  that  economic 
activity  will  continue  to  rise  in  1963  but  that  the  year-to-year  gain 


REVIEW    OF   FISCAL    OPERATIONS 


25 


will  be  less  than  that  realized  in  1962.  The  gross  national  product 
is  expected  to  total  $578  billion  in  the  calendar  year  1963,  an  increase 
of  $24  billion  over  1962.  The  1962  increase  was  $35  billion.  Personal 
income  is  estimated  to  total  $459  billion  in  1963,  an  increase  of  $19 
billion  as  compared  with  the  1962  rise  of  $24  billion.  The  estimated 
1963  increase  in  corporate  profits  of  $2.1  billion  to  $53.0  billion  falls 
short  of  the  1962  rise  of  $5.3  billion. 

Estimated  revenues  in  the  fiscal  years  1963  and  1964  reflect  the 
expected  increases  in  incomes  and  business  activity.  Receipts  are 
estimated  to  increase  from  $81.4  billion  in  fiscal  1962  to  $85.5  billion 
in  1963  and  further  to  $86.9  billion  in  1964.  The  smaller  rise  in  1964 
is  due  principally  to  the  recommended  reductions  in  income  taxes. 

Actual  administrative  budget  receipts  for  fiscal  1962  and  estimated 
receipts  for  1963  and  1964  are  compared  by  major  sources  in  the 
accompanying  table.  The  amount  shown  for  each  revenue  source 
is  the  net  amount  after  deduction  of  refunds  and  transfers  to  trust 
funds. 


Source 


Individual  income  taxes 

Corporation  income  taxes 

Excise  taxes 

Estate  and  gift  taxes 

Customs... 

Miscellaneous  receipts 

Subtotal  receipts 

Deduct: 

Interest  and  other  income  received  by  Treasury  from  Gov- 
ernment agencies  included,  above  and  also  included  in 
budget  expenditures 

Budget  receipts 


1962 
actual 


1963 
estimate 


1964 
estimate 


Increase, 
or  de- 
crease 
(-),  1964 
over  1963 


In  millions  of  dollars 


45,  571 
20,  523 
9,585 
2,016 
1,142 
3,204 


82, 042 


633 


81, 409 


47, 300 
21,200 
9,900 
2,060 
1,278 
4,408 


86, 146 


646 


85, 500 


45, 800 

23, 800 

10, 430 

2,125 

1,390 

4,034 


87, 579 


679 


86, 900 


-1,500 

2,600 

530 

65 

112 

-374 


1,433 


33 


1,400 


Individual  income  taxes. — Receipts  from  the  individual  income  tax 
are  estimated  to  increase  from  $45,571  million  in  1962  to  $47,300 
million  in  1963  as  a  result  of  the  expected  increase  in  personal  incomes. 
Because  of  the  proposed  tax  reduction  a  decline  to  $45,800  million  is 
estimated  for  1964.  Receipts  in  1964  nevertheless  will  remain  higher 
than  in  1962. 

Corporation  income  taxes. — Corporation  income  tax  receipts  are 
estimated  to  amount  to  $21,200  million  in  fiscal  1963,  a  rise  of  $677 
million  over  1962.  This  is  substantially  less  than  the  increase  associ- 
ated with  the  rise  in  corporate  profits  of  $5.3  billion  in  the  calendar 
year  1962.  The  estimated  profits  level  for  1962  is  before  adjustment 
for  the  larger  depreciation  deductions  allowed  for  the  fu-st  time  in 


26    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

1962  since  the  national  income  accounts  have  not  yet  been  revised 
for  the  added  deduction.  The  eftect  on  receipts  of  the  greater 
depreciation  deduction  and  the  investment  credit  under  the  Revenue 
Act  of  1962  is  responsible  for  the  small  increase  in  receipts  relative  to 
the  substantial  increase  in  profits. 

For  1964  an  increase  of  $2,600  million  to  $23,800  milhon  is  esti- 
mated. Receipts  in  1964  will  reflect  the  increase  in  profits  estunated 
for  the  calendar  year  1963  and  the  effect  of  the  first  step  in  placing 
corporation  payments  on  a  more  current  basis,  recommended  as  part 
of  the  President's  tax  program.  As  a  partial  offset,  receipts  will  be 
reduced  by  the  inversion  of  the  normal  and  surtax  rates  which  is 
also  part  of  the  program. 

Excise  taxes. — Net  excise  tax  revenues,  excluding  transfers  to  the 
highway  trust  fund,  are  estimated  to  increase  from  $9,585  million  in 

1962  to  $9,900  million  in  1963,  and  to  $10,430  million  in  1964.  The 
expected  increases  extend  across  the  entire  range  of  excises.  Net 
revenues  are  reduced  in  1963  and  1964  by  the  allocation  of  100  per- 
cent of  revenues  from  the  tax  on  trucks  to  the  highway  trust  fund, 
as  compared  with  the  previous  50  percent  so  allocated.  The  repeal 
of  the  tax  on  transportation  of  persons  other  than  by  air  and  the 
reduction  of  the  tax  on  air  transportation  of  persons  from  10  percent 
to  5  percent,  effective  November  15,  1962,  will  also  reduce  receipts  in 

1963  and  1964.  The  changes  in  transportation  taxes  proposed  by 
the  President  will  increase  receipts  somewhat  in  1964. 

Estate  and  gift  taxes. — Receipts  from  the  estate  and  gift  taxes  are 
estimated  to  rise  moderately  in  1963  and  1964.  The  optional  valua- 
tion of  estates  at  time  of  death  or  one  year  later  tends  to  dampen  the 
effect  of  variations  in  security  prices. 

Customs. — Customs  revenues  are  estimated  to  increase  from  $1,142 
million  in  1962  to  $1,278  million  in  1963  and  to  $1,390  million  in  1964 
as  a  result  of  the  growtli  of  economic  activity. 

Miscellaneous  budget  receipis. — Miscellaneous  receipts  are  expected 
to  increase  sharpl}^  in  1963  from  $2,572  million  to  $3,762  million, 
because  of  substantial  increases  in  rentals  from  Outer  Continental 
Shelf  lands  and  in  prepayment  of  foreign  loans.  The  latter  are  non- 
recurring and  consequently  a  decline  in  miscellaneous  receipts  to 
$3,355  million  is  estimated  for  1964. 

ADMINISTRATIVE  BUDGET  EXPENDITURES  IN   1962  AND  ESTIMATES 

FOR  1963  AND   1964 

The  increase  of  $6.3  bilUon  in  administrative  budget  expenditures 
for  fiscal  1962  over  1961  ))rouglit  total  budget  expenditures  for  the 
year  to  $87.8  billion.  Approximately  70  percent  of  this  increase,  or 
$4.5  billion,  is  attributable  to  programs  of  national  defense,  inter- 


REVIEW    OF   FISCAL    OPERATIONS 


27 


national  affairs  and  finance,  and  space  research  and  technology. 
These  three  programs  accounted  for  over  three-fifths  of  the  total 
budget  expenditures  in  1962.  Expenditures  by  major  functions  for 
the  fiscal  years  1954-62  are  shown  in  table  12,  and  expenditures  for 
1962,  with  corresponding  estimates  for  1963  and  1964,  detailed  by 
department  or  agency,  are  contained  in  table  16.  A  distribution  by 
certain  major  functions,  of  actual  budget  expenditures  for  the  five- 
year  period  1958-62,  together  with  the  estimated  expenditures  for 
the  fiscal  years  1963  and  1964,  are  summarized  from  The  Budget  of 
the  United  States  Government  for  the  Fiscal  Year  Ending  June  30,  1964, 
as  follows: 


Program 


Actual 


1958 


1959 


1960 


1961 


1962 


Estimated 


1963         1964 


In  billions  of  dollars 


National  defense 

International  affairs  and  finance 

Space  research  and  technology 

Interest  payments 

Veterans'  benefits  and  services 

Agriculture  and  agricultural  resources 

Health,  labor,  and  welfare 

Commerce  and  transportation 

Other  I 

Deduct  interfund  transactions 

Total 


44.2 
2.2 

.1 
7.7 
5.2 
4.4 
3.1 
1.6 
3.5 

.6 


71.4 


46.5 

45.7 

47.5 

51.1 

53.0 

3.8 

1.8 

2.5 

2.8 

2.9 

.1 

.4 

.  / 

1.3 

2.4 

7.7 

9.3 

9.0 

9.2 

9.8 

5.3 

5.3 

5.4 

5.4 

5.5 

6.6 

4.9 

5.2 

5.9 

6.7 

3.9 

3.7 

4.2 

4.5 

4.9 

2.0 

2.0 

2.6 

2.8 

3.3 

4.9 

4.2 

5.0 

5.4 

6.4 

.4 

.7 

.7 

.6 

.6 

80.3 

76.5 

81.5 

87.8 

94.3 

55.4 
2.7 

4.2 
10.1 
5.5 
5 
5 
3 
6 


S.8 


'  Includes  programs  relating  to  natural  resources;  housing  and  commimity  development;  education;  and 
general  government. 


Expenditures  for  national  defense  in  1962  exceeded  those  in  1961 
by  $3.6  billion.  Further  increases  of  $1.9  billion  and  $2.4  billion,  re- 
spectively, are  estimated  for  the  fiscal  years  1963  and  1964.  These 
estimates  include  outlays  for  military  assistance  to  other  nations, 
atomic  energy,  and  other  defense-related  activities. 

International  affairs  and  finance  expenditures,  which  include  those 
for  economic  and  financial  programs,  foreign  information  and  exchange 
programs,  and  the  conduct  of  foreign  affairs,  increased  in  1962 
by  $0.3  billion,  to  a  total  of  $2.8  billion.  Estimated  expenditures  in 
fiscal  1963  and  1964  are  expected  to  remain  at  approximately  the 
1962  amount,  with  the  increase  in  expenditm'es  for  the  economic  as- 
sistance programs  of  the  Agency  for  International  Development 
(AID)  being  more  than  offset  by  the  decrease  of  net  expenditures 
by  the  Export-Import  Bank  and  the  Department  of  State.  Expendi- 
tures for  foreign  information  and  exchange  programs  and  the  conduct 
of  foreign  affairs  are  estimated  to  be  slightly  higher  in  1963  and  1964. 

Expenditures  for  space  programs  totaled  $1.3  billion  in  fiscal  1962. 
Budget  estimates  for  1963  and  1964  call  for  respective  outlays  of 


28    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

$2.4  billion  and  $4.2  billion.  They  cover  the  costs  of  developing 
manned  space  vehicles,  space  probes  for  the  accumulation  of  scien- 
tific data,  developing  meteorological  and  communication  satellites, 
and  furthering  advancement  in  basic  research  and  technological 
development. 

The  increase  of  $0.2  billion  in  interest  payments  in  1962  over  1961, 
predominantly  interest  on  the  public  debt,  resulted  primarily  from  a 
higher  average  level  of  outstanding  interest-bearing  debt. 

Veterans'  benefits  and  services  accounted  for  $5.4  biUion  of  expend- 
itures in  1962  and  in  1961.  Estimates  for  1963  and  1964  include  an 
increase  of  approximately  $100  million,  or  a  total  expenditure  of 
$5.5  billion  for  each  of  these  years. 

Programs  relating  to  agi'icultm*e  and  agricultural  resources  in- 
creased in  fiscal  1962  over  1961  by  $0.7  billion,  to  $5.9  billion.  Budget 
estimates  for  1963  call  for  an  additional  increase  to  $6.7  billion,  but 
with  a  drop  to  $5.6  biUion  in  1964,  based  on  anticipated  substantial 
sales  by  the  Commodity  Credit  Corporation  of  cotton  expected  to  be 
placed  under  price  support  in  fiscal  1963. 

Health,  labor,  and  welfare  programs  resulted  in  expenditures  in 
fiscal  1962  of  $4.5  billion,  an  increase  of  $0.3  billion  over  those  in 
1961.  Estimates  for  1963  and  1964  include  respective  increases  of 
$0.4  billion  and  $0.7  biUion,  primarily  attributable  to  the  increases 
in  grants  to  States  for  public  assistance  in  1963  and  the  first-year 
effect  on  fiscal  1964  budget  expenditures  of  certain  proposed  legis- 
lation. 

The  increase  in  expenditures  for  commerce  and  transportation  pro- 
grams during  fiscal  1962  over  1961  amounted  to  $0.2  billion.  The 
estimated  expenditures  for  1963  and  1964  of  $3.3  billion  and  $3.4 
billion,  constitute  respective  increases  of  $0.5  biUion  and  $0.1  bUlion. 
The  1962  increase  over  1961  was  primarily  for  programs  relating  to 
the  advancement  of  business.  In  1963  and  1964  the  increases  are 
principally  due  to  programs  in  area  redevelopment. 

Trust  Receipts  and  Expenditures 
TRUST  RECEIPTS  IN  1962  AND  ESTIMATES  FOR  1963  AND  1964 

During  fiscal  1962,  net  trust  receipts  amounted  to  $24.3  biUion,  an 
increase  of  $0.7  biUion  over  1961.  Total  trust  receipts  in  fiscal  1963 
are  estimated  at  $26.9  biUion  and  $29.5  biUion  in  1964.  These 
estimates  give  consideration  to  the  effect  on  trust  receipts  of  certain 
legislative  proposals. 

Total  trust  receipts  by  certain  of  the  major  sources  for  the  fiscal 
years  1958-62,  with  estimates  for  1963  and  1964,  are  summarized  from 


REVIEW    OF    FISCAL    OPERATIONS 


29 


The  Budget  of  the  United  States  Government  for  the  Fiscal  Year  Ending 
June  30,  1964,  as  follows: 


Source 

Actual 

Estimated 

1958 

1959 

1900 

1901 

1962 

1963 

1964 

In  billions  of  dollars 

Employment  taxes    .,    .  .      .  ..    

8.2 
1.5 
2.0 
1.4 
3.1 
(•) 

8.4 
1.7 
2.1 
1.3 
3.4 
.1 

10.7 
2.2 
2.5 
1.3 
4.5 
.9 

12.4 
2.4 
2.8 
1.4 
5.0 
.5 

12.6 
2.7 
2.9 
1.4 
5.2 
.5 

14.8 
2.8 
3.2 
1.5 
5.1 
.5 

16.6 

Deposits  by  States,  unemployment  insurance. 
Excise  taxes ---  

2.8 
3.3 

Interest  on  trust  Investments 

1.6 

Other  trust  receipts  '. 

5.7 

Derliint.  interfiind  transactions 

.5 

Total  tnist  fiinrl  rftp/>ipt.s 

16.2 

16.8 

20.3 

23.6 

24.3 

26.9 

29.5 

*Less  than  $50  mUlion. 

•  Includes  Federal  employee  and  agency  payments  to  retirement  funds,  veterans'  life  insurance  premiums, 
and  other  miscellaneous  trust  receipts. 


Receipts  from  employment  taxes  increased  during  fiscal  1962  from 
1961  by  $155  million.  Most  of  this  was  due  to  the  rise  in  the  effective 
rate  of  tax  under  the  Federal  Unemployment  Tax  Act  (26  USC  3301) 
from  3.0  percent  to  3.1  percent.  Receipts  from  the  major  source  of 
employment  tax  revenue,  the  Federal  Insurance  Contributions  Act, 
gained  only  moderately  during  the  year  despite  significantly  larger 
payments  of  salaries  and  wages.  Net  receipts  from  employment 
taxes  in  any  given  fiscal  year  will  not  necessarily  reflect  changes  in 
the  level  of  wages  and  salaries  in  that  year,  because  of  adjustments 
representing  corrections  to  prior  year  estimates  of  taxes.  It  is 
estimated  that  employment  tax  receipts  in  the  fiscal  years  1963  and 
1964  ^vill  increase  from  1962,  by  $2.2  billion  and  $1.8  billion,  respec- 
tively. These  rather  substantial  amounts  are  estimated  primarily 
on  the  basis  of  the  rise  in  the  combined  social  security  tax  rate,  from 
Qji  percent  to  7%  percent,  effective  January  1,  1963. 

The  deposits  by  States  of  unemployment  insurance  taxes  were  $331 
million  greater  than  in  1961.  Receipts  from  this  source  in  fiscal 
years  1963  and  1964  are  expected  to  remain  relatively  unchanged. 

Excise  tax  revenues  transferred  to  trust  funds  are  represented  by 
the  net  transfers  to  the  highway  trust  fund.  In  1962,  these  receipts 
increased  $151  million  over  1961,  reflecting  the  combined  effect  of  a 
greater  volume  of  purchases  of  taxed  commodities  and  the  rise  in 
certain  excise  taxes  provided  by  the  Federal-Aid  Highway  Act  of 
1961,  which  became  effective  July  1,  1961.  The  anticipated  higher 
level  of  personal  disposable  income  in  1963  and  1964  is  expected  to 
result  in  an  increase  in  receipts  from  all  tax  sources.  In  addition,  in 
1963  and  1964,  excise  tax  receipts  to  be  transferred  to  the  highway 


30 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


trust  fund  will  be  augmented  by  the  transfer  of  100  percent  of  the 
revenues  from  the  10  percent  excise  tax  on  trucks  and  buses,  whereas 
previously  only  50  percent  of  these  receipts  were  transferred. 

TRUST   EXPENDITURES  IN   1962  AND  ESTIMATES  FOR  1963  AND  1964 

Net  trust  fund  expenditures  during  fiscal  1962  amounted  to  $24.1 
billion,  an  increase  of  $1.1  billion  over  1961.  Of  the  1962  total, 
85  percent  were  for  health,  labor,  and  welfare  programs;  more  than 
one-half  of  the  total,  or  $13.3  billion,  were  from  the  Federal  old-age 
and  survivors  insurance  trust  fund,  principally  as  benefit  pajrments. 

Net  trust  expenditures  in  the  fiscal  years  1963  and  1964  are 
estunated  at  $27.1  billion  and  $28.0  billion,  respectively.  A  distribu- 
tion of  total  trust  expenditures  by  certain  major  functions  for  the 
five-year  period,  1958-62,  with  estimates  for  fiscal  years  1963  and 
1964,  are  summarized  from  the  1964  Federal  budget  as  follows: 


Program 

Actual 

Estimated 

1958 

1959 

1960 

1961 

1962 

1963 

1964 

In  billions  of  dollars 

Health,  labor,  and  welfare -.. 

12.8 

1.4 

.  7 

.4 

.3 

-.3 

(*) 

14.3 

2.5 
.7 
.6 
.2 

1.2 
.1 

16.4 
2.8 
.7 
.5 
.3 
1.4 
.9 

19.2 
2.5 

.8 

.4 

o 

'.2 
.5 

20.4 
2.7 
.7 
.4 
.4 
1.1 
.5 

21.8 
2.9 
.9 
.4 
.4 
1.4 
.5 

22.8 

Commerce  and  transportation 

3.2 

Veterans'  benefits  and  services  

.6 

Agriculture  and  agricultural  resources 

National  defense 

.4 
.6 

Other  1 -- 

1.3 

Deduct  interfund  transactions 

.5 

Subtotal 

15.3 

.6 

19.6 
-1.3 

21.2 

-.5 

22.8 
.2 

25.2 
-1.1 

27.3 
-.2 

28.4 

Adjustment  to  monthly  Treasury  statement  2_ 

-.4 

Total  trust  expenditures. 

15.9 

18.3 

20.7 

23.0 

24.1 

27.1 

28.0 

•Less  than  $50  million. 

'  Includes  programs  relating  to  international  affairs  and  finance,  housing  and  community  development, 
education,  natural  resources,  and  general  government;  also  net  transactions  in  deposit  fund  accounts. 

2  Represents  net  investments  in  U.S.  securities  and  net  sales  and  redemptions  of  obligations  in  the  market 
of  Government-sponsored  enterprises  which  have  been  included  as  expenditure  transactions  in  the  related 
trust  fund  expenditure  functions  above. 

It  is  estimated  that  trust  expenditm*es  in  fiscal  1963  and  1964  for 
health,  labor,  and  welfare  programs  will  increase  by  $1.4  billion  and 
$1.0  billion,  respectively,  which  are  largely  a  reflection  of  built-in 
growth  within  the  trust  funds  established  under  the  social  security 
system. 

Trust  expenditures  for  commerce  and  transportation  programs  are 
principally  represented  by  those  of  the  highway  trust  fund.  The 
estimated  increases  of  trust  expenditures  in  this  category  dm'ing  fiscal 
1963  and  1964  are  $0.2  biUion  and  $0.4  billion,  respectively. 


REVIEW    OF    FISCAL    OPERATIONS  31 

Expenditures  from  trust  accounts  in  fiscal  1962  for  veterans'  bene- 
fits and  services  totaled  $0.7  billion,  mainly  for  death  and  disability- 
claims  and  insurance  dividend  payments.  In  fiscal  1963  expenditures 
will  rise  because  the  regular  dividend  payment  scheduled  for  fiscal 
1964  has  been  accelerated  into  fiscal  1963. 

Trust  fund  expenditures  in  1962  for  purposes  of  agriculture  and 
agricultural  resources  were  chiefly  confined  to  expenditures  by  Gov- 
ernment-sponsored farm  credit  institutions.  The  level  of  trust 
expenditiu-es  for  these  programs  is  expected  to  be  held  at  approxi- 
mately $400  million  through  1964. 

Trust  fund  expenditures  for  national  defense  are  principally  for 
foreign  assistance  advances.  It  is  estimated  that  in  the  fiscal  years 
1963  and  1964  these  advances  will  increase  by  approximately  $100 
million  each  year. 

Table  13  shows  a  distribution  by  major  functions  of  aU  trust  fund 
expenditures  for  the  years  1954-62.  Trust  account  and  other  trans- 
actions by  major  classification  for  the  period  1952-62  are  shown  in 
table  15;  similar  information  for  the  years  1938-51,  at  a  different  level 
of  detail,  is  contained  in  table  14, 


Receipts  from  and  Payments  to  the  Public 

The  Government's  financial  transactions  have  been  discussed  in 
this  report  principally  in  terms  of  administrative  budget  receipts 
and  expenditures  and  trust  fund  receipts  and  expenditures.  To 
study  the  impact  on  the  private  economy  of  Government  financial 
transactions,  a  useful  measure  which  combines  the  effects  of  budget 
and  trust  account  transactions  is  known  variously  as  "receipts  from 
and  payments  to  the  public"  or  "cash  income  and  outgo."  Basically, 
receipts  from  and  payments  to  the  public  are  derived  by  consolidating 
administrative  budget  receipts  and  expenditures  and  trust  fund 
receipts  and  expenditures,  excluding  transactions  involving  no  ex- 
change of  cash  with  the  public.  Excluded  are  payments  between 
budget  and  trust  accounts,  such  as  interest  payments  to  trust  funds 
on  their  investments  in  U.S.  securities,  advances  to  the  unemployment 
trust  fund,  and  payments  to  Indian  tribal  funds.  In  each  of  these 
instances  the  amounts  involved  are  considered  at  once  trust  fund 
receipts  and  administrative  budget  expenditures.  Examples  of  ad- 
ministrative budget  receipts  which  are  also  trust  fund  expenditures 
are  franchise  taxes  from  Government-sponsored  enterprises,  reim- 
bursements for  expenses  and  services,  and  repayments  of  advances. 

Excluded  also  is  the  accrued  interest  on  savings  bonds  which  the 
administrative  budget  includes  as  an  interest  expenditure  though  no 
transfer  of  cash  occurs  until  the  bond  is  redeemed.     In  those  cases 


32 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


where  the  Government  has  issued  bonds  or  notes  in  Heu  of  checks, 
the  administrative  budget  includes  these  issuances  as  expenditures 
rather  than  waiting  until  there  is  a  cash  outlay  when  the  bonds  or 
notes  are  redeemed.  An  example  of  this  is  the  special  notes  issued 
by  the  Government  to  the  International  Monetary  Fund  as  partial 
payment  of  the  U.S.  subscription  to  the  Fund. 

In  most  cases,  both  the  administrative  budget  and  trust  fund  ex- 
penditures are  recorded  at  the  time  checks  are  issued.  In  deriving 
payments  to  the  public,  an  adjustment  is  made  to  approximate  a 
checks-paid  basis  rather  than  a  checks-issued  basis 

In  short,  the  Government's  receipts  from  and  payments  to  the 
public  are  obtained  by  adding  the  administrative  budget  receipts  and 
expenditures  to  the  trust  fund  receipts  and  expenditures  with  an 
appropriate  deduction  for  net  intragovernmental  transactions,  and  an 
adjustment  to  expenditures  for  debt  issuances  in  lieu  of  checks,  the 
change  in  checks  outstanding,  and  certain  other  transactions  involving 
no  exchange  of  cash  with  the  public. 

The  following  summary  shows  total  receipts  from  and  pajTnents  to 
the  public  for  the  fiscal  years  1958  through  1962,  with  estimates  for 
1963  and  1964.  For  more  detailed  information  relating  to  the 
Government's  total  cash  income  and  outgo,  see  table  25. 


Receipts  from  and  payments  to  the  public 

Actual 

Estimated 

1958 

1959 

1960 

1961 

1962 

1963 

1964 

In  billions  of  dollars 

Receipts  from  the  public: 

Administrative  budget  receipts 

68.6 

16.2 

3.0 

67.9 

16.8 

3.2 

77.7 

20.3 

3.2 

77.7 

23.6 

4.0 

81.4 

24.3 

3.8 

85.5 

26.9 

3.9 

86.9 

Trust  fimd  receipts     ..  - 

29.5 

Deduct:  Intragovernmental  transactions- 

4.2 

Total  receipts  from  public 

81.9 

81.5 

95.1 

97.2 

101.9 

108.4 

112.2 

Payments  to  the  public: 

Administrative  budget  expenditures 

Trust  fund  expenditures 

71.4 
16.1 

4.2 

80.3 
18.5 

4.0 

76.5 
20.9 

3.1 

81.5 
23.0 

5.0 

87.8 
24.1 

4.2 

94.3 
27.1 

4.7 

98.8 
28.0 

Deduct:  Intragovernmental  transactions 
and  other  adjustments  (net) 

4.3 

Total  passmen ts  to  the  public 

83.4 

94.8 

94.3 

99.5 

107.7 

116.7 

122.  5 

Excess  of  receipts,  or  payments  (— ).. 

-1.5 

-13.1 

.8 

-2.3 

-5.8 

-8.3 

-10.3 

Investments  of  Government  Agencies  in  Public  Debt  Securities  (Net) 

Purchases  and  sales  of  public  debt  securities,  together  with  nominal 
amounts  of  securities  of  Government  agencies,  are  included  in  this 
classification,  primarily  at  par,  on  a  net  basis.  These  investments 
usuallj^  are  made  pursuant  to  legislative  requirements,  and  provide 
interest  income  on  funds  not  needed  to  meet  current  expenditures. 


REVIEW    OF    FISCAL    OPERATIONS  33 

Investment  transactions  are  not  reported  in  budget  or  trust  account 
operations  of  the  agencies  since  they  do  not  reflect  program  activi- 
ties. In  fiscal  1962,  the  purchases  for  public  enterprise  funds  and 
trust  funds  exceeded  sales  by  $435  million,  the  equivalent  of  the 
excess  of  such  purchases  over  sales  in  1961.  Also  in  1962,  investment 
transactions  of  certain  deposit  funds  constituting  Government- 
sponsored  enterprises  resulted  in  an  excess  of  pmxhases  totaling  $30 
million,  with  $434  million  as  the  total  excess  in  fiscal  1961. 

Sales  and  Redemptions  of  Obligations  of  Government  Agencies  in 

the  Market  (Net) 

Certain  Federal  agencies  have  authority  to  issue  their  obligations 
in  the  market  as  a  means  of  financing  their  operations,  as  explained 
below  under  Corporation  and  Certain  other  Business-Type  Activities 
of  the  Government.  Reported  at  par  value,  transactions  in  the 
securities  of  these  Government  agencies  dm-ing  fiscal  1962  resulted 
in  a  net  excess  of  sales,  or  issues,  aggregating  $658  million,  as  com- 
pared with  a  net  excess  of  redemptions  of  $733  million  in  1961. 
Transactions  in  obligations  of  Government-sponsored  enterprises 
during  the  year  resulted  in  a  net  excess  of  sales  totaling  $1,122  million; 
in  fiscal  1961,  the  net  excess  of  sales  totaled  $195  million. 

Corporations    and    Certain    Other    Business-type    Activities   of   the 

Government 

The  various  business-type  programs  administered  by  Government 
corporations  and  certain  other  agencies  in  accordance  with  statutory 
authority  are  financed  by  appropriations,  capital  stock  subscriptions, 
borrowings  from  the  public  or  the  U.S.  Treasury,  or  by  utilizing 
revenues  derived  from  then  own  operations.  In  cases  where  authority 
exists  for  agencies  to  borrow  from  the  Treasmy,  the  Secretary  of  the 
Treasury  is  authorized  to  pm'chase  the  securities  of  these  agencies, 
and  in  certain  cases  to  prescribe  or  approve  the  conditions  and  terms 
of  the  secm-ities.  Some  agencies  havmg  authority  to  borrow  from  the 
public  must  have  the  terms  of  the  securities  to  be  offered  approved  by 
the  Secretary  of  the  Treasmy  prior  to  issuance  in  accordance  with  the 
provisions  of  the  Government  Corporation  Control  Act  (31  U.S.C. 
868).  Agencies  exempt  from  this  requu'ement  must  consult  with  the 
Secretary  of  the  Treasury  on  proposed  offerings.  The  checldng  ac- 
counts of  most  Government  corporations  and  all  other  business-type 
activities  are  required  to  be  maintained  with  the  Treasurer  of  the 
United  States.  With  the  approval  of  the  Secretary  of  the  Treasury, 
some  accounts  may  be  kept  with  the  Federal  Reserve  Banks,  or  pri- 
vate banks  designated  as  depositaries  or  fiscal  agents  of  the  United 
States. 

661496—63 4 


34    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Financial  statements  submitted  to  the  Treasury 

Depai'tment  Cii'cular  No.  966,  and  Supplement  No.  1  thereto,  issued 
under  authority  of  the  Budget  and  Accounting  Procedures  Act  of 
1950,  requue  Government  corporations  and  certain  business-type 
agencies  to  submit  financial  data  periodically.  These  reports  serve 
as  the  bases  for  certain  combined  statements  compiled  by  the  Treasury 
which  are  designed  to  provide  a  full  disclosm-e  of  operations,  financial 
condition,  and  the  Government's  investment  in  these  enterprises. 

The  total  combined  assets  of  agencies  reporting  under  this  circular 
amounted  to  $124.0  billion  as  of  June  30,  1962,  compared  with  $116.1 
billion  a  year  earlier.  One  of  the  principal  assets  is  represented  by 
loans  receivable,  which  as  of  June  30,  1962,  totaled  $27.9  billion, 
represented  by  U.S.  dollar  loans  in  the  amount  of  $24.9  billion,  foreign 
currency  loans  totaling  $2.9  billion,  and  loans  to  Federal  agencies 
totaling  $135  million.  The  combined  liabilities  on  June  30,  1962, 
consisting  primarily  of  accounts  payable  and  accrued  liabilities, 
amounted  to  $9.9  billion,  compared  with  $7.9  billion  on  June  30,  1961. 
The  net  investment  of  the  Government  amounted  to  $114.2  billion, 
which  includes  borrowings  from  the  Treasury  in  the  amount  of  $8.6 
billion.  This  investment  excludes  the  Government's  interest  in 
mixed-ownership  or  Government-sponsored  corporations  and  trust 
revolving  funds  which  amounted  to  $2.9  billion  on  June  30,  1962, 
and  $2.8  billion  on  June  30,  1961. 

In  fiscal  1962,  the  total  combined  income,  expenses,  and  net  income 
or  loss,  for  the  agencies  reporting  as  business-type  activities  was  as 
follows: 

In  millions 

Operating  income $13,  511 

Other  gains 48 

$13, 559 

Operating  expenses 16,  333 

Less:  Net  decrease  in  allowances  for  losses 64 

16, 269 


Net  loss  for  fiscal  year  1962 2,  710 


The  net  loss  by  major  categories  of  tlie  reporting  agencies,  consisted 
of  the  following: 


N'el  income, 

or  loss  (— ) 

In  millions 


Public  enterprise  revolving  funds — $3,  426 

Intragovernmental  revolving  funds 22 

Certain  other  business-type  activities 694 


Net  loss,  as  above —2,  710 


REVIEW    OF    FISCAL    OPERATIONS  35 

The  major  part  of  the  net  loss  of  $3.4  billion  shown  above  for  public 
enterprise  revolving  funds  can  be  attributed  to  the  operations  of  two 
agencies;  namely,  the  Post  Office  Department  postal  fund,  with  a 
net  loss  of  $749  million,  and  the  Commodity  Credit  Corporation, 
with  a  net  loss  of  $2.6  billion. 

Individual  and  combined  financial  statements,  including  statements 
of  income  and  expense  and  source  and  application  of  funds,  are 
published  periodically  in  the  Treasury  Bulletin.  Comparative  com- 
bined balance  sheet  data  as  of  June  30,  1952  through  1962  are  shown 
in  table  123  of  this  report. 

Borrowing  authority  and  advances  by  the  Treasury 

New  congressional  authority  to  borrow  from  the  Treasm-y  granted 
in  fiscal  1962  to  certain  Government  corporations  and  agencies, 
amounted  to  $1.6  billion,  and  reductions  of  borrowing  authority 
totaled  $244  million,  resulting  in  a  net  increase  during  the  year  of 
$1.3  billion.  Unused  authority  as  of  June  30,  1962,  amounted  to 
$21.2  billion;  on  June  30,  1961,  unused  authority  totaled  $22.5  billion. 
The  status  of  the  borrowing  authority  of  these  corporations  and  agen- 
cies is  shown  in  table  120. 

Loans  or  advances  of  funds  made  by  the  Secretary  of  the  Treasury 
to  certain  Government  corporations  and  agencies,  pm-suant  to  the 
terms  of  the  borrowing  authority,  are  secured  by  formal  obligations 
or  agreements  executed  between  the  Secretary  and  the  head  of  the 
borrowing  agency.  These  borrowings,  or  advances,  are  reported  on 
the  agencies'  financial  statements  as  part  of  the  Government's  net 
investment  in  these  enterprises.  Advances  by  the  Treasury  in  fiscal 
1962,  exclusive  of  refinancing  transactions,  totaled  $8.3  biUion,  com- 
pared with  $7.5  billion  in  fiscal  1961.  Repayments  dm'ing  fiscal 
1962  amounted  to  $5.7  billion,  compared  with  $7.2  billion  in  1961. 
The  borrowings  from  the  Treasury,  outstanding  as  of  June  30,  1962, 
totaled  $28.6  billion,  compared  with  $26.0  billion  a  year  earlier.  A 
description  of  the  obligations  of  Government  corporations  and  agen- 
cies held  by  the  Treasury  on  June  30,  1962,  is  shown  in  table  122. 

Interest  and  other  payments  made  to  the  Treasury 

Interest  rates  applicable  to  borrowings  from  the  Treasury,  except 
where  fixed  by  law,  are  determined  from  month  to  month  by  the 
Treasury,  which  takes  into  consideration  the  cost  to  the  Government  in 
effecting  its  borrowings  in  the  current  market  as  reflected  by  the  pre- 
vaihng  market  yields  on  Government  obligations  having  maturities 
approximately  equivalent  to  the  advances  or  loans  made  to  the 
agencies.  Table  122  gives  a  description  of  the  securities  held  as  of 
June  30,  1962,  together  with  the  applicable  interest  rates. 


36    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Payments  in  the  form  of  interest,  dividends,  and  distribution  of 
earnings  are  made  either  on  the  basis  of  the  operating  results  of  an 
enterprise,  or  in  comphance  mth  legislative  requirements.  During 
fiscal  1962,  $685  million  was  received  in  the  Treasury  as  interest  pay- 
ments on  advances  to  agencies  and  $163  million  as  other  pajmients, 
compared  with  $706  million  and  $112  million,  respectively,  in  1961. 
Details  regarding  these  payments  are  contained  in  table  125. 

Capital  stock  owned  by  the  United  States 

During  the  fiscal  year  the  Government's  investments  in  capital 
stock  increased  by  $3.9  million;  repayments  of  Government-held 
capital  stock  amounted  to  $14.5  million.  Details  concerning  Treasury 
holdings  of  capital  stock  are  contained  in  table  119. 

Guaranteed  obligations  of  Government  agencies 

Certain  Government  corporations  and  agencies  having  authority  to 
borrow  from  the  public  may  issue  obligations  guaranteed  as  to  prin- 
cipal and  interest  by  the  United  States.  The  issuance  of  such  obli- 
gations during  the  fiscal  year  was  limited  to  the  Federal  Housing  Ad- 
ministration debentures  issued  in  exchange  for  foreclosed  mortgages 
on  behalf  of  its  various  mortgage  insurance  funds.  During  fiscal 
1962  guaranteed  obligations  were  issued  amounting  to  $348  million 
and  redemptions  totaled  $144  million,  compared  with  $192  million 
and  $92  million,  respectively,  in  1961.  As  of  June  30,  1962,  the  total 
outstanding  (held  outside  the  Treasury)  was  $444  million,  compared 
with  $240  million  on  June  30,  1961.  Included  in  the  amount  out- 
standing was  $0.5  million  of  matured  obligations  of  liquidated  corpo- 
rations for  which  funds  are  on  deposit  with  the  Treasury  covering  the 
matured  principal  and  interest.  A  description  of  guaranteed  obli- 
gations outstanding  is  contained  in  table  34. 

Nonguaranteed  obligations  of  Government  agencies 

Government-owned  and  Government-sponsored  corporations  and 
agencies  issuing  nonguaranteed  obligations  to  the  public  under  their 
statutory  authority  include  the  Tennessee  Valley  Authority,  Federal 
National  Mortgage  Association,  Federal  home  loan  banks.  Federal 
land  banks.  Federal  intermediate  credit  banks,  and  the  banks  for 
cooperatives.  Nonguaranteed  obligations  issued  dm*ing  fiscal  1962 
totaled  $8.1  billion,  redemptions  and  other  reductions  amounted  to 
$6.6  billion,  as  compared  with  $6.6  billion  and  $7.3  billion,  respec- 
tively, in  1961.  The  total  nonguaranteed  obligations  outstanding 
totaled  $9.3  billion  on  June  30,  1962,  and  $7.8  billion  on  June  30,  1961. 

Agencies  of  the  Farm  Credit  Administration  also  obtain  funds  for 
short  periods,  usually  between  bond  and  debenture  sales  dates,  by 
issuing  notes  to  banks  within  the  farm  credit  system  or  to  commercial 


REVIEW    OF    FISCAL    OPERATIONS  37 

banks.  As  of  June  30,  1962,  these  outstanding  notes  amounted  to 
$135  million,  as  compared  with  $73  million  on  June  30,  1961.  Certain 
other  agencies  also  issue  notes  at  infrequent  intervals  to  obtain  funds. 
Table  30  shows  the  nonguaranteed  obligations  outstanding  for  each 
issuing  agency  as  of  June  30,  1953-62. 

Account  of  the  Treasurer  of  the  United  States 

Statements  of  the  account  of  the  Treasurer  of  the  United  States  are 
published  in  summary  balance  sheet  form  in  the  Daily  Statement  of  the 
United  States  Treasury,  and  in  more  detail  in  table  59.  The  account 
of  the  Treasurer  consists  of  three  major  categories:  Gold,  silver,  and 
the  general  account.  As  of  June  30,  1962,  the  total  value  of  gold  on 
hand  was  $16,435  million,  principally  held  in  the  Fort  Knox 
Depository  with  lesser  amounts  in  mints  and  assay  offices.  Gold 
liabilities  included  $16,314  million  of  gold  certificates  issued  to 
Federal  Reserve  Banks  and  held  as  reserve  against  Federal  Reserve 
notes  and  for  the  redemption  of  U.S.  notes,  etc.,  with  the  balance 
of  $121  million  representing  available  gold.  Silver  bullion  and  silver 
dollars  included  in  the  assets  totaled  $2,299  million,  against  which 
liabilities  of  silver  certificates  (currency  issued  against  free  silver, 
etc.)  amounted  to  $2,277  million,  leaving  a  balance  of  silver  totaling 
$22  million  as  of  June  30,  1962.  The  assets  of  the  general  account, 
$10,509  million  on  June  30,  included  the  balances  of  gold  and  silver 
against  which  there  were  no  specific  legal  liabilities  or  reserves,  cash 
in  the  form  of  coin  and  currency,  unclassified  collections,  and  Govern- 
ment funds  on  deposit  with  the  Federal  Reserve  Banks  and  other 
depositaries.  Liabilities  of  the  general  account,  $79  million  as  of  this 
same  date,  included  principally  funds  to  the  credit  of  the  Board  of 
Trustees  of  the  Postal  Savings  System,  and  uncollected  items, 
exchanges,  etc. 

There  was  a  balance  of  $10,430  million  in  the  Treasurer's  account 
as  of  June  30,  1962,  representing  the  difference  between  the  assets  and 
liabilities,  which  consisted  of  the  available  operating  funds  on  de- 
posit in  Federal  Reserve  Banks;  the  funds  held  in  Treasury  tax  and 
loan  accounts  established  in  qualified  commercial  banks;  and  funds 
held  in  general  and  other  depositaries  not  immediately  available  for 
operating  purposes. 

During  fiscal  1962  there  was  an  increase  of  $3,736  million  in  the 
balance  of  the  Treasurer's  account.  Daily  balances  ranged  from  a 
low  of  $4,109  million  on  April  7,  1962,  to  a  high  of  $10,430  million  on 
June  29,  1962. 

The  net  change  in  the  balance  during  the  year  is  accounted  for  as 
follows : 


38    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Transactions  affecting  the  account  of  the   Treasurer  of  the    United    States,    fiscal 

year  1962 

[In  millions  of  dollars] 

Balance  June  30,  1961 6,  694 

Excess  of    deposits,    or    withdrawals    (  — ),    budget,  trust,    and  other 
accounts: 

Deposits 101,  608 

Withdrawals 106,  626     -5,  018 

Excess  of  deposits,  or  withdrawals  (  — ),  public  debt  accounts: 

Net  increase  in  gross  public  debt 9,  230 

Deduct: 

Excess  of  Government  agencies'  in- 
vestments   over    redemptions    in 

public  debt  securities 503 

Accrual  of  discount  on  savings  bonds 
and  bills  (included  in  net  increase 

in  gross  public  debt  above) 2,  571 

Less  certain  public  debt  redemptions 
(included  in  cash  withdrawals 
above) —1,  648 

Total  deductions . -1,426         7,804 

Excess  of  sales  of  obligations  of  Government  agencies  in  the  market 950 

Balance  June  30,  1962 10,  430 


Public  Debt  Operations  and  the  Ownership  of  Federal  Securities 

Public  debt  and  guaranteed  obligations  on  June  30,  1962,  amounted 
to  $298.6  billion,  a  net  increase  of  $9.4  billion  from  the  $289.2  billion 
outstanding  on  June  30,  1961.  About  two-thirds,  $196  billion,  of  the 
debt  was  in  marketable  issues,  representing  an  increase  of  $8.9  billion 
during  the  year.  The  remainder  of  the  debt,  mostly  in  special  issues 
to  Government  investment  accounts  and  in  U.S.  savings  bonds  held 
by  individuals  and  others,  increased  by  $0.5  bilhon. 

The  two  factors  which  to  a  large  extent  determine  the  amount  by 
which  the  pubHc  debt  decreases  or  increases  during  the  year  are  the 
budget  surplus  or  deficit  and  the  change  in  the  cash  balance  of  the 
Treasurer  of  the  United  States.  The  budget  deficit  of  $6.4  bilhon 
at  the  close  of  fiscal  1962,  together  with  the  increase  of  $3.7  billion  in 
the  cash  balance,  amounted  to  more  than  $10  bilhon.  Minor  items 
diminished  somewhat  the  total  required  for  financing  the  deficit  and 
the  cash  balance  increase,  leaving  a  net  of  $9.4  billion  to  be  financed 
by  additional  pubhc  debt  obligations  during  the  fiscal  year  1962. 
(A  summary  of  changes  in  the  debt  during  the  year  is  shown  in  the 
accompanying  table.) 


REVIEW    OF    FISCAL    OPERATIONS 


39 


Class  of  debt 

June  30, 
1961 

June  30, 
1962 

Increase,  or 
decrease  (— ) 

In  billions  of  doll 

irs 

Public  debt: 

Interest-bearing: 
Public  issues: 
Marketable 

187.1 
53.5 

196.1 
53.4 

8.9 

Nonmarketable 

(*) 

Total  public  issues 

Special  issues  to  Governuient  investment  accounts 

240.6 
45.0 

249.5 
44.9 

8.9 
-.1 

Total  interest-bearing  public  debt                          .  . 

285.7 

.3 

2.9 

294.4 

.4 

3.3 

8.8 

Matured  debt  on  which  interest  has  ceased  -  

.1 

Debt  bearing  no  interest 

.4 

Total  public  debt 

289.0 
.2 

298.2 
.4 

9.2 

Guaranteed  obUgations  not  owned  by  the  Treasury 

.2 

Total  gross  public  debt  and  guaranteed  obligations 

289.2 

298.6 

9.4 

*Less  than  $50  million. 

The  total  Federal  debt  has  been  moving  uTegularly  upward  since  1946 
and  the  debt  increase  in  fiscal  1962  continued  this  trend  (see  chart  3). 
There  were  a  number  of  j'ears  in  which  budget  surpluses  of  varying 
amounts  made  it  possible  to  reduce  the  debt,  but  those  reductions 
were  outweighed  by  debt  increases  in  other  years.  The  increases 
reflect  in  part  the  cost  of  economic  recessions;  in  far  greater  measure, 
however,  they  were  brought  about  by  the  Korean  War  and  by  con- 
tinuing heavy  defense  expenditures  since  that  time.  The  $9.4  billion 
increase  in  the  debt  during  fiscal  1962  was  largely  related  to  additional 
defense  needs  growing  out  of  the  intensification  of  the  Berlin  prob- 
lem following  the  Vienna  Conference  in  1 96 1 . 

Chart  3 

The  Federal  Debt- Semiannually  since  1946 


1  Including  pubUc  debt  and  guaranteed  obligations. 


40 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


The  $39  billion  growth  of  the  Federal  debt  since  December  1946 
has  been  much  less  than  increases  in  other  forms  of  debt  (see  chart  4). 
In  consequence,  the  Federal  portion  of  public  and  private  debt 
dropped  from  58  percent  of  the  total  in  1946  to  28  percent  in  June 
1961.  Moreover,  even  with  a  $9^  billion  increase  dming  fiscal  1962 
the  Federal  debt  declined  further  to  27  percent  when  measured 
against  the  debt  of  all  borrowers.  It  is  clear,  therefore,  that  as 
private  and  State  and  local  debt  expanded  with,  the  growth  of  the 
economy,  the  Federal  debt  proportionately  diminished. 


Chart  4 


Public  and  Private  Debt 


$Bil. 


1,000  — 


750  — 


500-       4461/, 


250—  '6 

58% 


IIO'/z 

mm 


so%- 


259'/, 


638 
135'/, 


42% 


31 '4  ^im 


267'/, 


1952 
■December  31- 


1, 008'/, 


29% 


360 


m 


290/, 


364 


289: 


28% 


39r/2 


298'4 


'^Individual 


'^Corporate 


Slate  and 
'  Local 


/ 

-27% 


Federal 


I960      1961          1962 
'     " June  30 ' 


The  Federal  debt  can  also  be  expressed  as  a  i^ercentage  of  gross 
national  product,  the  value  of  all  goods  and  services  produced  in  a 
given  period  (see  chart  5).  The  changes  in  this  relationship  since 
World  War  II  provide  another  indication  of  the  relative  slu-inkage  of 
the  Federal  debt  as  the  economy  has  grown.  The  ratio  of  Federal 
debt  to  gross  national  product  declined  from  116  percent  in  1946  to  the 
56  percent  in  June  1961.  And  despite  the  $9^  billion  increase  in  the 
debt  during  the  fiscal  year  1962,  there  was  a  further  decline  in  the  ratio 
to  54  percent  by  the  end  of  June  1962.  In  contrast,  the  growth  of 
total  debt  since  World  War  II  has  generally  kept  pace  with  the 
growth  of  the  economy.  Public  and  private  debt  together  amounted 
to  198  percent  of  the  gi-oss  national  product  in  June  1962,  only  about 
two  percentage  points  below  December  1946. 


REVIEW    OF   FISCAL    OPERATIONS 
Chart  5 

Public  and  Private  Debt  as  %  of  Gross  National  Product 


41 


% 


200' 


200% 


I50»-  50 


100' 


50» 


0        i 


1952 
-December  31 


201V.  197%      198% 

7i 


57  i 


70 


56  i; 


I5i 


;54 


"^Individual 


*—  Corporate 


Local 
-^Federal 


1961     1962 
" — June  30 — ' 


The  primary  concern  of  debt  management  is  the  marketable  debt. 
This  includes  most  of  the  Federal  debt  other  than  savings  bonds  and 
special  issues  to  Government  investment  accounts.  In  this  category, 
the  Treasury  marketed  a  total  of  $54K  billion  in  certificates,  notes, 
and  bonds  dm-mg  fiscal  1962.  This  included  over  $4)^  bilHon  of  new 
cash  borrowing;  the  refinancing  of  about  $41  billion  in  maturing 
issues;  and  the  advance  refunding  of  about  $9  billion  in  existing  debt. 
In  addition  to  the  $54K  billion  in  securities  marketed,  about  $1 
billion  of  IK  percent  notes  was  issued  in  exchange  for  nonmarketable 
Investment  Series  B  bonds.  Treasury  bills  issued  for  cash,  other  than 
the  rollover  of  maturing  regular  weekly  and  one-year  bills,  amounted 
to  almost  $13  billion. 

The  new  cash  financings,  largely  in  issues  of  Treasury  bills  and 
short  notes,  were  directed  toward  maintaining  U.S.  short-term  rates 
at  levels  reasonably  competitive  with  short-term  rates  in  the  world 
money  markets  in  order  to  discourage  outflows  of  short-term  invest- 
ment funds  from  augmenting  the  country's  balance-of-payments 
problems.  In  consequence,  the  marketable  debt  maturing  within 
one  year  rose  to  $88.4  billion,  an  increase  of  $7.3  billion  during  fiscal 
1962  (see  chart  6).  The  $18  billion  increase  in  short-term  debt 
since  midcalendar  year  1960  provided  additional  liquidity  during 
a  period  of  recession  and  early  recovery.  Thus,  while  this  action 
was  undertaken  to  maintain  short-term  rates  for  balance-of-payments 


42 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


reasons,  it  was  entirely  consistent  with  the  needs  of  the  economy  at 
the  time.  Such  action  would  not  have  been  appropriate  in  a  full 
expansion  phase  of  the  business  cycle.  In  fact,  a  rapidly  expanding 
economic  environment  would  undoubtedly  have  been  accompanied, 
as  in  the  past,  by  a  substantial  rise  in  short-term  rates.  This  would 
have  assisted  in  strengthening  our  balance-of-payments  position 
without  the  need  for  an  increase  in  the  supply  of  short-term  debt. 

Chart  6 

Structure  of  the  Under  I -Year  Marketable  Debt 


Note.— Coupon  issues  include  all  certificates,  notes,  and  bonds  maturing  within  one  year. 

A  large  volume  of  early  maturing  issues  has  important  impUcations 
in  terms  of  its  future  impact  on  the  market.  The  Treasury  has  been 
able  to  mitigate  these  potential  effects  tlirough  additions  to  regular 
weeldy  and  one-year  bills  which  are  rolled  over  automatically  at 
matm-ity.  The  total  amount  of  these  bills  has  been  maintained  at  a 
fairly  constant  ratio  (about  45  percent)  of  the  outstanding  debt 
maturing  within  one  year,  exclusive  of  seasonal  issues. 

Although  the  major  portion  of  new  cash  went  into  short-term  issues, 
more  than  $2^4  billion  was  raised  by  means  of  longer  issues,  over 
$1  billion  through  a  7%-year  bond,  and  $1}^  billion  through  a  6M-3^ear 
bond.  More  importantly,  significant  efforts  to  restructure  the  debt 
were  also  made  in  the  refunding  of  existing  obhgations  at  maturity. 
Of  the  $41  billion  in  maturing  issues  refinanced  during  fiscal  1962 
(other  than  Treasury  bills),  $23^  billion  was  in  one-year  certificates 
or  short  notes  maturing  within  16  months;  $15  bilhon  in  issues  be- 
tween 3  and  5  years  to  matm-ity;  $2)4  billion  in  5-to-lO  year  bonds; 


REVIEW    OF   FISCAL    OPERATIONS 


43 


and  $)2  billion  in  bonds  maturing  beyond  10  years.  However,  the 
major  share  of  debt  extension  was  attributable  to  the  refunding  of 
obligations  in  advance  of  maturity. 

The  role  of  advance  refunding  since  the  inception  of  the  technique 
in  1960  in  restructuring  the  marketable  debt  maturing  beyond  one 
year  is  illustrated  by  chart  7.  The  greatest  impact  has  been  in  the 
longer  maturities.  In  the  20-year  and  over  category,  $7%  biUion,  or 
about  half  of  the  $15  billion  outstanding,  was  originally  issued  in 
advance  refundings.  In  the  5-  to  lO-yeai-  and  10-  to  20-year  maturity 
areas  over  one-fourth  of  outstanding  issues  resulted  from  advance 
refundings. 

Chart  7 

Role  of  Advance  Refunding  in  Restructuring  the 
Over  I -Year  Marketable  Debt 


$Bil 

—        I  to  5  Year  Maturities 

80»- 


728 


60>-    58.3 


40" 


20  ► 


Original Iv  Issued 
in  Advance 
Refundings  * 

58.4  „n    ; 


^\ 

J54. 

3 

570 


$Bii.     5to  10  Years 
20.2 

20»-      17.1 


26.4  26.0 


20- 


0' 
20- 


6.7ii  .26% 


-27% 


20 Years  and  Over 


15.2 


7.7 


11.0 


33 


7.7.;.  50% 


I960        1961 
June  30 


Through  June  1962  there  had  been  five  advance  refundings,  of 
two  types.  The  first  of  these  are  senior  refundings  in  which  issues 
generally  falhng  into  the  5-  to  10-year  maturity  range  are  exchanged 
into  true  long-term  issues.  The  second  type,  called  junior  refundings, 
generally  involves  the  exchange  of  shorter  term  issues  into  interme- 
diate or  longer  securities. 

Senior  advance  refundings  meet  a  number  of  debt  management  ob- 
jectives. Among  these  are:  First,  to  maintain  the  ownership  pattern 
of  the  issues  refunded  (prmiarily  in  the  hands  of  longer  term  holders) ; 
second,  to  provide  needed  debt  restructuring  without  absorbing  long- 
term  funds  otherwise  available  to  the  private  sector  of  the  economy; 
third,  to  effect  the  required  debt  extension  with  a  minimum  of  market 
churning  as  well  as  a  minimum  impact  on  current  long-term  issue 


44     1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

prices;  and  fourth,  to  make  room  for  additional  intermediate  issues. 

The  major  purposes  of  junior  refundings  are  to  reduce  the  concen- 
tration of  early  maturities  so  that  refinancing  will  result  in  less  market 
impact  and  to  curtail  the  amount  of  highly  liquid  debt  in  the  maturity 
area  immediately  beyond  one  year,  thereby  reducing  potential  infla- 
tionary pressures.  The  success  of  advance  refunding  in  restructuring 
the  marketable  debt  is  indicated  by  the  fact  that  on  June  30,  1962, 
about  one-quarter  of  the  debt  maturing  after  one  year  was  originally 
issued  in  advance  refundings.  Structural  improvements  in  fiscal 
1962  were  due  to  a  combination  of  advance  refunding,  the  refinancing 
of  a  significant  amount  of  maturing  issues  into  longer  term  securities, 
and  the  placement  of  a  part  of  new  cash  borrowing  into  intermediate 
or  longer-term  securities.  The  net  result  was  a  five-month  extension 
in  the  average  length  of  the  marketable  debt — from  4  years  6  months 
on  June  30,  1961,  to  4  years  11  months  on  June  30,  1962.  This  in- 
crease took  place  despite  the  fact  that  new  money  borrowing  was 
largely  in  the  short-term  area  and  that  the  smiple  passage  of  time 
shortens  the  existing  over  one-year  debt  by  one  full  year  each  year. 

The  changes  in  the  ownership  of  the  debt  during  the  fiscal  year  have 
reflected  the  Treasury's  efforts  to  finance  the  budget  deficit  without 
generating  an  inflationary  potential.  Although  the  total  debt  in- 
creased by  $9K  billion  and  the  marketable  portion  by  approximately 
$9  billion,  commercial  bank  holdings  increased  by  only  $2^2  billion. 
The  Federal  Reserve  Banks  also  increased  their  holdings  by  approxi- 
mately $2)^  billion.  Thus,  $5  billion,  or  about  one-half  of  the  total 
increase  in  the  debt,  was  financed  outside  the  banldng  system. 

Savings  bonds,  which  are  nonmarketable,  represent  one-sLxth  of  the 
entire  outstanding  debt.  The  purchase  of  E  and  H  savings  bonds — - 
on  the  average,  held  b}^  then'  owners  for  7K  years — diminishes  the 
Treasm-y's  problem  of  refinancing  the  debt  and  contributes  to  the 
country's  financial  stability  b}'  keeping  a  sizeable  portion  of  the  debt 
in  the  hands  of  the  average  citizen.  On  June  30,  1962,  Series  E  and 
H  bonds  were  outstanding  in  the  amount  of  $45  billion  (including 
interest  accruals),  a  net  increase  of  more  than  $1  billion  during  the 
year. 

During  the  fiscal  year  1962  the  Treasury  undertook  borrowing  from 
foreign  official  agencies  for  the  purpose  of  improving  the  balance-of- 
payments  position  of  the  United  States  and  deterring  foreign  exchange 
speculation.  This  was  the  first  time  since  1918  that  the  Treasury  had 
conducted  foreign  borrowing  operations.  The  borrowing  in  fiscal 
1962  was  nonmarketable  and  was  in  the  form  of  foreign  certificates 
of  indebtedness.  On  June  30,  1962,  there  was  close  to  $1  billion  of 
these  foreign   certificates  outstanding  in   two   types,   approximately 


REVIEW    OF   FISCAL    OPERATIONS  45 

$0.9  billion  in  issues  denominated  in  dollars  and  about  $0.1  billion 
in  issues  denominated  in  certain  foreign  currencies. 

PUBLIC  DEBT  OPERATIONS 

The  refunding  of  the  $1K  billion  one-year  Treasury  bills,  maturing 
July  15,  1961,  was  the  first  financing  of  fiscal  1962.  On  July  5,  the 
Treasury  announced  that  $2  billion  of  new  one-year  bills  (dated 
July  15,  1961,  to  mature  July  15,  1962)  would  be  auctioned  on  July  11. 
The  new  bills  would  replace  the  $1K  billion  old  bills  maturing  July  15 
and  provide  $500  million  required  new  cash. 

On  July  13,  1961,  following  the  one-year  bill  auction,  the  Treasury 
announced  that  it  would  refund  in  one  operation  four  securities  totaling 
$12}^  billion  maturing  August  1  through  October  1,  and  that  the 
exchange  offering  would  be  followed  immediately  by  a  cash  borrowing 
of  $3K  billion  through  the  issuance  of  tax  anticipation  bills. 
The  four  maturing  issues  were: 

$7.8  billion  3)^  percent  certificates  maturing  August  1,  1961; 
$2.1  billion  4  percent  notes  maturing  August  1,  1961; 
$2.2  billion  2%  percent  bonds  maturing  September  15,  1961 ;  and 
$332  million  Iji  percent  notes  maturing  October  1,  1961. 
Holders  of  these  seciu-ities  were  given  an  exclusive  right  to  exchange 
them  for  any  of  the  following  securities: 

3}i  percent  15K-inonth  notes  dated  August  1,  1961,  to  mature 

November  15,  1962,  at  par;  or 
3%  percent  3-year  notes  dated  August   1,    1961,   to  mature 

August  15,  1964,  at  par;  or  additional  amounts  of 
3%  percent  bonds  originally  issued  on  June  23,  1960,  maturing 
May  15,  1968,  of  which  $1,390  million  was  outstanding,  to  be 
issued  at  a  price  of  99.375,  to  yield  approximately  3.98  per- 
cent to  maturity. 
Subscriptions  for  the  three-way  exchange  option,  which  were  received 
July  17  through  July  19,  totaled  $11.9  billion,  or  94.5  percent,  of  the 
August  1  through  October  1  maturities.     Subscriptions  for  the  15^- 
month  note  totaled  $6.1  billion,  for  the  3-year  note,  $5.0  billion,  and 
for  the  6%-year  bond  approximately  $750  milhon.     The  remaining 
$686  million,  or  5.5  percent,  of  the  maturing  securities  was  paid  off  in 
cash. 

The  Treasury  generally  needs  to  raise  new  cash  in  the  first  half  of 
the  fiscal  year  in  order  to  cover  its  requirements  during  the  period  of 
seasonally  low  tax  receipts.  The  first  such  seasonal  borrowing  took 
place  on  July  20,  1961,  when  the  Treasm-y  auctioned  $3^  billion  in  tax 
anticipation  bills  dated  July  26,  1961,  to  mature  March  23,  1962, 

On  September  7,  a  refunding  of  two  World  War  II  bond  issues  in 
advance  of  their  maturities  was  announced,  and  at  the  same  time  plans 


46    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

were  outlined  to  raise  the  estimated  $5  billion  cash  needed  over  the 
next  two  months. 

The  refunding  offer,  a  senior  advance  refunding  operation  (wherein 
intermediate-term  issues  are  exchangeable  for  new  long-term  issues) 
was  available  to  all  holders  of  the  2}^  percent  bonds  issued  during  the 
war-loans  in  1944.  The  amounts  of  these  bonds  outstanding  were 
$4.7  billion  of  the  March  1965-70s  and  $2.9  bilHon  of  the  March 
1966-7 Is.  Their  holders  were  offered  in  exchange  additional  amounts 
of  any  of  the  3}^  percent  outstanding  Treasmy  bonds  maturing  in 
1980,  1990,  and  1998.  The  bonds  eligible  for  exchange  were  held 
largely  by  insurance  companies,  savings  banks,  and  private  individuals 
(many  of  them  original  subscribers) . 

To  balance  the  relative  attractiveness  of  the  exchanges,  the  offerings 
involved  the  following  cash  payments  (per  $100  of  face  value)  other 
than  accrued  interest:  For  the  3)^s  of  1980,  $2.25  and  $3.50  to  be 
paid  by  the  holders  of  the  2}^s  of  1965-70  and  1966-71,  respectively; 
for  the  3}^s  of  1990,  $1.00  paid  to  the  holders  of  the  1965-70s  and  $.25 
paid  by  those  exchanging  the  1966-71s;  and  for  the  3Ks  of  1998, 
$2.00  and  $1.00,  respectively,  paid  to  the  holders  of  the  1965-70s  and 
1966-71S. 

The  advance  refunding  offer  open  to  all  subscribers  from  September 
11  through  September  15,  and  additionally  for  individuals  through 
September  20,  was  a  success  with  $3.8  billion  2^  percent  bonds 
exchanged  for  the  outstanding  3)2  percent  longer  term  bonds.  Of  total 
subscriptions,  $1.3  billion  was  for  the  1980  maturity,  $1.3  billion  for 
the  1990  maturity,  and  $1.2  billion  for  the  1998  maturity.  In  all, 
more  than  51  percent  of  the  eligible  bonds  of  public  holders  (that  is, 
holders  other  than  Federal  Keserve  Banks  and  Government  invest- 
ment accounts)  was  exchanged.  The  result  represented  a  significant 
amount  of  debt  extension,  with  little  or  no  disturbance  in  the  market 
for  outstanding  issues,  and  achieved  a  definite  improvement  in  the 
matm"ity  structure  of  the  marketable  debt. 

Cash  needs  for  the  two  months  following  the  September  7  announce- 
ment were  met  in  three  steps: 

Approximately  $2K  billion  of  June  1962  tax  anticipation  bills 
were  auctioned  on  September  20,  1961,  with  payment  on 
September  27. 
An  offering  of  $2  biUion  in  additional  amounts  of  3)4  percent 
Treasury  notes  to  mature  May  15,  1963  (originally  issued  in 
May  1961),  was  announced  September  28  and  offered  early  in 
October  at  a  price  of  99%  to  yield  approximately  3.33  percent. 
$2.3  billion  of  the  total  subscribed  for  was  accepted. 


REVIEW    OF    FISCAL    OPERATIONS  47 

$2  billion  in  one-year  Treasury  bills  auctioned  on  October  10, 

to  replace  $1)2  billion  of  outstanding  one-year  bills  matming 

October  16,  to  provide  another  $500  million  new  money. 

These  new  money  offerings  in  the  September-October  financings 

raised  $5.3  billion  for  the  Treasury.     In  addition,  $0.2  billion  was 

obtained  by  adding  to  regular  weekly  bills  on  October  19  and  October 

26. 

On  November  2  the  Treasury  announced  an  exchange  offer  for 
meeting  the  mid-November  2%  percent  bond  maturity  of  $7.0  billion. 
At  the  same  time  announcement  was  made  that  $800  million  in  new 
funds  would  be  obtained  for  current  needs  (largely  the  estimated 
amount  of  maturing  bonds  that  would  be  turned  in  for  cash)  by  issuing 
a  strip  of  bills  on  November  15  to  be  sold  on  an  auction  basis. 

The  Treasury's  objective  of  extending  the  maturity  of  the  debt 

whenever  feasible  was  reflected  in  the  exchange  offer  to  the  holders 

of  the  bonds  due  November  15.     The  offer  provided  thi-ee  maturity 

options  which  included  two  intermediate  or  longer  issues,  as  foUows: 

A  15-month  3%  percent  note,  dated  November  15,  1961,  due 

February  15,  1963,  at  par; 
An    additional    amount    of    outstanding    3%    percent    bonds 
originally  issued  November  15,  1960,  maturing  May  15,  1966, 
to  be  issued  at  a  price  of  99.75,  to  j^ield  about  3.81  percent; 
An    additional    amount    of    outstanding    3%    percent    bonds 
originally  issued  on  December  2,  1957,  maturing  November 
15,  1974,  to  be  issued  at  a  price  of  99.00,  to  yield  about 
3.97  percent. 
The  subscription  books  closed  on  November  9,  with  more  than 
$6}^  billion,  or  94  percent,  of  the  maturing  bond  exchanged.     Of  the 
issues  taken,  more  than  $3.6  billion  was  for  the  short-term  note, 
$2.4  billion  for  the  4K-year  bond,  and  $517  million  for  the  13-year 
bond.     The  remaining  $419  million,  or  6  percent,  of  the  maturing 
bond  was  paid  off  in  cash. 

The  $800  million  bill  strip  auctioned  on  November  9  increased  each 
of  the  eight  bill  issues  maturing  December  7,  1961,  through  January  25, 
1962,  by  $100  million.  Subscriptions  were  required  to  be  in  units  of 
at  least  $8,000  or  in  multiples  of  that  amount,  with  a  single  bid  price 
submitted  for  the  entire  strip  ranging  in  maturity  from  22  to  71  days. 
Each  of  the  eight  bill  maturities  increased  was  currently  outstanding 
in  an  amount  of  $1.6  billion  against  $1.7  billion  for  all  of  the  other 
weekly  bills  maturing  in  the  next  thi'ee  months. 

Immediately  after  the  issuance  of  the  bills  the  Treasur}^,  on  Novem- 
ber 17,  announced  an  exchange  offering  to  holders  of  approximately 


48    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

$970  million  Series  F  and  G  savings  bonds  issued  in  1950  and  maturing 
in  1962.  Holders  of  these  obligations  were  offered  an  exchange  into 
additional  amounts  of  SJg  percent  marketable  bonds  originally  issued 
June  23,  1960,  maturing  May  15,  1968,  at  a  price  of  99.50  for  an 
effective  yield  of  3.96  percent.  Exchange  values  of  the  F  and  G 
bonds  were  fixed  to  provide  one  percent  more  than  otherwise  would 
have  accrued  from  December  15,  1961,  to  the  matm-ity  dates  of  the 
F  and  G  bonds  and  3.96  percent  from  those  dates  to  the  maturity 
of  the  3%  percent  bond.  The  exchange  offer  was  accepted  by  holders 
of  $320  million  of  the  1962  F  and  G  maturities  outstanding. 

On  January  3,  1962,  the  Treasury  announced  that  it  would  borrow 
$1K  to  $1%  billion  of  new  money  in  two  financings  to  meet  the  Govern- 
ment's cash  needs. 

The  fu'st  financing  announced  at  the  time  provided  the  Treasury 
with  $500  million  new  cash.  One-year  bills  matmdng  January  15, 
1962,  in  the  amount  of  $1^  bilhon  were  replaced  with  $2  biUion  of 
new  one-year  bills  maturing  January  15,  1963.  The  second  financing, 
announced  January  11,  was  the  issuance  of  an  additional  $1.1  billion 
of  outstanding  4  percent  bonds  maturing  October  1,  1969,  originally 
issued  in  October  1957.  The  new  issue  was  priced  at  99.75  to  yield 
about  4.04  percent. 

On  February  1,  1962,  plans  were  announced  for  refunding  four 
issues  of  Treasm-y  notes  totahng  $11.7  billion,  thi-ee  due  February 
15,  and  one  on  April  1.     The  four  maturing  securities  were : 

$9.1   billion  3%  percent  notes  maturing  February   15,    1962; 
$0.6  billion  3^^  percent  notes  maturing  February  15,  1962; 
$1.4  billion  4  percent  notes  matm'ing  February  15,  1962;  and 
$0.6  billion  1%  percent  notes  maturing  April  1,  1962. 
In  exchange,  holders  of  the  maturing  securities  were  offered  two  new 
securities  dated  February  15,  a  3K  percent  one-year  certificate  and  a 
4  percent  4y2-3^ear  note.     All  but  3.5  percent  ($416  milhon)  of  the 
matui'ing  issues  was  exchanged,  $6.9  billion  for  the  one-year  certificate 
and  $4.5  billion  for  the  4K-year  note. 

Following  this  regular  refunding,  the  Treasury  undertook  an  ad- 
vance refunding  in  mid-February,  wdth  the  exchange  effective  on 
March  1,  1962.  For  the  first  time,  one  operation  combined  a  junior 
advance  refunding  (in  which  holders  of  relatively  short-tenn  maturi- 
ties are  given  an  opportunity  to  move  into  longer  issues)  and  a  senior 
advance  refunding  (in  which  holders  of  intermediate-term  securities 
are  offered  an  exchange  into  long-term  issues).  The  Treasury  offered 
to  the  holders  of  five  issues  of  outstanding  Treasury  bonds  maturing 


REVIEW    OF    FISCAL    OPERATIONS  49 

from  February  15,  1964,  through  December  15,  1972,  totaling  $18.7 
billion,  the  option  of  earning  additional  interest  during  the  remaining 
terms  of  these  existing  issues  by  extending  their  maturities  for  addi- 
tional periods  ranging  between  6%  and  26K  years. 

The  advance  refunding  operation  combined  the  following  specific 
exchange  offerings : 

In  the  junior  portion,  holders  of  the  $3.9  bilhon  3  percent  bonds 
due  February  15,  1964,  were  eligible  to  exchange  them  on  a  par- 
for-par  basis  for  a  new  issue  of  4  percent  bonds  due  in  August 
1971.  Holders  of  the  $6.9  billion  2%  percent  bonds  due  February 
1965  were  offered  an  exchange  into  the  new  4s  of  1971  or  into 
additional  amounts  of  the|  outstanding  4  percent  bonds  of  Feb- 
ruary 15,  1980.  However,  to  equahze  the  attractiveness  of  the 
exchange  options,  holders  of  the  2%  percent  bonds  were  required 
to  pay  $2.00  (per  $100  of  face  value)  on  the  new  4s  of  1971  and 
$.25  on  the  4s  of  1980. 

In  the  senior  portion  of  the  advance  refunding,  holders  of  $8.0 

billion  2K  percent  bonds  of  June,   September,   and  December 

1967-72S  were  offered  two  outstanding  3%  percent  bonds  due  in 

February    1990    and    November    1998.     All   but   one   of    these 

exchanges  involved  cash  payments  by  subscribers  as  follows: 

On  the  3}^s  of  1990,  (per  $100  of  face  value)  $1.25,  $1.50,  and 

$1.75,  respectively,  by  the  holders  of  the  2Ks  matm*ing  in  June, 

September,  and  December  of  1967-72;  and  on  the  3Ks  of  1998, 

par-for-par  (no  payment)  by  holders  of  the  June  2^8  and  $.25 

and  $.50,  respectively,  by  holders  of  the  September  and  December 

maturities. 

No  Hmit  was  placed  on  the  amount  of  the  four  issues  offered  and 

subscriptions  in  all  totaled  $5.2  billion  and  were  allotted  in  full,  $2.8 

billion  for  the  1971  maturity,  $0.6  bilHon  for  the  1980  maturity,  and 

$0.9  bilhon  for  each  of  the  1990  and  1998  maturities.     Of  the  $5.2 

billion  total  subscribed,  $4.2  billion  of  pubhc  holdings  of  the  ehgible 

issues,  or  25  percent,  was  exchanged. 

To  offset  the  expected  drain  due  to  the  cash  redemption  of  the  tax 
anticipation  bills  maturing  on  March  23,  and  to  continue  its  efforts 
to  keep  U.S.  short-term  rates  competitive  in  the  world  money  markets, 
the  Treasury,  early  in  March,  announced  an  offering  of  $1.8  billion 
in  new  182-day  tax  anticipation  bills  to  be  auctioned  on  March  20 
and  to  mature  September  21,  1962.  The  new  tax  bills  were  dated 
March  23,  1962,  the  date  on  which  the  old  issue  of  tax  bills  matured. 
In  a  strengthened  bond  market  environment,  the  Treasury  decided 
in  early  April  to  raise  $1%  billion  of  needed  new  cash  by  offering  an 

661496 — 63 5 


50     1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

intermediate-term  issue — a  6)^-year  3%  percent  bond  matm^ing 
August  15,  1968.  Immediately  following  the  closing  of  the  sub- 
scription books  for  the  bond,  $2  billion  of  one-year  bills  were  rolled 
over  at  auction  replacing  a  like  amount  of  bills  maturing  April  15. 

The  last  financing  of  the  fiscal  year,  exclusive  of  regular  weekly 
biUs,  was  announced  in  the  latter  part  of  April.  The  Treasury  com- 
bined in  one  operation  the  refunding  of  two  securities  maturing  in 
mid-May  with  the  bond  maturing  on  June  15.  The  three  maturing 
issues,  which  totaled  $11%  biUion,  were: 

$5.5  bilhon  3  percent  certificates  maturing  May  15,  1962; 

$2.2  billion  4  percent  notes  maturing  May  15,  1962;  and 

$4.0  bilhon  2%  percent  bonds  matm-ing  June  15,  1962. 
To  continue  the  structural  improvement  of  the  debt  whenever  practi- 
cable, the  Treasury  offered  holders  of  the  matiu-ing  securities  a  choice 
of  the  following  three  new  issues,  two  having  maturities  beyond  one 
year.    The  three  options  all  dated  May  15,  1962,  were: 

3%  percent  one-year  certificate  to  mature  May  15,  1963,  at  par; 

3%  percent  3%-year  note  to  mature  February   15,    1966,   at 
99.80  to  yield  approximately  3.68  percent  to  maturity;  or 

3%  percent  9)^-3"ear  bond  to  matiue  November  15,   1971,  at 
99.50  to  yield  approximately  3.94  percent  to  maturity. 
Exchanges  totaled  $11  billion,  $6.7  bilhon  into  the  one-year  certifi- 
cate, $3.1  billion  into  the  3%-year  note,  and  $1.2  biUion  into  the  9^- 
year  bond.    The  remaining  $679  milhon,  5.8  percent  of  the  maturing 
securities,  was  turned  in  for  cash. 

During  the  course  of  the  fiscal  year,  $2.7  biUion  of  new  cash  was 
raised  through  periodic  increases  in  the  regular  weekly  bill  offerings 
in  order  to  maintain  upward  pressure  on  U.S.  short-term  rates. 
(See  text  table  on  offerings  of  marketable  Treasury  securities.) 
The  major  part  of  the  weekly  bill  increase  was  raised  in  the  second 
half  of  the  fiscal  year  with  $1.5  billion  or  more  than  one-half  of  the 
total  issued  in  the  91 -day  bills  during  the  period  of  February  through 
May. 

The  followdng  tables  summarize  the  financing  operations  during  the 
fiscal  year  and  show  the  results  of  the  pubHc  offerings  of  marketable 
Treasm-y  securities,  excluding  the  refinancing  of  regular  weekl}^  bills. 
For  additional  information  see  table  41  for  allotments  by  investor 
classes  and  the  exhibits  on  public  debt  operations  beginning  with 
exhibit  1. 


REVIEW    OF   FISCAL    OPERATIONS 


51 


Public  offerings  of  marketable  Treasury  securities  excluding  refinancing  of  regular 

weekly  bills,  fiscal  year  1962 

[In  millions  of  dollars] 


Date  of 
issue 


Description  of  security 


Issued  for 
cash 


For 

new 

money 


For 
re- 
funding 


Issued  in 
exchange 


For 
matur- 
ing 
issue 


In 
ad- 
vance 

re- 
funding 


Total 


1961 

Apr.  1 
Aug.  1 
Aug.  1 
Aug.  1 
Sept.  15 
Sept.  15 
Sept.  15 
Oct.  1 
Oct.  11 
Nov.  15 
Nov.  15 
Nov.  15 
Dec.   15 

196H 

Jan.  24 
Feb.  15 
Feb.  15 
Mar.  1 
Mar.  1 
Mar.  1 
Mar.  1 
Apr.  1 
Apr.  18 
May  15 
May  15 
May  15 


1961 


July 

15 

July 

26 

Sept. 

27 

Oct. 

16 

Nov. 

15 

1962 

Jan. 

15 

Mar. 

23 

Apr. 

15 

Bonds,  Notes,  and  Certificates  of  indebtedness 


1J^%  exchange  note— Apr.  1, 1966  ' 

3K%  note— Nov.  15,  1962 

3M%  note— Aug.  15,  1964 

3's%  bond— May  15,  1968  additional  at  99.375. 

3H%  bond— Nov.  15,  1980  additional.. 

3M%  bond— Feb.  15,  1990  additional.. 

33^%  bond— Nov.  15, 1998  additional 

1M%  exchange  note— Oct.  1,  1966  '. 

Z]4%  note— May  15, 1963  additional  at  99.875.. 

3M%  note— Feb.  15,  1963 

3M%  bond— May  15, 1966  additional  at  99.75.. 
3J8%  bond— Nov.  15, 1974  additional  at  99.00.. 
ZJiJo  bond— May  15,  1968  additional  at  99.50.. 


2  606 

6,082 

5,019 

749 


357 


1,273 
1,298 
1,187 


2,295 


3,642 

2,384 

517 

3  320 


4%  bond— Oct.  1, 1969  additional  at  99.75.. 

3H%  certificate— Feb.  15, 1963 

4%  note— Aug.  15,  1966 

4%  bond— Aug.  15,  1971 

4%  bond— Feb.  15,  1980  additional 

31^%  bond— Feb.  15,  1990  additional 

3J^2%  bond— Nov.  15,  1998  additional 

1M%  exchange  note— Apr.  1, 1967  ' 

ZH%  bond— Aug.  15, 1968 

33^%  certificate— May  15, 1963 

ZVi%  note— Feb.  15,  1966  issued  at  99.80... 
3J8%  bond— Nov.  15, 1971  issued  at  99.50.. 

Total  bonds,  notes,  and  certificates. 

Bills  *  (Matukity  Value) 


2.908%  1-yr.— July  15, 1962 

2.484%  240-day  (tax  anticipation)  Mar.  23,  1962. 
2.705%  268-day  (tax  anticipation)  June  22,  1962., 

2.975%  1-yr.— Oct.  15,  1962 , 

2.277%  46.5-day  average  for  strip  « , 


1,114 


6,862 
4,454 


2,806 
563 
900 
933 


1,258 


48 


6,685 
3,113 
1,204 


3.366%  1-yr.— Jan.  15, 1963. 

2.896%  182-day  (tax  anticipation)  Sept.  21,  1962 

2.943%  1-yr.— Apr.  15,  1963 

Increases  in  regular  weekly  bill  offerings 

1961:  July  through  September 199 

October  through  December 201 

1962:  January  through  March 801 

April  through  June 1,502 

Total  bills... 

Total  public  offerings 


4,667 


503 

3,503 

2,511 

501 

800 


500 
6 1, 802 


1,491 


42,044 


10 


8,959 


1,491 


11 


1,363 


139 


1,921 


80 


2,703 


12, 823 
17,490 


6,266 
6,266 


240 
42, 284 


8,959 


606 
6,082 
5,019 

749 
1,273 
1,298 
1,187 

357 
2,295 
3,642 
2,384 

517 

320 


1,114 

6,862 

4,454 

2,806 

563 

900 

933 

48 

1,258 

6,685 

3,113 

1,204 


55, 670 


2,004 
3,503 
2,511 
2,003 
800 


2,001 
1,802 
2,001 


2,703 


19, 329 
74, 999 


•  Issued  only  on  demand  in  exchange  for  2%%  Treasury  Bonds,  Investment  Series  B-1975-80. 

2  Issued  subsequent  to  June  30, 1961. 

'  Includes  about  $306,000  cash  payment  on  exchange  of  Series  F  and  G  savings  bonds. 

<  Treasury  bills  are  sold  on  a  discount  basis  with  competitive  bids  for  each  issue.  The  average  price  for 
auctioned  issues  gives  an  approximate  yield  on  a  hauls:  discount  basis  as  indicated  for  each  series. 

«  Consists  of  additional  amounts  of  eight  series  of  outstanding  regular  weekly  Treasury  bills,  $100  million 
maturing  each  week  from  Dec.  7,  1961,  through  Jan.  25, 1962. 

« Includes  $168  million  tax  anticipation  bills  maturing  Mar.  23, 1962,  which  were  presented  for  payment 
in  lieu  of  cash. 


52 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Disposition  of  marketable  Treasury  securities  excluding  regular  weekly  bills,  fiscal 

year  1962 

[In  millions  of  dollars] 


Date  of 
refund- 
ing or 
retire- 
ment 


1961 

Aug. 

1 

Aug. 

1 

Aug. 

1 

Aug. 

1 

Sept. 

15 

Sept. 

15 

Nov. 

15 

196S 

Feb. 

15 

J'eb. 

15 

Feb. 

15 

Feb. 

15 

Mar. 

Mar. 

Mar. 

Mar. 

Mar. 

May 

15 

May 

15 

May 

15 

1961 

July 

15 

Sept. 

22 

Oct. 

16 

196S 

Jan. 

15 

Mar. 

23 

Apr. 

15 

June 

22 

Security 


Description  and  maturity  date 


Bonds,  Notes,  and  Certificates  of 
Indebtedness 

ZH%  certificate— Aug.  1, 1961 

4%  note— Aug.  1,  1961 

2H%  bond— Sept.  15,  1961 

ni%  note— Oct.  1,  1961 

2H%  bond— Mar.  15,  1965-70 

21.^%  bond— Mar.  15,  1966-71 

2}2%  bond— Nov.  15,  1961 - 

35/^%  note— Feb.  15,  1962 

4%  note— Feb.  15,  1962 

3H%  note— Feb.  15,  1962 

nWo  note— Apr.  1,  1962 

3%  bond— Feb.  15,  1964 

2S/g%  bond— Feb.  15,  1965 

2!-^%  bond— June  15,  1967-72... 

2H%  bond— Sept.  15,  1967-72 

2H%  bond— Dec.  15,  1967-72 

3%  certificate- May  15,  1962 , 

4%  note— May  15,  1962 

2H%  bond— June  15,  1962 

Total  bonds,  notes,  and  certificates 

Bills 

3.265%— July  15,  1961.. 

2.473%— (tax  anticipation)  Sept.  22,  1961 . 
3.131%— Oct.  16,  1961 


Issue  date 


2.679%— Jan.  15,  1962. 

2.484%— (tax  anticipation)  Mar.  23,  1962. 
2.827%— Apr.  15,  1962.. 

2.7057o— (tax  anticipation)  June  22,  1962.. 

Total  bills 

Total  securities 


Aug. 

Aug. 

Nov. 

Oct. 

Feb. 

Dec. 

Feb. 


May 

Feb. 

Nov. 

Apr. 

Feb. 

June 

June 

Oct. 

Nov. 

May 

Apr. 

June 


15, 1960 
1, 1957 
9, 1953 
1, 1956 
1, 1944 
1,1944 

15, 1954 


1, 1957 

15. 1959 

15. 1960 
1, 1957 

14, 1958 
15, 1958 
1, 1945 
20, 1941 
15, 1945 

15. 1961 
14, 1960 

1, 1945 


Redeemed 
for  cash 

or 

carried  to 

matured 

debt 


Julv  15,1%0 
Apr.  3, 1961 
Oct.    17,1960 


Jan.  15, 1961 
July  26,1961 
Apr.  15,1961 
Sept.  27, 1961 


Exchanged  for 
new  security 


At  ma- 
turity 


198 

348 

52 


419 


62 
126 
142 

86 


99 

157 
423 


2,200 


1,491 
2  1, 503 

1,491 


1,363 
3  3, 503 

1,920 
2  2,511 


13, 782 
15, 982 


7,741 

1,938 

1,891 

280 


In  ad- 
vance 
refund 
ing 


6,544 


585 
1,309 
8,956 

465 


5,410 
2,054 
3,540 


40, 713 


I  10 


111 


1  139 


180 


240 
40,953 


2,251 
1,506 


1,154 

2,214 

414 

764 

656 


8,959 


8,959 


Total 


7,829 
2,136 
2,239 
332 
2,251 
1,506 
6,963 


647 

1,435 

9,098 

551 

1,154 

2,214 

414 

764 

656 

5,509 

2,211 

3,963 


61,873 


1,501 
1,503 
1,502 


1,502 
3,503 
2,000 
2,511 


14,021 
65, 894 


•  Accepted  m  payment  in  lieu  of  cash. 
2  Including  tax  anticipation  issues  redeemed  for  taxes. 

'  Includes  amount  redeemed  for  taxes  and  amount  accepted  in  payment  in  lieu  of  cash  for  the  new  tax 
anticipation  bill  maturing  Sept.  21, 1962. 


REVIEW    OF   FISCAL    OPERATIONS 


53 


Allotments  of  marketable  Treasury  securities  other  than  regular  weekly  bills,  fiscal 

year  1962  i 

[In  millions  of  dollars] 


Date  of 
financ- 
ing 


Issue — description  of  security  and 
maturity  date 


Amount 
issued 


Allotments  by  investor  classes 


U.S.  Gov- 
ernment 

investment 
accounts 

and 

Federal 

Reserve 

Banks 


Commer- 
cial banks  2 


All  others 


1961 
Aug.  1 
Aug.  1 
Aug.  1 
Sept.  15 
Sept.  15 
Sept.  15 
Oct.  11 
Nov.  15 
Nov.  15 
Nov.  15 
Dec.  15 

196S 
Jan.  24 
Feb.  15 
Feb.  15 
Mar.  1 
Mar.  1 
Mar.  1 
Mar.  1 
Apr.  18 
May  15 
May  15 
May  15 


1961 
July  15 
July  26 
Sept.  27 
Oct.  16 
Nov.  15 

196S 
Jan.    15 
Mar.  23 
Apr.  15 


Bonds,  Notes,  and  Certificates  of 

Indebtedness 

3M%  note— Nov.  15,  1962-H 

3M%  note— Aug.  15,  1964-E.... 

3Vg%  bond— May  15,  1968  additional 

3H%  bond— Nov.  15,  1980  additional 

3J^%  bond— Feb.  15,  1990  additional 

3J^%  bond— Nov.  15,  1998  additional 

3M%  note— May  15.  1963-D  additional.... 

3M%  note— Feb.  15,  1963-E... 

3%%  bond— May  15,  1966  additional 

37-8%  bond— Nov.  15,  1974  additional 

3J^%  bond— May  15,  1968  additional 

4%  bond— Oct.  1, 1969  additional 

3J^%  certificate- Feb.  15,  1963-A 

4%  note— Aug.  15,  1966-A 

4%  bond— Aug.  15,  1971 

4%  bond— Feb.  15,  1980  additional 

3}4%  bond— Feb.  15,  1990  additional 

3M%  bond— Nov.  15,  1998  additional 

3M%  bond— Aug.  15,  1968 

3M%  certificate- May  15,  1963 

3Vs%  note— Feb.  15,  1966 

3>g%  bond— Nov.  15,  1971 

Bills 

2.908%— July  15,  1962 

2.484%  (tax  anticipation)— Mar.  23,  1962.. 

2.705%  (tax  anticipation)— June  22,  1962 

2.975%— Oct.  15,  1962 

2.277%,— strip  3 

3.366%— Jan.  15,  1963 

2.896%  (tax  anticipation)— Sept.  21,  1962.. 
2.943%— Apr.  15,  1963 


6,082 

5,019 

749 

1,273 

1,298 

1,187 

2,295 

3,642 

2,384 

517 

320 


1,114 

6,862 

4,454 

2,806 

563 

900 

933 

1,258 

6,686 

3,114 

1,204 


2,004 
3,503 
2,511 
2,003 
800 


2,001 
1,802 
2,001 


3,386 

1,600 

58 

480 

161 

290 

100 

68 

4 

136 

(*) 


100 

3,411 

1,518 

408 

177 

218 

221 

100 

2,330 

17 

64 


75 

"iii' 


217 
153 
163 


1,241 

2,203 

309 

61 

81 

50 

2,056 

2,158 

1.514 

105 

136 


780 
1,618 
2,043 
1,591 

116 
94 
77 

753 
2,287 
2,261 

653 


917 

3,473 

2,493 

939 

361 


,078 
689 
925 


1,455 

1,216 
382 
732 

1,056 
847 
139 

1,416 
866 
276 
184 


234 
1,833 
893 
807 
270 
588 
635 
405 
2,069 
836 
487 


1,012 

30 

18 

953 

439 


706 
960 
913 


*Less  than  $500,000. 

1  Excludes  1M%  Treasury  E  A  and  EO  notes  issued  in  exchange  for  nonmarketable  2%%  Treasury  Bonds, 
Investment  Series  B-1975-80. 

2  Includes  trust  companies  and  stock  savings  banks. 

'  Consists  of  an  additional  $100  million  each  of  eight  series  of  outstanding  weekly  bills  issued  in  a  strip  on 
Nov.  15,  1961,  maturing  Dec.  7,  1961  to  Jan.  25,  1962,  inclusive. 


54    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  public  debt  subject  to  limitation  rose  to  levels  not  far  from  the 
temporary  ceiling  of  $298  billion  during  the  first  half  of  the  fiscal  year 
because  of  seasonal  and  other  cash  borrowing.  The  peak  of  $297.3 
billion  was  reached  on  November  24,  1961. 

The  temporary  limit  which  had  been  authorized  on  June  30,  1961, 
before  the  Berlin  crisis  made  additional  defense  expenditures  neces- 
sary, provided  the  Treasury  with  little  margin  to  meet  its  seasonal 
borrowing  needs  or  to  meet  any  unforeseen  requirements.  On  March 
13,  1962,  an  additional  temporary  increase  of  $2  billion  was  author- 
ized by  the  Congress  for  the  balance  of  the  fiscal  year,  bringing  the 
temporary  ceiling  to  $300  billion  for  the  period  from  March  13,  1962, 
through  June  30,  1962.  The  debt  subject  to  limitation  during  the 
second  half  of  the  fiscal  year  rose  to  a  new  peak  of  $299.5  billion  on 
June  14,  1962. 

Since  the  outstanding  debt  would  exceed  the  temporary  lunit  of 
$300  billion  at  the  end  of  the  fiscal  year  1962  and  regular  seasonal 
borrowing  would  be  required  during  the  ensuing  fiscal  year,  an  act 
approved  July  1,  1962,  authorized  increased  ceilings  in  the  temporary 
debt  limit  as  follows:  $308  billion  from  July  1,  1962,  through  March 
31,  1963,  $305  bilhon  from  April  1  through  June  24,  1963,  returning 
to  $300  billion  from  June  25  through  June  30,  1963.  For  further 
detail  on  the  statutory  limit  on  the  public  debt  and  guaranteed 
obligations  as  of  June  30,  1962,  see  table  36  and  for  a  summary  of 
amendments  to  the  law  limiting  the  debt,  see  table  37. 

Public  nonmarketable  debt  decreased  by  less  than  $0.1  billion  during 
fiscal  1962  to  $53.4  billion.  The  relatively  small  net  change  reflected 
more  substantial  increases  and  decreases  in  the  various  types  of  public 
nonmarketable  debt  outstanding,  including  large  changes  within 
the  savings  bonds  category. 

As  previously  mentioned,  direct  borrowing  from  foreign  official 
agencies  amounted  to  $1.0  billion  at  the  close  of  the  fiscal  year.  This 
amount  of  nonmarketable  borrowing  was  offset  by  a  decline  of  $1.1 
billion  in  the  investment  series  bonds.  The  steady  decline  in  invest- 
ment series  bonds  continued  in  fiscal  1962,  and,  as  in  the  past,  was 
due  principally  to  the  exchange  of  nonmarketable  Series  B  investment 
bonds  for  marketable  5-year  Iji  percent  exchange  notes. 

The  largest  portion  of  the  public  nonmarketable  debt  is  in  U.S.  sav- 
ings bonds,  which  are  demand  securities  pa3^able  at  guaranteed  re- 
demption values.  Although  savings  bonds  of  various  series  have 
been  continuously  on  sale  since  March  1935,  Series  E  and  Series  H 
are  the  only  savings  bonds  currently  being  sold.  There  were  $45.0 
bUlion  of  these  series  outstanding  on  June  30,  1962,  amounting  to  15 
percent  of  the  total  interest-bearing  debt.  The  growth  in  E  and  H 
bonds  outstanding  was  $1.1  billion  for  the  year,  which  was  slightly 


REVIEW    OF    FISCAL    OPERATIONS 


55 


larger  than  their  increase  in  fiscal  1961.  Series  F,  G,  J,  and  K  bonds, 
no  longer  on  sale,  decreased  by  $1.0  billion.  This  decline  included 
the  $320  million  Series  F  and  G  bonds  that  would  have  matured 
during  the  calendar  year  1962,  but  which  were  exchanged  on  December 
15,  1961,  in  accordance  with  the  Treasury's  offer,  for  the  3%  percent 
marketable  bond  of  1968.  Total  interest-bearing  savings  bonds  out- 
standing of  all  series  at  the  close  of  fiscal  1962  was  $47.6  billion,  an 
increase  of  $0.1  bUlion  during  the  year. 


Class  of  security 

June  30, 1961 

June  30,  1962 

Increase,  or 
decrease  (— ) 

In  billions  of  dollars 

U.S.  savings  bonds: 

Series  E 

37.8 
6.0 

38.3 
6.7 

0  4 

Series  H 

7 

Subtotal  E  and  H 

43.8 
1.8 
1.9 

45.0 

.9 

1.8 

1  1 

Series  F  and  Q 

—  9 

Series  J  and  K 

—  1 

Subtotal  savings  bonds 

47.5 

47.6 

.9 
.1 

(*) 

4.7 
.1 

.1 

Certificates  of  indebtedness: 

Foreign  series 

g 

Foreign  currency  series 

.1 

Treasury  bonds: 

RE  A  series 

(*) 

5.8 
.1 

(*) 
-1.1 

Investment  series 

Depositary  bonds 

(*) 

Total  interest-bearing  public  nonmarke table  issues 

53.5 

53.4 

(*) 

•Less  than  $50  million. 

During  fiscal  1962,  the  Treasury  encouraged  new  and  continued 
investment  in  Series  H  bonds  in  two  ways.  In  August  1961,  H  bonds 
with  issue  dates  of  June  1952  through  January  1957  were  granted  a 
10-year  extension.  Beginning  February  1,  1962,  the  first  of  these 
bonds  in  their  extended  maturity  period  will  earn  interest  at  a  straight 
3%  percent  rate  per  annum,  payable  semiannually  by  Treasury 
check.  This  is  the  first  time  that  the  Treasury  has  given  the  exten- 
sion privilege  to  any  savings  bonds  other  than  Series  E.  In  addition, 
the  Treasury  announced  in  November  1961  that  the  annual  purchase 
limit  of  H  bonds  would  be  increased  to  $20,000  after  January  1,  1962. 
The  limit  of  $10,000  (maturity  value)  on  E  bonds  was  continued. 
Details  of  these  new  regulations  may  be  found  in  exhibits  7-10. 

OWNERSHIP  OF  FEDERAL  SECURITIES 

Of  the  $9.4  billion  total  increase  in  the  Federal  debt  during  fiscal 
1962,  the  banking  system  (commercial  and  Federal  Reserve  Banks) 
absorbed  $4.8  billion.  Private  nonbank  investors  acquired  $4.2 
billion  and  Government  investment  accounts  absorbed  the  remaining 
$0.4  bUlion.  Ownership  of  Federal  securities  by  investor  classes  on 
selected  dates  is  presented  in  the  following  table. 


56    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Ownership  of  Federal  securities  '  by  investor  classes  on  selected  dates,  1 941-63 

[Dollar  amounts  in  billions] 


June  30, 
1941 

Feb.  28, 
1946  2 

June  30, 
1961 

June  30, 
1962 

Change 

during 

fiscal  year 

1962 

Estimated  ownership  by: 

Private  nonbank  investors: 

Individuals  5 

$11.2 

7.1 

3.4 

2.0 

.6 

.2 

.5 

$64.1 

24.4 

11.1 

19.9 

6.7 

2.4 

6.6 

'  $63. 4 

11.4 

6.3 

'19.7 

'19.3 

12.8 

10.5 

$65.2 
11.3 
6.3 
19.3 
19.7 
14.1 
11.6 

$1.8 
—  1 

Insurance  companies 

Mutual  savings  banlis-. ..- 

(•) 
—.4 

Corporations  *... 

State  and  local  governments 

4 

Foreign  and  international' 

1  5 

Miscellaneous  investors  ' 

1. 1 

Total  private  nonbank  investors 

25.0 
8.5 

19.7 
2.2 

135.1 
28.0 
93.8 
22.9 

143.3 
56.1 
62.5 
27.3 

147.6 
56.5 
65.0 
29.7 

4  2 

Federal  Government  investment  accounts. 

Commercial  banks ..  _. 

.4 
2  4 

Federal  Reserve  Banks... 

2  4 

Total  gross  debt  outstanding 

55.3 

279.8 

289.2 

298.6 

9  4 

Percent  of  total 

Percent  owned  by: 

Private  nonbank  investors; 

Individuals.. 

20 
25 

23 
25 

22 
28 

22 

28 

Other 

Total 

45 

15 

36 

4 

48 

10 

34 

8 

50 

19 

22 

9 

49 
19 
22 
10 

Federal  Government  investment  accounts 

Commercial  banks 

Federal  Reserve  Banks.                      ..  .  . 

Total  gross  debt  outstanding 

100 

100 

100 

100 

•Less  than  $50  million. 
'  Revised. 

•  Gross  public  debt,  and  guaranteed  obligations  of  the  Federal  Government  held  outside  the  Treasury. 
2  Immediate  postwar  peak  of  debt. 

'  Includes  partnerships  and  personal  trust  accounts.    Nonprofit  institutions  and  corporate  pension  trust 
funds  are  included  under  "Miscellaneous  investors." 

♦  Exclusive  of  banks  and  insurance  companies. 

» Includes  the  investments  of  foreign  balances  and  international  accounts  in  the  United  States. 
8  Includes  savings  and  loan  associations,  nonprofit  institutions,  corporate  pension  trust  funds,  and  non- 
bank  dealers. 

Private  nonbank  investors  held  an  estimated  $147.6  billion  of 
Federal  securities  at  the  end  of  fiscal  1962,  almost  one-half  of  the 
$298.6  billion  total  Federal  debt  outstanding.  This  group  of  investors 
comprises  individuals  (including  partnerships  and  personal  trust 
accounts),  insurance  companies,  mutual  savings  banks,  savings  and 
loan  associations,  nonfinancial  corporations,  pension  funds,  foreign 
and  international  accounts,  State  and  local  governments,  nonbank 
dealers,  and  nonprofit  associations.  Commercial  banks  and  Federal 
Reserve  Banks  together  held  $94.6  billion,  representing  nearly  one- 
third  of  the  debt.  The  remaining  $56.5  billion  was  held  in  Govern- 
ment investment  accounts  (primarily  social  security  and  unemployment 
trust  funds,  veterans'  insurance  funds,  and  Government  employees' 
retirement  funds).    These  figures  are  graphically  presented  in  chart  8. 


REVIEW    OF   FISCAL    OPERATIONS 

Chart  8 
Ownership  of  the  Federal  Debt,  June  30, 1962 


57 


$Bil. 


300  > 


Total 


200  — 


I00>- 


;  298'/2 


Nonbank  Investors 


Gov't  Invest. 
Accounts 


All  Other 


Bonks 


;65;;;: 


'"""V<^ 


•^Coml 


Federal 
Reserve  ''■^|=;29^;^ 


Within  the  private  nonbank  sector,  individuals  increased  their 
holdings  of  Federal  securities  by  $1.8  billion,  from  $63.4'"  billion  in 
June  1961  to  $65.2  billion  in  June  1962,  and  remained  the  largest 
single  investor  group  in  the  Federal  debt  ownership  structure.  They 
increased  their  holdings  of  Series  E  and  H  savings  bonds  by  $1.1 
billion  during  the  fiscal  year,  bringing  their  investment  in  these 
bonds  to  an  alltime  high  of  $44.6  biUion  which  represented  two-thirds 
of  all  Federal  securities  owned  by  this  group.  Individuals'  holdings 
of  the  discontinued  Series  F,  G,  J,  and  K  savings  bonds  declined  by 
$0.5  bniion  dming  fiscal  1962,  while  holdings  of  other  Federal 
securities,  mainly  marketable  issues,  were  increased  by  about  $1.2 
billion. 

Federal  securities  held  by  insurance  companies  on  June  30,  1962, 
totaled  $11.3  billion,  a  decrease  of  $0.1  billion  during  the  year.  Life 
insurance  firms  owned  $6.2  bUlion,  or  54  percent  of  the  total,  $0.2 
billion  less  than  their  holdings  of  a  year  earlier.  Life  insurance 
companies  continued  to  reduce  their  investment  in  nonmarketable 
obligations  through  the  exchange  of  $0.4  biUion  Investment  B  bonds 
for  marketable  IK  percent  notes  during  the  year.  Through  their 
participation  in  the  senior  advance  refunding  of  September  1961,  life 
insurance  companies  acquired  an  additional  $1.0  bUlion  of  securities 
maturing  in  20  years  or  more.  This  refunding  of  almost  one-sixth 
of  their  total  Federal  securities  had  the  ejffect  of  sharply  increasing 


'  Eevised. 


58    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  average  length^  of  life  insurance  marketable  holdings  to  20  years 
8  months,  from  the  1961  fiscal  yearend  figure  of  16  years  7  months. 

Fire,  casualty,  and  marine  insurance  companies  increased  their 
holdings  of  Federal  securities  by  $0. 1  billion  during  the  year,  reaching 
a  yearend  level  of  $5.2  billion.  They  continued  to  hold  about 
two-thirds  of  their  marketable  portfolio  in  securities  matm'ing  within 
1  to  10  years  and  another  20  percent  in  under-one-year  maturities. 
The  average  length  of  the  marketable  holdings  of  these  companies 
was  reduced  by  2  months  during  the  fiscal  year  to  5  years  7  months  on 
June  30,  1962. 

At  the  end  of  fiscal  1962  mutual  savings  banks  held  $6.3  billion  of 
Federal  securities,  slightly  less  than  on  June  30,  1961.  Savings  banks 
increased  their  holdings  of  securities  in  the  20-year  and  over  category 
by  $0.3  billion  during  the  year,  primarily  by  subscribing  to  long-term 
issues  offered  in  the  senior  advance  refunding  of  September  1961. 
Mainly  as  a  result  of  this  exchange,  the  average  maturity  of  the 
mutual  savings  banks  portfolio  rose  from  10  years  6  months  on 
June  30,  1961,  to  11  years  3  months  at  the  end  of  fiscal  1962. 

Federal  securities  held  by  nonfinancial  corporations  totaled  $19.3 
billion  at  the  end  of  fiscal  1962,  $0.4  billion  lower  than  the  amount 
held  on  June  30,  1961. 

Holdings  of  Federal  securities  by  State  and  local  governments 
were  estimated  to  be  $19.7  billion  at  the  close  of  fiscal  1962,  an  increase 
of  $0.4  billion  from  that  of  June  1961.  About  $6  billion  of  the  Federal 
security  holdings  of  these  State  and  local  governmental  units  was  in 
employee  retirement  funds.  The  retirement  funds  participated  ac- 
tively in  the  senior  advance  refundings  during  the  fiscal  year  and 
acquired  $0.5  billion  of  securities  maturing  in  1980,  1990,  and  1998. 
The  maturity  structure  of  their  portfoho  closely  paralleled  that  of 
life  insurance  companies  and  the  average  length  of  the  marketable 
holdings  of  186  surveyed  funds  on  June  30,  1962,  was  slightly  over 
21  years. 

The  general  purpose  funds  of  State  and  local  governments  continued 
to  increase  during  the  year  as  the  investment  of  temporarily  idle 
balances  resulting  from  capital  market  borrowing  and  other  som^ces 
grew  at  a  faster  pace  than  the  liquidation  for  current  cash  needs. 
Although  well  over  one-half  of  the  holdings  of  these  funds  mature  in 
the  12  months  of  fiscal  year  1963,  there  is  a  sizeable  investment  in 
securities  maturing  in  the  over  20-year  maturity  range.  These 
general  funds  added  $0.4  billion  of  1980,  1990,  and  1998  maturities 
during  the  advance  refundings  of  fiscal  1962,  and  at  the  end  of  the 


>  In  deriving  average  length  figures,  all  marketable  securities  are  classified  to  final  maturity  except 
partially  tax-exempt  bonds  which  are  classified  to  earliest  call  date. 


REVIEW    OF   FISCAL    OPERATIONS  59 

year,  the  average  length  of  the  marketable  holdings  of  298  surveyed 
funds  reached  5  years  8  months. 

The  holdings  of  all  other  private  nonbank  investors  amounted  to 
$25.7  biUion  on  June  30,  1962,  an  increase  of  $2.5  billion  for  the  year. 
Foreign  balances  invested  in  Federal  securities  increased  by  $0.9 
billion  to  $9.0  billion  at  the  close  of  the  fiscal  year.  The  larger 
Western  European  countries  accounted  for  the  bulk  of  the  12-month 
increase  which  was  largely  represented  by  special,  nonmarketable  cer- 
tificates of  indebtedness  issued  directly  to  foreign  monetary  authori- 
ties. International  institutions  increased  their  holdings  by  $0.6 
billion  as  the  International  Bank  for  Reconstruction  and  Develop- 
ment acquired  $0.3  billion  of  marketable  securities,  and  the  Inter- 
national Monetary  Fund  an  additional  $0.2  billion  of  special 
noninterest-bearing  notes. 

Savings  and  loan  associations  increased  their  holdings  by  $0.4 
billion  during  the  fiscal  year  to  $5.4  billion.  The  marketable  securi- 
ties of  the  488  large  savings  and  loan  associations  included  in  the 
Treasury  survey  of  ownership  had  an  average  length  to  maturity  of 
9  years  3  months  on  June  30,  1962,  4  months  longer  than  that  of  the 
previous  fiscal  yearend. 

The  remaining  investors  (nonprofit  associations,  nonbank  dealers, 
corporate  pension  funds,  and  certain  smaller  institutional  groups)  in 
the  private  nonbank  investor  group  are  estimated  to  have  increased 
their  holdings  of  Federal  securities  by  $0.7  biUion  during  the  fiscal 
year  and  to  have  held  about  $6.2  billion  on  June  30,  1962. 

Government  investment  accounts  added  to  their  holdings  of  Fed- 
eral securities  during  the  year  by  $0.4  billion.  The  largest  increases 
were  registered  by  the  Government  employee  retirement  funds  ($1.0 
billion),  the  highway  trust  fund  ($0.2  billion),  and  the  Federal  De- 
posit Insurance  Corporation  ($0.2  biUion).  The  major  offset  to  these 
increases  was  a  $1.1  billion  reduction  in  the  Federal  old-age  and  sur- 
vivors insurance  trust  fund.  Of  the  $56.5  billion  Federal  securities 
held  by  Government  investment  accounts  on  June  30,  1962,  $44.9 
billion,  or  almost  80  percent,  was  in  the  form  of  special  issues  held 
only  by  these  accounts.  Details  on  the  ownership  by  Government 
investment  accounts  are  shown  in  tables  67-92. 

The  $4.8  biUion  increase  in  Federal  securities  held  by  the  banking 
system  during  the  year  was  evenly  divided  between  commercial  and 
Federal  Reserve  Banks.  The  $2.4  billion  increase  in  the  Federal  Re- 
serve System  account  brought  the  total  to  $29.7  billion  at  the  yearend. 
The  $2.4  bUlion  increase  in  the  holdings  of  commercial  banks  was  con- 
centrated in  the  smaUer  country  member  and  nonmember  bank  groups 
which  acquired  $2.0  biUion  of  the  total.     New  York  and  Chicago 


60 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


banks  reduced  their  holdings  of  Federal  securities  by  $0.2  billion, 
while  reserve  city  banks  added  $0.6  billion. 

A  breakdown  of  the  estimated  changes  during  fiscal  1962  in  bank 
versus  nonbank  ownership  is  given  by  type  of  issue  in  the  following 
table.  A  summary  of  the  Treasury  survey  of  ownership  of  the 
interest-bearing  public  debt  and  guaranteed  obligations  for  fiscal  1962 
is  shown  in  table  58. 


Estimated  changes  in  ownership  of  Federal  securities  '  by  type  of  issue,  fiscal  year 

1962 


[In  billions  of  doUars 

Total 
changes 

Change  accounted  for  by- 

Private 
nonbank 
investors 

Govern- 
ment in- 
vestment 
accounts 

Commer- 
cial 
banks 

Federal 

Reserve 

Banks 

Marketable  securities: 
Treasury  bills: 

Weekly — maturing  within  3  months. 

2.5 

1.0 

1.5 

.3 

1.1 

1.1 

1.6 

.4 

.1 
-.1 

-.1 

(*) 

1.3 
-.3 

.1 
-.2 

(*) 

Weekly — maturing  in  3-6  months 

2 

One-year  -_  

-.1 

Tax  anticipation . 

.1 

Total  bills 

5.3 

.2 

9.2 

-5.6 

4.2 

.8 

.9 

-2.3 

(•) 
(•) 
(•) 
.5 

1.0 

.3 

5.7 

-4.4 

.1 

Treasury  certificates  of  indebtedness... 

-.9 

Treasury  notes.. _ 

2.6 

Treasury  bonds,  etc 

.6 

Total  marketable. - 

9.1 

3.6 

.6 

2.5 

2.4 

Nonmarketable  securities,  etc.: 
U.S.  savings  bonds 

.1 

-.1 

-1.1 

1.4 

2 

""""-i.6' 

1.4 

(*) 

-.1 
-.1 

-.1 

Special    issues    to     Government    investment 
accounts .. 

Treasury  bonds,  investment  series... 

(*) 

Other .. 

Total  nonmarketable,  etc.. 

.3 

.6 

-.2 

-.1 

Total  change 

9.4 

4.2 

.4 

2.4 

2.4 

•Less  than  $50  million. 

>  Gross  public  debt,  and  guaranteed  obligations  of  the  Federal  Government  held  outside  the  Treasury. 

Taxation  Developments 

Taxation  developments  during  1962  were  highlighted  by  the  com- 
pletion of  congressional  action  on  recommendations  contained  in  the 
President's  tax  message  of  April  1961  (see  the  1961  annual  report 
exhibit  12,  pp.  303-313).  The  Revenue  Act  of  1962,  enacted  in  Octo- 
ber, provides  an  investment  credit  to  stimulate  modernization  of 
American  productive  capacity,  removes  unwarranted  tax  induce- 
ments to  investment  abroad,  and  contains  many  provisions  to  make 
the  tax  law  more  equitable.  As  a  further  encouragement  to  invest- 
ment, in  July  1962  the  Treasury  Department  issued  a  revision  of 
depreciation  schedules  and  procedures  to  permit  more  rapid  and 
realistic  depreciation  of  machinery  and  equipment.     Legislation  was 


REVIEW    OF   FISCAL    OPERATIONS  61 

also  enacted  granting  self-employed  individuals  the  right  to  take  an 
income  tax  deduction  for  contributions  to  qualified  pension  and  profit- 
sharing  plans.  The  rates  of  the  corporate  income  tax  and  certain 
excise  taxes  were  extended  for  another  year  beyond  their  scheduled 
expiration  date  of  June  30,  1962. 

Presidential  tax  recommendations 

The  January  1962  budget  message  of  the  President  for  the  fiscal 
year  1963  repeated  his  request  of  April  20,  1961,  for  a  tax  credit  for 
investment  in  depreciable  property,  with  offsetting  revenues  to  be 
derived  from  tax  reforms.  (For  further  details,  see  the  1961  annual 
report,  pp.  102-103.) 

As  part  of  his  general  recommendations  to  utUize  Federal  budget 
policy  for  economic  growth  and  stability,  the  President  included  in 
the  budget  message  a  request  for  standby  discretionary  authority, 
subject  to  congressional  veto,  to  reduce  personal  income  tax  rates 
when  there  is  clear  evidence  of  economic  need.  It  was  suggested  that 
permissible  periods  and  percentages  for  such  reductions  be  included 
in  the  legislation.  In  addition,  the  President  urged  the  enactment  of 
legislation  to  strengthen  the  Federal-State  unemployment  system  by 
including  a  permanent  system  of  extended  benefits  under  certain 
circumstances  for  workers  whose  regular  benefits  have  expired. 

The  President's  budget  message  recommended  extension  for  an- 
other year  of  tax  rates  which  were  scheduled  to  be  reduced  or  repealed 
on  July  1,  1962.  These  included  the  corporation  income  tax  and  the 
excises  on  alcoholic  beverages,  cigarettes,  passenger  automobiles, 
automobile  parts  and  accessories,  and  general  telephone  service.  At 
the  same  time,  the  President  recommended  revision  of  the  10  percent 
excise  tax  on  transportation  of  persons  as  part  of  his  proposals 
for  a  system  of  user  charges  for  the  airways  and  waterways.  Under 
these  proposals,  the  10  percent  tax  on  transportation  of  persons, 
other  than  by  air,  would  have  been  repealed  effective  after  June  30, 
1962,  and  the  tax  on  transportation  of  persons  by  air  extended  at  the 
10  percent  rate  through  December  31,  1962.  As  of  January  1,  1963, 
the  tax  on  air  transportation  would  have  been  replaced  by  a  5  percent 
user  charge  on  transportation  of  persons  and  freight  by  air;  the  existing 
net  tax  of  2  cents  per  gallon  on  aviation  gasoline  would  have  been 
extended  to  jet  fuel,  with  the  rate  increased  to  3  cents  a  gallon  on 
fuel  used  in  general  (private  plane)  aviation;  and  a  tax  of  2  cents  per 
gallon  imposed  on  fuel  used  in  boats  on  the  inland  waterways. 

These  user  charge  recommendations  also  were  included  in  the 
President's  message  on  transportation  of  April  5,  1962.  That  message 
additionally  recommended  an  increase  from  5  years  to  7  years  in  the 


62    1962  REPORT  OF  THE  SECRETARY  OP  THE  TREASURY 

period  during  which  regulated  public  utilities,  including  those  engaged 
in  transportation,  can  carry  over  operating  losses. 

The  President's  message  on  conservation,  transmitted  to  the  Con- 
gress on  March  1,  1962,  recommended  the  creation  of  a  land  con- 
servation fund  to  be  used  to  purchase  additional  recreational  lands. 
The  fund  would  have  been  financed  by  fees  from  users  of  Federal 
parks  and  recreational  areas,  receipts  from  the  sale  of  surplus  Fed- 
eral lands  (other  than  military  lands),  the  2  cents  per  gallon  of  the 
4  cents  per  gallon  tax  on  gasoline  which  purchasers  of  gasoline  may 
now  have  refunded  if  the  gasoline  is  used  in  boats,  and  an  annual 
graduated  user  charge  on  pleasure  craft. 

Revenue  Act  of  1962 

The  Revenue  Act  of  1962,  Public  Law  87-834,  approved  October 
16,  1962,  miproves  existing  law  in  virtually  every  area  covered  by 
the  President's  1961  tax  proposals  (see  1961  annual  report,  pp. 
23-26).  Considerable  prelmiinary  work  on  the  bill  had  been  done 
by  the  Committee  on  Ways  and  Means  of  the  House  of  Representa- 
tives in  1961  (see  1961  annual  report,  pp.  104-105). 

Investment  credit. — The  President  originally  proposed  a  credit 
against  income  tax  liability  measured  primarily  by  investment  ex- 
penditures in  new  equipment  in  excess  of  current  depreciation  allow- 
ances. In  the  law  as  enacted,  the  credit  is  not  dependent  upon 
depreciation  allowances.  The  tax  credit  is  7  percent  (3  percent  in 
the  case  of  certain  public  utilities)  of  investment  made  after  Decem- 
ber 31,  1961,  in  depreciable  machinery  and  equipment  used  in  the 
United  States.  The  amount  of  the  credit  may  be  offset  in  full 
against  tax  liability  not  in  excess  of  $25,000,  and  against  one-fourth 
of  the  tax  liability  above  this  level.  A  tliree-year  carryback  and  a 
five-year  carryforward  are  provided  for  unused  credits.  In  comput- 
ing the  credit  there  is  taken  into  account  the  full  cost  of  property 
(except  that  the  cost  of  used  property  must  be  reduced  by  the  adjusted 
basis  of  similar  property  disposed  of)  with  an  estimated  useful  life 
of  eight  years  or  more,  two-thirds  of  the  cost  of  propertj^  ^\^th  an 
estimated  life  of  six  to  eight  years,  and  one-third  of  the  cost  of  prop- 
erty with  an  estimated  life  of  four  to  six  years.  All  investment  in 
ehgible  new  property  and  up  to  $50,000  per  year  of  investment  in 
used  property  may  qualify  for  the  credit.  Contrary  to  the  Presi- 
dent's recommendation,  the  law  requu'es  a  reduction  of  the  depreciable 
basis  of  assets  by  the  amount  of  the  investment  credit. 

Gain  from  disposition  of  certain  depreciable  property. — Gain  from  the 
disposition  of  depreciable  property  generally  has  been  taxed  at  capital 
gains  rates,  even  though  such  gain  may  represent,  in  whole  or  in  part, 
a  recovery  of  depreciation  previously  charged  against  ordinary  income. 
Under  the  Revenue  Act  of  1962,  the  gain  on  the  disposition  of  de- 


REVIEW    OF   FISCAL    OPERATIONS  63 

preciable  personal  property  will  be  taxed  as  ordinary  income  to  the 
extent  of  gain  representing  depreciation  taken  after  December  31, 
1961.  In  view  of  the  recapture  provided  for  gains  reflecting  "exces- 
sive" depreciation,  the  law  contains  a  liberalizing  change  which  permits 
taxpayers  to  reduce  the  amount  taken  into  account  as  salvage  value 
of  depreciable  personal  property  with  a  useful  life  of  three  years  or 
more  by  10  percent  of  the  cost  of  the  asset.  The  deduction  for 
charitable  contributions  of  depreciable  personal  property  also  is 
revised  to  reflect  the  new  treatment  of  gains  from  dispositions  of 
depreciable  personal  property.  The  deduction  is  reduced  by  the 
amount  of  any  depreciation  taken  after  December  31,  1961,  which 
would  have  been  taxed  as  ordinary  income  if  the  property  had  been 
sold  at  its  fair  market  value  at  the  time  of  such  contribution.  This 
provision  prevents  a  second  deduction  of  an  amount  already  deducted 
as  depreciation. 

The  President's  original  recommendation  that  ordinary  income  tax 
treatment  be  applied  to  gains  on  the  disposition  of  real  property  in 
the  same  manner  as  personal  property  was  not  included  in  the  law. 

Interest  and  dividends. — In  lieu  of  the  President's  recommendation 
for  withholding  of  tax  at  source  on  interest,  dividends,  and  coopera- 
tives' patronage  dividends,  the  new  law  provides  that  information 
returns  be  filed  with  the  Internal  Revenue  Service  on  payments 
made  on  or  after  January  1,  1963,  of  dividends,  interest,  or  patronage 
dividends  of  $10  or  more  per  annum  to  any  person.  Similar  informa- 
tion statements  must  be  furnished  to  the  recipients  of  such  payruents. 
Under  prior  law  and  regulations,  dividend  payments  of  $10  or  more, 
interest  payments  of  $600  or  more,  and  patronage  dividend  payments 
of  $100  or  more  had  to  be  reported  to  the  Service,  and  there  was  no 
reporting  to  the  recipient. 

The  President's  recommendation  for  repeal  of  the  dividend  credit 
and  exclusion  was  not  included  in  the  law. 

Travel,  entertainment,  and  gifts. — The  President  originally  recom- 
mended that  the  cost  of  certain  business  entertainment  and  the 
maintenance  of  entertainment  facilities,  such  as  yachts  and  hunting 
lodges,  be  disallowed  in  full  as  a  tax  deduction.  In  addition,  he 
requested  that  restrictions  be  imposed  on  the  deductibility  of  business 
gifts,  business  trips  combined  with  vacations,  and  excessive  personal 
living  expenses  incurred  on  business  travel  away  from  home. 

The  Revenue  Act  of  1962  imposes  substantial  limitations  on  deduc- 
tions for  entertainment  expenses.  The  so-called  Cohan  rule  (Cohan  v. 
Commissioner,  39  F.  2d  540),  under  which  taxpayers  could  estimate 
the  amount  of  these  expenses  for  tax  deduction  purposes,  is  ehminated. 
Strict  substantiation  is  now  required,  not  only  of  the  amount  of  such 
expenses  but  of  their  business  nature.     No  deduction  is  to  be  per- 


64    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

mitted  for  the  cost  of  most  business  gifts  in  excess  of  $25  to  any  one 
individual  per  year.  In  the  case  of  combined  business  and  vacation 
travel,  if  the  total  time  away  from  home  exceeds  one  week  and  if  the 
pleasure  portion  of  the  trip  constitutes  25  percent  or  more  of  the  time 
away  from  home,  no  deduction  is  allowed  for  the  portion  of  the  expense 
which  is  not  allocable  to  the  business  activity.  Entertainment  ex- 
penses are  disallowed  unless  they  are  directly  related  to — or,  in  the 
case  of  entertainment  immediately  preceding  or  follomng  a  sub- 
stantial and  bona  fide  business  discussion,  associated  Avith — the  active 
conduct  of  the  taxpayer's  business.  Costs  of  maintaining  enter- 
tainment facilities,  such  as  yachts,  hunting  lodges,  and  country  club 
dues,  are  to  be  allowed  as  a  deduction  only  if  the  particular  facility 
is  used  more  than  50  percent  in  furtherance  of  the  taxpayer's  trade 
or  business;  and  then  only  with  respect  to  the  portion  of  the  cost  of 
such  use  which  is  directly  related  to  the  active  conduct  of  the  tax- 
payer's trade  or  business.  Exceptions  to  the  new  limitations  are 
made  for  such  items  as  business  meals  and  recreational  expenses  for 
employees. 

Mutual  savings  banks  and  savings  and  loan  associations. — Mutual 
savings  banks  and  savings  and  loan  associations  were  virtually  free 
of  income  tax  under  prior  law  because  deductions  could  be  taken  for 
additions  to  bad  debt  reserves  as  long  as  total  reserves,  surplus,  and 
undivided  profits  did  not  exceed  12  percent  of  deposits.  The  Treasury 
Department  recommended  that  these  institutions  be  taxed  in  a  man- 
ner more  closely  comparable  to  commercial  banks.  Under  the 
Revenue  Act  of  1962,  the  savings  institutions  may  take  deductions 
for  additions  to  reserves  for  losses  on  nonqualifying  loans  (generally 
loans  on  other  than  real  property)  only  to  the  extent  that  the  deduc- 
tions are  based  on  loss  experience.  A  special  deduction  is  provided 
for  the  reserve  for  losses  on  qualifying  loans  on  real  property.  This 
deduction  is  the  larger  of:  (1)  60  percent  of  retained  income  (before 
deductions  for  bad  debt  reserves)  less  the  amount  of  additions  to  the 
reserve  for  nonqualifying  loans,  but  not  in  excess  of  the  amount  nec- 
essary to  bring  the  reserve  up  to  6  percent  of  real  estate  loans;  (2)  the 
amount  necessary  to  bring  the  reserve  up  to  3  percent  of  real  estate 
loans;  or  (3)  the  reserve  addition  which  would  be  permitted  under  the 
loss  experience  method.  More  generous  provision  is  made  for  new 
companies.  It  is  also  provided  that  the  deduction  for  additions  to 
the  loss  reserve  on  real  estate  loans  (unless  determined  under  the 
experience  method)  may  not  exceed  an  amount  which  brings  the  total 
of  reserves,  surplus,  and  undivided  profits  to  12  percent  of  deposits 
or  withdrawable  accounts.  Certain  excise  tax  exemptions  previously 
available  to  savings  and  loan  associations  also  were  repealed  by  the 
new  law. 


REVIEW    OF    FISCAL    OPERATIONS  65 

Cooperatives. — Under  prior  law  a  cooperative  could  exclude  from 
its  taxable  income  patronage  dividends  allocated  to  patrons  in 
noncash  form,  even  though  the  patrons  had  to  pay  no  current  tax  on 
such  allocations  because  they  had  no  market  value.  The  act,  following 
the  President's  recommendation,  provides  for  current  taxation  of 
cooperative  income,  either  at  the  cooperative  level  or  the  patron 
level.  In  order  for  patronage  dividends  to  be  deductible  by  a  coopera- 
tive, at  least  20  percent  of  the  face  value  must  be  paid  in  cash.  Fur- 
thermore, where  the  patronage  dividend  is  not  all  paid  in  cash,  the 
patron  is  subject  to  current  taxation  on  the  face  value  of  the  noncash 
portion  of  the  dividend  (and  this  portion  is  deductible  by  the  coopera- 
tive) only  if  it  is  redeemable  in  cash  within  90  days  at  the  option  of  the 
patron  or  the  patron  has  consented  by  specified  means  to  be  currently 
taxable  thereon. 

Mutual  fire  and  casualty  insurance  companies. — Stock  fire  and 
casualty  companies  are  taxed  on  their  total  income,  that  is,  income 
derived  from  investments  and  income  from  underwriting.  Mutual 
fire  and  casualty  insurance  companies,  on  the  other  hand,  have  been 
taxed  at  corporate  rates  only  upon  their  investment  income,  or  one 
percent  of  their  gross  receipts,  whichever  is  greater.  Underwriting 
income  and  losses  have  not  been  recognized  as  part  of  taxable  income. 
The  President  recommended  the  taxation  of  mutual  fire  and  casualty 
companies  on  the  same  basis  as  their  stock  counterparts. 

The  new  law  taxes  mutual  fire  and  casualty  companies  on  their 
underwriting  income  as  well  as  their  investment  income,  except  that  it 
defers  tax  upon  a  portion  of  each  year's  underwriting  income,  repre- 
senting a  reserve  against  underwriting  losses,  for  a  period  of  five  years 
and  for  an  indefinite  period  in  the  case  of  one-eighth  of  each  year's 
underwriting  income.  Special  provisions  apply  to  small  companies, 
companies  with  concentrated  risks,  reciprocals  or  interinsurers, 
and  factory  mutuals. 

Foreign  income. — The  Revenue  Act  of  1962  contains  a  number  of 
provisions  revising  the  tax  treatment  of  foreign  income.  As  a  general 
rule,  the  foreign  income  of  foreign  corporations  owned  by  Americans 
is  not  subject  to  U.S.  tax  until  such  income  is  distributed  to  the  U.S. 
owners.  The  Revenue  Act  of  1962  eliminates  this  deferral  of  U.S. 
tax  for  profits  of  those  foreign  corporations  which  have  "tax  haven" 
income  in  excess  of  30  percent  of  total  income.  The  U.S.  shareholders 
of  these  "tax  haven"  corporations  are  subject  to  current  tax  in  the 
United  States.  Tax  haven  corporations  are,  in  general,  those  incor- 
porated in  countries  which  impose  little  or  no  income  tax  on  opera- 
tions outside  such  countries.  Tax  haven  income  includes  such  items 
as  certain  types  of  interest,  dividends,  royalties,  and  profits  from 
some  sales  and  service  activities.     Dividend  and  interest  income  to 

661496—63 6 


66    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  foreign  corporation  from  less-developed  countries  which  would 
otherwise  be  tax  haven  income  wiU  not  be  taxed  if  reinvested  in  less- 
developed  countries.  Existing  law  with  respect  to  the  operation  of 
nontax  haven  foreign  corporations,  such  as  manufactm-ing  companies, 
is  not  affected  by  the  act.  Fm-thermore,  there  are  two  important 
overall  exceptions  to  the  application  of  current  taxation.  If  U.S. 
shareholders  of  a  foreign  corporation  (or  a  group  of  foreign  corpora- 
tions) receive  a  certain  "minunum  distribution"  of  aftertax  foreign 
earnings  of  the  corporation,  or  group  of  corporations,  they  will  be 
exempt  from  the  current  tax  on  the  tax  haven  income  of  such  cor- 
poration or  corporations.  Secondly,  if,  among  other  things,  75  per- 
cent of  the  foreign  company's  income  came  from  U.S.  exports  and 
sufficient  export  promotion  expenses  overseas,  its  U.S.  shareholders 
will  not  be  taxed  on  the  profits  from  such  export  trade  income  which 
might  otherwise  be  tax  haven  income  to  the  extent  that  such  profits 
are  reinvested  in  assets  used  in  its  export  trade  business. 

Another  amendment  revises  the  method  of  computing  the  U.S. 
tax  on  dividends  received  by  U.S.  corporations  from  foreign  subsid- 
iaries operating  in  developed  countries,  but  not  as  to  those  operating 
in  less-developed  countries.  Under  prior  law,  the  foreign  income  tax 
paid  by  the  foreign  subsidiary  was  deducted  from  the  earnings  and 
profits  subject  to  U.S.  tax  as  a  dividend.  In  addition,  the  U.S. 
company  was  allowed  a  tax  credit  (a  deduction  from  its  tax  liability) 
for  a  proportionate  part  of  the  foreign  income  tax  paid  by  the  sub- 
sidiary. Thus,  both  a  deduction  and  a  credit  were  allowed  for  the 
foreign  income  tax,  so  that  "double  counting"  existed.  Under  the 
act,  the  parent  corporation  receiving  dividends  from  developed  area 
subsidiaries  is  required,  as  a  condition  for  obtaining  the  tax  credit,  to 
include  in  taxable  income  the  amount  of  the  foreign  tax,  which  ensures 
that  the  earnings  represented  by  the  dividend  wiU  bear  a  tax  equal 
to  the  present  U.S.  corporate  tax  rate  of  52  percent. 

Earnings  of  foreign  subsidiaries  which  are  realized  through  a 
liquidation  or  sale  of  the  foreign  corporation  have  been  taxed  as 
capital  gains  in  the  past.  Under  the  act,  gains  received  by  certain 
U.S.  shareholders  on  the  liquidation  or  sale  of  a  controlled  foreign 
corporation  will  be  subject  to  U.S.  tax  at  ordinary  rates  (less  a  credit 
for  foreign  taxes),  rather  than  at  capital  gain  rates,  to  the  extent  of 
the  undistributed  profits  of  the  foreign  corporation  accmnulated  after 
December  31,  1962.  Earnings  received  from  less-developed  country 
corporations  held  for  10  years  or  more  are  excluded  from  the  new 
rule  for  such  years  as  the  subsidiary  qualified  as  a  less-developed 
country  corporation  and  will  continue  to  be  taxed  as  capital  gains. 

Under  prior  law,  U.S.  citizens  who  were  "bona  fide  residents" 
of  a  foreign  country  were  exempt  from  U.S.  tax  on  their  earned  income. 


REVIEW   OF   FISCAL   OPERATIONS  67 

The  1962  act  limits  the  amount  that  can  be  so  excluded  to  $20,000 
per  year  for  the  first  three  years  of  such  residence  and  $35,000  per 
year  thereafter.  The  act  does  not  change  the  provision  of  existing 
law  that  U.S.  citizens  physically  present  in  a  foreign  country  for  17 
out  of  18  consecutive  months,  but  not  establishing  residence  abroad, 
may  exclude  $20,000  of  earned  income  per  year  during  the  period  of 
such  presence  abroad. 

The  act  corrects  the  tax  advantage  to  U.S.  taxpayers  arising  from 
ownership  of  stock  of  foreign  investment  companies  which  accumu- 
lated their  income  so  that  these  shareholders  could,  in  effect,  turn 
investment  income  into  capital  gains  when  their  stock  was  redeemed 
or  sold.  Gain  on  the  sale  of  stock  of  foreign  investment  companies 
now  will  be  taxed  as  ordinary  income  to  the  extent  of  the  undistributed 
earnings  and  profits  of  the  company  for  taxable  years  begmning  after 
December  31,  1962.  An  exception  is  made  if  the  company  elects, 
beginning  in  1963,  to  distribute  90  percent  of  its  ordinary  income  and 
the  U.S.  shareholders,  in  addition,  report  their  share  of  the  undistrib- 
uted capital  gains  of  the  company.  Stock  ownership  in  foreign 
investment  companies  will,  thus,  have  substantially  the  same  tax 
position  as  that  in  domestic  investment  companies. 

Other  provisions  of  the  Revenue  Act  of  1962  relating  to  foreign 
income  include:  The  elimination  of  the  exemption  of  foreign  real 
estate  from  the  Federal  estate  tax  as  of  July  1964;  the  taxation  at 
ordinary  income  rates  of  sales  after  calendar  1962  of  U.S.  patents  and 
like  property  by  U.S.  parent  corporations  to  their  foreign  subsidiaries; 
the  correction  of  an  aspect  of  the  foreign  tax  credit  mechanism  relating 
to  interest  income  which  provided  an  incentive  to  the  transfer  of  U.S. 
funds  for  deposit  abroad  on  a  short-term  basis;  the  substantial 
expansion  of  the  information  requhed  to  be  furnished  to  the  Internal 
Revenue  Service  regarding  foreign  subsidiaries;  the  full  U.S.  taxation 
of  U.S.  beneficiaries  receiving  distributions  from  foreign  trusts  created 
by  U.S.  grantors;  and  taxation  at  fau'  market  value  rather  than,  as 
previously,  at  cost  of  distributions  of  property  from  foreign  corpora- 
tions. 

The  act  provides  that  its  provisions  will  control  in  the  event  of 
conflicts  with  any  existing  tax  treaties.  The  Treasury  Department 
does  not  believe  that  there  are  any  conflicts  with  such  treaties  (with 
one  minor  exception  in  the  Greek  Estate  Tax  Treaty).  Therefore, 
the  provision  merely  forestalls  needless  litigation  without  violating 
our  treaty  obligations. 

Miscellaneous  items. — The  act  contains  a  number  of  amendments 
not  related  to  the  President's  tax  recommendations. 

The  legislation  permits  a  deduction  as  an  ordinary  and  necessary 
business  expense  of  expenses  of  appearing  before  or  submitting  state- 


68 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


ments  to  individual  legislators,  committees,  or  legislative  bodies  in 
connection  with  legislative  matters.  It  also  permits  the  deductibility 
under  similar  circumstances  of  dues  paid  to  an  organization  allocable 
to  such  activities  by  the  organization  and  to  the  communication  of 
information  between  the  organization  and  its  members  with  respect 
to  legislation  of  direct  interest  to  the  members  and  the  organization. 
The  legislation  does  not  permit  the  deductibility  of  the  most  significant 
portion  of  lobbying  expenses,  that  is,  expenses  incurred  in  connection 
with  appeals  to  the  public  or  segments  thereof  to  support  or  defeat 
legislation,  commonly  referred  to  as  "grassroots"  lobbying. 

Other  amendments  of  more  than  limited  interest  provide  that: 
Expenditures  incurred  by  farmers  in  the  clearing  of  land  may  be 
deducted  to  the  extent  of  $5,000  or  25  percent  of  the  taxable  income 
from  farming  for  the  year,  whichever  is  the  lesser;  when  an  individual 
is  entitled  in  effect  to  spread  his  income  for  tax  purposes  back  over 
the  years  to  which  it  is  attributable,  he  may  elect  to  apply  the  20-  or 
30-percent  Imiitation  on  charitable  contributions  before  the  income 
is  spread;  there  shall  be  excluded  from  gross  income,  for  taxable 
years  ending  after  July  2,  1948,  certain  awards  made  pursuant  to 
evacuation  claims  of  Japanese-Americans;  and  a  tenant-stockholder 
of  a  cooperative  housing  corporation  may  take  a  deduction  for  depre- 
ciation of  his  stock  if  he  uses  his  share  of  the  building  for  business  or 
the  production  of  income. 

Revenue  effect. — The  following  table  indicates  the  revenue  effect  of 
the  Revenue  Act  of  1962. 


Estimated  revenue  effect  of  the  Revenue  Act  of  1962 
[In  millions  of  dollars] 


Investment  tax  credit ' 

Capital  gains  on  depreciable  property 

Reporting  on  dividends  and  interest 

Expense  accounts 

Mutual  savings  banks  and  savings  and  loan  associations 

Mutual  fire  and  casualty  companies 

Cooperatives 

Foreign  items: 

Controlled  foreign  corporations 

Oross-up  of  dividends 

All  other  foreign  items 

Miscellaneous  provisions... 

Total 


Full  year 


Gross  1        Net  2 


-1,020 

+100 

<+240 

+100 

+200 

+40 

+35 

+85 

+25 

+30 

-5 


-170 


-580 

+50 

<+155 

+65 

+135 
+25 
+25 

+85 

+25 

+30 

-5 


+10 


Fiscal  year  1963 


Gross  ' 


-985 


+5 
+5 


+5 


-970 


Net  J 


-530 


+5 
+5 


+5 


-515 


'  Without  taking  into  account  the  effect  of  the  provisions  on  the  economy. 

2  After  taking  into  account  the  estimated  etTect  of  the  provisions  on  the  economy. 

s  At  levels  of  income  and  investment  estimated  for  1962.  In  estimating  the  net  revenue  cost  of  the  invest- 
ment credit,  its  favorable  elTects  on  tlie  level  of  investment  were  computed  from  statistical  relationships  in 
the  past  years  between  investment  and  gradual  changes  in  the  cost  of  capital  goods  (profitability)  and  cash 
flow.  This  procedure  thus  does  not  take  into  account  the  especially  favorable  impact  on  businessmen's 
decisions  to  invest  of  the  sudden  major  improvements  in  these  factors  resulting  from  the  enactment  of  the 
credit.    Taking  this  into  account  should  produce  more  favorable  effects  than  those  shown  in  the  table. 

«  Estimated  gain  from  increased  compliance  because  of  reporting  requirements. 


REVIEW    OF    FISCAL    OPERATIONS  69 

Depreciation  developments 

On  July  11,  1962,  the  Treasury  Department  issued  its  revised 
Depreciation  Guidelines  and  Rules  as  Revenue  Procedure  62-21  (for 
background  see  1961  annual  report,  pp.  109-111).  The  new  guide- 
lines apply  to  about  75  broad  classes  of  assets  and  thus  depart  from 
the  item  by  item  approach  of  Bulletin  F  issued  in  1942.  New  guide- 
line lives,  on  the  average,  are  30  to  40  percent  shorter  than  those 
previously  suggested,  and  will  permit  more  rapid  depreciation  than 
presently  taken  on  70  to  80  percent  of  machinery  and  equipment. 
They  will  not  disturb  the  depreciation  on  the  remaining  business  assets 
on  which  depreciation  is  now  as  fast  as,  or  faster  than,  that  provided 
in  the  new  guidelines.  Any  taxpayer  may  use  the  new  guideline 
lives,  or  a  life  longer  than  the  guidelines,  as  a  matter  of  right  for  a 
period  of  3  years.  In  addition,  any  taxpayer  may  continue  to  use 
even  shorter  lives  if  he  has  already  done  so  in  prior  years  or 
may  adopt  shorter  lives  if  supported  by  the  facts  and  circumstances. 
Use  of  the  guidelines  (or  shorter  lives)  will  continue  to  be  accepted 
thereafter  unless  there  are  clear  indications  that  the  taxpayer's 
replacement  practices  do  not  conform  with  the  depreciation  claimed 
or  are  not  even  showing  a  trend  in  that  direction.  Tax  reductions 
possible  from  the  new  depreciation  guidelines  were  estunated  to  be 
$1.5  billion  in  the  fu'st  year  of  operation. 

A  central  aim  of  the  new  procedure  is  to  provide  an  objective  test, 
although  not  an  exclusive  one,  of  the  appropriateness  of  the  deprecia- 
tion taken,  whether  faster,  longer,  or  the  same  as  in  the  guidelines. 
This  test  is  provided  by  the  reserve  ratio  table  contained  in  Revenue 
Procedure  62-21  which  illustrates  for  various  depreciable  lives  classi- 
fied by  depreciation  methods  whether  retirement  and  replacement 
practices  are  consistent  with  the  class  life  being  used.  Class  lives  may 
be  lengthened  or  shortened  if  the  actual  reserve  ratio  falls  beyond  the 
standards  set  forth  in  the  reserve  ratio  table.  The  reserve  ratio  test 
is  not  exclusive,  and,  where  not  met,  the  taxpayer  always  will 
be  allowed,  as  previously,  to  demonstrate  the  reasonableness  of 
his  depreciation  derived  on  the  basis  of  all  pertinent  facts  and 
circumstances. 

Pensions,  social  security,  and  unemployment  compensation 

The  Self -Employed  Individuals  Tax  Retirement  Act  of  1962  f  Public 
Law  87-792,  approved  October  10,  1962)  permits  self-employed 
individuals  to  participate  in  qualified  pension  and  profit-sharing  plans. 
Previously,  only  employees  were  permitted  to  be  covered  by  such 
plans.  Under  the  legislation,  a  self-employed  person  can  contribute 
annually  to  a  pension  or  profit-sharing  plan  on  his  own  behalf  10  per- 
cent of  his  personal  service  income  or  $2,500,  whichever  is  less.  In 
determining  his  income  tax  liability  he  can  deduct  one-half  of  these 


70    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

contributions,  so  that  his  maximum  annual  deduction  is  $1,250. 
Under  certain  conditions,  he  can  contribute  (but  not  deduct)  addi- 
tional amounts  within  limits.  The  funds  set  aside  in  the  plans  as 
well  as  the  earnings  accumulated  on  such  funds  remain  free  of  tax 
until  withdrawn. 

Contributions  to  the  plans  can  be  invested  in  a  wide  range  of  assets 
held  in  a  trust  or  a  custodial  account  or  invested  directly  in  annuity- 
contracts  or  a  special  issue  of  Government  bonds.  A  plan  must  pro- 
vide that  self-employed  individuals  shall  not  receive  benefits  before 
the  age  of  59K  unless  they  are  disabled  before  that  age.  Benefits  for 
the  self-employed  also  must  begin  before  the  age  of  70K.  The  retire- 
ment benefits  received  from  the  plans  by  self-employed  individuals 
will  be  taxable  as  ordinary  income.  Averaging  treatment  will  be 
accorded  lump-sum  distributions. 

A  self-employed  person  establishing  a  plan  for  himself  under  the 
legislation  is  required  to  provide  comparable  coverage  in  the  plan  for 
all  his  full-time  employees  with  more  than  three  years  of  service  and 
give  them  vested  rights.  A  plan  is  not  permitted  to  discriminate  in 
favor  of  the  self-employed  person,  highly  paid  employees,  officers, 
or  supervisors. 

The  legislation  is  effective  for  taxable  years  beginning  after  Decem- 
ber 31,  1962.  The  revenue  loss  is  estimated  at  $115  million  for  a  full 
year  of  operation. 

No  changes  were  made  in  1962  in  the  law  governing  social  security 
taxes.  But  substantial  amendments  were  made  to  the  public  assist- 
ance and  child  welfare  programs  under  the  Social  Security  Act  by  the 
Public  Welfare  Amendments  of  1962,  Public  Law  87-543,  approved 
July  25,  1962.  The  new  law  incorporates  recommendations  the 
President  made  to  the  Congress  in  his  message  of  February  1,  1962, 
on  this  subject. 

In  a  message  to  Congress  on  February  9,  1961,  President  Kennedy 
recommended  extension  of  the  social  security  system  to  include  a 
health  insurance  program  for  all  persons  aged  65  or  over  who  are 
eligible  for  social  security  or  railroad  retirement  benefits  (see  1961 
annual  report,  p.  107).  This  recommendation  was  repeated  in  the 
President's  budget  message  of  January  1962.  The  President's  rec- 
ommendation was  incorporated  in  H.R.  4222,  but  the  bill  was  not 
reported  out  of  the  committee.  A  bill  similar  to  H.R.  4222,  but 
extended  to  provide  benefits  for  those  not  eligible  for  social  secm'ity, 
was  introduced  in  the  Senate  as  an  amendment  to  H.R.  10606  which 
became  Public  Law  87-543,     The  Senate  tabled  the  amendment. 


REVIEW    OF    FISCAL    OPERATIONS 


71 


Tax  rate  extension  and  user  charges 

The  President's  request  for  extension  of  certain  tax  rates  was  incor- 
porated in  Public  Law  87-508,  approved  June  28,  1962.  In  addition 
to  a  one-year  extension  of  the  corporate  income  tax  and  the  excise 
taxes  on  alcoholic  beverages,  cigarettes,  passenger  automobiles  and 
parts  and  general  telephone  service,  the  act  repealed  the  10  percent 
excise  tax  on  transportation  of  persons,  except  by  air,  as  of  Novem- 
ber 16,  1962.  The  tax  on  transportation  by  air  was  reduced  to  5  per- 
cent as  of  the  same  date  with  provision  made  for  repeal  of  the  tax  as  of 
July  1,  1963.  The  domestic  portion  of  international  air  trips  was 
exempted  from  tax  at  the  time  of  the  tax  reduction.  The  10  percent 
tax  on  private  line  communication  services  was  repealed  as  of  January 
1,  1963,  for  services  used  in  a  trade  or  business.  The  revenue  effect  of 
this  law  is  shown  in  detail  in  the  following  table. 

Estimated  revenue  effect  of  the  Tax  Rate  Extension  Act  of  1962 

[In  millions  of  dollars] 


Effect  on  net  budget  receipts, 
fiscal  year  1963 

Increase, 
or 

Source 

Increase, 

or 

decrease 

(-)in 

receipts 

Decrease 
in  refimds 

Total 

decrease 

(-)in 

revenue, 

full  year 

Corooration  income  tax 

1,300 

1,300 

2,800 

Excise  taxes: 
Alcohol: 

Distilled  spirits 

177 

77 

9 

138 
9 
5 

315 
86 
14 

180 

Beer - 

78 

Wines 

9 

Total  alcohol  taxes.. - 

263 

152 

415 

267 

Tobacco: 

Cigarettes  (smaU). 

235 

24 

259 

240 

Manufacturers  excise  taxes: 

Passenger  automobiles 

360 
60 

50 

410 
60 

430 

Parts  and  accessories  for  automobiles                    - 

73 

Tot^al  Tnarnfaf  tiirers  excise  taxps 

420 

50 

470 

503 

Miscellaneous  excise  taxes: 
Communications : 

General  telephone  service 

395 
-6 

395 
-6 

525 

Repeal  tax  on  private  or  leased  wires                  

-18 

Total  commiiTi  ICJi  tions  taxes 

389 

389 

507 

Transportation  of  persons: 
Air: 

Rate  change 

40 

-2 
-3 

40 

-2 
-3 

Repeal  tax  on  domestic  portion  of  international 
travel 

-4 

Other 

-46 

Total  transportation  of  persons    .    . 

35 

35 

-50 

Total  miscellaneous  excise  taxes 

424 

424 

457 

Total  excise  taxes 

1,342 

226 

1,568 

1,467 

Grand  total 

2,642 

226 

2,868 

4,267 

72     19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Consideration  of  the  President's  airways  and  waterways  user  charge 
proposals  was  deferred.  The  Congress  also  did  not  act  on  the  land 
conservation  fund  recommendation. 

Miscellaneous  legislation 

Income  taxes. — Public  Law  87-403,  approved  February  2,  1962, 
revised  the  tax  treatment  of  General  Motors  stock  received  by 
individuals  as  a  result  of  the  court  order  in  the  du  Pont  antitrust  case 
{United  States  v.  E.  I.  du  Pont  de  Nemours  and  Co.,  et  al,  365  U.S.  806 
(1961)).  The  receipt  of  stock  by  individual  shareholders  (or  any 
shareholder  not  entitled  to  the  corporate  dividend  received  deduction) 
is  treated  as  a  return  of  capital,  with  capital  gains  tax  to  be  paid  on 
any  excess  of  the  value  of  the  distribution  over  the  stockholders' 
basis  for  their  du  Pont  stock.  If  the  bill  had  not  been  enacted,  indi- 
vidual shareholders  would  have  been  required  to  pay  ordinary  income 
tax  on  the  full  fair  market  value  of  the  General  Motors  stock  received. 

Public  Law  87-426,  approved  March  31,  1962,  permits  taxpayers 
to  deduct  casualty  losses  on  retm^ns  filed  for  the  taxable  year  immedi- 
ately preceding  the  taxable  year  in  which  the  disaster  occurred  if  the 
disaster  occurred  before  the  time  prescribed  for  the  filing  of  the 
income  tax  return  for  the  prior  year.  To  qualify  for  this  treatment, 
the  casualty  loss  must  be  attributable  to  a  disaster  in  an  area  desig- 
nated by  the  President  as  a  disaster  area  under  section  1855  of  Title 
42  of  the  United  States  Code.  Since  the  law  is  effective  for  any 
disaster  occurring  after  December  31,  1961,  it  was  available  to 
taxpayers  suffering  storm  losses  in  the  Atlantic  Coast  storm  of  March 
1962. 

For  purposes  of  the  estimated  income  tax,  fishermen  are  to  be 
accorded  the  same  treatment  as  farmers,  according  to  the  provisions 
of  Public  Law  87-682,  approved  September  25,  1962.  The  principal 
advantage  provided  is  the  privilege  of  filing  the  declaration  of  es- 
timated tax  and  paying  the  estimated  tax  by  January  15  after  the 
end  of  the  year  in  question  (in  the  case  of  calendar-year  taxpa3"ersj. 

The  President's  recommendation  in  his  transportation  message 
to  Congress  for  a  7-year  net  operating  loss  carryover  for  public 
utilities  was  adopted  in  large  part  in  Public  Law  87-710,  approved 
September  28,  1962.  While  corporations  generally  may  carry  net 
operating  losses  back  three  years  and  any  remaining  unused  loss 
forward  five  years,  this  legislation  permits  regulated  transportation 
corporations  (other  than  pipelines)  to  carry  forward  a  net  operating 
loss  for  7  years  if  the  loss  occurs  in  a  taxable  year  ending  after  De- 
cember 31,  1955. 

Pubhc  Law  87-768,  approved  October  9,  1962,  liberalized  the 
requirements  that  consmner  finance  companies  must  meet  to  be 
exempt  from  personal  holding  company  tax.     Previously,  the  In- 


REVIEW    OF    FISCAL    OPERATIONS  73 

ternal  Revenue  Code  specified  that  the  exempt  consumer  finance 
companies  must  derive  80  percent  of  their  gross  income  from  loans 
made  under  Hmits  specified  in  the  Code.  Under  the  new  law,  con- 
sumer finance  companies  need  only  meet  State  restrictions  on  the 
amount  of  interest  charged,  or  the  period  of  loans  granted.  Income 
from  subsidiaries  exempt  from  personal  holding  company  tax  may 
be  included  in  the  80  percent  of  gross  income  which  qualifies  the 
finance  company  for  exemption  from  personal  holding  company  tax. 

An  amendment  to  a  tariff  law,  Public  Law  87-790,  approved 
October  10,  1962,  extended  the  existing  deduction  permitted  life 
insurance  companies  of  2  percent  of  their  premiums  from  group 
accident  and  health  insurance  contracts  to  premimns  from  individual 
accident  and  health  contracts.  Congress  has  requested  the  Treasury 
Department  to  conduct  a  study  of  problems  raised  by  this  amend- 
ment, including  the  appropriateness  of  such  a  deduction,  its  de- 
sirability as  between  group  and  individual  contracts,  and  the  de- 
sirability of  giving  a  similar  allowance  to  casualt}'"  insurance  companies. 

The  Trade  Expansion  Act  of  1962,  Pubhc  Law  87-794,  approved 
October  11,  1962,  includes  several  forms  of  adjustment  assistance 
for  firms  certified  as  being  eligible  because  of  serious  injury  by  in- 
creased UTiports  resulting  from  trade  agreement  concessions.  One 
relief  provision  extends  the  net  operating  loss  carryback  from  three 
to  five  years  for  any  firm  certified  for  tax  assistance  by  the  Secretary 
of  Commerce.  The  5-year  carryback  applies  only  to  losses  incurred 
in  taxable  years  ending  on  or  after  December  31,  1962. 

Public  Law  87-858,  approved  October  23,  1962,  adds  to  the  list 
of  organizations  for  which  the  additional  10  percent  charitable  de- 
duction may  be  taken  those  organized  and  operated  exclusively 
to  receive,  invest,  and  disburse  funds  for  the  benefit  of  a  college 
which  is  an  instrumentality  of  a  State  or  a  political  subdivision  thereof. 

The  law  also  contains  six  amendments  to  Part  I  of  Subchapter  L  of 
the  Internal  Revenue  Code,  relating  to  income  taxation  of  life  in- 
surance companies.  The  amendments  are  concerned  with:  Taxation 
of  variable  annuities  for  years  beginning  after  December  31,  1962; 
exemption  from  tax  for  capital  gains  realized  under  segregated  asset 
accounts  for  qualified  pension  contracts;  computation  of  tax  where  net 
long-term  gain  exceeds  net  short-term  capital  loss;  the  order  of  priority 
to  be  used  in  determining  the  limit  applicable  to  certain  deductions 
(e.g.,  policyholder  dividends);  the  definition  of  a  new  corporation  for 
pm-poses  of  the  8-year  loss  carryover;  and  the  reduction  of  tax  ac- 
counts in  the  case  of  certain  distributions  between  January  1,  1962, 
and  December  31,  1963,  of  stock  of  given  types  of  controlled  insm-ance 
corporations. 


74    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Public  Law  87-863,  approved  October  23,  1962,  increases  the 
general  limit  on  the  personal  income  tax  deduction  for  medical  ex- 
penses from  $2,500  to  $5,000  multiplied  by  the  number  of  exemptions, 
other  than  those  for  age  and  blindness.  The  overall  maximum  deduc- 
tion for  an  individual  filing  a  separate  return  is  raised  from  $5,000  to 
$10,000;  for  a  joint,  head  of  household,  or  sm'viving  spouse  return, 
the  increase  is  from  $10,000  to  $20,000.  The  allowable  medical  de- 
duction by  an  individual  or  his  spouse,  one  of  whom  is  65  years  of  age 
or  older  and  disabled  and  not  filing  separate  returns,  is  increased  from 
$15,000  to  $20,000;  for  a  joint  return  when  both  are  over  65  and  dis- 
abled, the  maximum  is  increased  from  $30,000  to  $40,000. 

Public  Law  87-863  also  amends  prior  law  to  permit  exemption  from 
income  tax  of  pension  plans  which  provide  medical  benefits  to  retired 
employees.  However,  a  plan  mil  qualify  for  exemption  only  if  the 
medical  benefits  are  subordinate  to  the  retirement  benefits. 

This  act  further  grants  taxpayers  a  new  option  to  expense  intangible 
drilling  and  development  costs  if  they  previously  had  exercised  an 
option  to  capitalize  these  costs  under  the  Internal  Revenue  Code  of 
1939.  The  new  option  applies  to  taxable  years  beginning  after 
October  22,  1962.  A  revision  also  was  made  in  the  method  of  com- 
puting the  reduction  of  tax  where  a  taxpayer  restores  a  substantial 
amount  (over  $3,000)  included  in  his  income  in  a  prior  year  because  it 
was  incorrectly  believed  to  be  held  by  him  under  a  claim  of  right. 

Public  Law  87-870,  approved  October  23,  1962,  provides  that  a 
terminal  railroad  corporation  is  not  required  to  take  into  income 
amounts  charged  for  terminal  services  performed  for  any  railroad 
corporation  which  are  offset  by  credits  for  related  charges  by  the  rail- 
road corporation.  Similarly,  a  railroad  shareholder  of  the  terminal 
railroad  corporation  is  not  to  be  considered  as  having  received  a 
dividend  or  incurred  expenses  with  respect  to  these  amounts  so  offset. 
For  taxable  years  ending  after  its  enactment,  Public  Law  87-870  is  not 
to  apply  to  the  extent  that  it  would  create  (or  increase)  a  net  operating 
loss  of  the  terminal  railroad  corporation.  Special  rules  are  provided 
for  application  to  closed  years  and  years  prior  to  enactment  of  the  law. 

The  credit  against  tax  permitted  individuals  for  retirement  income, 
other  than  social  security  or  similar  payments  excluded  from  income, 
was  increased  by  Public  Law  87-876,  approved  October  24,  1962,  in 
order  to  relate  the  value  of  the  credit  more  closely  to  recent  increases 
in  social  secm'ity  benefits  and  the  outside  earnings  permitted  social 
security  beneficiaries.  The  maximum  amount  of  retirement  income 
which  may  be  taken  into  account  in  computing  the  credit  is  raised 
from  $1,200  to  $1,524.  In  addition,  instead  of  earned  income  in 
excess  of  $1,200  reducing  the  retirement  income  eligible  for  the  credit 
on  a  doUar-for-dollar  basis,  the  dollar-for-dollar  reduction  will  occur 


i 


REVIEW    OF    FISCAL    OPERATIONS  75 

only  for  earnings  above  $1,700;  for  earnings  between  $1,200  and 
$1,700,  the  retirement  income  will  be  reduced  by  50  cents  for  every 
dollar  of  earnings.  Moreover,  for  those  retiring  under  public  retire- 
ment programs,  this  new  reduction  for  earned  income  wiU  apply  to 
those  age  62  or  over,  rather  than  65  or  over,  as  under  prior  law; 
for  those  under  62  years  of  age  who  are  under  a  public  retkement 
program,  the  deduction  from  retirement  income  of  earned  income  in 
excess  of  $900  continues  to  apply,  the  same  as  under  prior  law. 

This  act  also  includes  a  provision  denying  mutual  savings  banks 
and  savings  and  loan  associations,  unless  otherwise  permitted  by 
regulations,  the  right  to  deduct  in  any  one  year  amounts  paid  or 
credited  to  depositors  or  account  holders  if  such  amounts  are  paid 
or  credited  for  periods  representing  more  than  12  months. 

Excise  taxes.- — The  Tariff  Classification  Act  of  1962,  Public  Law 
87-456,  approved  May  24,  1962,  includes  a  provision  for  the  transfer 
of  the  taxes  on  imported  sugar,  petroleum  products,  coal,  copper, 
lumber,  certain  animal  and  vegetable  oils  and  oil-bearing  seeds  from 
the  Internal  Revenue  Code  to  the  new  tariff  schedules.  Although 
these  taxes  had  been  incorporated  in  the  Internal  Revenue  Code, 
provision  always  had  been  made  for  their  assessment  and  collection 
as  a  duty  under  the  Tariff  Act.  The  act  also  provides  for  transfer 
of  the  taxes  on  the  first  domestic  processing  of  coconut  and  pahn 
oil  to  the  tariff  schedules  and  changes  the  method  of  computing  the 
tax  on  sugar  manufactm'ed  in  the  United  States.  The  changes  will 
be  effective  the  tenth  day  following  a  proclamation  of  the  President 
relating  to  the  new  tariff  schedules.  At  the  end  of  calendar  1962 
such  a  proclamation  had  not  been  issued. 

Public  Law  87-535,  the  Sugar  Act  Amendments  of  1962,  approved 
July  13,  1962,  extended  the  excise  taxes  on  domestically  manufactured 
or  imported  sugar  from  December  31,  1962,  through  June  30,  1967. 

Expenditures  by  manufacturers  for  'local  advertising"  in  coopera- 
tion with  their  distributors,  which  may  be  excluded  from  the  selling 
price  on  which  the  manufacturers  excise  tax  is  based,  were  expanded 
by  a  section  of  Public  Law  87-770,  approved  October  9,  1962,  to 
include  advertising  in  magazines  or  outdoor  advertising  signs  or  post- 
ers. Previously,  the  deduction  was  limited  to  newspaper,  radio,  and 
television  advertising. 

Public  Law  87-858,  approved  October  23,  1962,  includes  a  section 
amending  the  special  rule  for  determining  the  constructive  (taxable) 
price  for  manufacturers'  sales  at  retail,  or  to  retailers.  The  new  law 
permits  individual  manuf  actiu'ers,  except  those  producing  automobiles, 
trucks  and  buses,  business  machines,  and  matches,  to  use  the  highest 
price  at  which  they  sell  to  wholesale  distributors  as  a  constructive 
sales  price.     In  the  case  of  the  named  products,  manufacturers  may 


76    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

use  the  constructive  price  mentioned  only  if  they  show  that  the  nor- 
mal method  of  sale  by  manufacturers  of  the  specific  type  of  item  is 
not  at  retail,  or  to  retailers,  or  a  combination  thereof.  If  such  proof 
is  not  given,  the  taxable  price  for  sales  to  retailers  is  the  actual  selling 
price,  and  for  sales  at  retail,  the  lower  of  the  actual  price  or  the  high- 
est price  for  which  such  articles  are  sold  to  wholesalers  by  manufac- 
turers. Prior  to  Public  Law  87-858,  the  requirement  with  respect  to 
automobiles,  trucks  and  buses,  business  machines,  and  matches  was 
the  rule  for  all  manufacturers  excise  taxes. 

Public  Law  87-859,  approved  October  23,  1962,  includes  a  section 
which  extends  from  June  30,  1963,  to  June  30,  1966,  the  present  sus- 
pension of  the  3  cents  per  pound  tax  on  the  first  domestic  processing 
of  coconut  oil,  palm  oil,  and  palm  kernel  oil.  The  suspension  does  not 
go  to  the  additional  tax  of  2  cents  a  pound  on  coconut  oil  which  is 
not  derived  from  materials  from  the  Philippine  Islands  or  the  Trust 
Territory  of  the  Pacific  (see  also  Public  Law  87-456,  above). 

Administration,  interpretation,  and  clarification  of  tax  laws 

During  the  fiscal  year,  the  Treasmy  Department  published  39 
Treasury  decisions,  3  complete  regulations  (not  issued  as  Treasury 
decisions),  5  executive  orders,  and  24  notices  of  proposed  rulemaking 
relating  to  tax  matters. 

The  addition  of  section  456  to  the  Internal  Revenue  Code  by  Public 
Law  87-109,  required  the  issuance  of  temporary  regulations  (T.D. 
6596)  to  inform  taxpayers  how  to  make  the  election  permitted  by 
the  section,  the  scope  of  the  election,  and  how  the  special  transi- 
tional rule  contained  in  the  section  will  operate.  Section  456  permits 
certain  membership  organizations  to  elect  to  defer  the  reporting  of 
prepaid  dues  income  which  relates  to  a  liability  to  render  services  or 
make  available  membership  privileges  over  a  period  beyond  the  close 
of  the  taxable  year  of  receipt  and  not  exceeding  36  months. 

Other  Treasury  decisions  published  concerned  the  election  for  deter- 
mining, for  years  prior  to  1961,  gross  income  from  the  mining  of  certain 
clays  and  shale  used  in  the  manufacture  of  certain  products;  the 
election  to  treat  as  allowable  mining  processes  the  crushing,  grinding, 
and  separation  of  clay  or  quartzite  from  waste  for  certain  prior  tax- 
able years  when  used  in  the  manufacture  of  refractory  products;  the 
election  to  include  prepaid  subscription  income  in  gross  income  for 
the  taxable  years  during  which  a  liability  exists  to  furnish  or  deliver 
a  newspaper,  magazine,  or  other  periodical;  the  deduction  of  ALuy- 
land  ground  rent  paid  on  or  after  January  1,  1962;  acquisitions  made 
to  evade  or  avoid  income  tax  and  allocation  of  income  and  deductions 
among  taxpayers;  and  real  estate  investment  trusts. 


REVIEW    OF    FISCAL    OPERATIONS  77 

Notices  of  proposed  rulemaking  published  dui'ing  the  year  con- 
cerned the  use  of  taxpayer  account  numbers;  excise  tax  on  motor 
vehicles;  copyright  royalties  for  purposes  of  personal  holding  company 
tax  and  small  business  investment  companies;  credits  and  refunds 
for  certain  excise  taxes  on  sales  and  services;  excise  tax  on  toilet 
preparations;  and  valuation  of  shares  of  open-end  investment  com- 
panies. 

Federal-State  tax  relations 

Significant  developments  occurred  in  the  area  of  Federal-State 
administrative  cooperation.  In  February  1962,  the  Secretary  of  the 
Treasm-y  submitted  to  the  Congress  draft  legislation  which  would 
permit  the  Internal  Revenue  Service  (1)  to  make  special  statistical 
studies  from  tax  data  upon  wiitten  request  from  States  (and  other 
governmental  and  private  organizations)  on  a  reimbm'sable  basis, 
and  (2)  to  provide  training  facilities  for  representatives  of  State, 
local,  and  foreign  governments  at  a  reasonable  fee.  Money  received 
in  payment  for  work  or  other  services  would  be  retained  in  a  special 
account  and  used  to  reimburse  the  appropriation  for  these  activities. 
PubHc  Law  87-870,  approved  October  23,  1962,  gave  effect  to  the 
Secretary's  recommendation. 

Exchange  of  tax  information  between  the  Internal  Revenue  Service 
and  the  States  was  increased  by  the  negotiation  of  cooperative  agree- 
ments with  additional  States.  This  program  was  initiated  in  1950 
as  an  income  tax  audit  exchange  and  revised  in  1957  to  cover  all 
types  of  tax  information.  Prior  to  1961  cooperative  agreements  were 
in  effect  with  seven  States.  As  of  July  1,  1962,  agreements  had  been 
negotiated  with  13  States,  and  three  additional  States  came  into 
the  program  before  the  end  of  1962.^ 

During  the  year,  agreements  between  the  Treasury  and  the  States 
for  withholding  of  State  income  taxes  on  salaries  of  Federal  employees 
by  Federal  departments  and  agencies  were  entered  into  with  four 
additional  States  (Wisconsin,  Minnesota,  New  Mexico,  and  Virginia). 
With  the  exception  of  six  States,  all  States  imposing  income  taxes 
now  provide  for  withholding  of  tax  on  wages  and  salaries,  and  the 
Treasmy  has  agreements  with  all  these. 

International  tax  matters 

The  major  legislative  developments  dm-ing  the  year  in  interna- 
tional taxation  were  included  in  the  Revenue  Act  of  1962  and  have 
been  discussed  in  earlier  paragraphs  with  the  domestic  aspects  of 
that  act. 

1  Cooperative  agreements  are  in  effect  witli:  California,  Colorado,  Indiana,  Iowa,  Kansas,  Kentucky, 
Maryland,  Minnesota,  Missouri,  Montana,  North  Carolina,  Ohio,  Oregon,  Utah,  West  Virginia,  and 
Wisconsin . 


78    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

During  1962,  Treasury  discussions  were  conducted  with  several 
countries  for  the  purpose  of  negotiating  new  tax  treaties  or  amending 
existing  treaties.  Talks  \vith  Japan  were  concluded  and  a  protocol 
was  signed  on  August  14,  1962,  which  modifies  and  supplements  the 
existing  income  tax  convention.  The  protocol  is  designed  to  bring 
the  Japanese  convention  into  closer  conformity  with  other  income 
tax  conventions  to  which  the  United  States  is  a  party.  The  changes 
relate  particularly  to  the  treatment  of  income  from  interest,  divi- 
dends, and  royalties. 

As  a  result  of  discussions  concerning  the  application  to  the  Nether- 
lands Antilles  of  theU.S.  tax  treaty  with^the  Netherlands,  it  was  agreed 
that  for  this  purpose  there  shoidd  be  modifications  of  three  articles 
relating  to  the  tax  treatment  of  interest,  dividends,  and  royalties. 
These  modifications  would  eliminate  the  abuse  of  the  convention  by 
persons  residing  outside  the  Antilles  who  create  companies  incorpo- 
rated in  the  Netherlands  Antilles  for  the  purpose  of  investing  in  the 
United  States  and  deriving  income  subject  to  the  reduced  Avithholding 
taxes  or  to  tax  exemption  under  the  treaty. 

Discussions  as  to  modification  of  the  income  tax  treaty  with  Sweden, 
which  began  before  fiscal  1962,  were  continued.  Further  negotiations 
took  place  with  Germany  and  the  Netherlands  with  a  view  to  modi- 
fying existing  treaties,  but  were  not  concluded  by  the  close  of  the 
fiscal  year.  Exploratory  talks  were  held  with  Portugal  for  the  purpose 
of  considering  an  income  tax  convention  to  eliminate  double  taxation. 

Treasury  representatives  comprised  the  U.S.  delegation  to  the 
Fiscal  Committee  of  the  Organization  for  Economic  Cooperation  and 
Development  (OECD)  which  has  been  engaged  in  developing  a  model 
income  tax  convention  to  serve  as  a  basis  for  treaties  between  the 
member  countries  and  ultimately,  perhaps,  as  a  basis  for  a  multilateral 
accord.  The  Fiscal  Committee  established  two  new  working  groups 
dm'ing  the  year,  each  headed  by  the  U.S.  delegation.  One  is  charged 
\vith  the  development  of  a  treaty  provision  to  cope  mth  the  abuse  of 
income  tax  conventions  by  persons  who  are  nonresidents  of  a  given 
country  but  establish  legal  entities  there  to  receive  income  generated 
elsewhere  to  get  the  benefit  of  that  country's  tax  treaties.  The  other 
working  group  is  preparing  recommendations  on  tax  measures  that 
might  be  taken  by  [industrialized  countries  to  promote  private  in- 
vestment in  developing  countries. 

For  additional  materials  on  taxation  see  exhibits  17-28. 

International  Financial  Affairs 

The  U.S.  balance  of  payments  and  gold  and  dollar  movements 

The  U.S.  balance  of  'payments. — The  U.S.  overall  balance-of- 
payments  position  continued  to  improve  in  the  first  half  of  the  calendar 


REVIEW    OF    FISCAL    OPERATIONS  79 

year  1962,  but  much  remains  to  be  done  before  equilibrium  is  reached 
in  our  international  accounts.  (The  overall  balance  is  the  sum  of 
changes  in  gold  and  convertible  currency  holdings  of  U.S.  monetary 
authorities  plus  changes  in  gross  liquid  liabilities  to  foreigners.)  After 
overall  deficits  averaging  $3.7  billion  per  year  in  the  calendar  years 
1958-1960,  the  deficit  was  cut  to  $2.5  billion  in  1961  and  in  the  first 
half  of  1962  was  running  at  an  annual  rate  of  $1.4  billion. 

Our  "basic  balance"  (the  balance  on  goods  and  services,  Government 
assistance,  and  long-term  capital  account,  which  represents  aU  of  our 
recorded  international  transactions  exclusive  of  U.S.  private  short- 
term  capital  outflow  and  foreign  commercial  credits  to  the  United 
States)  averaged  $3.3  billion  per  year  in  the  calendar  years  1958-1960, 
then  was  sharply  reduced  to  a  little  over  $400  million  in  1961.  In  the 
first  half  of  1962  it  was  running  at  an  annual  rate  of  $568  million. 

Part  of  the  improvement  in  our  balance-of-payments  position  has 
been  due  to  debt  prepayments  by  foreign  countries  to  the  U.S.  Govern- 
ment. In  the  first  half  of  1962,  much  of  the  reduction  in  our  overall 
deficit  was  apparently  due  to  the  payments  difficulties  experienced  by 
Canada  in  that  period.  (Preliminary  figures  indicate  that,  as  our  net 
receipts  from  Canada  were  to  a  large  extent  reversed  following  the 
improvement  of  the  Canadian  international  position,  our  overall  deficit 
with  all  areas  rose  somewhat  to  an  annual  rate  for  the  first  nine  months 
of  1962  of  about  $1.8  billion.) 

Analyzing  the  recent  situation  in  the  broadest  of  terms,  a  funda- 
mental indication  of  the  strengthening  of  our  international  payments 
position  has  been  the  reduction  of  our  deficits,  as  variously  measured, 
in  spite  of  a  rise  in  nonmilitary  merchandise  imports.  In  the  first 
half  of  1962,  our  merchandise  imports  rose  to  $15.9  billion  at  an 
annual  rate,  an  increase  of  $1.4  billion  over  our  imports  for  the  full 
year  1961.  In  spite  of  this,  our  basic  balance  in  the  first  half  of  1962 
worsened  by  only  $170  million  at  an  annual  rate  while  the  overall 
deficit  was  lower  by  $1  billion  on  an  annual  rate  basis. 

For  a  detailed  statistical  analysis  of  the  balance-of-payments  data 
for  1960,  1961,  and  the  first  half  of  1962,  see  table  111.  Data  on  the 
U.S.  international  investment  and  gold  position,  which  reflect  changes 
in  our  international  assets  and  liabilities  resulting  from  our  balance  of 
payments  and  investments  abroad,  are  presented  in  table  110. 

In  March  1962  the  Secretary  of  the  Treasury  submitted  a  pubHc 
report  to  the  President  reviewing  the  various  measures  which  had  been 
taken  by  the  administration,  and  the  tasks  which  remained  to  be  ac- 
complished, in  order  to  cope  with  the  urgent  balance-of-payments 
problem  faced  by  the  United  States.  (The  report  is  reproduced  as 
exhibit  35.  Other  statements  on  the  balance-of-payments  situation 
by  the  Secretary,  Under  Secretary  Fowler,  and  the  Under  Secretary  of 


80     19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  Treasury  for  Monetary  Affairs  are  presented  in  exhibits  38,  40, 
and  41.) 

Gold  and  dollar  movements.— The  gold  and  liquid  dollar  holdings  of 
foreign  countries  (excluding  gold  holdings  of  the  USSR  and  other 
Eastern  European  countries  and  China  Mainland)  amounted  to  an 
estimated  $43.6  billion  on  June  30,  1962.  Of  this  amount,  official 
gold  reserves  were  $22.6  billion,  official  and  private  short-term  dollar 
assets  held  with  banks  in  the  United  States  were  $19.6  billion,  and 
estimated  official  and  private  holdings  of  U.S.  Government  bonds  and 
notes  were  $1.3  bilhon.  The  total  represented  an  increase  of  $3.6 
billion  over  the  amount  held  as  of  June  30,  1961    (see  table  108). 

Western  European  countries  increased  their  gold  and  liquid  dollar 
assets  during  fiscal  1962  by  $3.2  billion,  accounting  for  most  of  the 
foreign  gains.  Alost  European  countries  shared  in  the  gains,  with 
France  registering  the  largest  increase  (over  $800  milHon) ;  but  Ger- 
man}^, which  had  the  largest  gain  in  fiscal  1961  in  spite  of  large  debt 
prepayments,  sustained  a  reduction  of  almost  $300  milfion  in  fiscal 
1962.  Latin  American  holdings  rose  by  $222  milfion,  reversing  a  loss 
of  approximately  the  same  amount  in  fiscal  1961.  Asiatic  holdings 
rose  by  only  $109  million,  substantially  below  the  fiscal  1961  gain,  as 
Japanese  holdings  declined  by  $157  million.  Canadian  holdings  were 
reduced  by  $235  million.  The  holdings  of  the  rest  of  the  worJd  rose 
by  $349  mifiion,  including  a  $279  million  gain  by  the  Union  of  South 
Africa. 

The  gold  and  liquid  dollar  assets  held  by  international  institutions 
rose  by  $168  mifiion,  amounting  to  $7.6  biUion  at  the  end  of  fiscal  1962. 

The  estimated  official  gold  holdings  of  the  world  (excluding  the 
USSR,  other  Eastern  European  countries,  and  China  Mainland)  were 
$41.3  billion  as  of  June  30,  1962.  Of  this  amount  the  United  States 
held  $16.5  billion  and  international  institutions  $2.1  billion. 

Treasury  foreign  exchange  reporting  system. — Data  relating  to  capi- 
tal movements  between  the  United  States  and  foreign  countries  have 
been  collected  by  the  Treasury  Department  since  1935.  The  data  are 
obtained  from  monthly  reports  by  banks  and  brokers  and  quarterly 
reports  by  nonfinancial  concerns  to  the  Treasury  Department  through 
the  Federal  Reserve  Banks.  The  reports  provide  information  on 
liabilities  to  foreigners,  claims  on  foreigners,  and  securities  transac- 
tions with  foreigners,  and  constitute  the  basis  for  statistics  on  the 
dollar  holdings  of  foreign  countries  and  international  institutions  and 
other  statistics  on  capital  movements  which  enter  into  the  U.S.  bal- 
ance of  paA'ments. 

The  program  begun  during  fiscal  1961  to  enlarge  the  coverage  and 
to  improve  the  reliability  of  the  reports  was  continued  during  fiscal 
1962.    Substantial  improvements  were  made  in  the  coverage  of  report- 


REVIEW    OF    FISCAL    OPERATIONS  81 

ing  by  nonbanking  firms.  In  consultation  witli  other  interested  Gov- 
ernment agencies  and  witli  tlie  Federal  Reserve  System,  a  broad  review 
of  the  foreign  exchange  reporting  system  was  begun  with  a  view  to 
appraising  the  need  for  developing  additional  types  of  data  and 
the  feasibility  of  obtaining  them.  Some  of  these  proposals  were  dis- 
cussed with  a  number  of  banks  and  nonbanldng  concerns.  By  the  end 
of  the  fiscal  year  preparations  were  in  an  advanced  stage  for  the  intro- 
duction of  a  new  report  from  nonbanking  concerns  on  their  liquid 
assets  abroad.  (This  report  was  put  into  effect  in  August  1962.) 
These  steps  were  part  of  the  continuing  program  to  ensure  the  re- 
liability of  the  capital  movements  statistics. 

Foreign  exchange  stabilization  operations 

The  operations  which  were  begun  in  the  fiscal  year  1961  were  con- 
tinued and  expanded  during  fiscal  1962.  After  many  years  of  controls 
exercised  by  most  foreign  countries  over  their  international  payments, 
the  major  world  cmTencies  became  convertible  for  nonresidents  in 
1959  and  funds  were  permitted  to  flow  much  more  freely  in  inter- 
national money  markets.  Movements  of  short-term  funds  in  search 
of  favorable  interest  rates  or  in  response  to  doubts  about  cm'rency 
stability  made  it  highly  desirable  for  the  United  States  to  protect  the 
dollar  against  temporary  and  disorderly  exchange  rate  movements  by 
means  of  official  operations  in  the  exchange  markets.  These  opera- 
tions are  of  particular  importance  at  a  time  when  the  U.S.  balance  of 
payments  is  in  deficit.  Transactions  of  this  natm-e  have,  of  course, 
been  conducted  for  years  by  many  other  countries  and  were  also 
carried  on  by  the  United  States  before  World  War  II. 

The  first  of  these  operations  was  reported  in  1961.  It  consisted  of 
intervention  in  the  forward  exchange  market  for  Deutschemarks  fol- 
lowing the  revaluation  of  the  mark  in  March  1961,  and  was  success- 
fully completed  in  the  latter  half  of  the  calendar  year.  All  forward 
commitments  were  liquidated,  and  with  the  strengthening  of  the 
dollar  it  proved  advantageous  to  pm-chase  moderate  amounts  of 
Deutschemarks  on  a  spot  basis  for  use  in  futme  operations.  A  portion 
of  the  marks  so  acquired  was  employed  dm-ing  the  latter  part  of  the 
fiscal  year  1962  at  times  of  temporary  pressure  on  the  dollar.  With 
the  usefulness  of  such  operations  firmly  established,  the  Treasury 
broadened  its  activities  during  the  fiscal  year  by  diversifying  into 
other  major  currencies  and  by  testing  and  activating  new  techniques 
of  intervention  in  the  exchange  markets. 

One  major  operation  undertaken  by  the  Treasmy  involved  the 
sale  of  forward  Swiss  francs  to  offset  "hot  money"  inflows  into  Switzer- 
land, which  had  temporarily  sweUed  Swiss  dollar  reserves  in  the  wake 
of  the  Berlin  crisis  in  the  faU  of  1961.     In  order  to  provide  cover  for 

661496 — 63 7 


82     1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

these  forward  transactions,  a  line  of  credit  was  arranged  with  the 
Swiss  National  Bank,  and  a  portion  ($46  million)  of  this  line  was 
utilized  by  the  issuance  of  three-month  certificates  of  indebtedness 
denominated  in  Swiss  francs  to  supply  tlie  Treasury  with  additional 
S^viss  franc  balances.  In  the  second  half  of  the  fiscal  year  the  flow  of 
dollars  into  Smtzerland  was  reversed.  Consequently,  the  borrowings 
were  repaid,  the  forward  obligations  substantially  reduced,  and  some 
gold  was  purchased  from  Switzerland  by  the  United  States.  These 
operations  of  the  Treasm^y  to  even  out  the  flow  of  U.S.  dollars  to  and 
from  Switzerland  were  also  of  assistance  to  the  S^viss  authorities  by 
introducing  new  methods  to  help  offset  the  excessive  liquidity  in  the 
Swiss  market  that  tends  to  be  created  by  the  occasional  inflows  of 
short-term  funds  into  a  traditional  "safe  haven." 

Early  in  the  fiscal  year  a  balance  of  Netherlands  guilders  was  ac- 
quired, for  such  use  as  might  later  prove  desirable.  In  January, 
when  a  substantial  premimn  on  the  forward  guilder  encouraged  dollar 
inflows  into  the  Netherlands  and  deterred  outflows  for  short-term 
investment  purposes,  it  was  decided  to  test  operations  in  the  forward 
guilder  market.  The  subsequent  dechne  in  the  premium  on  the  for- 
ward guilder  and  also  a  weakening  in  the  spot  guilder  rate  allowed 
additional  pm-chases  of  spot  guilders  to  cover  the  Treasury's  forward 
commitments  and  also  left  a  balance  to  permit  fm'ther  occasional 
intervention  in  the  market. 

Owing  to  a  continuing  balance-of-payments  surplus  in  Italy,  that 
country's  dollar  reserves  increased  substantially  dm-ing  the  period 
and  created  a  potential  gold  demand  on  the  United  States.  To  lessen 
the  accumulation  of  dollars  by  Italy,  the  Treasury  took  over  a  sub- 
stantial bloc  of  forward  contracts  from  the  Italian  exchange  authorities 
and  also  began  to  operate  in  the  spot  market  in  lire,  using  for  this  pur- 
pose lire  borrowed  against  the  issuance  of  certificates  of  indebtedness 
denominated  in  hi'e.  These  operations  have  been  continued  and 
expanded  up  to  the  present  time. 

The  foreign  cmTency  borro"\\ing  operations  in  Swiss  francs  and 
Italian  lire  were  the  first  such  borroAvings  undertaken  since  1918. 
They  proved  a  particularly  useful  tool,  giving  the  United  States 
foreign  cm'rency  balances  for  operational  needs  in  a  manner  mutually 
advantageous  to  the  United  States  and  the  foreign  monetary  author- 
ities concerned. 

Early  in  1962  the  Federal  Reserve  began  foreign  exchange  opera- 
tions with  policy  objectives  identical  to  those  of  the  Treasmy,  and 
coordinated  tlu-ough  the  Federal  Reserve  Bank  of  New  York  which 
acts  as  agent  for  both.  Federal  Reserve  operations  during  the  period 
took  the  form  of  a  series  of  swap  arrangements  with  seven  countries 
totaling  $700  million,  which  added  greatly  to  the  U.S.  resources  avail- 


REVIEW    OF   FISCAL    OPERATIONS  83 

able  for  exchange  operations.  The  usefulness  of  such  swap  arrange- 
ments to  foreign  countries  as  well  as  to  the  United  States  was  shown 
in  the  case  of  Canada  where  a  Federal  Reserve  swap  played  an  impor- 
tant role  in  the  Canadian  Government's  stabilization  program  of  June 
1962,  designed  to  reinforce  Canada's  efforts  to  defend  the  Canadian 
dollar. 

The  usefulness  of  these  operations  is  not  limited  to  the  immediate 
effects  of  the  transactions  themselves.  The  fact  that  the  United 
States,  in  cooperation  with  the  monetary  authorities  of  other  leading 
countries,  has  brought  into  being  facilities  to  protect  the  dollar  in 
international  exchange  markets  against  temporary  pressures  in  itself 
provides  reassurance  and  deters  speculative  movements.  Thus,  the 
exchange  markets  remained  relatively  calm  at  the  time  of  the  world- 
wide stock  market  declines  of  May  and  June  1962,  a  gratifying  devel- 
opment that  may  be  explained,  at  least  in  part,  by  the  existence  of 
cooperative  facilities  to  protect  currency  values.  (See  exhibit  44.) 
Treasury  exchange  and  stabilization  agreements 

During  the  fiscal  year  Treasury  exchange  agreements  were  signed 
with  Costa  Rica,  El  Salvador,  and  the  Philippines,  and  the  agreements 
with  Mexico  and  Argentina  were  renewed  or  replaced.  As  of  June 
30,  1962,  agreements  were  in  force  with  five  countries,  Argentina, 
BrazU,  Costa  Rica,  Mexico,  and  the  Philippine  Republic,  in  the  total 
amount  of  $226  million.  A  one-year  exchange  agreement  with  Chile, 
in  the  amount  of  $15  million,  ended  on  February  9,  1962.  The  one- 
year  exchange  agreement  with  El  Salvador,  in  the  amount  of  $6 
million,  which  would  have  expired  on  July  14,  1962,  was  terminated 
at  the  request  of  El  Salvador  on  May  4,  1962. 

The  Treasury  Department  on  September  7,  1961,  concluded  a 
one-year  $6  million  exchange  agreement  with  Costa  Rica  to  assist  that 
country  in  simplifying  its  foreign  exchange  rate  structure  and  in 
achieving  an  exchange  system  free  of  restrictions.  This  exchange 
agreement  supplemented  a  $15  million  standby  arrangement  with  the 
International  Monetary  Fund,  which  was  announced  on  September  6, 
1961.     (See  exhibit  46.) 

The  existing  Treasury  exchange  agreement  with  Mexico  for  $75 
mfilion  was  renewed  for  two  years  on  December  22,  1961.  The  agree- 
ment was  extended  to  support  Mexico's  exchange  rate,  in  conjunction 
with  an  International  Monetary  Fund  standby  arrangement  for  $90 
mUlion  and  also  an  Export-Import  Bank  credit  of  $90  million  which 
had  been  announced  on  August  2,  1961. 

The  $50  million  exchange  agreement  between  the  U.S.  Treasury 
Department  and  Argentina  signed  on  June  7,  1962,  replaced  one  for 
a  similar  amount  signed  on  December  28,  1961.  This  agreement  was 
supplementary  to  an  International  Monetary  Fund  standby  arrange- 


84    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

ment  of  June  6,  1962,  in  the  amount  of  $100  million,  for  the  purpose 
of  assisting  the  Argentine  Government  in  continuing  its  stabilization 
efforts.  During  the  fiscal  year  Argentina  repaid  $12  million  against 
advances  totaling  $25  million  made  under  an  exchange  agreement  in 
force  in  1959.  No  drawings  were  made  by  Argentina  in  the  fiscal  year 
1962.     (See  exhibit  48.) 

On  June  19,  1962,  a  $25  million  Treasury  exchange  agi-eement  with 
the  Philippine  Republic  was  signed.  The  Treasury  agreement  added 
to  the  financial  support  provided  by  the  $40,400,000  standby  arrange- 
ment between  the  International  Monetary  Fund  and  the  Philippines, 
which  went  into  effect  on  April  11,  1962.     (See  exhibit  49.) 

During  the  fiscal  year  the  Government  of  Brazil  made  several 
drawings  under  the  $70  million  exchange  agreement  concluded  in 
May  1961  between  the  Brazilian  Government  and  the  Treasury 
Exchange  Stabilization  Fund.  (See  annual  report  for  1961,  p.  122, 
exhibit  23  and  this  report  exhibit  47.)  A  drawing  of  $35  million  was 
made  on  September  26.  A  special  45-day  drawing  of  $30  million 
made  on  October  31  was  repaid  on  December  14,  1961.  Another 
$9.5  million  was  drawn  on  April  27,  1962. 

The  International  Monetary  Fund 

Drawings  from  the  Fund  were  made  by  21  countries  during  fiscal 
1962  in  various  currencies  equivalent  to  over  $2.5  billion.  The 
United  Kingdom  and  Canada,  respectively,  drew  $1.5  billion  and 
$300  million.  The  remaining  $700  million  was  acquired  by  less- 
developed  countries. 

The  drawing  by  the  United  Kingdom,  in  August  1961,  was  accom- 
panied by  a  standby  arrangement  with  the  Fund  under  which  the 
United  Kingdom  could  draw  an  additional  $500  million  during  the 
following  twelve  months.  These  facilities,  constituting  the  largest 
ever  provided  by  the  Fund,  were  in  support  of  a  series  of  fiscal  and 
monetary  measures  and  certain  other  policies  designed  to  restore  a 
strong  United  Kingdom  balance-of -payments  position  at  the  existing 
rate  of  exchange  and  without  the  imposition  of  restrictions  on  trade 
and  current  payments.  During  the  following  months,  the  United 
Kingdom  position  improved  markedly,  and  through  repmrhases  by 
the  United  Kingdom  and  drawings  of  sterling  by  other  members,  over 
$900  million  of  past  United  Kingdom  Fund  drawings  were  repaid  by 
June  30,  1962.^ 

The  drawing  by  Canada,  its  first,  represented  part  of  a  total  of 
$1,050  million  in  the  form  of  short-term  financial  assistance  extended 
in  June  1962  to  defend  the  stability  and  convertibility  of  the  Canadian 


>  Subsequently  the  entire  drawing  was  repaid,  but  the  standby  continued  in  effect. 


REVIEW    OF    FISCAL    OPERATIONS  85 

dollar  at  the  recently  established  par  value.  Additional  assistance 
was  provided  by  the  Export-Import  Bank  ($400  million),  the  Federal 
Reserve  System  ($250  million),  and  the  Bank  of  England  ($100 
million).  Another  industrialized  country,  Japan,  also  received  Fund 
assistance  in  the  form  of  a  $305  million  standby  arrangement  for  one 
year  beginning  January  1962;  as  of  June  30,  1962,  no  currency  draw- 
ing had  been  made  under  this  arrangement. 

Among  the  less-developed  countries  which  made  drawings  on  the 
Fund  during  the  fiscal  year,  the  largest  use  of  Fund  resources  was  by 
India  ($250  million),  followed  by  Argentina  ($110  million),  Indonesia 
($82  million),  the  United  Arab  Republic  ($60  million),  and  Mexico 
($45  million).  Ten  additional  Latin  American  countries  and  four  in 
other  areas  also  made  drawings. 

In  all,  ten  currencies  were  drawn  from  the  Fund  during  the  fiscal 
year:  Continental  European  currencies  (German  marks,  French 
francs,  Netherlands  guilders,  Italian  lire,  Belgian  francs,  and  Swedish 
kronor)  totaling  $1.4  bUlion,  U.S.  dollars  totaling  $760  million,  sterling 
totaling  $215  million,  $75  million  in  Canadian  dollars,  and  $80  million 
in  Japanese  yen.  At  the  time  of  the  United  Kingdom  drawing,  the 
Fund  replenished  its  holdings  of  dollars  and  other  currencies  needed 
by  the  sale  of  $500  million  of  its  gold,  of  which  $150  million  was  sold 
to  the  United  States.  Repayments  to  the  Fund  totaled  $1.4  billion, 
including  $1.2  billion  of  currencies  repurchased  by  countries  against 
earlier  drawings,  $38  million  of  repayments  in  gold,  and  $155  million 
through  drawings  of  currencies  by  other  members. 

Standby  arrangements  were  in  effect  as  of  June  30,  1962,  with  21 
countries  against  which  about  $1.9  billion  of  currencies  could  be 
drawn.  Nearly  $1.3  billion  of  this  amount  was  available  to  the 
United  Kingdom,  Upon  expiry  of  the  existing  United  Kingdom 
arrangement  in  August  1962,  a  new  one-year  standby  arrangement  of 
$1.0  billion  was  concluded. 

During  the  fiscal  year  steps  were  taken  toward  strengthening  the 
international  monetary  system  by  a  special  borrowing  arrangement 
between  the  Fund  and  the  ten  leading  industrial  countries  or  their 
central  banks  (the  United  States,  the  United  Kingdom,  France,  Italy, 
Japan,  Canada,  the  Netherlands,  and  Belgium,  and  the  central  banks 
of  Germany  and  Sweden.)  This  followed  intensive  discussions  of  the 
requirements  of  the  international  monetary  sj-stem  and  of  the  ability 
of  the  Fund  to  meet  exceptional  demands  for  its  resources  arising 
chiefly  as  the  result  of  more  widespread  currency  convertibility  and 
temporary  major  disturbances  due  to  short-term  international  capital 
movements.  The  arrangement  was  embodied  in  a  decision  of  January 
8,  1962,  and  an  exchange  of  letters  among  the  countries  concerned  in 
December  1961.    The  Fund  decision  set  forth  the  terms  and  conditions 


86     1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

on  which  the  Fund  would  borrow  supplemental  resources  and  make 
such  resources  available  to  a  potential  drawing  country.  Proposals 
for  the  borrowing  by  the  Fund  of  the  currencies  of  the  principal 
industrial  countries  had  been  previously  discussed  at  the  Annual 
Meeting  of  the  Fund  Board  of  Governors  in  Vienna  in  September 
1961.  In  December  representatives  of  the  United  States  and  the 
nine  other  interested  governments,  meeting  in  Paris,  reached  agree- 
ment on  the  terms  and  conditions  under  which  they  would  be  prepared 
to  lend  their  currencies  to  the  Fund.  These  terms  and  conditions 
were  set  forth  in  an  exchange  of  letters  between  Secretary  Dillon  and 
the  French  Minister  of  Finance,  dated  December  15,  1961,  and  by 
similar  letters  exchanged  between  the  French  Minister  and  the  other 
governments. 

Under  these  arrangements,  the  participants  would  be  prepared  to 
lend  their  currencies  to  the  Fund  up  to  specified  amounts  whenever 
the  Fund,  together  with  these  countries,  considered  that  additional 
resom-ces  were  needed  to  forestall  or  cope  with  an  impau-ment  of  the 
international  monetary  system.  The  total  amount  of  such  resources 
would  be  the  equivalent  of  $6  billion,  including  a  U.S.  credit  arrange- 
ment of  $2  billion. 

On  February  2,  1962,  the  President  requested  legislation  to  au- 
thorize U.S.  participation  in  the  Special  Borrowing  Arrangements.^ 
In  support  of  the  legislation  Secretary  Dillon  testified  before  the 
House  Committee  on  Banking  and  Currency  in  February  (see  ex- 
hibit 32)  and  before  the  Senate  Foreign  Relations  Committee  in 
March.  The  authorizing  legislation  was  enacted  on  June  19,  1962 
(Public  Law  87-490).  The  borrowing  arrangements  became  effective 
on  October  24,  1962,  when  the  United  States  formally  adhered  to  the 
Fund  decision. 

In  accordance  with  arrangements  under  which  members  of  the 
Fund  which  have  accepted  the  convertibility  obligations  of  Article 
VIII  of  the  Agreement  consult  with  the  Fund  on  a  voluntary  basis,  the 
first  annual  consultation  between  the  Fund  and  the  United  States  was 
held  in  March  1962. 
Programs  for  financing  economic  development 

The  International  Bank. — New  loans  authorized  by  the  Interna- 
tional Bank  (IBRD)  during  fiscal  1962  totaled  over  $880  million,  and 
were  extended  for  development  projects  in  nineteen  countries.  Loans 
for  electric  power  accounted  for  over  one-half  the  total,  followed  by 
transportation  projects  ($241  million),  and  industrial  and  other 
purposes  ($148  milhon). 


'  The  President's  message  and  the  relevant  documents  arc  contained  in  the  National  Advisory  Council, 
on  International  Monetary  and  Financial  Problems,  Special  Report,  On  Special  Borrowing  Arrangements 
of  the  International  Monetary  Fund,  January  1962. 


REVIEW    OF   FISCAL    OPERATIONS  87 

Disbursements  of  loan  funds  during  the  period  totaled  $485  million. 
Continuing  its  recent  practices,  the  IBRD  sold,  without  its  guarantee, 
$319  million  of  portions  of  its  loan  portfolio.  The  Bank's  outstanding 
funded  debt  increased  by  $292  million,  as  new  borrowings  and  receipts 
from  transactions  arranged  earlier,  mostly  outside  the  United  States, 
amounted  to  $463  million,  and  repayments  and  refundings  totaled 
$171  million. 

During  the  entire  period  of  its  operations  the  IBRD  has  extended 
loans  totaling  over  $6.5  billion,  excluding  cancellations,  terminations, 
and  refundings.  Principal  repayments  to  the  Bank  totaled  $542 
million  and  portions  of  loans  sold  or  agreed  to  be  sold  amounted  to 
$1.3  billion.  Disbursements  totaled  $4.8  billion.  Excluding  the  early 
postwar  reconstruction  loans  to  European  members  totaling  about 
$500  million,  IBRD  development  loans  amounting  to  $2.2  billion  have 
been  made  in  Asia  and  the  Middle  East,  $1.6  billion  in  the  Western 
Hemisphere,  $947  million  in  Europe,  $885  million  in  Africa,  and  $418 
milhon  in  Australia. 

The  IBRD  continued  during  fiscal  1962  to  provide  various  advisory 
services  and  technical  assistance  to  its  members.  In  the  furtherance 
of  the  mobilization  of  capital  from  the  industrialized  countries  for  in- 
vestment in  countries  formulating  comprehensive  development  plans, 
the  IBRD  has  taken  an  active  role  in  the  formation  and  coordination 
of  consultative  groups.  During  the  year  gi-oups  for  Nigeria  and 
Tunisia  met  under  the  chau-manship  of  the  IBRD.  Requests  by  other 
countries  for  the  formation  of  such  groups  are  being  considered.  The 
financial  consortia  of  countries  interested  in  providing  major  assistance 
to  India  and  Pakistan  held  a  number  of  meetings  dming  the  year, 
and  additional  financing  commitments  were  made  in  support  of  the 
development  plans  of  these  nations. 

The  International  Development  Association. — The  International  De- 
velopment Association  (IDA),  an  affiliate  of  the  International  Bank 
providing  development  financing  on  lenient  terms,  had  by  June  30, 
1962,  extended  $235  million  in  credits  since  the  commencement  of  its 
operations  in  November  1960.  Eighteen  credits  totahng  $134 
million  were  extended  dm-ing  the  fiscal  year. 

The  initial  resources  of  the  IDA  are  contributed  by  the  member 
governments  according  to  a  schedule  of  installments  over  a  five-year 
period  ending  in  1964.  Of  the  total  initial  subscriptions,  amounting 
to  about  $917  million  on  the  basis  of  the  membership  as  of  June  30, 

1962,  the  U.S.   share  is  $320,290,000.     The   three  remaining  U.S. 
installments  of  $61.7  million  each  are  payable  in  November  1962, 

1963,  and  1964. 

As  of  June  30,  1962,  IDA's  freely  convertible  resources,  including 
subscription  installments  to  be  received,  available  for  additional  credits 


88    1962  KEPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

amounted  to  about  $520  million.  This  figure  does  not  include  the  90 
percent  portion  of  the  subscriptions  of  the  Part  II  members  which  is 
payable  in  their  own  currencies.  Discussions  of  the  question  of  the 
replenishment  of  IDA  resources  commenced  dming  the  year,  and  at  the 
Annual  Meeting  of  the  Board  of  Governors  held  in  Washington  in 
September  1962,  it  was  agreed  that  the  Executive  Dh-ectors  would 
study  this  question  and  make  specific  recommendations. 

The  International  Finance  Corporation. — The  International  Finance 
Corporation  (IFC),  an  affiliate  of  the  International  Bank  which  in- 
vests in  productive  private  enterprises,  made  nine  investment  com- 
mitments dm-ing  the  year  totaling  $18.4  million.  An  under\\Titing 
commitment  of  $2.9  million  also  was  made.  The  cumulative  total  of 
investment  commitments,  net  of  cancellations,  reached  $62.5  million 
as  of  June  30,  1962,  in  addition  to  the  underwriting  commitment, 
comprising  investments  in  20  countries.  IFC  investments  sold  or 
agi'eed  to  be  sold  to  private  investors  totaled  $10.1  million.  Cumu- 
lative disbm-sements  amounted  to  about  $45  million  and  uncommitted 
funds  available  for  operational  activities  totaled  $55.3  million. 

The  IFC  Articles  of  Agreement  were  amended  during  fiscal  1962  to 
remove  the  restriction  on  equity  investment.  Most  new  commit- 
ments undertaken  since  the  amendment  became  effective  in  September 
1961  included  the  acquisition  by  the  IFC  of  some  common  stock, 
along  with  fixed-interest  obligations. 

Inter-American  Development  Bank. — On  June  30,  1962,  the  Inter- 
American  Development  Bank  (IDB)  completed  its  first  full  year  of 
operations.  Since  its  first  loan  in  February  1961,  it  had  approved  69 
loans  totaling  $224  million  in  almost  every  Latin  American  country. 
Forty-eight  loans  totaling  $156  million  were  made  from  ordinaiy 
capital  and  twenty-one  loans  totaling  $68  million  were  made  from 
the  Fund  for  Special  Operations.  Loans  have  been  made  in  the  fields 
of  both  industry  and  agi'iculture  and  most  have  financed  private 
enterprise  projects. 

The  IDB's  authorized  resources  total  $1  billion,  but  because  Cuba 
did  not  become  a  member,  actual  resources  are  about  $959  million; 
composed  of  about  $813  million  in  ordinary  capital  and  $146  million 
in  the  Fund  for  Special  Operations.  The  ordinary  capital  consists 
of  about  $382  million  in  paid-in  capital  with  the  remainder  in  callable 
capital.  The  paid-in  portion  is  made  up  of  50  percent  gold  or  U.S. 
dollars  and  50  percent  in  the  cm-rency  of  the  member  country;  it  is 
paid  in  three  installments,  the  last  of  which  is  due  by  October  31, 
1962.  The  aggregate  U.S.  participation  in  the  IDB  amounts  to 
$450  million,  comprising  a  subscription  of  $150  million  for  paid-in 
shares  of  capital  stock,  a  subscription  of  $200  million  to  the  callable 
capital  stock,  and  a  quota  of  $100  miUion  in  the  resomxes  of  the  Fund 


REVIEW    OF    FISCAL    OPERATIONS  89 

for  Special  Operations.  Also  included  in  the  Bank's  ordinary  re- 
sources is  about  $24  million  in  Italian  lire,  raised  by  a  bond  issue  in 
Italy  in  April  1962  in  the  Bank's  first  borrowing  operation. 

The  payment  of  about  $146  million  in  contributions  to  the  Fund 
for  Special  Operations  was  completed  in  October  1961.  These  are 
calculated  on  the  basis  of  quotas  separate  from  the  capital  subscrip- 
tions but  are  also  paid  50  percent  in  gold  or  U.S.  currency  and  50 
percent  in  member's  currency.  Loans  from  the  Fund  for  Special 
Operations  are  made  on  terms  appropriate  for  dealing  with  special 
circumstances  and,  unlike  those  from  ordinary  capital,  are  usually 
repayable  in  the  cm'rency  of  the  borrower. 

On  June  19,  1961,  the  IDB  entered  into  an  agreement  with  the 
United  States  which  entrusted  to  the  Bank  the  administration  of 
the  Social  Progress  Trust  Fund,  comprising  $394  million  of  the  funds 
appropriated  by  the  Congress  on  May  27,  1961,  for  the  Inter- 
American  Social  and  Economic  Cooperation  Program  (Public  Law 
87-41).  Under  the  Trust  Fund  Agreement,  the  IDB  is  empowered 
to  use  the  resources  to  extend  loans  and  provide  technical  assistance 
to  Latin  American  countries  on  flexible  terms  and  conditions  to 
support  their  own  efforts  in  specified  fields  of  social  development. 
As  of  June  30,  1962,  thirty-six  Social  Progress  Trust  Fund  loans  had 
been  extended  for  a  total  amount  of  $224  million  to  14  Latin  American 
countries,  and  $1.1  million  had  been  extended  in  the  form  of  non- 
reimbursable technical  assistance. 

The  Third  Annual  Meeting  of  the  Board  of  Governors  of  the  IDB 
was  held  in  Buenos  Aires,  Argentina,  in  April  1962.  The  U.S.  dele- 
gation was  headed  by  Secretary  of  the  Treasury  Dillon,  as  U.S. 
Governor.  During  the  meeting  the  Governors  approved  resolutions 
directing  the  Executive  Du'ectors  to  study  the  question  of  enlarging 
the  resources  of  the  Bank  and  the  question  of  export  financing  in 
Latin  America. 

The  Alliance  for  Progress. — President  Kennedy,  on  March  13,  1961, 
called  upon  the  peoples  of  Latin  America  to  join  in  an  "Alliance  for 
ProgT-ess"  to  work  cooperatively  in  a  concerted  effort  to  satisfy  basic 
needs  for  homes,  work,  land,  health,  and  schools.  He  requested  the 
convocation  of  a  special  meeting  of  the  Inter-American  Economic 
and  Social  Council  at  the  ministerial  level  to  discuss  this  program. 
The  meeting  was  held  at  Punta  del  Este,  Uruguay,  in  August  1961. 
As  leader  of  the  U.S.  delegation,  Secretary  of  the  Treasury  Dillon 
outlined  the  objectives  of  the  Alliance  and  suggested  specific  pro- 
posals for  the  pursuit  of  these  objectives  dm-ing  the  decade  of  the 
sixties.  He  indicated  that  the  United  States  would  be  prepared  to 
provide  over  a  biUion  dollars  of  assistance  for  the  first  year  of  the 
Alliance.    He  said  that  if  Latin  America  took  the  necessary  internal 


90    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

measures  it  might  reasonabl}^  expect  its  own  efforts  to  be  matched 
by  an  inflow  of  capital  dm-ing  the  next  decade  amounting  to  at  least 
$20  billion  from  all  som'ces  of  external  financing,  public  and  private. 

The  Charter  of  Punta  del  Este,  adopted  at  the  meeting,  established 
the  framework  of  the  Alliance  for  Progress,  which  places  emphasis  on 
the  responsibilities  of  the  Latin  American  countries  to  undertake  ad- 
ministrative reforms,  including  both  land  and  tax  reforms,  and  to 
prepare  plans  and  implementing  measures  to  promote  balanced  eco- 
nomic and  social  growth.  It  was  agreed  that  the  development  plans 
and  programs  of  individual  countries  would  be  reviewed  by  a  panel 
of  experts  selected  by  the  Inter- American  Economic  and  Social 
Council  of  the  Organization  of  American  States. 

Diu-ing  the  fiscal  year  1962,  the  U.S.  Government  authorized 
assistance  in  the  form  of  loans  and  gi'ants  in  excess  of  $1.1  billion 
to  Latin  America  in  pm-suance  of  the  Alliance  for  Progi'ess.  The 
sources  of  this  assistance  included  the  Agency  for  International 
Development  ($475  million),  loans  by  the  Export-Import  Bank  hav- 
ing a  maturity  of  more  than  five  years  ($263  million),  the  Social 
Progress  Trust  Fund  administered  by  the  Inter-American  Develop- 
ment Bank  ($224  million).  Food  for  Peace  ($147  million),  and  the 
Peace  Corps  ($7  million). 

The  Agency  jor  International  Development. — Pursuant  to  the  Foreign 
Assistance  Act  of  1961  (Public  Law  87-195)  the  International  Coopera- 
tion Administration  and  the  Development  Loan  Fund  were  abohshed, 
and  the  foreign  economic  assistance  program  established  by  the 
legislation  was  assigned  to  the  new  Agency  for  International  Develop- 
ment (AID)  in  the  Department  of  State,  which  was  created  on  Novem- 
ber 4,  1961.  Among  the  authorities  entrusted  to  AID  were  development 
lending,  development  gi-ants  and  technical  cooperation,  invest- 
ment guarantees,  supporting  assistance,  surveys  of  investment 
opportunities,  and  development  research.  In  addition,  AID  was 
made  responsible  for  administering  part  of  the  funds  provided  under 
the  Inter-American  Progi'am  for  Social  Progress  (Public  Law  86-735) 
and  for  negotiating  loans  involving  U.S.-owned  local  cmTencies, 
including  those  acquired  under  sections  104(e)  and  104(g)  of  the 
Agricultural  Trade  Development  and  Assistance  Act  of  1954  (Public 
Law  480),  as  amended. 

Dm-ing  fiscal  1962,  AID  dollar  commitments  amounted  to  $2.5 
billion.  Of  the  total,  doUar  repayable  loans  authorized  accounted 
for  $1.6  bilhon.  About  $920  milhon  was  authorized  for  loans  to 
countries  in  the  Near  East  and  South  Asia,  more  than  one-half  this 
amount  to  India.  Loan  authorizations  to  Latin  America  totaled 
about  $455  million,  loans  to  Africa  about  $165  million,  and  loans 
to  Far  Eastern  countries  about  $62  million. 


REVIEW    OF    FISCAL    OPERATIONS  91 

Under  the  provisions  of  the  Foreign  Assistance  Act,  the  AID 
continued  the  recent  pohcy  of  maximizing  expenditures  within  the 
United  States  of  foreign  assistance  funds.  Commodity  procui^ement 
was  prohibited  from  specified  countries  other  than  less-developed 
countries,  and  the  portion  of  assistance  transferred  to  foreign  countries 
in  the  form  of  dollars  rather  than  U.S.  goods  and  services  was  being 
reduced. 

The  Export-Import  Bank. — The  total  of  the  loans,  guarantees, 
and  export  credit  insurance  authorized  by  the  Export-Import  Bank 
during  the  fiscal  year  amounted  to  over  $1.8  billion,  representing  the 
largest  volume  of  business  done  by  the  Bank  in  any  year  since  the 
large  postwar  reconstruction  loans  were  extended  to  European 
countries.  Development  project  credits  totaled  $555  million,  and 
emergency  foreign  trade  loans  $500  million.  Included  within  the 
latter  were  $400  million  in  short-term  standby  credits  for  Canada 
extended  in  June  1962  to  be  used,  if  needed,  to  maintain  Canada's 
trade  with  the  United  States.  This  amount  was  additional  to  credits 
made  available  by  the  International  Monetary  Fund,  the  Federal 
Reserve  System,  and  the  Bank  of  England  to  assist  in  the  maintenance 
of  the  par  value  of  the  Canadian  dollar.  The  Export-Import  Bank 
also  extended  exporter  credits  and  guarantees  amounting  to  $462 
million,  and  committed  $345  million  for  export  credit  insurance 
through  the  Foreign  Credit  Insurance  Association  (FCIA). 

The  FCIA,  an  unincorporated  group  of  over  70  major  American 
marine,  casualty,  and  property  insurance  companies,  which  began 
operations  in  February  1962,  was  formed  in  response  to  a  request  by 
the  Export-Import  Bank  for  participation  by  the  insurance  companies 
with  the  Bank  in  providing  export  credit  insurance  for  U.S.  exporters. 
This  was  one  of  the  activities  started  during  the  year  to  implement 
the  President's  directive  to  prepare  a  new  program  to  place  U.S. 
exporters  on  a  basis  of  full  equality  with  their  competitors  in  other 
countries.  Comprehensive  policies  issued  by  the  FCIA  cover  both 
political  and  credit  risks  and  are  available  for  short-term  (usually 
up  to  180  days)  and,  beginning  July  16,  1962,  for  medium-term  (six 
months  to  five  years)  credit  transactions.  The  Export-Import  Bank 
underwrites  all  of  the  political  risks  and  half  of  the  credit  risk  on  poli- 
cies issued  by  FCIA. 

Another  new  program  instituted  by  the  Export-Import  Bank 
during  the  year  was  a  system  of  guarantees  for  commercial  banks 
and  other  financial  institutions  providing  medium-term  export 
financing  without  recourse  on  the  U.S.  exporter.  Under  this  program 
the  commercial  banks  assume  the  credit  risks  on  the  early  maturities 
of   the  foreign  buyer's   obligations,    and   the  Export-Import  Bank 


92    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

guarantee  covers  political  risks  on  all  maturities  and  credit  risks  on  the 
later  maturities. 

The  Export-Import  Bank  disbursed  $943  million  during  the  fiscal 
year,  and  export  guarantees  and  insurance  amounting  to  $807  million 
were  financed  privately.  In  addition,  the  Bank  sold  $300  million 
of  its  portfolio  paper  to  private  U.S.  banks.  Its  earnings  from  interest 
and  fees  were  $165  million.  Interest  paid  to  the  U.S.  Treasury  on 
borrowed  money  was  $57  million,  and  a  $35  million  dividend  was 
declared  on  the  stock  of  the  Bank  held  by  the  Secretary  of  the  Treas- 
ury. The  Bank's  uncommitted  lending  authority  on  June  30,  1962, 
was  $846  million. 

Other  international  organizations  and  conferences 

The  Organization  for  Economic  Cooperation  and  Development. — The 
Organization  for  Economic  Cooperation  and  Development  (OECD)  ^ 
is  the  successor  of  the  Organization  for  European  Economic  Coopera- 
tion (OEEC).  The  OECD  took  the  place  of  the  OEEC  in  September 
1961.  The  United  States  and  Canada  joined  the  new  organization 
although  they  had  not  been  members  of  the  old  one. 

Under  Secretary  of  the  Treasury  Fowler  attended  the  first  Minis- 
terial Council  meeting  of  the  OECD  in  Paris  on  November  16-17, 
1961.  At  this  meeting  the  Council  of  Ministers  determined  that 
OECD  member  countries  as  a  group  should  try  to  increase  real 
output  by  50  percent  in  the  decade  of  the  sixties. 

The  Economic  Policy  Committee  of  the  OECD  held  regular  meet- 
ings throughout  the  year  in  order  to  discuss  the  overall  economic 
situation  in  the  member  countries.  Under  Secretary  Roosa  was 
a  regular  U.S.  delegation  member  to  these  meetings. 

The  Treasmy  has  participated  in  the  activities  of  two  Working 
Parties  of  the  Economic  Policy  Committee.  The  Working  Party  on 
Policies  for  the  Promotion  of  Better  Payments  Equilibrium  (Working 
Party  3)  meets  regularly  at  intervals  of  approximately  six  weeks; 
Under  Secretary  Roosa  is  the  Chairman  of  the  U.S.  delegation  to  this 
Working  Party.  These  meetings  review  the  situations  of  both  surplus 
and  deficit  countries,  and  aim  at  achieving  joint  cooperation  toward 
the  goal  of  international  monetary  stability. 

A  second  study  gi'oup  of  the  Economic  PoHcy  Committee,  the 
Working  Party  on  Policies  for  the  Promotion  of  Economic  Growth 
(Working  Party  2),  since  its  inception  has  been  concerned  with 
implementing  the  50  percent  collective  gi'owth  target  adopted  by  the 
OECD  Ministerial  Council  in' November  1961. 

'  Members  of  the  OECD  include  the  United  States,  Canada,  Austria,  Belgium,  Denmark,  France, 
Germany,  Greece,  Iceland,  Ireland,  Italy,  Luxembourg,  the  Netherlands,  Norway,  Portugal,  Spain, 
Sweden,  Switzerland,  Turkey,  and  the  United  Kingdom. 


REVIEW    OF   FISCAL    OPERATIONS  93 

The  Development  Assistance  Committee  (DAC)  of  the  OECD  has 
investigated  and  considered  means  whereby  development  aid  could 
be  made  available  on  a  more  ejffective  basis  and  with  a  greater  degi-ee 
of  harmonization.  DAC  membership  includes  Belgium,  Canada, 
France,  Germany,  Italy,  Japan,  ^  the  Netherlands,  Portugal,  the 
United  Kingdom,  the  United  States,  and  the  Commission  of  the 
European  Economic  Community. 

The  total  flow  of  long-term  official  and  private  financial  resources 
from  DAC  members  to  the  developing  countries  increased  from  $7.4 
billion  in  the  calendar  year  1960  to  $8.7  billion  in  1961.  The  Annual 
Aid  Review  of  the  DAC  provides  for  careful  study  and  examination 
of  each  member's  program  and  enables  a  comparison  of  relative  aid 
burdens  and  general  aid  policies.  The  Treasury  Department 
participated  in  the  U.S.  review  which  was  held  in  June. 

The  Economic  Development  and  Review  Committee  of  the  OECD 
annually  reviews  the  economies  of  the  member  countries  and  issues 
a  public  report;  the  Treasury  participates  in  the  Committee's  formal 
examination  of  the  U.S.  economy  and  in  the  drafting  of  the  public 
report  that  follows.  The  Treasury  also  participates  in  the  work  of 
the  Fiscal  Committee  of  the  OECD  and  supplies  the  U.S.  delegate 
to  the  meetings.  Other  OECD  Committees  in  which  the  Treasury 
has  an  interest  include  the  Trade  Committee  and  the  Committee  for 
Invisible  Transactions. 

The  European  Economic  Community. — ^The  movement  toward 
European  economic  integration  intensified  during  the  fiscal  year  1962. 
The  members  of  the  European  Economic  Community  (EEC)  (France, 
Italy,  Germany,  Belgium,  the  Netherlands,  and  Luxembourg)  cut 
their  internal  tariffs  by  ten  percent  on  December  31,  1961 ;  at  the  same 
time  they  abolished  intra-EEC  quota  restrictions  on  industrial  goods. 
In  addition,  the  member  nations  moved,  on  December  31,  1961,  from 
Stage  I  to  Stage  II  of  the  timetable  which  was  established  for  the 
EEC.  Entry  into  the  second  stage  entailed  arriving  at  agreement  on 
a  common  agricultural  policy  for  the  Six. 

In  May  1962,  it  was  announced  that  a  "speed-up"  decision  had 
been  made  to  cut  tariffs  by  an  additional  ten  percent  on  July  1,  1962. 
As  a  result,  on  July  1,  1962,  tariffs  within  the  Common  Market  were 
50  percent  below  what  they  were  in  1957  on  industrial  products. 
The  reduction  of  basic  duties  on  a  large  number  of  agricultural 
products  reached  35  percent.  The  rate  at  which  customs  duties 
have  been  cut  has  placed  the  EEC  two  years  ahead  of  the  timetable 
laid  down  in  the  original  Treaty. 

Great  Britain  applied  in  August  1961  for  full  membership  in  the 
European  Economic  Community;  Ireland,  Denmark,  and  Norway 

I  Japan  is  not  an  OECD  member  but  participates  in  the  DAC. 


94    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

have  also  applied  for  full  admission.  A  number  of  other  European 
countries  have  applied  for  associate  membership. 

The  General  Agreement  on  Tariffs  and  Trade. — The  nineteenth 
session  of  the  Contracting  Parties  to  the  General  Agreement  on 
Tariffs  and  Trade  (GATT)  was  held  during  the  fiscal  year.  This 
session  and  the  work  of  various  committees  of  the  GATT  were  con- 
cerned as  usual  with  a  very  broad  range  of  problems  affecting  world 
trade.  There  was  evident,  however,  a  new  stress  on  the  need  for 
adaptation  of  the  GATT  program  to  deal  more  effectively  with  certain 
special  problems,  notably  those  of  agricultural  trade  and  the  need  of 
the  less-developed  countries  for  expanded  export  markets.  An  im- 
petus was  given  to  more  vigorous  attention  to  the  latter  problem  by 
a  Ministerial  Meeting  under  GATT  in  November  1961,  at  which  44 
countries  were  represented.  A  Declaration  on  the  Promotion  of  the 
Trade  of  Less-Developed  Countries  was  adopted  by  the  Contracting 
Parties  as  a  basis  for  future  work  in  this  field. 

With  the  continued  strengthening  of  the  currencies  of  the  major 
trading  countries,  representatives  of  the  United  States  pressed,  both 
in  GATT  meetings  and  on  other  occasions,  for  further  progress 
toward  eliminating  nontariff  restrictions  by  the  major  developed 
countries.  The  quantitative  restrictions  by  the  economically-strong 
countries  in  Western  Europe  against  nonagricultural  products  have 
been  relaxed  to  a  point  where  they  have  only  minor  significance. 
Other  nontariff  restrictions,  however,  continue  to  present  obstacles  to 
U.S.  exports. 

The  United  States  has  continued  to  direct  major  effort  toward 
relaxing  agricultural  restrictions.  One  forum  for  this  effort  has  been 
in  GATT  Committee  II,  which  is  now  seeking  "practical  measures 
for  the  creation  of  acceptable  conditions  of  access  to  world  markets 
for  agricultural  commodities."  There  have  also  been  direct  high-level 
U.S.  negotiations  with  officials  of  EEC  and  its  member  governments, 
designed  to  protect  the  trading  rights  and  opportunities  of  the  United 
States  in  the  Common  Market.  Intensive  study  is  now  being  given  by 
the  interested  departments,  including  the  Treasury,  of  the  indirect 
barriers  to  U.S.  exports.  A  program  of  action  is  to  be  undertaken 
when  the  nature  and  significance  of  these  barriers  is  more  completely 
understood. 

Negotiations  with  the  EEC  countries  were  of  central  importance 
in  the  GATT  Tariff  Negotiations  Conference  which  convened  in 
Geneva  in  September  1960.  These  complex  negotiations  involved 
two  phases.  The  first  phase  was  concerned  mainly  with  questions 
of  compensation  where  rates  of  duty  previously  bound  in  GATT 
were  to  be  increased  through  the  establishment  by  the  EEC  of  a 
single  common  external  tariff  to  replace  the  various  tariffs  of  the 


REVIEW    OF   FISCAL    OPERATIONS  95 

member  countries.  These  "compensation"  negotiations  were  sub- 
stantially completed  by  May  1961.  Then  began  a  general  round  of 
negotiations  for  reciprocal  reductions  of  tariff  levels,  involving 
negotiations  by  many  countries,  not  only  with  the  EEC,  but  also 
among  themselves. 

In  this  phase,  the  United  States  negotiated  agreements  for  reciprocal 
tariff  reductions  with  the  EEC  and  14  other  countries.  By  far  the 
most  important  of  these  agreements,  measured  by  the  amount  of 
trade  aifected,  was  the  one  with  the  EEC.  Next  in  importance  was 
the  agreement  with  the  United  Kingdom.  Both  phases  of  the 
negotiations  were  formally  concluded  in  July  1962,  when  the  final 
act  authenticating  the  results  of  the  Tariff  Conference  was  opened 
for  signature. 

International  conferences. — The  Annual  Meeting  of  the  Boards  of 
of  Governors  of  the  International  Monetary  Fund  and  the  Inter- 
national Bank  and  its  affiliates  was  held  in  Washington  in  September 
1962.  The  U.S.  delegation  was  headed  by  Secretary  Dillon  as  U.S. 
Governor  and  Under  Secretary  of  State  Ball  as  Alternate  Governor. 
Under  Secretary  Fowler,  Under  Secretary  of  the  Treasury  for  Mone- 
tary Affairs  Roosa,  Assistant  Secretary  Leddy,  and  Mr.  Frank  A. 
Southard,  Jr.  (U.S.  Executive  Dkector  of  the  Fund)  acted  as  tem- 
porary Alternate  Governors.  The  delegation  included  members  of 
the  agencies  constituting  the  National  Advisory  Council  on  Inter- 
national Monetary  and  Financial  Problems,  members  of  congres- 
sional committees,  and  other  officials  of  the  Government  concerned 
with  the  affairs  of  the  international  financial  organizations. 

President  Kennedy  addressed  the  Governors  on  September  20  and 
emphasized  the  necessity  for  the  other  developed  countries  to  assume 
a  greater  share  of  the  free  world's  financial  burdens.  The  President 
also  announced  the  interest  of  the  United  States  in  an  expansion  of 
resources  of  the  International  Development  Association.  At  the 
meeting  of  the  Fund  Governors,  Secretary  Dillon  (see  exhibit  39)  re- 
viewed domestic  developments  in  the  United  States  and  noted  the 
improvement  in  the  international  position  of  the  dollar  and  of  the 
international  payments  system  generally.  In  the  meeting  of  Gover- 
nors of  the  Bank  and  its  affiliated  institutions,  the  Executive  Direc- 
tors of  the  International  Development  Association  were  requested  to 
prepare  a  report  on  the  need  for  increasing  its  resomxes. 

Secretary  of  the  Treasury  Dillon  headed  the  U.S.  delegation  to 
the  Special  Meeting  of  the  Inter-American  Economic  and  Social 
Council  at  the  Ministerial  level  held  at  Punta  del  Este,  Uruguay, 
August  5-17,  1961  (see  exhibit  29).  The  Charter  of  Punta  del 
Este  and  the  Declaration  to  the  peoples  of  America  were  signed 
at  this  Conference.     In  December,  Secretary  Dillion  attended  the 


96    19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

North  Atlantic  Treaty  Organization  Ministerial  meeting  in  Paris. 
Under  Secretary  Fowler  represented  the  Treasury  Department  at  the 
First  Meeting  of  the  Joint  United  States- Japan  Committee  on  Trade 
and  Economic  Affairs,  held  at  Hakone,  Japan,  November  2-4,  1961. 

Secretary  Dillon  led  the  U.S.  delegation  at  the  seventh  meeting  of 
the  Joint  Canadian-United  States  Committee  on  Trade  and  Economic 
Affairs  held  in  Ottawa,  January  12-13,  1962.  He  also  headed  the 
U.S.  delegation  to  the  Third  Annual  Meeting  of  the  Board  of  Gover- 
nors of  the  Inter-American  Development  Bank  held  in  Buenos  Aires, 
Argentina,  April  23-26,  1962  (see  exhibit  37). 

Secretary  Dillon  and  Under  Secretary  Roosa  addressed  the  American 
Bankers  Association  meeting  held  in  Rome,  May  15-18.  Secretary 
Dillon  reviewed  the  U.S.  balance-of-payments  problem  and  stressed 
the  importance  of  the  development  of  European  capital  markets  (see 
exhibit  38).  Under  Secretary  Roosa  outlined  U.S.  activities  in 
foreign  exchange  markets  (see  exhibit  42). 
Lend-lease  silver 

During  World  War  II  the  United  States  transferred  a  total  of  410.8 
million  ounces  of  Treasmy  silver  to  certain  foreign  countries  under 
authority  of  the  Lend-Lease  Act  of  March  11,  1941.  Although  the 
agreements  differed  somewhat  in  detail,  they  provided  that  the  debtor 
countries  were  to  return  a  like  kind  and  quantity  of  silver  within  five 
years  after  termination  of  the  national  emergency  as  determined  by 
the  President.  Accordingly,  the  lend-lease  silver  was  due  to  be  re- 
turned by  April  27,  1957,  although  the  agi-eements  with  several  of  the 
countries  permitted  a  postponement  of  part  of  the  repayment  for 
two  additional  years.  Prior  to  June  30,  1960,  the  entire  amount  of 
silver  due  from  the  Governments  of  Australia,  Belgium,  Ethiopia,  the 
Netherlands,  and  the  United  Ivingdom  (also  acting  for  the  Govern- 
ment of  the  Fiji  Islands)  had  been  retm-ned  and  taken  into  the  account 
of  the  Treasurer  of  the  United  States.  In  addition,  a  large  portion  of 
the  silver  furnished  during  the  war  under  lend-lease  for  use  in  undi- 
vided India  had  been  returned  and  taken  into  the  Treasm-er's  account 
pursuant  to  arrangements  concluded  in  1957,  whereb}^  the  U.S.  Gov- 
ernment agreed  to  a  division  of  liability  for  this  silver  between  India 
and  Pakistan.  (See  annual  reports  for  1957,  pages  49  and  50;  1958, 
pages  56  and  57;  and  1959,  page  65.)  Saudi  JArabia  (commenced  re- 
payments during  fiscal  1961. 

In  the  course  of  fiscal  1962,  a  total  of  15.6  million  fine  troy  ounces 
of  silver,  consisting  of  3.6  million  ounces  from  India,  and  12.0  million 
ounces  from  Pakistan  was  returned  and  taken  into  the  account  of 
the  Treasurer  of  the  United  States.  Cash  repayments  of  $13.7  million 
made  by  Saudi  Arabia  were  received  and  taken  into  the  Treasurer's 
account.     Converted  on  the  basis  of  the  market  price  for  silver  on 


REVIEW    OF   FISCAL    OPERATIONS 


97 


the  dates  of  receipt  of  such  repayments,  this  is  equivalent  to  14.4 
milHon  fine  troy  ounces  of  silver.  On  June  15,  1962,  the  United  States 
and  Pakistan  concluded  an  agreement  providing  for  an  extension  in 
connection  with  the  balance  remaining  outstanding  on  account  of 
Pakistan's  obligation.  Pursuant  to  this  agreement,  the  outstanding 
balance,  which  amounts  to  approximately  4.6  million  ounces,  is  to  be 
returned  in  three  annual  installments  commencing  in  1962.  Re- 
payment may  be  made  either  in  silver  or  in  dollars  on  the  basis  of  the 
market  price  of  silver  on  the  date  the  payment  is  made. 


Lend-lease  silver  transactions  as  of  June  30,  1962 
[In  millions  of  fine  ounces  except  where  otherwise  specifically  indicated] 


Silver  trans- 
ferred from 

the  Treasury 

to  lend-lease 

for  account 

of  foreign 

governments 

Silver 

returned  and 
taken  into 
the  account 

of  the  Treas- 
urer of  the 

United  States 

Silver 

being 

returned 

Dollar 
repay- 
ments 
(millions) 

SUver 

to  be 

returned 

Australia 

11.8 

.3 

5.4 

.2 

172.5 

56.7 

53.5 

122.3 

88.1 

11.8 

.3 

5.4 

.2 

172.2 

56.7 

47.9 

1.4 

88.1 

Bplffium                                 -__ 

Ethiopia      -  .  .  

Fiii 

India                     -      - _._.      

0.3 

Netherlands 

Pakistan 

1.0 

3  4.6 

Saudi  Arabia      . .  . . 

2  $13. 7 

5.5 

United  Kinedom 

Total 

410.8 

384.0 

1.3 

2  $13. 7 

10.1 

1  Includes  1,031,250  ounces  lost  at  sea  while  in  transit. 

2  Equivalent  to  14.4  million  fine  troy  ounces  of  silver  converted  on  basis  of  the  market  price  on  the  date 
of  receipt. 

3  Under  an  agreement  originally  concluded  with  Pakistan  in  1957  and  modified  in  1962,  the  balance  is 
being  returned  in  annual  installments. 

Foreign  Assets  Control 

For  the  purpose  of  preventing  Communist  China  from  obtaining 
foreign  exchange  through  the  exportation  of  merchandise  to  the  United 
States,  the  Foreign  Assets  Control  Regulations  prohibit  the  unlicensed 
purchase  and  importation  into  the  United  States  of  Communist  China 
or  North  Korean  merchandise,  as  well  as  numerous  other  commodities 
therein  specified  which  are  of  types  that  have  historically  come  from 
China.  The  Control  does  not  issue  licenses  authorizing  importation 
of  Chinese-type  merchandise  unless  satisfactory  evidence  of  [its  non- 
Communist  Chinese  origin  is  presented. 

Importation  under  general  licenses  is  authorized  with  respect  to 
specific  shipments  of  Chinese-type  merchandise  certified  to  be  of  non- 
Communist  Chinese  origin  by  the  Government  of  a  foreign  country 
from  which  they  were  directly  exported,  provided  that  the  country  in 
question  has  set  up  procedures  for  certification  pm-suant  to  standards 
agreed  to  by  the  Treasury  Department.  The  following  Governments 
now  have  such  certification  procedures:  Australia,  Belgium,  Canada, 

661496—63 8 


98    1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Formosa,  France,  the  Federal  Republic  of  Germany,  Hong  Kong 
India,  Italy,  Japan,  the  Netherlands,  the  Republic  of  Korea,  Spain, 
Switzerland,  the  United  Kingdom,  and  Vietnam.  Notices  of  the 
availability  of  certificates  of  origin  for  particular  commodities  and  of 
the  governments  prepared  to  issue  them  are  published  from  time  to 
time  in  the  Federal  Register.  During  the  year  a  number  of  additional 
items  became  available  for  certification. 

The  enforcement  measures  of  the  Control  resulted  in  a  number  of 
successful  criminal  prosecutions.  A  total  of  $64,894  was  collected  b}^ 
the  Government  in  forfeitures,  fines,  and  other  penalties  as  a  result  of 
proceedings  under  the  Foreign  Assets  Control  Regulations. 

The  Cuban  Import  Regulations  were  issued  on  February  6,  1962, 
under  Proclamation  3447  and  section  620(a)  of  the  Foreign  Assistance 
Act  of  1961  to  implement  the  embargo  proclaimed  by  the  President  on 
trade  with  Cuba  (see  exhibit  50).  As  initially  issued  they  prohibited 
the  importation  of  all  goods  of  Cuban  origin  and  all  goods  imported 
from  or  through  Cuba,  except  piKSuant  to  license.  On  March  23, 
1962,  the  Regulations  were  extended  to  include  imports  of  goods 
manufactured  in  third  countries  containing  Cuban  components.  As 
amended,  they  were  issued  under  the  additional  authority  of  section 
5(b)  of  the  Trading  with  the  Enemy  Act. 


ADMINISTRATIVE     REPORTS 


Management  Improvement  Program  i 

Continued  emphasis  in  the  Treasury  Department  on  the  potentiali- 
ties of  management  and  their  realization  was  reflected  during  the 
fiscal  year  1962  in  a  wide  variety  of  actions  taken  to  improve  adminis- 
trative operations. 

Identifiable  annual  savings  from  management  improvements  during 
the  year  amounted  to  $12.7  million,  the  second  highest  reported  during 
the  past  sixteen  years.  Of  this  total,  $1.9  million  resulted  from  the 
incentive  awards  program.  In  addition,  there  were  numerous  accom- 
plishments which  contributed  to  the  efficiency  of  administration  but 
which  cannot  be  measured  in  terms  of  savings  in  money  or  manpower. 

The  more  significant  management  improvements  of  Treasury  bu- 
reaus are  covered  in  the  administrative  reports  of  the  specific  opera- 
tional bureaus  in  this  report.  Selected  activities  of  a  more  general 
nature  are  discussed  below.  A  detailed  account  is  presented  in  the 
annual  report  Progress  in  Management  Improvement  obtainable  from 
the  Office  of  the  Secretary. 

Special  studies  and  projects 

Several  revisions  were  made  in  the  internal  organizational  structure 
of  the  Office  of  the  Secretary  to  improve  and  strengthen  the  alignment 
and  coordination  of  Treasury  functions. 

A  special  appraisal  of  the  long-range  planning  of  all  Treasury  bu- 
reaus and  offices  was  completed  and  appropriate  implementation  of 
recommendations  was  under  consideration  at  the  end  of  fiscal  1962. 

Staff  of  the  Office  of  the  Secretary  visited  81  Treasury  offices  in  8 
metropolitan  areas  in  connection  with  the  field  appraisal  project 
directed  toward  greater  emphasis  on  the  Treasm-y's  management  im- 
provement program  and  increased  field  participation. 

A  study  was  completed  of  the  administrative  and  training  aspects  of 
the  Treasury  Law  Enforcement  Officer  Training  School,  and  steps 
were  being  taken  at  the  close  of  fiscal  1962  to  effect  improvements  in  it. 

The  Treasury  Department  Plan  for  Appraisal  of  Field  Organization 
and  Management,  designed  for  the  individual  needs  of  the  bureaus, 
was  completed  and  submitted  to  the  Bureau  of  the  Budget.  The 
special  reviews  called  for  in  the  plan  have  been  conducted  or  will  be 
completed  in  the  near  future. 

In  10  metropolitan  areas  where  the  Civil  Service  Commission  estab- 
lished Federal  executive  boards  during  the  year,  79  Treasury  field 
officials  were  designated  to  participate  as  members. 

A  comprehensive  study  of  the  roles  and  missions  of  the  U.S.  Coast 
Guard  was  completed  and  80  recommendations  were  submitted  for 
approval  and  implementation.  The  study  group,  which  participated 
actively  during  a  nine-month  period,  included  staff  members  from 

'  See  bureau  reports  for  significant  bureau  accomplishments. 

101 


102   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  Treasury  Department,  the  Bureau  of  the  Budget,  and  the  De- 
partment of  Defense. 

Financial  management  * 

In  connection  with  the  Government-wide  responsibihty  of  the  De- 
partment for  central  accounting  and  financial  reporting,  that  portion 
of  the  Treasury's  system  of  central  accounts  which  relates  to  account- 
ing in  the  regional  accounting  offices  of  the  Bureau  of  Accounts  was 
streamlined  effective  July  1,  1961.  Improvement  of  the  new  proce- 
dures continued  throughout  fiscal  1962.  It  is  expected  that  these  im- 
provements and  others  planned  will  result  in  an  increase  in  annual 
recurring  savings  from  the  $94,686  reported  for  fiscal  1962  to  $150,000 
thereafter. 

Responsibility  for  fiscal  internal  auditing  and  administrative  ac- 
counting for  appropriations  and  funds  was  transferred  from  the  Fiscal 
Assistant  Secretary  and  the  Commissioner  of  Accounts  to  the  Ad- 
ministrative Assistant  Secretary  by  Treasury  Order  No.  170-9  dated 
July  28,  1961  (see  exhibit  51).  This,  together  with  his  responsibilities 
in  the  areas  of  budgeting,  personnel,  and  management  and  organiza- 
tion, represents  a  significant  step  toward  a  "controller  type"  of  organi- 
zation. Internal  issuances  relating  to  accounting  were  reviewed  and 
a  new  series  of  accounting  policy  statements  were  prepared  and  issued, 
with  the  old  series  rescinded  as  obsolete. 

The  Department  conducted  a  general  overall  preliminary  evaluation 
of  the  internal  audit  programs  of  all  Treasury  bureaus.  Also,  full 
appraisals  were  made  of  the  fiscal  internal  audit  systems  in  actual 
operation  in  two  bureaus.  In  addition  substantial  departmental  as- 
sistance was  provided  in  the  revision  of  the  internal  audit  system  and 
programs  of  one  bureau,  and  similar  assistance  was  being  extended  to 
two  other  bureaus. 

Personnel  management 

Significant  advances  were  made  toward  achieving  the  following 
Office  of  Personnel  objectives:  Improved  service  to  management  at  all 
levels  in  the  Department;  effective  leadership  in  personnel  administra- 
tion; and  improved  cooperation  and  better  utilization  of  available 
resources  within  and  outside  the  Department. 

President  Kennedy's  Executive  Orders  10987  and  10988  on  agency 
appeals  systems  and  employee-management  cooperation  in  the  Federal 
Service  constituted  two  of  the  year's  most  significant  personnel  de- 
velopments. Regulations  implementing  these  orders  and  revised 
standards  of  conduct  were  prepared  cooperativel}^  by  representatives 
of  the  bureaus  and  the  Office  of  Personnel. 

The  fifth  Treasury  Department  orientation  program  was  held  for 
middle  and  upper  management  personnel  from  the  bureaus  and  the 
Ofiice  of  the  Secretary.  The  Secretary  of  the  Treasury  and  his  key 
assistants  briefed  110  employees  at  the  training  sessions  on  Treasury 
organization  and  functions. 

A  comprehensive  study  of  qualifications  and  classification  standards 
of  Treasury  enforcement  agents  was  initiated  and  virtually  completed 
during  the  year. 

>  See  detailed  statement  In  the  Anntuil  Report  to  the  Secretary  of  the  Treasury  onllmprovemenit  in  Financial 
Management. 


ADMINISTRATIVE    REPORTS  103 

Delegations  of  personnel  authority  were  rewritten  and  approved  by 
the  Secretary.  Bureaus  were  aided  in  developing  classification  and 
qualification  standards.  Guides  on  manpower  utilization  were  issued. 
A  new  system  for  reporting  training  was  devised,  and  analyses  of 
training  programs  were  made  and  supplied  to  bureau  heads  and  top 
departmental  staff.  A  new  system  was  devised  for  reporting  activities 
in  the  equal  employment  opportunities  areas. 

In  keeping  with  management's  emphasis  on  measures  to  increase 
productivity,  there  was  a  significant  growth  in  employee-training 
throughout  the  Department.  More  than  95,000  courses  were  com- 
pleted, representing  some  3.5  million  man-hours  of  training,  an  increase 
over  1961  of  47  percent  in  courses  completed,  and  36  percent  in 
man-hours  of  training.  The  largest  number  was  in  the  technical, 
scientific,  and  professional  area  which  accounted]  for  54  percent 
of  the  total  courses  completed  and  87  percent  of  the_^  total  man-hours 
of  training. 

The  Office  of  the  Secretary  stressed  the  development  of  executive 
skills,  and  emphasized  the  eft'ective  use  of  available  training  resources 
within  and  outside  the  Federal  service  in  meeting  Treasury  training 
requirements.  Among  the  external  resources  used  by  the  Depart- 
ment in  the  training  of  high  level  personnel  were:  the  Industrial 
College  of  the  Armed  Forces;  the  National  War  College;  the  Depart- 
of  State's  Foreign  Service  Institute;  the  Brookings  Institution;  the 
Woodrow  Wilson  School  of  Public  and  International  Affairs  at 
Princeton  University;  and  the  Civil  Service  Commission, 

The  first  State-Treasury  personnel  exchange  program  was  initiated 
in  consonance  with  a  recommendation  of  the  Subcommittee  on 
National  Policy  Machinery  of  the  Senate  Committee  on  Government 
Operations. 

A  plan  was  developed  with  the  Civil  Service  Commission  for 
nationwide  inspection  of  Treasury  personnel  management  in  fiscal 
1963  which  provided  for  Department  participation  in  the  Civil 
Service  Commission  inspection  and  utilization  of  Civil  Service  Com- 
mission evaluations. 

Incentive  awards  program 

The  Department  continued  to  stimulate  interest  in  the  incentive 
awards  program  with  particular  emphasis  on  encouraging  employees 
to  make  worthwhile  suggestions.  This  emphasis  on  useful  suggestions 
resulted  in  a  slight  drop  in  the  number  of  suggestions  received  and 
those  adopted.  There  was  an  increase  of  75  percent  in  the  estimated 
tangible  savings  over  those  in  1961.  There  was  also  a  20  percent 
increase  in  the  number  of  performance  awards.  The  payment  of 
awards  for  superior  work  performance  provided  a  valuable  incentive 
for  increased  production  on  routine  jobs. 

Safety  program 

For  calendar  1961  the  Treasury  Department  and  the  Department 
of  the  Army  shared  the  President's  Safety  Award  for  establishments 
having  more  than  75,000  employees.  The  disabling  injury  frequency 
rate  (the  number  of  lost  time  injuries  per  million  man-hours)  was 
reported  as  3.5,  the  lowest  ever  recorded  by  the  Treasury  Depart- 


104   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

ment.  The  number  of  injuries  dropped  from  633  in  calendar  1960 
to  590  in  calendar  1961  reflecting  the  success  of  accident  prevention 
efforts. 

Property  management 

The  Department  continued  its  vigorous  efforts  to  dispose  of  excess 
real  and  personal  property  promptly  and  to  take  full  advantage  of 
surplus  property  available  from  other  agencies. 

Eight  properties,  consisting  of  land  and  improvements  with  a  total 
acquisition  cost  of  $85,000,  were  declared  excess.  Four  other  prop- 
erties previously  declared  excess  were  sold  for  $28,000.  Of  real 
property  not  involving  acreage,  87  parcels,  having  a  total  acquisition 
cost  of  $1,700,000,  were  disposed  of,  and  86_additional  parcels,  having 
a  total  acquisition  cost  of  $669,000,  were  approved  for  disposal. 
In  addition  to  financial  receipts,  the  disposal  of  these  properties  will 
reduce  maintenance  and  protection  costs. 

Treasury  bureaus  were  moved  into  new  buildings  at  10  locations. 
In  several  instances  these  moves  permitted  the  housing  under  one 
roof  of  offices  formerly  widely  scattered.  This  resulted  in:  saving 
time,  salaries  of  employees,  and  transportation  costs;  bringing  to- 
gether various  phases  of  related  work;  and,  greater  convenience  to 
the  public. 

During  fiscal  1962,  the  Treasury  Department  received  from  other 
Federal  agencies  without  reimbursement  excess  personal  property 
with  an  original  acquisition  cost  of  about  $2  million,  and  declared 
excess  personal  property  with  an  original  acquisition  cost  of  about 
$14  million. 

Bureau  of  the  Comptroller  of  the  Currency  ^ 

The  Bureau  of  the  Comptroller  of  the  Currency  is  responsible  for 
the  execution  of  laws  relating  to  the  supervision  of  national  banking 
associations.  The  duties  of  the  office  include  those  incident  to  the 
formation  and  chartering  of  new  national  banking  associations,  the 
examination  of  all  national  and  District  of  Columbia  banks,  the 
establishment  of  branch  banks,  the  consolidation  of  banks,  the  con- 
version of  State  banks  into  national  banks,  recapitalization  programs, 
and  the  issuance  and  redemption  of  Federal  Reserve  notes. 

There  were  nmnerous  significant  developments  in  the  Bureau  of  the 
Comptroller  of  the  Currency  during  the  fiscal  year  1962.  A  policy 
of  full  public  disclosure  has  been  established.  Public  hearings  now 
are  held  on  all  matters  involving  issues  of  national  interest  with  respect 
to  mergers,  consolidations,  applications  to  organize  new  national 
banks,  branch  applications,  and  other  related  matters.  This  approach 
has  exposed  operations  of  the  Comptroller's  office  to  fuU  public  view, 
thus  assuring  timely  and  objective  action  compatible  with  the  views, 
principles,  and  laws  involved.  In  addition  to  the  policy  of  full  public 
disclosure,  a  program  was  established  for  distributing  to  all  national 
banks  and  other  interested  parties  copies  of  communications  relating 
to  policies  and  procedures  of  the  Comptroller's  office.  To  accomplish 
this,  the  publication  of  The  Weekly  Bulletin  was  instituted  to  announce 
receipt  of  and  action  taken  on  applications  for  new  charters,  branches, 

'  Additional  information  concerning  the  Bureau  of  the  Comptroller  of  the  Currency  is  contained  in  the 
separate  Animal  Report  of  the  Comptroller  of  the  Currency. 


ADMINISTRATIVE    REPORTS  105 

mergers,  consolidations,  purchase  of  assets,  assumption  of  liabilities, 
name  and  location  changes,  conversions,  and  other  information  of 
interest  to  national  banks  and  the  entire  financial  community. 

Effective  August  1,  1962,  the  Comptroller's  office  established  14 
regional  offices  in  lieu  of  the  old  system  of  12  district  offices.  This 
regionalism  of  the  National  Banking  System  eliminated  split  States, 
resulted  in  a  better  distribution  of  examination  work  among  field 
offices,  facilitated  optimum  utilization  of  bank  examining  manpower, 
and  gave  long  overdue  recognition  to  the  economic  growth  in  the 
Northwestern  States,  the  Kocky  Mountain  States,  and  the  Southern 
States. 

A  broad  and  intensive  study  was  made  of  the  practical  problems 
which  confront  the  National  Banking  System  in  coping  with  the  ever- 
changing  factors  of  our  modern  dynamic  economy.  The  Comptroller 
of  the  Currency  sought  and  received  the  cooperation  and  assistance 
of  this  country's  bankers  who  face  the  day-to-day  practical  problems 
of  modern  banking.  Twenty-four  of  the  leading  bankers  served  as 
advisers  to  the  Comptroller  in  order  to  prepare  the  study.  A  complete 
and  thorough  reexamination  was  made  of  [the  entire  structure  of  the 
National  Banking  System,  including  laws,  regulations,  policies,  pro- 
cedures, forms,  and  examinations.  The  study  which  was  submitted  to 
the  Comptroller  on  September  11,  1962,  has  thrown  light  on  those 
factors  which  have  impeded  the  proper  functioning  of  the  commercial 
banks.  Prompt  action  will  be  taken  on  all  matters  which  can  appro- 
priately be  the  subject  of  new  and  revised  regulations  issued  by  the 
Comptroller  within  the  framework  of  present  laws.  Where  needed, 
additional  legislation  will  be  proposed  to  provide  greater  flexibility 
and  additional  capacity  to  national  banks,  so  that  they  may  more 
effectively  meet  the  needs  of  the  public  and  business  for  credit  and 
other  banking  services. 

Other  major  improvements  resulting  from  changes  within  the 
Bureau  are  speedier  action  on  applications  for  charters,  mergers,  and 
branches.  All  persons  concerned  with  these  functions  were  notified 
and  a  system  of  reporting  was  established  to  assure  adherence  to  time 
standards.  This  approach  has  greatly  expedited  business  of  the  utmost 
importance  to  the  banking  community.  Under  former  procedure, 
bank  examination  reports  were  sent  to  the  Washington  headquarters 
of  the  Comptroller's  office  where  employees  of  the  central  office  dealt 
directly  with  national  bank  officials  on  all  matters  requiring  attention. 
It  is  now  the  policy  of  this  Office  to  have  regional  chief  national  bank 
examiners  deal  directly  with  national  bank  officials  on  these  matters. 

There  have  been  many  other  accomplishments  in  the  Bureau  of 
the  Comptroller  of^the  Currency'during  the  past  year.  Though  there 
are  many  more  to  be  made,  the  new  program  has  given  the  banking 
community  a  new  spirit  of  progress  and  accomplishment.  The  vigor, 
energy,  enterprise,  and  initiative  which  banks  throughout  the  country 
are  displaying  are  clearly  evident  in  the  constant  flow  of  proposals 
for  new  charters,  new  branches,  additional  capital  flotations,  as  well  as 
in  plans  for  mergers,'  consolidations,  and  for  the  formation  of  bank 
holding  companies.  Fresh  capital  is  being  committed  in  increasing 
amounts  to  new  banking  ventures  at  home,  and  opportunities  abroad 
are  being  explored  at  an  accelerating  rate.  Confidence  in  the  national 
banking  community  is  at  a  high  level. 


106   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Abstract  of  reports  of  condition  of  active  national  banks  on  the  date  of  each  report 

from  June  30,  1961,  to  June  SO,  1962 
[In  thousands  of  dollars] 


Assets 

Loans  and  discounts,  including 
overdrafts - 

U.S.  Government  securities,  direct 
obligations 

Obligations  guaranteed  by  U.S. 
Government 

Obligations  of  States  and  political 
subdivisions 

Other  bonds,  notes,  and  deben- 
tures  

Corporate  stocks,  including  stocks 
of  Federal  Reserve  Banks 


Total  loans  and  securities 

Cash,  balances  with  other  banks, 
and  cash  items  in  process  of  col- 
lection  

Bank  premises  o\vned,  furniture 
and  fixtures 

Real  estate  owned  other  than  bank 
premises 

Investments  and  other  assets  in- 
directly representing  bank  prem- 
ises or  other  real  estate 

Customers'  liability  on  accept- 
ances  

Other  assets.- 


Total  assets. 


LlABIUTIES 

Demand  deposits  of  individuals, 
partnerships,  and  corporations... 

Time  and  savings  deposits  of  indi- 
viduals, partnerships,  and  corpo- 
rations  

Deposits  of  U.S.  Government  and 
postal  savings 

Deposits  of  States  and  political 
subdivisions 

Deposits  of  banks 

Certified  and  officers'  checks,  etc. . 

Total  deposits 


Demand  deposits 

Time  and  savings  deposits... 
Mortgages  or  other  liens  on  bank 

premises  and  other  real  estate 

Rediscounts  and  other  Uabihties 

for  borrowed  money 

Acceptances  outstanding 

Other  liabilities 


Total  liabilities. 


Capital  Accounts 

Capital  stock 

Surplus.- 

Undivided  profits 

Reserves  and  retirement  account 
for  preferred  stock 


Total  capital  accounts. 


Total  liabiUties  and  capital 
accounts -- 


June  30,  1961 

(4,524  banks) 


63,439,852 
33,397,413 

124, 680 

10, 123, 742 

1,419,736 

337, 241 


108, 842, 664 

25,  274, 240 

1,774,055 

53, 978 

187,073 

441,638 
725, 347 


137,  298, 995 


59, 212, 875 

40,338,073 

3, 756, 972 

9,  762, 861 
7, 848, 020 
1, 566, 137 


122, 484, 938 


78,891,899 
43, 593, 039 

3,338 

355. 466 

448, 976 

2, 567,  224 


125, 859, 942 


3, 478, 403 
6,620,169 
2,071,321 

269, 160 


11,439.053 


137, 298. 995 


Sept.  27. 1961 
(4,523  banks) 


65, 126, 699 
35,  613, 945 

124, 167 

10, 630, 990 

1, 590, 467 

340, 572 


113, 426, 840 

24, 489, 635 

1,807,908 

58, 226 

191, 515 

459, 098 
750, 041 


141, 183,  263 


60, 131, 865 

41,379,308 

4, 843, 695 

9, 164, 153 
8,  252, 977 
1, 399, 562 


125,171.560 


80, 512, 872 
44, 658,  688 

3,447 

1,085,863 

467,  225 

2. 776,  551 


129, 504, 646 


3,  510,  219 
5, 655, 738 
2,237,432 

275,228 


11,  678, 617 


141, 183. 263 


Dec.  30,  1961 
(4,513  banks) 


67, 308, 734 
35. 959, 763 

127,915 

11,077,350 

1, 569, 230 

359, 281 


116,402,273 

31,078,445 

1, 849, 848 

61,365 

191, 196 

479, 808 
746, 117 


150, 809. 052 


67, 138, 117 

42, 034, 484 

3. 527, 015 

10,  270. 143 

10, 463, 584 

2, 077, 274 


135, 510, 617 


89, 965, 459 
45,  545, 158 

3,773 

224, 615 

489, 640 

2, 705, 101 


138, 933, 746 


3, 577, 244 
5, 935, 779 
2, 080, 103 

282, 180 


11, 875, 306 


150, 809, 052 


Mar.  26, 1962 
(4,498  banks) 


67, 464, 993 
34, 928, 617 

126, 471 

11,898,873 

1, 525, 106 

367, 439 


116,311,499 

25, 161, 121 

1, 884, 555 

66, 398 

195,312 

477, 513 
741,979 


144, 838, 377 


60, 143, 776 

44, 710, 715 

3, 976, 499 

9, 845, 648 
8, 163, 124 
1,404,524 


128, 244,  286 


79, 725. 825 
48, 518, 461 

3,552 

1,253,307 

484, 797 

2, 807. 585 


132, 793, 527 


3,  651, 736 
6, 058, 057 
2, 067, 971 

267, 086 


12, 044, 850 


144, 838, 377 


June  30. 1962 

(4,500 

banks) 


69, 770,  562 
34, 382, 833 

125,  219 

12, 808, 791 

1, 772,  265 

381, 100 


119,  240, 770 

26, 860, 010 
1,931,130 

65, 176 

187, 289 

453, 726 
820, 783 


149, 558, 884 


60,704,744 

46,974,830 

5, 639, 542 

10, 389, 793 
8, 277, 623 
1,741,128 


133, 727, 660 


82,834,181 
50, 893, 479 

3,574 

379, 445 

462,  658 

2,  742, 687 


137, 316, 024 


3, 682, 475 
6, 123, 886 
2, 164, 235 

272,264 


12,242,860 


149, 558. 884 


Changes  in  the  condition  of  active  national  banks 

The  total  assets  of  the  4,500  active  national  banks  in  the  United 
States  and  possessions  on  June  30,  1962,  amounted  to  $149,559 
million,  as  compared  with  the  total  assets  of  4,524  banks  amounting 


ADMINISTRATIVE    REPORTS 


107 


to  $137,299  million  on  June  30,  1961,  an  increase  of  $12,260  million 
during  the  year.  The  deposits  of  the  banks  in  1962  totaled  $133,728 
million,  which  was  $11,243  million  more  than  in  1961.  The  loans  in 
1962  were  $69,771  million,  exceeding  the  1961  figure  by  $6,331  million. 
Securities  held  totaled  $49,470  million,  an  increase  of  $4,067  million 
during  the  year.  Capital  accounts  of  $12,243  million  were  $804 
million  more  than  in  the  preceding  year. 

Summary  of  changes  in  number  and  capital  stock  of  national  banks 

The  authorized  capital  stock  of  the  4,502  national  banks  in  existence 
on  June  30,  1962,  consisted  of  common  stock  aggregating  $3,682 
million,  and  preferred  stock  aggregating  $3.2  million.  The  common 
stock  of  the  4,525  national  banks  in  existence  a  year  earlier  amounted 
to  $3,478  million,  and  preferred  stock  to  $1.3  million.  During  the 
year  charters  were  issued  to  47  national  banks  having  an  aggregate 
of  $17.1  million  of  common  stock  and  $2  million  of  preferred  stock. 
There  was  a  net  decrease  of  23  in  the  number  of  national  banks  in  the 
system  by  reason  of  voluntary  liquidations,  statutory  consolidations 
and  mergers,  conversions  to  and  mergers  or  consolidations  with  State 
banks  under  the  provisions  of  the  act  of  August  17,  1950  (12  U.S.C. 
214),  and  one  receivership. 

More  detailed  information  regarding  the  changes  in  the  number  and 
capital  stock  of  national  banks  in  1962  is  shown  in  the  following  table. 

Organizations,  capital  stock  changes,  and  liquidations  of  national  banks,  fiscal  year 

1962 


Number 
of  banks 


Capital  stock 


Common 


Preferred 


Charters  in  force  June  30,  1961,  and  authorized  capital  stock  >. 

Increases: 

Charters  issued 

Capital  stock: 

232  cases  by  statutory  sale 

606  cases  by  statutory  stock  dividends 

1  case  by  stock  dividend  under  articles  of  association- 
Si  cases  by  statutory  consolidation 

31  cases  by  statutory  merger 


4,525 


f  $3, 477, 504, 359 


$1,323,300 


47 


17, 106, 000 

45, 753, 295 

122, 443, 591 

25,000 

15, 970,  540 

12, 033, 367 


2, 000, 000 


Total  increases. 


47 


213, 331, 793 


2, 000, 000 


Decreases: 

Voluntary  liquidations 

Statutory  consolidations 

Statutory  mergers 

Conversions  into  State  banks 

Merged  or  consolidated  with  State  banks. 
Receivership 

Capital  stock: 

6  cases  by  statutory  consolidation 

3  cases  by  statutory  merger _.. 

4  cases  by  retirement- 


18 
22 
13 

3 
13 

1 


2, 720, 000 


675, 000 

3, 866, 200 

25,000 

980, 650 
225, 500 


163, 660 


Total  decreases. 


70 


8, 492, 350 


163,  660 


Net  change 

Charters  in  force  June  30, 1962,  and  authorized  capital  stock  '. 


-23 


204, 839, 443 


1,836,340 


4,502 


3,  682, 343, 802 


3,159,640 


■■  Revised. 

•  These  figures  diSer  from  those  in  the  preceding  table.  The  figures  as  of  June  30,  1961,  Include  one  new 
bank  not  yet  open  for  business,  and  one  bank  in  the  process  of  merging  or  consolidating  with  and  into  a 
State  bank  under  the  provisions  of  the  act  of  Aug.  17,  1950  (12  U.S.C.  214),  and  exclude  one  bank  consoli- 
dated with  another  national  bank  under  the  provisions  of  the  act  of  Nov.  7,  1918,  as  amended  (12  U.S.C. 
215).  The  figures  as  of  June  30,  1962,  Include  two  new  banks  not  yet  open  for  business,  one  bank  m  the 
process  of  going  into  voluntary  liquidation,  one  bank  in  the  process  of  merging  or  consolidating  with  and 
into  a  State  bank,  and  exclude  tiiree  banks  consolidated  with  and  one  bank  merged  with  other  national 
banks  under  the  provisions  of  the  act  of  Nov.  7,  1918,  as  amended  (12  U.S.C.  215). 


l08   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Bureau  of  Customs 

The  major  responsibility  of  the  Bureau  of  Customs  is  to  administer 
the  Tariff  Act  of  1930,  as  amended.  Primary  duties  include  the 
assessment  and  collection  of  all  duties,  taxes,  and  fees  due  on  unported 
merchandise,  the  enforcement  of  customs  and  related  laws,  and  the 
administration  of  certain  navigation  laws  and  treaties.  As  an 
enforcement  organization,  the  Bureau  of  Customs  is  concerned 
primarily  with  combating  smuggling  and  frauds  on  the  revenue. 
It  also  enforces  the  regulations  of  numerous  other  Federal  agencies. 

Collections 

Revenue  collected  by  the  Customs  Service  during  the  fiscal  year 
1962  was  an  alltime  record  of  approximately  $1,624  million,  or  14.1 
percent,  more  than  the  $1,423  million  collected  in  1961 .  These  figures 
include  customs  duty  collections,  excise  taxes  on  imported  merchan- 
dise collected  for  the  Internal  Revenue  Service,  and  certain  miscel- 
laneous collections.  Larger  customs  collections  than  in  fiscal  1961  were 
reported  by  42  out  of  45  customs  districts.  Collections  by  customs 
districts  are  shown  in  table  21. 

Customs  duty  collections  alone  amounted  to  more  than  $1,171 
million,  16.2  percent  more  than  the  $1,008  million  collected  in  1961. 
Collections  by  Customs  of  internal  revenue  taxes  on  imported  liquors, 
wines,  perfumes,  etc.,  amounted  to  almost  $445  million,  9.5  percent 
more  than  the  $406  million  collected  in  1961.  Miscellaneous  collec- 
tions amounted  to  almost  $8  million,  a  decrease  of  14.9  percent  from 
those  collected  in  1961.  The  major  classes  of  all  collections  by  the 
Customs  Bureau  are  shown  in  table  22. 

Of  all  imports  into  the  United  States  during  fiscal  1962,  more  than 
38  percent  were  duty  free.  Included  were  some  commodities,  such 
as  copper  and  iron  and  steel  scrap,  imported  free  for  Government 
stockpile  purposes,  or  authorized  by  special  acts  of  Congress  for  free 
entry  although  dutiable  under  the  Tariff  Act  of  1930,  or  taxable  under 
the  Internal  Revenue  Code.  The  62  percent  which  was  dutiable 
constituted  the  basis  of  customs  duties  on  imports. 

Customs  operations  in  1962 

Vehicles  and  persons  entering. — Nearly  158  million  persons  were 
subject  to  customs  inspection  in  fiscal  1962.  More  than  45.4  million 
carriers  entered  U.S.  harbors,  international  airports,  or  crossed  U.S. 
borders,  bringing  nearly  128  million  passengers.  In  addition,  approxi- 
mately 30  million  persons  walked  across  the  borders.  There  was  an 
0.4  percent  increase  in  carriers  and  an  0.3  percent  increase  in  persons 
entering  the  United  States  as  compared  Avith  fiscal  1961.  Statistics 
for  the  two  years  are  contained  in  tables  98  and  99. 

Entries  of  merchandise. — The  volume  of  imports  into  the  United 
States  in  fiscal  1962  resumed  its  long-term  rise,  breaking  the  record 
set  in  fiscal  1960.  The  value  totaled  $15.5  billion,  up  $1.7  billion 
from  fiscal  1961.  Formal  entries  of  merchandise,  comprising  con- 
sumption, warehouse,  and  rewarehouse,  exceeded  one  million  for  the 
seventh  consecutive  3'ear,  and  1.5  million  for  the  first  time  in  history. 
There  were  1,547,940  formal  entries  filed  during  fiscal  1962,  a  10.7 
percent  increase  over  1961.  Baggage  declarations  and  informal  entries 
covering  mail  importations  and  other  shipments  valued  at  less  than 


ADMINISTRATIVE    REPORTS  109 

$250  totaled  7,079,926,  an  increase  of  29.1  percent.  The  volume  of 
entries  handled  by  customs  officers  during  the  past  two  years  is  shown 
in  table  96. 

Drawback  transactions. — •Drawback  allowance  on  the  importation 
of  merchandise  manufactured  from  imported  materials  and  for  certain 
other  export  transactions  usually  amounts  to  99  percent  of  the  customs 
duties  paid  at  the  time  the  goods  are  entered.  The  total  drawback 
paid  in  fiscal  1962  was  $14,756,430,  an  increase  of  27.3  percent  over 

1961.  The  principal  imported  materials  used  in  manufactured  ex- 
ports in  1962  were  petroleum  and  its  products;  chemicals;  citrus 
fruit  juices;  tobacco,  unmanufactured;  coal-tar  products;  sugar;  watch 
movements;  copper  and  manufactures;  iron  and  steel  semimanu- 
factures; aluminum;  and  medicinal  preparations.  Table  97  shows  the 
drawback  transactions  for  1961  and  1962, 

Appraisement  of  merchandise  {including  Customs  Information  Ex- 
change).— ^The  number  of  invoices  filed  during  fiscal  1962  increased 
8.5  percent;  2,366,771  compared  with  2,181,008  in  1961.  The 
number  of  packages  examined  by  appraisers'  personnel  totaled 
1,504,689,  an  increase  of  9.3  percent  over  the  1,377,351  examined  in 
fiscal  1961. 

The  backlog  of  unappraised  invoices  more  than  30  days  old  rose  to 
307,000,  reflecting  an  increase  of  58.2  percent  over  the  194,000  on  hand 
at  the  close  of  fiscal  1961.  This  sharp  rise  may  be  attributed  to  the 
initiation  in  January  1962  of  the  U.S.  import  duties  annotated  veri- 
fication program  (USIDA)  which  requires  customs  examiners  to  be 
responsible  for  the  verification  of  four  statistical  elements,  i.e.,  country 
of  origin,  commodity  code  number,  unit  of  quantity,  and  value  with 
respect  to  each  item  on  each  invoice  of  imported  merchandise.  During 
the  first  5  months  of  operation,  652,759  entries  were  verified.  These 
comprised  1,145,531  individual  items,  each  requiring  four  verifications. 
There  were  289,322  items  (25.3  percent  of  the  total)  which  required 
correction  of  one  or  more  of  the  verified  elements. 

Under  the  Antidumping  Act  of  1921,  as  amended  (19  U.S.C.  160- 
171),  16  complaints  were  received,  compared  with  32  in  1961.  The 
disposal  of  33  cases  left  12  under  investigation  at  the  end  of  fiscal 

1962,  compared  with  29  the  previous  year.  For  a  determination  as 
to  possible  injury  to  American  industry  four  cases  were  referred  to 
the  U.S.  Tariff  Commission.  One  new  case  on  countervailing  duty 
was  received  in  addition  to  the  three  cases  carried  over  from  1961. 
Three  cases  were  closed,  leaving  one  outstanding. 

Two  new  cases  involving  convict  labor  were  received  during  the 
year  in  addition  to  the  one  case  carried  over  from  1961.  One  case 
was  closed,  leaving  a  balance  of  two  cases. 

The  activities  of  the  Customs  Information  Exchange  in  New  York, 
N.Y.,  continued  at  approximately  the  same  high  level  as  that  of  1961. 
Appraisers'  reports  of  classification  and  value,  covering  a  cross  section 
of  imported  merchandise  received  at  each  port,  totaled  76,000 
compared  with  78,000  in  1961.  These  reports  indicate  the  relative 
number  of  commodity  items  received  at  any  given  port  for  the  first 
time,  as  well  as  regularly  received  items  at  new  prices  or  subject  to 
different  terms  of  sale  from  previous  shipments. 


110   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Classification  and  value  differences  indicate  the  number  of  in- 
stances where  the  value  or  classification  of  merchandise  information 
varied  among  ports  or  when  the  conclusions  of  appraising  officers 
differed.  In  the  latter,  additional  study  and  analysis  were  required 
before  a  uniform  price  or  rate  could  be  established.  There  were 
6,775  reports  of  value  differences  during  fiscal  1962,  as  compared  with 
7,243  in  1961.  Differences  in  classification  totaled  4,693  during  1962 
compared  with  4,803  in  1961,  indicating  a  decrease  in  new  commodities 
received. 

Detailed  investigations  abroad  to  obtain  information  for  appraise- 
ment decreased  from  215  in  fiscal  1961  to  212  in  1962.  The  low  in- 
cidence of  inquiries  was  ascribed  to  the  continuing  effect  of  the  elimina- 
tion of  foreign  value  as  a  basis  of  appraisement  under  the  terms  of  the 
Customs  Simplification  Act  of  1956  (19  U.S.C.  1402)  and  to  the  current 
regulation  which  permits  a  foreign  inquiry  only  as  a  last  resort  in 
securing  value  information. 

Technical  services. — The  laboratories  of  the  Technical  Services 
Division  analyzed  about  132  thousand  samples  in  fiscal  1962,  an  in- 
crease of  6.5  percent  over  those  in  1961.  The  increase  in  the  number 
of  samples  was  general  with  approximately  two-thirds  of  the  classes 
reflecting  an  increase.  Imported  merchandise  samples  submitted 
for  appraisement  and  tariff  classification  information  made  up  the 
large  majority  of  those  analyzed.  Other  types  analyzed  were  those 
taken  from  seizures,  mainly  of  narcotics  and  other  prohibited  mer- 
chandise ;  preshipment  samples  of  merchandise  intended  for  shipment 
to  the  United  States  analj^zed  to  assist  in  establisliing  proper  classi- 
fication ;  and  samples  tested  for  other  Government  agencies. 

Chief  chemists  analyzed  cargo  sample  weighing  data  to  assure  that 
accuracy  and  precision  were  within  control  limits.  Studies  were 
made  of  20  cargoes  of  raw  sugar,  47  cargoes  of  refined  sugar,  and  58 
cargoes  of  tobacco.  Statistical  evaluation  of  the  verification  of  liqui- 
dations by  comptrollers  (final  determination  of  duty  and  taxes)  and 
the  development  and  furnishing  of  investigative  aids  for  enforcement 
officers  were  continued. 

The  division  recommended  tentative  approval  of  bullv  weighing 
and  sampling  equipment  at  three  locations.  Installations  at  two  other 
locations  were  being  considered  at  the  close  of  the  fiscal  year. 

A  contract  was  awarded  for  the  construction  of  a  75-ton  capacity 
truck  scale  in  Brooklyn,  N.Y. 

In  cooperation  with  the  Immigration  and  Naturalization  Service, 
plans  and  specifications  were  prepared  and  contracts  were  awarded  for 
the  construction  of  a  border  station  and  two  residences  at  the  following 
locations:  Lancaster,  Minn.;  Opheim,  Mont.;  Antler,  Fortuna,  Han- 
nah, Sarles,  and  Walhalla,  N.D.  Several  of  these  construction  proj- 
ects have  been  completed.  Construction  plans  of  various  projects 
involving  space  for  Customs  prepared  by  the  General  Services  Ad- 
ministration or  engineering  firms  were  reviewed  and  appropriate 
changes  recommended.  The  General  Services  Administration  has 
awarded  contracts  for  an  inspection  station  at  Massena,  N.Y.,  and  at 
Sault  Ste.  Marie,  Mich.  Other  major  General  Services  Administra- 
tion border  projects  now  under  way  include  Jackman,  Lubec,  Vance- 
boro,  and  Van  Buren,  Me. ;  Derby  Line  and  Highgate  Springs,  Vt. ; 


ADMINISTRATIVE    REPORTS 


111 


Lewiston  Bridge,  N.Y. ;  Del  Rio  and  El  Paso  (Cordova  Island),  Tex.; 
Nogales,  Ariz. ;  Pigeon  River,  Minn. ;  Sweetgrass,  Mont. ;  and  Pembina, 
N.D. 

Export  control. — The  following  table  shows  the  volume  of  export 
control  activities: 


Activity 


1961 


1962 


Percentage 
increase,  or 
decrease  (— ) 


Export  declarations  authenticated 

Shipments  examined 

Number  of  seizures 

Value  of  seizures 

Export  control  employees 


4, 758, 249 

596, 457 

222 

$656, 903 

173 


4, 721, 709 

641, 489 

196 

$504,  707 

201 


-0.8 

7.6 

-11.7 

-23.2 

16.2 


Protests  and  appeals. — Protests  filed  by  importers  against  the  rate 
and  amount  of  duty  assessed  and  other  decisions  made  by  collectors 
of  customs  increased  4.6  percent.  Appeals  for  reappraisement  filed  by 
importers  who  did  not  agree  with  appraisers  as  to  the  value  of  mer- 
chandise decreased  37.1  percent.  The  following  table  shows  the 
number  of  protests  and  appeals  filed  during  fiscal  1961  and  1962, 


Protests  and  appeals 

1961 

1962 

Percentage 
increase,  or 
decrease  (— ) 

Protests: 
Filed  with  collectors  by  importers  (formal) 

35, 627 

n.a. 

3,532 

27,907 

27,281 

37,270 
52,374 

n.a. 

n.a. 
17, 164 

4.6 

Filed  with  collectors  by  Importers  (informal) 

Allowed  by  collectors                         .  . 

Denied  by  collectors  and  forwarded  to  customs  court 

Appeals  for  reappraisement  filed  with  collectors 

-37.1 

n.a.    Not  available. 

Marine  activities. — Vessels  in  the  American  merchant  marine  con- 
tinued to  increase  during  fiscal  1962.  At  the  end  of  the  year  the 
documented  fleet  totaled  52,730,  an  increase  of  3.2  percent.  During 
the  year  1,476  vessels  were  removed  from  documentation  so  that 
approximately  3,100  vessels  (roughly  the  total  number  of  all  sizes 
built)  never  before  documented  were  added.  Approximately  8,700 
were  documented  as  yachts  and  almost  44,000  were  authorized 
through  documentation  to  be  used  in  commercial  activities  in  foreign, 
coasting,  or  fishing  trades.  There  was  an  increase  of  16  percent  in 
the  number  of  vessels  documented  as  yachts.  The  following  table 
compares  the  volume  of  marine  documentation  during  fiscal  years 
1961  and  1962. 


Activity 


1961 


1962 


Percentage 
increase,  or 
decrease  (— ) 


Total  vessels  documented  at  end  of  year 

Documents  issued  (registers,  enrollments,  and  licenses) 

Licenses  renewed  and  changes  of  master  endorsed 

Mortgages,  satisfactions,  notices  of  lien,  bills  of  sale,  abstracts 

of  title,  and  other  Instruments  of  title  recorded 

Abstracts  of  title  and  certificates  of  ownership  issued 

Navigation  fines  imposed 

Tonnage  tax  payments 

Certificates  and  permits 

Name  changes - 

n.a.    Not  available. 


61,115 
17, 396 
47,440 

14, 954 
7,754 
2,919 

23, 731 

1,152 

929 


52, 730 
17, 286 
49, 238 

15, 707 
7,597 

n.a. 

n.a. 
1,493 
1,110 


3.2 
-.6 
3.8 

6.0 
-2.0 


29.6 
19.6 


112   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Total  gross  tonnage  of  vessels  documented  at  the  end  of  fiscal  1962 
was  25,489,871,  The  decrease  in  tonnage  dui'ing  the  year  was  less 
than  in  other  recent  years,  because  a  number  of  large  vessels  pre- 
viously under  foreign  flag  w^ere  admitted  to  American  registry.  As  in 
1961  such  transfers  apparently  were  made  to  qualify  for  participa- 
tion in  the  transportation  of  foreign-aid  cargoes  under  the  Cargo- 
Preference  Act,  as  amended  (46  U.S.C.  1241(b))  which  requires  that 
at  least  50  percent  of  such  cargoes  be  shipped  in  American-flag  vessels. 

The  Bureau  redefined  the  rig  classifications  used  in  the  docmnenta- 
tion  of  vessels  and  added  certain  designations  for  new  types  of  vessels, 
such  as  hydrofoil  and  nuclear  craft.  The  Bureau  eliminated  distinc- 
tions between  types  of  unrigged  or  nonself-propelled  vessels,  since 
such  distinctions  were  no  longer  useful,  and  designated  all  such  vessels 
as  barges.  Sail-propelled  vessels  were  so  designated,  and  distinc- 
tive rig  designations  such  as  "bark,"  "sloop,"  and  "ketch,"  were 
eliminated. 

Development  of  a  simplified  system  of  ship  registry  was  continued. 
A  packet  of  forms  and  an  outline  of  procedures  were  being  reviewed 
at  the  end  of  the  year  preparatory  to  transmittal  to  other  appropriate 
Government  agencies  and  to  steamship  companies  and  associations 
for  fm-ther  review  and  comment.  The  proposed  changes  will  require 
legislation,  which  is  in  preliminary  di-aft. 

The  Bureau  of  Customs  continued  to  represent  the  Treasury 
Department  on  the  Water  Transportation  Facilitation  Committee, 
chaired  by  the  Department  of  Commerce,  and  composed  of  all  Gov- 
ernnient  agencies  interested  in  shipping  problems.  The  committee 
continued  work  on  developing  an  international  program  for  simplify- 
ing entry  and  clearance  controls.  Attention  has  been  focused  on  the 
Draft  Convention  for  the  Facilitation  of  International  Waterborne 
Transportation  in  the  Western  Hemisphere,  proposed  as  a  regional 
agreement  for  adoption  by  the  Organization  of  American  States 
(OAS)  through  the  Inter- American  Ports  and  Harbors  Conference. 
The  convention,  which  is  sponsored  by  the  Permanent  Technical 
Committee  on  Ports  of  the  Conference,  is  modeled  along  the  lines  of 
the  International  Civil  Aviation  Organization  (ICAO)  agreement 
covering  aircraft  procedm-es  and  has  attached  an  annex  of  standards 
and  recommended  jDractices.  The  committee  was  also  active  in 
assisting  in  the  formulation  of  U.S.  policy  for  the  approaching  meeting 
of  a  committee  on  travel  and  transport  of  the  Intergovernmental 
Maritime  Consultative  Organization  (IMCO),  which  is  considering 
similar  action  on  the  broader  international  scope  of  the  latter  group. 
The  United  States  has  suggested  to  IMCO  that  the  OAS  draft  conven- 
tion and  annex  might  serve  as  a  basis  for  consideration  in  imple- 
menting its  own  program.  The  Customs  Bureau  is  vitally  interested 
in  the  work  of  the  Water  Transportation  Facilitation  Committee 
because  the  first  mipetus  of  the  work  program  in  the  facilitation  field 
is  expected  to  be  in  the  area  served  by  Customs.  This  agency  has  a 
wide  interest  in  the  whole  field  of  waterborne  transportation  proce- 
dm-es through  its  responsibilities  for  assisting  other  agencies  with 
enforcement  of  regulations.  These  include:  Mannmg  and  inspection 
requirements  of  the  U.S.  Coast  Guard;  quarantine  requirements  of 


ADMINISTRATIVE    REPORTS  113 

the  U.S.  Public  Health  Service;  and  immigration  requirements  of  the 
U.S.  Immigration  and  Naturalization  Service. 

It  is  expected  that  the  Bureau  will  be  represented  on  the  U.S. 
delegations  to  the  meeting  of  the  IMCO  group  in  London,  England, 
in  November  1962  and  in  the  OAS  meeting  which  is  scheduled  to  follow 
the  IMCO  meeting. 

The  Subcommittee  on  Tonnage  Measurement,  Intergovernmental 
Maritime  Consultative  Organization,  met  in  London,  England, 
from  December  11  through  15,  1961.  The  U.S.  delegation,  headed  by 
Customs,  presented  for  consideration  a  simplified  formula  for  the 
admeasurement  of  cargo  and  passenger  vessels.  The  subcommittee 
set  up  a  working  group  to  consider  as  a  matter  of  urgency  and  recom- 
mend to  the  subcommittee  proposals  for  the  treatment  of  shelter-deck 
ships  for  tonnage-measurement  pm'poses.  The  working  group  also  is 
to  develop  detailed  proposals  for  a  universal  system  of  tonnage 
measurement  based  upon  unification  of  existing  systems  or  national 
proposals  for  new  systems,  such  as  the  U.S.  simplified  formula. 

The  U.S.  delegation  is  participating  in  the  program  of  the  working 
group  and  is  studying  and  evaluating  the  foreign  proposals.  Work  is 
continuing  within  the  United  States  to  refine  and  extend  the  coverage 
of  the  U.S.  proposals  in  the  light  of  foreign  evaluations  and  our  own 
national  requirements.  At  the  end  of  fiscal  1962,  the  Tonnage 
Measurement  Subcommittee  of  the  U.S.  Shipping  Coordinating 
Committee,  also  headed  by  Customs,  was  drafting  a  proposal  dealing 
with  shelter-deck  treatment  for  consideration  of  the  working  group 
and  recommendation  to  the  IMCO  subcommittee. 

The  shelter-deck  spaces  are  cargo  spaces  between  decks  and  the 
superstructures  of  vessels.  It  is  desired  to  continue  the  present  exemp- 
tions of  shelter-deck  spaces  from  inclusion  in  tonnage  without 
requiring  the  tonnage  openings  and  other  features  now  required. 
Domestic  legislation  would  be  required  to  put  the  U.S.  proposals  into 
effect. 

Amending  legislation  enacted  on  August  17,  1961  (46  U.S.C.  35) 
permits  that  U.S.  vessels  sold  while  abroad  may  be  documented  anew 
as  vessels  of  the  United  States  in  such  manner  and  under  such  cir- 
cumstances as  prescribed  by  the  Secretary  of  the  Treasury.  Previ- 
ously, the  vessels  could  not  be  redocumented  until  they  returned  to 
the  United  States.  Legislation  was  enacted  on  August  30,  1961 
(46  U.S.C.  404a)  to  permit  a  fishing  vessel  to  transport  without 
monetary  consideration  the  catch  of  another  U.S.  fishing  vessel  from 
the  high  seas  to  a  port  in  the  United  States  without  having  to  exchange 
their  fishing  licenses  for  registers.  By  an  amendment  to  the  Ship 
Mortgage  Act  of  1920,  dated  September  26,  1961  (46  U.S.C.  922), 
preferred  mortgages  may  be  placed  on  towboats,  barges,  scows, 
lighters,  car  floats,  canal  boats,  or  tank  vessels  of  not  less  than  25 
gross  tons.  Previously,  preferred  mortgages  could  be  placed  on  such 
vessels  only  if  they  measured  200  gross  tons  or  more.  Pursuant  to  an 
act  of  June  30,  1961  (46  U.S.C.  289b),  passengers  may  be  transported 
on  Canadian  vessels  in  southeastern  Alaska,  and  passengers  and 
merchandise  may  be  transported  on  Canadian  vessels  between  Hyder, 


661496—63- 


114   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Alaska,  and  other  points  in  Alaska  and  other  points  in  the  United 
States,  until  the  Secretary  of  Commerce  determines  that  U.S.  flag 
service  is  available  to  provide  such  transportation.  Several  legisla- 
tive proposals  were  reviewed  which  would  exempt  foreign  vessels  in 
certain  circumstances  from  the  prohibition  against  transporting 
merchandise  between  points  in  the  United  States. 

The  exemption  of  water-ballast  spaces  from  gross  tonnage  was 
reviewed  in  the  light  of  the  adaptation  and  availability  of  such  spaces. 
As  a  result,  new  requirements  connected  with  the  granting  of  exemp- 
tions from  gross  tonnage  for  water-ballast  spaces  were  put  into  effect 
and  provisions  made  for  a  Bureau  review  of  all  cases  where  such 
exemption  exceeds  30  percent  of  the  vessel's  gross  tonnage,  calculated 
without  any  allowance  for  water  ballast. 

Instructions  were  issued  to  clarify  the  treatment  of  water-ballast 
spaces  bounded  by  wood.  This  action  was  predicated  upon  Coast 
Guard  rulings  that  water-ballast  spaces  in  hull  compartments  bounded 
by  wood  could  not  be  considered  properl}^  constructed  and  are  not 
useable  for  water  ballast.  It  was  determined  that  such  spaces  should 
be  included  in  gross  tonnage. 

The  United  States  added  Greece  to  the  list  of  countries  whose 
admeasurement  rules  it  recognizes.  Consequently,  Greek  vessels, 
the  registers  of  which  indicate  gross  and  net  tonnages  determined  under 
its  national  rules,  are  taken  in  ports  of  the  United  States  to  be  of  the 
tonnage  so  expressed. 

Applications  for  admeasurement  of  yachts  increased  at  some  ports 
during  the  spring  and  summer;  however,  the  overall  backlog  of  ap- 
plications was  reduced  through  the  use  of  additional  personnel. 
The  applications  received  at  the  end  of  fiscal  1962  were  being  processed 
and  the  yachts  scheduled  for  admeasurement  within  a  reasonable 
time.  Two  hydrofoil  vessels  were  measured  during  the  year,  one  of 
which  was  built  in  the  United  States  as  an  experimental  vessel  for 
the  U.S.  Maritime  Administration.  New  vessels  built  for  ocean- 
ographic  research  and  existing  vessels  being  converted  to  such  service 
were  also  measured. 

A  procedure  to  facilitate  the  frequent  exchange  of  information 
between  the  Panama  Canal  admeasurers  and  Customs  has  resulted 
in  a  better  understanding  of  Canal  admeasurement  practices  and  is 
expected  to  prove  helpful  in  the  Bureau's  issuance  of  Panama  Canal 
tonnage  certificates. 

At  the  request  of  the  Military  Sea  Transportation  Service,  Depart- 
ment of  tlie  Navy,  waiver  of  the  navigation  laws  of  the  United  States 
was  granted  pursuant  to  the  authority  contained  in  the  act  of  Decem- 
ber 27,  1950  (46  U.S.C.  1  note),  to  permit  certain  foreign-flag  vessels 
under  time  charter  to  Military  Sea  Transportation  Service  to  transport 
military  cargo  and  passengers  between  Cape  Canaveral,  Fla.,  and 
San  Juan  and  Ma5^aguez,  P.R.,  for  a  period  of  two  years  from  De- 
cember 9,  1961. 

At  the  request  of  the  Acting  Secretary  of  the  Army,  waiver  of  the 
navigation  laws  was  granted  to  the  extent  necessary  to  permit  Cana- 
dian vessels  to  be  employed  in  dredging,  towing,  and  transporting  of 
merchandise   and   passengers   in    connection   with   the   dredging  of 


ADMINISTRATIVE    REPORTS 


115 


Wolfe  Island  Cut  on  the  Saint  Lawrence  River.  This  operation  is 
related  to  the  Saint  Lawrence  Seaway  project. 

Instructions  were  issued  requiring  vessels  leaving  ports  in  Alaska 
and  Hawaii  for  noncontiguous  territories  of  the  United  States  to 
clear  and  present  export  declarations  in  the  same  manner  as  vessels 
departing  from  any  other  State.  Instructions  also  were  issued 
requiring  that  portable  deck  tanks  be  listed  on  a  vessel's  inward 
manifest  as  cargo  regardless  of  their  customs  status  otherwise.  Vessels 
clearing  for  ports  in  the  Sino-Soviet  bloc,  Hong  Kong,  Macao,  or 
Cuba,  were  held  to  be  subject  to  the  requirement  for  filing,  before 
departing,  outward  manifests  and  export  declarations  for  the  cargo 
aboard  destined  only  for  such  ports  and  not  for  cargo  destined  for 
other  ports  on  the  same  voyage. 

Australia  was  added  to  the  list  of  countries  whose  yachts  ma}^  ob- 
tain licenses  to  cruise  in  U.S.  waters  without  entering  and  clearing  at 
each  domestic  port  of  call  and  without  paying  tonnage  taxes  and  other 
entry  fees.  This  was  done  in  anticipation  of  the  imminent  arrival  of 
an  Austrahan  competitor  in  the  American  cup  races  and  upon  satis- 
faction that  yachts  of  the  United  States  were  granted  reciprocal 
privileges  by  the  Australian  Government. 

The  following  table  compares  entrances  and  clearances  of  vessels 
in  fiscal  1961  and  1962. 


Vessel  movements 

1961 

1962 

Percentage 
increase,  or 
decrease  (— ) 

Entrances: 
Direct  from  foreign  ports . 

48, 364 
38, 459 

47, 463 
39, 631 

—1.9 

Via  other  domestic  ports . 

3.0 

Total --- 

86, 823 

87, 094 

.3 

Clearances: 
Direct  to  foreign  ports 

46,421 
38, 193 

45,  772 
39,  667 

—1.4 

Via  other  domestic  ports 

3.9 

Total 

84,614 

85, 439 

1.0 

Law  enforcement  and  investigative  activities. — The  Customs  Agency 
Service  conducted  20,356  investigations  during  1962,  compared  with 
18,828  in  1961,  an  increase  of  8.1  percent.  These  investigations 
were  made  under  the  customs,  navigation,  and  related  laws  adminis- 
tered by  the  Bureau  of  Customs  and  several  laws  administered  by 
other  Government  agencies  and  enforced  by  Customs.  Table  101 
shows  the  number  and  types  of  cases  investigated  during  1961  and 
1962. 

As  in  other  recent  years,  the  most  active  enforcement  districts  were: 
Laredo,  Tex.,  with  637  arrests  and  245  convictions;  Los  Angeles, 
Calif.,  with  499  arrests  and  285  convictions;  and  New  York,  N.Y., 
with  99  arrests  and  59  convictions. 

Customs  agents  made  1,429  arrests  and  convicted  685  violators, 
compared  with  1,483  arrests  and  743  convictions  in  fiscal  1961. 
The  following  table  shows  the  number  of  arrests  and  dispositions  during 
fiscal  1961  and  1962. 


116   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Activity 


1961 


1 

1962 

1,483 

1,429 

743 

685 

34 

33 

101 

67 

399 

283 

14 

4 

'396 

456 

208 

297 

Percentage 
increase,  or 
decrease  (— ) 


-3.7 

-7.8 

-3.0 

-33.7 

-29.1 

-71.4 

15.2 

42.8 


Arrests 

Convictions 

Acquittals 

Nolle  prossed 

Dismissed 

Not  indicted 

Under,  or  awaiting  indictment 

Turned  over  to  State  and  other  Federal  authorities  for  prose^ 
cution 

'  Revised. 

Officers  of  the  Customs  Agency  Service  cooperated  during  fiscal 
1962  with  Federal,  State,  and  local  law  enforcement  agencies  and  with 
officials  of  foreign  governments  in  6,127  cases,  937  more  than  in  fiscal 
1961. 

Customs  agents  and  enforcement  officers  made  5,819  seizures 
during  fiscal  1962,  as  compared  with  4,017  seizures  in  1961.  Fines 
and  penalties  incurred  in  fiscal  1962  totaled  $21,374,970  compared 
with  $28,469,300  in  1961.  _ 

Although  included  in  statistics  for  the  Customs  Agency  Service 
as  a  whole,  the  customs  port  investigators  made  344  arrests  during 
fiscal  1962,  as  compared  with  265  the  year  before.  They  also  made 
3,753  seizures  of  merchandise  in  fiscal  1962,  compared  with  2,579 
in  1961,  with  a  total  appraised  value  of  $8,728,834  and  $8,409,141, 
respectively. 

Between  September  1961  and  April  1962,  a  task  force  was  formed 
of  representatives  of  the  Office  of  the  Secretary  of  the  Treasury,  the 
Bureau  of  the  Budget,  and  the  Bureau  of  Customs  to  survey  and 
determine  the  enforcement  requirements  of  the  Customs  Agency 
Service.  The  group  visited  more  than  a  dozen  ports  including  the 
New  York  International  Airport.  The  study  included  utilization  of 
personnel,  management  and  supervision,  equipment,  duty  assignments, 
geographical  areas  requiring  enforcement  coverage,  efficiency  of  per- 
sonnel, radio  and  automotive  equipment,  and  electronic  investigative 
aids.  The  task  force  study  concluded:  That  the  concept  of  basic 
customs  enforcement  is  in  harmony  with  present  policy  and  will 
remain  so  in  the  foreseeable  future;  that  the  present  system  of  customs 
enforcement  is  as  efficient  as  current  resources  permit;  and  that  the 
request  of  the  Bureau  of  Customs  for  an  increase  in  personnel  and 
equipment  to  meet  its  enforcement  responsibilities  is  justified.  It 
recommended  that  the  Customs  Agency  Service  force  be  increased  to 
1,200  customs  port  investigators,  the  build-up  to  be  extended  over  a 
three-year  period.  The  task  force  concluded  that  the  Bureau's  en- 
forcement efficiency  has  reached  the  highest  level  in  its  history  limited 
only  by  inadequate  strength.  The  consolidation  of  the  intelligence 
gathering  and  investigative  arm  with  the  basic  enforcement  functions 
has  resulted  in  a  balanced  law  enforcement  organization  with  ade- 
quate authority,  and  professional  standards  in  the  concept,  training, 
morale,  and  dedication  to  duty  of  national  significance. 

Customs  seizures  of  narcotic  drugs  durin*;  fiscal  1962  declined  from 
the  unusually  large  amounts  for  1961  as  detailed  in  the  following  table. 


ADMINISTRATIVE    REPORTS 
Seizures  of  narcotic  drugs 


117 


Drug  seizures 

Fiscal 

years 

Percentage 
increase,  or 

1961 

1962 

decrease  (— ) 

Narcotic  drugs:  (weight  in  grams) 
Heroin  ___ 

11, 177. 13 

147 
27,364.23 

9 
17, 383.  99 

19 

3, 790. 64 

153 

3, 645. 573 

397 
3,255 

176 

2,357.80 

111 
7,553.59 

8 
7,651.75 

10 

9,347.15 

283 

9, 176. 824 

429 
1,766 

139 

—78  9 

Number  of  seizures 

—24  5 

Raw  opium 

—72  4 

Number  of  seizures 

—11  1 

Smoking  opium 

—56  0 

Number  of  seizures 

—47  4 

Others 

146  6 

Number  of  seizures.-- 

85.0 

Marihuana:  (weight  in  kilograms) 
Bulk.— - 

151.7 

Number  of  seizures 

8.1 

Cigarettes— (Number) — 

—45.8 

Number  of  seizures - 

-21.0 

Cocaine  has  declined  in  prominence  with  two  seizures  of  about  four 
poimds  each.     In  both  cases  the  indicated  source  was  Bolivia. 

Mexico  continues  to  supply  at  least  95  percent  of  the  marihuana 
consumed  in  the  United  States.  During  fiscal  1962  several  im- 
portant gangs  trafficking  in  this  commodity  were  put  out  of  busi- 
ness. One  of  the  most  active  operated  from  El  Paso,  Tex.,  to  New 
York,  N.Y.  In  a  year-long  investigation  customs  agents  arrested  9 
members  of  this  gang,  who  were  all  sentenced  to  periods  varying  from 
2  to  15  years.  Another  investigation  brought  into  custody  13  mem- 
bers and  employees  of  a  Chicago  gang,  several  of  whom  received  sen- 
tences of  2  to  10  years,  while  others  are  fugitives,  having  forfeited 
substantial  bail.  Another  investigation  resulted  in  the  apprehension 
of  8  members  of  a  gang  in  Junction,  Tex.,  operating  between  Mexico 
and  Detroit,  Mich.  The  most  recent  conspiracy  case,  not  concluded 
at  the  end  of  fiscal  1962,  involved  the  arrest  of  14  defendants  who 
were  engaged  in  smuggling  marihuana  through  El  Paso,  Tex.,  and 
shipping  it  to  Los  Angeles,  Calif. 

Information  developed  by  customs  oJSicers  stationed  abroad  was 
responsible  for  the  capture  of  several  lots  of  narcotics  destined  for  the 
United  States.  The  largest  involved  40  pounds  of  smoking  opium  and 
13  pounds  of  heroin  which  Chinese  crewm embers  had  smuggled  aboard 
a  British  naval  vessel  in  Singapore,  and  which  the  captain  located 
between  Honolulu  and  San  Francisco,  along  with  diamonds  and  jade 
valued  at  $70,000.  Customs  officers  at  Honolulu  also  seized  $5,000 
worth  of  Chinese  medicines  which  crewmembers  had  smuggled  into 
that  port. 

Seizures  of  merchandise  throughout  the  country  by  all  types  of 
customs  officers  during  fiscal  1962  for  violation  of  laws  enforced  by 
the  Customs  Service  numbered  16,475  with  an  appraised  value  of 
$26,853,303,  compared  with  14,658  seizures  in  1961,  appraised  at 
$15,850,918.  This  reflected  an  increase  of  12.4  percent  in  the  number 
of  seizures  and  69.4  percent  in  the  appraised  value  from  the  year 
before.  Title  to  only  a  fraction  of  the  merchandise  captured  passed 
to  the  Government,  as  most  was  destroyed  or  returned  to  the  owners 
upon  payment  of  fines  or  penalties.  Details  of  seizures  are  shown  in 
table  100. 


118   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Foreign  trade  zones. — During  fiscal  1962  the  value  of  merchandise 
received  in  Foreign  Trade  Zone  No.  1  at  New  York,  N.Y.,  increased 
by  almost  $5  million  or  13  percent.  Long  tons  delivered  from  the 
zone  increased  4.3  percent  over  last  year,  although  the  value  of  such 
merchandise  was  7.1  percent  less.  Three  ships  berthed  to  lade  do- 
mestic ship's  stores  and  27  ships  used  the  zone  facilities  for  dis- 
charging cargo  from  foreign  countries.  Large  quantities  of  refined 
sugar,  radios,  piece  goods  of  wool  and  cotton,  bulk  and  bottled  liquor, 
cameras,  Brazil  nuts,  steel,  chemicals,  machinery,  caviar,  talc,  cut- 
lery, zinc  and  lead  ingots,  and  tungsten  ore  were  stored  and  more 
than  6,700  manipulations  operations  were  performed  in  the  zone. 

The  number  of  entries  received  in  Foreign  Trade  Zone  No.  2  at 
New  Orleans,  La.,  increased  10.9  percent  over  last  year.  Duties 
and  taxes  collected  increased  24.3  percent.  Fishing  lures  were  brought 
into  the  zone,  commingled  with  American  made  lures,  and  assembled 
into  kits.  Other  articles  brought  into  this  zone  were  Brazil  nuts, 
casein,  burlap,  chemical  compounds,  chicory,  chinaware,  cotton, 
earthenware,  fish  meal,  fish  netting,  lead  and  lead  oxide,  logs,  lumber, 
musical  instruments,  mustard  seed,  sugar,  tile,  sewing  machine 
heads,  transistor  radios,  waste  bagging,  whiskey,  wire  rope,  and 
personal  and  household  effects.  A  grant  for  the  establishment  of 
Foreign  Trade  Subzone  No.  2A,  at  New  Orleans,  was  issued  on 
February  14,  1962,  by  the  Foreign  Trade  Zones  Board. 

There  were  decreases  in  all  activities  at  Foreign  Trade  Zone  No. 
3  at  San  Francisco.  No  vessels  used  the  zone  facilities  for  discharging 
cargo,  nor  were  any  ships  berthed  to  lade  domestic  ship's  stores. 
There  were  615  manipulations  performed  in  the  zone  diu-ing  the  year. 

The  number  of  entries  received  at  Seattle,  Wash.  (No.  5)  increased 
21.6  percent  over  fiscal  1961.  Long  tons  received  in  the  zone  in- 
creased 40.7  percent  and  the  value  of  goods  received  increased  27.2 
percent.  All  activities  at  this  zone  increased  with  the  exception  of 
long  tons  and  value  of  goods  delivered  from  the  zone.  A  wide  variety 
of  articles  from  many  countries  was  received  in  the  zone  for  the 
Seattle  World's  Fair.  Largest  tonnage  commodities  were  ball  and 
roller  bearings,  camp  lanterns  and  stoves  from  Japan;  waterproof 
wearing  apparel  from  Norway;  mung  beans  from  Thailand;  chemicals 
and  machinery  from  Canada;  cotton  waste  from  Mexico;  and 
exhibition  material  from  France. 

Foreign  Trade  Zone  No.  7  began  operations  at  Mayaguez,  P.R.., 
on  August  21,  1961.  Activities  within  this  zone,  which  is  4K  miles 
inland  from  the  piers,  consisted  of  repacking  and  remarking  of  dental 
instruments,  the  marking  of  books,  pamphlets,  and  wool  sweaters 
with  the  country  of  origin,  and  the  manufacture  of  raw  cotton  into 
cotton  card  laps. 

Foreign  Trade  Subzone  7A  opened  at  Penuelas,  P.R.,  on  May  1, 
1962.  Two  vessels  used  the  zone  facilities  for  discharging  cargo  from 
foreign  countries  and  two  ships  berthed  in  the  zone  to  lade  domestic 
ship's  stores. 

Foreign  Trade  Zone  No.  8  at  Toledo,  Ohio,  began  operations  on 
August  28,  1961.  Goods  entering  this  zone  consisted  of  14  different 
commodities  from  9  countries  of  origin.  Construction  began  in 
May  1962  to  expand  this  zone's  facilities  by  an  additional  35,000 
square  feet. 


ADMINISTRATIVE    REPORTS 


119 


The  following   table  contains  a  brief  summary  of  foreign   trade 
zone   operations    during   fiscal    1962. 


Trade  zone 

Number 
of  entries 

Received  in  zone 

Delivered  from  zone 

Duties  and 
internal 
revenue 

Long  tons 

Value 

Long  tons 

Value 

taxes 
collected 

New  York 

5,182 

3,783 

5,282 

800 

22 

7 

291 

42,  868 

28,411 

1.527 

418 

246 

34, 667 

12, 146 

$39, 821, 181 

13, 029, 855 

1, 855, 054 

701, 388 

246, 759 

665, 216 

7,  088. 575 

46, 263 

39, 969 

1,930 

337 

239 

21,322 

7,937 

$37, 109, 941 

19, 207,  748 

2, 244, 635 

557, 841 

147, 251 

1, 085, 640 

4, 723, 879 

$3, 701, 750 

New  Orleans 

1, 425, 618 

San  Francisco 

241, 654 

Seattle  -              

110, 247 

Mayaguez 

9 

Penuelas...    .      .-      -  .. 

15, 337 

Toledo 

24, 025 

Customs  ports  of  entry,  stations,  and  airports. — -The  limits  of  the  ports 
of  Atlanta,  Ga.,  and  Sitka,  Alaska,  were  extended  and  redescribed  to 
include  areas  not  theretofore  covered.  The  ports  of  entry  at  Beaufort 
and  Morehead  City,  N.C.,  were  consolidated  as  the  port  of  Beaufort- 
Morehead  City.  A  new  customs  station  was  established  at  Salisbury, 
Md.  The  designations  of  Hodgon  and  Littleton,  Maine,  as  customs 
stations  were  revoked.  The  International  Seaplane  Base  at  Ranier, 
Minn.,  was  designated  as  an  international  airport  (airport  of  entry). 

The  following  offices  of  the  Appraiser  of  Merchandise,  were  estab- 
lished as  principal  customs  field  offices:  District  No.  47,  Colorado; 
District  No.  34,  Dakota;  District  No.  40,  Indiana;  District  No.  42, 
Kentucky;  District  No.  1,  Maine  and  New  Hampshire;  District  No. 
19,  Mobile;  District  No.  15,  North  Carolina;  District  No.  16, 
South  Carolina;  and  District  No.  43,  Tennessee. 

Cost  of  administration 

Regular  nonreimbursable  customs  employment  increased  3.3  per- 
cent in  fiscal  1962.  Total  employment  increased  3.9  percent.  Export 
control  employment,  financed  by  funds  from  the  Department  of  Com- 
merce, increased  16.2  percent,  and  employment  financed  by  funds 
transferred  from  the  Department  of  Agriculture  increased  13.3  percent. 

Customs  operating  expenses  totaled  $65,917,528,  including  export 
control  expenses  and  the  cost  of  additional  inspection  reimbursed  by 
the  Department  of  Agricultm-e. 

The  following  table  shows  man-year  employment  data  in  fiscal  1961 
and  1962. 


Operation 

Man-years 
1961 

Man-years 
1962 

Percentage 
increase 

Regular  customs  operations: 

Nonreimbursable.                                             .... .  . 

7,328 
302 

7,573 
315 

3.3 

Reimbursable!-.  ..- 

4.3 

Total  regular  customs  employment 

7,630 
173 

188 

7,888 
201 
213 

3.4 

Export  control 

16.2 

Additional  inspection  for  Department  of  Agriculture 

13.3 

Total  employment.. 

7,991 

8,302 

3.9 

'  Salaries  reimbursed  to  the  Government  by  the  private  firms  who  received  the  exclusive  services  of 
these  employees. 


120   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Management  improvement  program 

Significant  improvements  were  made  in  many  areas  of  customs 
activity  with  annual  recurring  savings  of  over  $137,000.  Of  this, 
approximately  $42,500  was  realized  during  the  year  and  was  used 
to  finance  Customs'  half  of  the  construction  of  one  border  station 
and  two  residences  at  Walhalla,  N.D.,  a  joint  Customs-Immigration 
project.  The  full  recurring  amount  will  be  applied  to  meet  increased 
costs  of  a  steadily  rising  workload.  It  is  estimated  that  these  ex- 
penses in  fiscal  1963  will  be  at  least  8  percent  higher  than  those  of 
1962,  the  previous  peak. 

Travel  and  air  commerce. — A  new  procedure  was  adopted  to  accel- 
erate the  clearance  of  in  transit  air  passengers  through  the  United 
States.  These  passengers  may  now  check  their  baggage  through  the 
United  States  to  the  port  of  departure  without  examination  by  cus- 
toms officers.  Previously,  unless  the  baggage  was  forwarded  under 
bond,  baggage  examination  was  required  even  though  the  passenger 
was  transiting  the  United  States  en  route  to  another  country. 

A  bilingual  customs  inspector  participated  in  a  European  tour  con- 
ducted by  U.S.  firms  engaged  in  international  passenger  transporta- 
tion. The  inspector  explained  customs  procedures  and  provided 
information  to  encourage  foreigners  to  visit  the  United  States. 

Duty  paid  by  returning  U.S.  residents  on  articles  shipped  to  them 
from  overseas  and  later  claimed  to  be  free  under  their  exemption  is 
now  refunded  before  verification  of  the  claim.  Under  previous  pro- 
cedures the  claim  had  to  be  verified  before  the  refund  was  made. 

Entry  oj  merchandise. — Entry  offices  were  established  at  four  addi- 
tional airports  during  the  year  to  facilitate  the  clearance  of  merchan- 
dise. This  service,  now  provided  at  our  six  largest  airports,  enables 
importers  of  air  cargo  to  complete  all  necessary  customs  requirements 
at  the  airport. 

The  procedures  for  forwarding  imported  air  cargo  from  the  port  of 
first  arrival  to  another  port  for  entry  were  simplified  by  an  optional 
plan  which  eliminated  the  necessity  for  preparing  additional  in-bond 
manifests. 

Importers  of  alcoholic  beverages  were  authorized  to  pay  internal 
revenue  taxes  on  a  semimonthly  basis.  This  deferred  payment  pro- 
cedure extends  to  importers  the  same  privileges  previousl}^  granted  to 
firms  withdrawing  domestic  liquor  from  internal  revenue  bonded 
warehouses. 

As  another  convenience  to  importers,  Customs  now  collects  both 
duty  and  internal  revenue  tax  due  on  imported  tobacco  products. 
Before  this  change,  importers  were  required  to  make  payments  to  two 
separate  services. 

A  new  procedure  permits  joint  examination  b}^  the  United  States 
and  Canadian  Customs  of  theatrical  effects  exported  by  rail  from  the 
United  States  to  Montreal,  or  Toronto,  Canada,  for  temporary  use. 
The  railroad  cars  are  examined  by  Canadian  Customs  for  import 
purposes  and  by  United  States  Customs  for  export  purposes  jointl}''  at 
the  importers'  premises,  thus  ehminating  one  examination  formerly 
performed  at  the  border  and  resulting  in  a  saving  of  time  to  the 
theatrical  companies. 

Government  military  agencies,  the  General  Services  Administration, 
and  the  Atomic  Energy  Commission  were  authorized  to  obtain  imme- 


ADMINISTRATIVE    REPORTS  121 

diate  delivery  permits  for  indefinite  periods  of  time  on  importations 
for  their  respective  agencies.  Before  this,  the  permits  had  to  be  re- 
newed yearly  with  resulting  inconvenience  and  delay  if  not  renewed 
on  time. 

The  application  for  special  license  to  lade  or  unlade  and  the  request 
for  overtime  services  were  combined  into  one  form  for  airline  companies, 
with  a  provision  for  automatic  yearly  renewal. 

Procedures  were  revised  to  permit  importers  of  carpet  wool  to  retain 
liability  for  use  of  the  wool  unless  specific  requests  were  made  for 
relief  of  such  liability  under  the  importer's  bond.  This  procedure 
also  provides  Customs  with  a  better  method  of  controlling  the  use  of 
imported  carpet  wool. 

The  release  of  merchandise  entered  under  informal  entries  was  ex- 
pedited by  permitting  customs  brokers  to  prepare  serially  numbered 
informal  entries  under  the  control  of  customs  officers. 

The  customs  form  under  which  vessels  are  permitted  to  proceed 
from  one  domestic  port  to  another  was  revised  to  require  a  listing  of 
each  foreign  port  which  the  vessel  touches  while  so  proceeding. 
This  will  provide  more  complete  information  for  the  collectors  of 
customs  at  succeeding  American  ports  in  meeting  accountability  re- 
quirements for  foreign  cargo  aboard. 

Other  improvements  made  during  the  year  were:  Customs  employees 
were  authorized  to  accept  personal  checks  from  individuals  importing 
merchandise  for  their  personal  use,  rather  than  requiring  cash,  when 
banking  facilities  are  not  available;  three  forms  were  combined  into 
one  for  use  in  reporting  discrepancies  between  manifested  merchandise 
and  landed  merchandise  to  provide  for  a  simpler  method  of  rectifying 
any  discrepancies;  a  packing  list  was  required  of  imported  merchan- 
dise to  enable  customs  to  make  a  representative  examination  while 
selecting  fewer  packages;  and  four  days  were  added  to  the  two  already 
allowed  within  which  an  entry  must  be  filed  under  certain  special  im- 
mediate delivery  procedures. 

Liquidation  of  entries. — The  backlog  of  import  entries  awaiting 
tentative  determination  of  duties  and  taxes  due  was  reduced  to  458,000 
as  of  June  30,  1962,  almost  100,000  less  than  the  number  of  such  entries 
on  hand  a  year  earlier.  This  reduction  of  more  than  17  percent  was 
accomplished  by  a  continued  high  rate  of  individual  production,  im- 
proved procedures,  and  by  the  addition  of  some  personnel. 

Enforcement  activities. — A  system  of  radio  telephones  was  installed 
in  customs  patrol  cars  at  four  selected  seaports.  This  new  communi- 
cation system  has  increased  the  effectiveness  of  enforcement  operations 
by  permitting  closer  supervision  of  waterfront  areas  and  by  releasing 
personnel  previously  assigned  to  offices  to  outside  activities.  Both 
incoming  and  outgoing  calls  are  handled  directly  from  patrol  cars  with 
this  equipment  which  supplements  the  two-way  radio  system  already 
in  use. 

An  electronic  status  console  was  installed  at  the  customs  enforce- 
ment headquarters  in  New  York,  N.Y.  This  console,  which  is  pat- 
terned after  similar  devices  used  by  several  major  police  departments, 
consists  of  an  illuminated  map  of  the  New  York  pier  area  showing  the 
location  of  all  docked  ships  by  lights  and  the  location  of  customs  patrols 
by  small  magnetized  cars.  All  calls,  to  and  from  the  dispatcher,  pre- 
viously recorded  by  hand,  are  now  automatically  recorded  on  reuseable 


122   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

magnetic  tape.  The  use  of  this  console  has  increased  the  efficiency  of 
enforcement  in  the  New  York  area  and  has  released  some  office  person- 
nel for  outside  enforcement  activities. 

Other  management  improvements. — The  Canadian  query  program, 
estabhshed  several  years  ago  to  provide  accurate  information  on  U.S. 
customs  requirements  to  Canadian  exporters  was  expanded  by  the 
designation  of  four  additional  appraisers'  offices  to  provide  this 
service.  This  expansion  has  brought  the  source  of  the  information 
closer  to  the  recipients  and  has  resulted  in  better  compliance  with 
customs  requirements  by  Canadian  businessmen. 

The  quality  of  import  statistics  furnished  to  the  Bureau  of  the 
Census  was  improved  by  a  new  plan,  under  which  any  changes  in 
quantity,  value,  classification,  rate,  or  description  of  imported  mer- 
chandise are  corrected  before  the  statistical  copies  are  transmitted  to 
Census.  This  change  benefits  both  the  Government  and  industry  by 
providing  more  accurate  data  on  imported  merchandise. 

As  a  convenience  to  importers,  brokers,  and  customs  personnel,  all 
requirements  for  additional  invoicing  information  were  consolidated 
into  the  customs  regulations. 

A  forms  management  program,  which  provides  for  the  continuous 
review  and  control  of  all  customs  forms,  was  adopted  with  an  officer 
designated  in  the  Washington  headquarters  and  in  each  principal 
customs  field  office  to  carry  out  the  program.  During  the  fiscal  year, 
25  customs  forms  were  abolished,  61  were  revised,  2  were  consolidated, 
and  2  new  forms  were  created.  The  establishment  of  a  uniform  paper 
stock  for  printing  entry  forms  saved  $4,000  in  annual  printing  costs. 

Management  teams  from  the  Washington  headquarters  inspected 
46  collection,  appraisement,  agency,  and  laboratory  districts  during 
the  year.  In  the  course  of  the  inspections  manpower  requirements 
were  reevaluated  in  terms  of  existing  and  anticipated  workloads, 
simplffied  procedures  were  installed,  and  other  changes  were  made  to 
improve  the  efficiency  of  field  operations. 

Under  the  incentive  awards  program,  780  suggestions  were  received 
and  230  were  adopted  with  awards  of  $5,300.  The  230  suggestions 
adopted  represent  a  slight  increase  over  those  adopted  in  fiscal  1961. 
Total  identifiable  savings  resulting  from  the  suggestions  amounted  to 
$17,500. 

Future  'plans  and  programs. — A  task  force  of  citizens,  appointed  in 
fiscal  1961  to  study  ways  of  improving  customs  procedures  and  facil- 
ities for  foreign  tourists  and  U.S.  citizens  returning  from  abroad, 
completed  its  report.  The  report,  made  pubhc  on  February  21,  1962, 
contained  32  recommendations.  On  March  19,  1962,  the  Secretary 
of  the  Treasury  appointed  a  steering  committee  to  study  the  recom- 
mendations of  the  task  force.  Those  found  to  be  desirable  will  be 
put  into  effect. 

Future  plans  for  Customs  include:  The  preparation  of  detailed  plans 
to  improve  internal  accounting  and  fiscal  procedures;  the  application 
of  electronic  data  processing  to  accountmg  operations  at  New  York, 
N.Y.;  a  continuation  of  the  study  of  mail  parcels  designated  as  gifts 
to  determine  whether  there  is  widespread  abuse  of  the  statutory 
exemption  for  gift  parcels  which  may  requhe  corrective  action;  and 
completion  of  the  project  to  estabhsh  improved  procedures  for  the 
designation  of  international  airports  according  to  their  capabiUty  to 
process  aircraft  arriving  from  abroad. 


ADMINISTRATIVE    REPORTS  123 

Office  of  Defense  Lending 

The  Office  of  Defense  Lending,  established  July  1,  1957,  by  Treasury 
Department  Order  No.  185,  is  responsible  for  the  following  functions 
which  had  been  transferred  to  the  Secretary  of  the  Treasury. 

Activities  under  the  Defense  Production  Act 

The  making  and  administering  of  loans  to  private  business  enter- 
prises under  the  authority  of  section  302  of  the  Defense  Production 
Act  of  1950,  as  amended  (50  App.  U.S.C.  2153),  were  assigned  to  the 
Secretary  of  the  Treasury  by  Executive  Order  No.  10489,  dated  Sep- 
tember 26,  1953.  Under  section  302,  this  Office  can  consider  only 
applications  for  loans  which  are  certified  as  essential  for  national 
defense  purposes  by  the  Office  of  Emergency  Planning  of  the  Executive 
Office  of  the  President. 

No  new  loans  were  authorized  during  the  fiscal  year  1962.  Loans 
outstanding  were  reduced  from  $121.6  million  to  $121.3  million  and 
commitments  from  $13.6  milHon  to  $1.5  million  during  the  year. 
Gross  reductions  in  borrowing  during  the  fiscal  year  amounted  to 
$13.9  million,  but  borrowing  of  $11.9  million  was  necessary  to  purchase 
an  outstanding  commitment,  thus  making  a  net  reduction  of  $2  million 
in  notes  payable  to  the  Treasury.  Interest  payments  of  $3.5  million 
were  made. 

Activities  under  the  Federal  Civil  Defense  Act 

The  lending  functions  under  section  409  of  the  Federal  Civil  Defense 
Act  were  transferred  to  the  Secretary  of  the  Treasury  on  September 
28,  1953,  pursuant  to  section  104  of  the  Reconstruction  Finance  Corpo- 
ration Liquidation  Act  (50  App.  U.S.C.  2261).  Smce  the  close  of  fiscal 
1955  no  administrative  expense  allowance  has  been  authorized  for  this 
program,  and  no  applications  for  new  loans  have  been  accepted.  As 
of  July  1,  1961,  the  loans  outstanding  amounted  to  $798,344  and  de- 
ferred participation  commitments  to  $1,776,138.  These  loans  had 
been  reduced  to  $691,687  and  the  commitments  to  $1,308,343  as  of 
June  30,  1962.  Notes  payable  to  the  Treasury  were  reduced  by 
$140,000.     Interest  paid  amounted  to  $19,295. 

Liquidation  of  Reconstruction  Finance  Corporation  assets 

The  Reconstruction  Finance  Corporation  was  abolished  effective  at 
the  close  of  June  30,  1957,  pursuant  to  the  provisions  of  Reorganization 
Plan  No.  1  of  1957.  Its  remaining  assets,  liabilities,  and  obligations 
were  transferred  to  the  Secretary  of  the  Treasury,  the  Administrator 
of  the  Small  Business  Administration,  the  Housing  and  Home  Finance 
Administrator,  and  the  Administrator  of  General  Services.  The 
Secretary  of  the  Treasury  is  responsible  for  completing  the  liquidation 
of  business  loans  and  securities  with  individual  balances  as  of  June  30, 
1957,  of  $250,000  or  more,  securities  of  and  loans  to  rafiroads,  securities 
of  financial  institutions,  and  the  windup  of  corporate  affairs. 

Net  income  and  proceeds  of  liquidation  amounting  to  $2.5  million 
were  paid  into  the  Treasury  as  miscellaneous  receipts  in  fiscal  1962, 
thus  making  a  total  of  $47  million  paid  since  July  1,  1957.  The 
portfofio  of  RFC  loans,  securities,  and  commitments  amounted  to 
$8.3  million  on  June  30,  1962,  a  reduction  of  $7.8  million  from  the 


124   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

$16.1  million  outstanding  a  year  earlier.  Total  reductions  effected 
have  amounted  to  $47.2  million,  approximately  85  percent  of  the 
portfolio  of  $55.5  million  transferred  to  the  Secretary  of  the  Treasury 
on  July  1,  1957. 

The  Office  of  Domestic  Gold  and  Silver  Operations 

The  Office  of  Domestic  Gold  and  Silver  Operations  was  established 
in  the  Office  of  the  Under  Secretary  for  Monetary  Affairs  in  accordance 
with  Treasury  Department  Order  No.  193  dated  October  9,  1961  (see 
exhibit  51).  The  duties  transferred  to  the  Under  Secretary  by  the 
October  9,  1961,  amendments  to  Parts  54  and  80  of  Title  31  of  the 
Code  of  Federal  Regulations  were  delegated  to  the  Director,  Office  of 
Domestic  Gold  and  Silver  Operations,  by  Treasury  Department  Order 
No.  193-1  of  October  20,  1961. 

Assistance  is  given  by  this  Office  to  the  Under  Secretary  for  Mone- 
tary Affairs  in  the  formulation,  execution,  and  coordination  of  policies 
and  programs  relating  to  gold  and  silver,  in  both  their  monetary  and 
their  commercial  aspects. 

Information  and  statistics  relating  to  the  use  of  gold  and  silver  are 
prepared  for  his  guidance  in  meeting  these  responsibilities. 

The  Office  administers  the  Treasury  Department  Gold  Regulations 
relating  to  the  purchase,  sale,  and  control  of  industrial  gold,  issues 
licenses  and  other  authorizations  for  industrial,  professional,  and  ar- 
tistic use  of  gold,  both  in  the  United  States  and  abroad,  receives  and 
examines  reports  of  operations,  and  investigates  and  supervises  the 
activities  of  users  of  gold.  Investigations  into  possible  violations  of 
the  Gold  Regulations  are  correlated  \vith  the  U.S.  Secret  Service  or 
other  enforcement  agencies. 

The  Office  develops,  implements,  administers,  and  executes  regula- 
tions and  procedures  pertaining  to  silver,  parl:icularly  newly-mined 
silver,  including  records,  reports,  and  other  related  matters. 

Bureau  of  Engraving  and  Printing 

The  Bureau  of  Engraving  and  Printing  designs,  engraves,  and 
prints  U.S.  currency.  Federal  Reserve  notes,  securities,  postage  and 
revenue  stamps,  and  various  commissions,  certificates,  and  other 
forms  of  engraved  work  for  Government  agencies.  The  Bureau  also 
prints  bonds  and  postage  and  revenue  stamps  for  the  governments  of 
insular  possessions  of  the  United  States. 

Defiveries  of  all  classes  of  work  to  the  customer  agencies  in  the 
fiscal  year  1962  totaled  27,715,972,318  pieces,  as  compared  with 
26,746,227,150  pieces  in  1961,  an  increase  of  969,745,168,  or 
approximately  3.5  percent,  in  the  deliveries  of  Bureau  products. 

Changes  were  made  in  the  organizational  structure  during  the  year 
in  order  to  improve  operating  efficiency. 

Management  attainments 

The  Director  of  the  Bureau  held  frequent  conferences  and  meetings 
with  supervisory  personnel  for  the  purpose  of  providing  constant 
stimulation  and  leadersliip.  An  Employment  Policy  Review  Board 
was  established  to  receive,  investigate,  and  evaluate  complaints  of 


ADMINISTRATIVE    REPORTS  125 

discrimination.  The  Bureau's  concern  in  promoting  and  maintaining 
high  morale  among  employees  was  reflected  in  the  employee  develop- 
ment and  training  policy,  and  in  the  employee  relations  policy  which 
embraces  fair  employment  practices,  favorable  working  conditions,  and 
safety  and  health  services. 

Manpower  requirements  were  reviewed  throughout  the  year  and 
each  vacancy  was  evaluated  before  a  request  was  made  for  a  replace- 
ment. The  reduction  of  personnel  from  3,038  employees  at  the 
beginning  of  the  fiscal  year  to  2,943  at  its  close,  a  decrease  of  95,  was 
largely  the  result  of  the  application  of  management  improvement 
techniques. 

The  Bureau  conducted  industrial  engineering  studies,  analyses  of 
production  processes,  and  quality  control  surveys  to  improve  work 
methods  and  operations,  increase  industrial  efficiency,  and  insure 
development  and  practice  of  sound  quality  control  systems.  Im- 
provements in  equipment  as  well  as  in  the  processes  employed  in  the 
manufacture  of  currency  and  postage  stamps  were  made.  To  facili- 
tate operations,  further  modifications  were  made  on  sheet-fed  rotary 
currency  presses  and  web-fed  rotary  stamp  presses.  Other  Bureau 
research  activities  to  improve  the  quality  of  its  products  related  to 
paper,  tape,  labels,  film,  adhesives,  plate  wear,  presses,  and  equipment. 

Close  liaison  was  maintained  with  representatives  of  the  Depart- 
ment of  Agricultm-e  concerning  the  expanded  food  stamp  program 
and  with  the  Post  Office  Department  in  planning  future  requirements 
for  regular  and  commemorative  postage  stamps. 

Reviews  and  audits  made  by  the  Bureau's  Internal  Audit  Staff 
indicate  that  Bureau  policies  have  been  carried  out  effectively.  In 
fiscal  1962,  74  financial  and  management  type  audits,  containing  91 
audit  recommendations,  were  released.  Ninety-six  recommendations 
were  cleared  and  only  41  audit  recommendations  were  still  under 
consideration  at  the  close  of  the  year. 

Through  the  excess  property  program  the  Bureau  received  $1,771 
from  the  sale  of  obsolete  equipment  and  material  declared  excess,  and 
obtained  equipment  valued  at  $187,120  at  no  charge  through  the 
Federal  utilization  program. 

It  is  estimated  that  annual  recurring  savings  of  $24,671  will  accrue 
from  employee  suggestions  adopted  during  the  fiscal  year.  Through 
the  records  management  program  672  cubic  feet  of  noncurrent  records 
were  transferred  from  office  space  to  the  records  storage  area  and  311 
cubic  feet  of  obsolete  records  were  destroyed.  In  response  to  1,126 
requests,  75  new  forms  were  prepared,  36  were  eliminated,  35  consoli- 
dated, and  347  were  improved  and  revised  in  connection  with  the  forms 
management  program. 

The  Bureau  continued  to  emphasize  the  Treasury  Department 
safety  program.  April  1962  marked  the  second  month  in  the  history 
of  the  Bureau  safety  program  in  which  no  disabling  injuries  oc- 
curred.    The  injury  frequency  rate  has  been  decreasing  yearly. 

The  second  major  application  of  machine  accounting,  payroll  and 
labor  distribution,  was  developed  during  the  year.  This  included  the 
installation  of  punch-card  time  and  attendance  reporting,  program- 
ming and  wiring  of  the  control  panels,  and  labor  cost  distribution. 
Pajrroll  operations  were  being  reviewed  at  the  end  of  fiscal  1962  for 
further  refmement  and  improvement. 


126   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  Bureau  conducts  continuing  employee  development  programs 
which  encompass  both  outside  and  internal  training  and  orientation. 
The  course  of  supervisory  development  conferences  was  completed 
by  69  employees.  The  objectives  were  to  increase  skills  in  the  human 
relations  aspects  of  the  supervisors'  jobs  and  to  increase  their  knowl- 
edge of  the  pertinent  laws  and  regulations.  A  35-mm  color  slide 
presentation  of  the  salary  and  wage  progi'am  prepared  by  Bureau  per- 
sonnel was  used  for  the  first  time. 

Estimated  savings  resulting  from  management  improvements 
during  fiscal  1962  totaled  nine  man-years  and  approximately  $73,300 
on  a  recurring  annual  basis.  All  realized  savings  were  applied  against 
the  cost  of  products  and  have  been  reflected  either  in  the  Bureau's 
billing  rates  or  in  decreases  in  appropriation  requests  by  the  Office  of  the 
Treasurer  of  the  United  States  for  funds  for  the  purchase  of  currency. 

New  issues  of  postage  stamps  and  deliveries  of  finished  work 

New  issues  of  postage  stamps  delivered  by  the  Bureau  in  fiscal  1962 
are  shown  in  table  105.  A  comparative  statement  of  deliveries  of 
finished  work  for  fiscal  1961  and  1962  appears  in  table  103. 

Finances 

The  Bureau  operations  are  financed  by  reimbursements  to  a  working 
capital  fund  authorized  by  law.  Balance  sheets  and  a  statement  of 
income  and  expense  as  of  June  30,  1962  and  1961,  follow. 

Balance  sheets  as  of  June  30,  1962  and  1961 


Assets 


June  30,  1962 

June  30,  1961 

$3, 314,  240 
2,  081, 938 

800, 032 

3, 954,  540 

3, 138, 817 

1,  064, 505 

56, 248 

$3,  294, 070 
1, 274, 673 

762, 520 

3,669,498 

2,996.548 

1, 097,  054 

61, 396 

14, 410, 320 

13, 155, 769 

19,  684, 923 

94, 300 

193,714 

442, 275 

3, 955, 961 

2, 196, 607 

305,030 

19, 505,  859 

88,317 

193, 843 

435, 031 

3, 955. 961 

2, 138, 720 

36, 789 

26, 872, 810 
12, 370, 307 

26, 354, 520 
11, 008, 940 

14, 502, 503 
819 

15, 345, 580 
360 

14, 503, 322 

15, 345, 940 

64,632 

104,623 

28,978,274 

28,606,322 

Current  assets: 

Cash  with  Treasury. 

Accounts  receivable 

Inventories: ' 

Raw  materials 

Work  in  process 

Finished  goods 

Stores 

Prepaid  expenses 

Total  current  assets 

Fixed  assets: ' 

Plant  machinery  and  equipment 

Motor  vehicles 

OlBce  machines 

Furniture  and  fixtures 

Dies,  rolls,  and  plates 

Building  appurtenances 

Fixed  assets  under  construction 

Less  portion  charged  oS  as  depreciation 

Excess  fixed  assets  (estimated  realizable  value) 

Total  fixed  assets 

Deferred  charges 

Total  assets 


Footnotes  at  end  of  table. 


ADMINISTRATIVE    REPORTS 


127 


Balance  sheets  as  of  June  30,  1962  and  1961 

— Continued 

Liabilities  and  investment  of  the  United  States 

June  30,  1962 

June  30,  1961 

Liabilities: ' 

Accounts  payable .  .. 

$452, 127 

1, 019, 555 

1, 643, 968 

97,  776 

576, 777 

1,082 

$400  910 

Accraed  liabilities: 

Payroll . 

883  639 

Accrued  leave .  ._.  ..    .    . 

1, 475, 161 

Other.. 

115  196 

Trust  and  deposit  liabilities ...  .  . 

564, 063 

Other  liabilities .  . 

4,876 

Total  liabilities 

3,791,285 

3, 443, 845 

Investment  of  the  U.S.  Government: 
Principal  of  the  fund: 

Appropriation  from  U.S.  Treasury. 

3, 250, 000 
22, 000, 930 

3, 250, 000 

Donated  assets,  net 

22.000  930 

Total  principal 

25, 250, 930 
-63, 941 

25  250  930 

Earned  surplus,  or  deficit  (— )  * 

—88, 453 

Total  investment  of  the  U.S.  Government ...  .. 

25, 186, 989 

25. 162. 477 

28, 978, 274 

28,606,322 

1  Finished  goods  and  work  in  process  inventories  are  valued  at  cost.  Except  for  the  distinctive  paper 
which  is  valued  at  the  acquisition  cost,  raw  materials  and  stores  inventories  are  valued  at  the  average  cost 
of  the  materials  and  supplies  on  hand. 

2  The  act  of  August  4, 1950,  establishing  the  Bureau  of  Engraving  and  Printing  fund,  specifically  excluded 
from  the  assets  of  the  fund  the  land  and  buildings  occupied  by  the  Bureau  (31  U.S.C.  181a).  These  assets 
are  valued  at  about  $9,000,000.  However,  under  the  Supplemental  Appropriation  Act  of  1961  (74  Stat.  514), 
$1,250,000  was  appropriated  for  emergency  repairs  to  the  Bureau  of  Engraving  and  Printing  Annex  Building. 
Plant  machinery  and  equipment,  furniture  and  fixtures,  office  machines,  and  motor  vehicles  acquired  on  or 
before  June  30, 1950,  are  stated  at  appraised  values.  Additions  since  June  30, 1950,  and  all  building  appiute- 
nances  are  valued  at  acquisition  cost.  Dies,  rolls,  and  plates  were  capitalized  as  of  July  1,  1951,  on  the  basis 
of  average  unit  costs  developed  for  the  fiscal  year  1950  reduced  to  recognize  their  estimated  useful  life.  Since 
July  1, 1951,  an  costs  of  dies,  rolls,  and  plates  have  been  charged  to  operations  in  the  year  acquired. 

'  Outstanding  commitments,  consisting  of  undelivered  purchase  orders  and  unperformed  contracts, 
totaled  $3,626,842  as  of  June  30, 1962,  compared  with  $3,617,362  as  of  June  30, 1961;  of  these  amounts,  $2,296,113 
as  of  June  30, 1962,  and  $2,497,766  as  of  June  30, 1961,  related  to  contracts  entered  into  prior  to  Jime  30,  but  not 
to  be  performed  until  the  ensuing  fiscal  years. 

*  The  act  of  August  4,  1950,  provided  that  any  surplus  accruing  to  the  fund  in  any  fiscal  year  be  paid  into 
the  general  fund  of  the  Treasury  as  miscellaneous  receipts  except  that  any  surplus  would  be  applied  first  to 
restore  any  impairment  of  capital  by  reason  of  variations  between  prices  charged  and  actual  costs  (31  U.S.C. 
181a). 


Statement  of  income  and  expense  for  the  fiscal  years  1962  and  1961 


Income  and  expense 

1962 

1961 

Operating  revenue:  Sales  of  engraving  and  printing 

$24,681,845 

$24, 235, 683 

Operating  costs: 
Cost  of  sales: 

Direct  labor 

9, 366, 156 
3, 946, 379 

9  438  947 

Direct  materials  used... 

4, 033. 564 

Prime  cost 

13,312,535 

13.472.511 

Overhead  costs: 

Salaries  and  indirect  labor 

7,307,064 

1,  061, 617 

288, 218 

1,274,941 

488, 086 

294, 843 

1, 578, 862 

56,539 

36,694 

7. 184. 555 

Factory  supplies ... _ 

1, 110, 591 

Repair  parts  and  supplies..  . . 

246  372 

Employer's  share  personnel  benefits .  . 

1, 294, 445 

Rents,  communications,  and  utilities 

457, 983 

Other  services 

293, 681 

Depreciation  and  amortization 

1, 945, 966 

Losses  on  disposal  or  retirement  of  fixed  assets 

236, 308 

Sundry  expense  (net) 

9,217 

Total  overhead 

12,386,864 

12, 779, 118 

Total  costs  1 

25,  699, 399 

26, 251, 629 

Footnotes  at  end  of  table. 


128   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Statement  of  income  and  expense  jor  the  fiscal  years  1962  and  1961 — Continued 


Income  and  expense 

1962 

1961 

Operating  costs;— Continued 
Cost  of  sales:— Continued 
L-ess: 

Nonproduction  costs: 
Shop  costs  capitalized 

164, 125 
450,  630 

427,311 

115,275 

Cost  of  miscellaneous  services  rendered  other  agencies 

431, 151 

Net  increase,  or  decrease  ( — )  in  finished  goods  and  work  in  process 
inventories 

1, 444, 333 

Total - --- - 

1, 042,  066 

1, 990,  759 

Cost  of  sales            

24, 657, 333 

24, 260.  870 

Operating  profit,  or  loss  (— ) 

24,  512 

-25, 287 

Nonoperating  revenue: 

Sales  of  card  checks    .                            -           -  

213, 392 

Operation  and  maintenance  of  incinerator  and  space  utilized  by  other 
Treasury  activities 

385, 779 
64, 851 

379, 457 

Other  services 

49,  072 

450, 630 

641,921 

Nonoperating  costs: 

Purchase  of  card  checks 

173,  520 

Freight  out-card  checks                                            .  - - 

36, 167 

Other  costs  of  miscellaneous  services  rendered  other  agencies 

450. 630 

431, 151 

450,  630 

640.  838 

Nonoperating  profit. 

1,083 

Net  profit  or  loss  (—)  for  the  year  2_     

24, 512 

-24,204 

1  No  amounts  are  included  in  the  accounts  of  the  fund  for  (1)  interest  on  the  investment  of  the  Government 
in  the  Bureau  of  Engraving  and  Printing  fund,  (2)  depreciation  on  the  Bureau's  buildings  excluded  from 
the  assets  of  the  fund  by  the  act  of  August  4, 1950,  and  (3)  other  costs  incurred  by  other  agencies  on  behalf 
of  the  Bureau. 

'  The  act  of  August  4,  1950,  provided  that  any  surplus  accruing  to  the  fund  in  any  fiscal  year  be  paid  into 
the  general  fund  of  the  Treasury  as  miscellaneous  receipts  except  that  any  surplus  would  be  applied  first  to 
restore  any  impairment  of  capital  by  reason  of  variations  between  prices  charged  and  actual  cost  (31  U.S.C. 
181a). 

Fiscal  Service 

The  Fiscal  Service  consists  of  the  Office  of  the  Fiscal  Assistant 
Secretary,  the  Bureau  of  Accounts,  the  Bureau  of  the  Public  Debt,  and 
the  Office  of  the  Treasurer  of  the  United  States.  The  Fiscal  Assistant 
Secretary,  in  addition  to  being  responsible  for  the  operations  of  these 
offices,  gives  general  supervision  to  the  Office  of  Defense  Lending. 
He  is  responsible  for  administration  of  the  cash  position  of  the  Treas- 
ury, which  includes  the  distribution  of  funds  between  Federal  Reserve 
Banks  and  other  Government  depositaries,  and  participates  in  plan- 
ning Treasury  financing  operations.  He  also  is  responsible  for  the 
general  direction  of  the  fiscal  agency  operations  of  Federal  Reserve 
Banks  and  the  Treasury's  central  agency  participation  in  the  joint 
financial  management  improvement  program  with  the  Bureau  of  the 
Budget  and  the  General  Accounting  Office. 

The  reports  which  follow  detail  the  operations  under  the  responsi- 
bilities of  the  Fiscal  Assistant  Secretary  as  they  relate  to  the  three 
components  of  the  Fiscal  Service. 

BUREAU  OF  ACCOUNTS 

The  Bureau's  functions  are  mainly  Government-wide  in  scope  and 
include  the  maintenance  of  the  Government's  system  of  central 
accounts;   issuance  of  the  Government's  central  financial  reports; 


ADMINISTRATIVE    REPORTS  129 

accounting  and  reporting  for  foreign  currencies  acquired  by  the 
Government  without  purchase  with  dollars;  disbursing  for  virtually 
all  civilian  agencies  of  the  Government;  general  direction  and  designa- 
tion of  Government  depositaries;  determination  of  qualifications  and 
underwriting  limitations  of  surety  companies  to  write  fidelity  and 
other  surety  bonds  covering  Government  activities;  investment  of 
social  security  and  other  trust  funds;  administration  of  loans  and  ad- 
vances by  the  Treasury  to  Government  corporations  and  other 
agencies;  and  participation  with  the  Office  of  the  Fiscal  Assistant 
Secretary  in  the  joint  financial  management  improvement  program. 

Technical  guidance  is  furnished  to  Treasury  bureaus  and  other 
agencies  on  accounting  systems  and  related  matters  affecting  the 
central  accounting  and  reporting  function.  Periodic  audits  relating 
to  funds  administered  in  the  Bureau  are  conducted  and  special  audits 
within  the  Department  are  supervised  and  coordinated.  The  col- 
lection of  amounts  due  and  the  payment  of  claims  under  certain 
international  agreements  are  administered.  The  Bureau  performs 
other  fiscal  work  as  may  be  required. 

Reorganization  Plan  III,  dated  April  2,  1940,  established  the  Bureau 
of  Accounts,  and  on  December  12,  1952,  the  Bureau  was  reorganized 
pursuant  to  Treasury  Department  Order  No.  164.  On  July  28,  1961, 
Treasury  Department  Order  No.  170-9  transferred  from  the  Fiscal 
Assistant  Secretary  and  the  Commissioner  of  Accounts,  certain 
responsibilities  relating  to  the  development  of  regulations  and  the 
general  administration  of  fiscal  internal  auditing  and  administrative 
accounting  for  appropriations  and  funds  as  they  affect  the  various 
bureaus  of  the  Department.     (See  exhibit  51.) 

Accounting  and  Reporting 

Systems  improvement 

Under  the  direction  of  the  steering  committee  for  the  joint  financial 
management  improvement  program.  Bureau  staff  continued  to 
participate  with  the  General  Accounting  Office  and  the  Bureau  of 
the  Budget  during  the  fiscal  year  1962  in  the  following  studies: 
Current  practices  of  the  executive  branch  relating  to  programming, 
budgeting,  accounting,  reporting,  pricing,  and  billing  for  reimbursable 
services  and  supplies  furnished  by  the  agencies  (a  preliminary  report 
was  made  in  July  1961);  identification  and  appraisal  of  the  financial 
reporting  practices  of  the  executive  branch  as  a  whole,  to  determine 
possibilities  for  consolidation,  coordination,  simplification,  etc.,  and 
to  develop  appropriate  recommendations  (a  preliminary  report  was 
submitted  in  June  1961);  and,  a  study  to  determine  improved  methods 
of  recording  and  reporting  motor  vehicle  operations  and  related  cost 
data  as  a  basis  for  managing  Federal  fleet  operations. 

Agreements  with  Minnesota  and  Wisconsin  were  completed  by  the 
Bureau  for  the  withholding  of  State  income  taxes  from  compensation 
of  Federal  employees,  pursuant  to  the  act  of  July  17,  1952,  as  amended 
(5  U.S.C.  84b,  84c),  and  appropriate  instructions  were  issued  to  Gov- 
ernment agencies.  The  staff  continued  to  advise  and  assist  Federal 
and  State  agencies  in  the  solution  of  mutual  problems  on  the  with- 
holding of  State  income  taxes. 

661496—63 10 


130   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Other  systems  work  carried  out  during  fiscal  1962  included  the 
following  diverse  matters:  Cooperation  was  given  Federal  Reserve 
Banks  and  the  Internal  Revenue  Service  in  solving  problems  relating 
to  revenue  accounting  and  depositary  receipt  operations,  including 
conversion  to  electronic  data  processing  (EDP).  Staff  continued 
to  serve  on  a  board  of  Civil  Service  examiners  for  the  purpose  of 
rating  applicants  for  accounting  positions  in  the  Government. 
Treasury  and  Fiscal  Service  regulations  and  instructions  to  Govern- 
]nent  agencies  were  prepared  on  a  wide  range  of  fiscal  and  accounting 
matters.  The  Office  of  the  Treasurer  was  assisted  in  initiating 
development  of  an  accounting  manual  for  fiscal  operations,  and  in 
simplifying  certain  daily  reporting.  A  report  was  prepared  on  the 
costs  of  mailing  payroll  checks  direct  to  employees.  Improvements 
were  made  in  the  method  of  allocating  wdthheld  income  and  social 
security  taxes.  New  procedures  were  developed  for  handling  Federal 
unemployment  tax  and  railroad  unemployment  insurance  contribu- 
tions. The  Bureau  also  participated  in  studies  to  determine  the 
feasibility  of  converting  to  computer  s^^stems  the  payroll  operations 
of  the  Fiscal  Service  and  the  central  accounting  and  reporting 
operations. 

Central  accounting 

The  central  accounts  for  the  receipts,  expenditures,  appropriations, 
and  related  cash  operations  of  the  Government  are  maintained  by  the 
Division  of  Central  Accounts  in  accordance  with  section  114  of  the 
Budget  and  Accounting  Procedures  Act  of  1950  (31  U.S.C.  66b),  and 
Treasury  Department  Circular  No.  945,  as  amended.  The  central 
accounting  system  integrates  the  transactions  of  all  collecting  and 
disbursing  officers  and  the  Treasurer  of  the  United  States,  the  appro- 
priation, fund,  and  receipt  accounts  of  the  Government,  and  budget 
results,  with  a  disclosure  of  the  related  cash  assets  and  liabilities. 
The  data  required  for  such  central  reports  as  the  Monthly  Statement 
oj  Receipts  and  Expenditures  oj  the  United  States  Government  and  the 
annual  Combined  Statement  of  Receipts,  Expenditures  and  Balances  oj 
the  United  States  Government  have  as  their  source  the  central  account- 
ing system. 

By  using  deposit  in  transit  accounts,  the  system  of  central  accounts 
provides  a  Government-wide  control  over  deposits  reported  by 
collecting  and  disbursing  officers  for  credit  to  the  account  of  the 
Treasurer  of  the  United  States.  The  central  accounting  system  also 
provides  the  means  by  which  the  data  on  checks  issued  as  reported 
by  disbursing  officers  are  integrated  with  the  detailed  check  recon- 
ciliation of  disbursing  officers'  accounts  by  the  Office  of  the  Treasurer 
of  the  United  States  and  mth  the  expenditure  data  affecting  appro- 
priations and  funds. 

Under  revised  procedures  placed  in  operation  during  fiscal  1962, 
Treasury  regional  offices  now  keep  control  accounts  for  all  transac- 
tions at  the  level  of  each  agency  accounting  station  for  which  the 
Treasury  disburses.  Agency  accounting  stations,  on  the  basis  of 
their  own  records,  furnish  the  Division  of  Central  Accounts  monthly 
statements  of  transactions,  classified  by  the  individual  appropria- 
tion, fund,  and  receipt  accounts  involved.  The  classified  transac- 
tions reported  are  then  reconciled  to  the  control  accounts  maintained 


ADMINISTRATIVE    REPORTS  131 

in  the  Treasury  regional  accounting  offices.  A  significant  stream- 
lining of  the  system  has  resulted  in  an  estimated  first-year  saving 
of  $94,686  and  estimated  annual  recurring  savings  of  $150,000. 

Expenditure  transfer  and  adjustment  documents  (previously  re- 
corded in  agency  station  control  accounts  by  Treasury  regional 
offices)  are  now  handled  centrally  in  the  Division  of  Central  Accounts. 
This  procedure  minimizes  the  number  of  points  of  contact  for  agency 
stations  with  respect  to  reconciliations  with  Treasmy  control  accounts. 

A  total  of  3,881,951  accounting  items  was  processed  during  fiscal 
1962  by  the  central  and  regional  accounting  offices  of  the  Division 
of  Central  Accounts.     The  total  for  fiscal  1961  was  4,155,787. 

Central  reporting 

In   the  survey  of  Government-wide  financial  reporting  in  fiscal 

1961  the  representatives  of  the  joint  financial  management  improve- 
ment program  determined  that  the  information  published  in  the 
major  financial  reports  of  the  Government  was  being  utilized  but 
would  be  of  more  value  if  updated  and  if  certain  additional  data  were 
included. 

Accordingly,  the  Treasury  in  fiscal  1962  took  steps  to  make  the 
data  in  certain  of  its  reports  more  timely  and  somewhat  wider  in 
scope.  The  principal  reports  compiled  in  the  Division  of  Central 
Reports  include:  The  Monthly  Statement  of  Receipts  and  Expenditures 
of  the  United  States  Government,  the  monthly  statement  of  Budgetary 
Appropriations  and  Other  Authorizations,  Expenditures  and  Unexpended 
Balances,  the  montlily  Treasury  Bulletin,  the  annual  Combined  State- 
ment of  Receipts,  Expenditures  and  Balances  of  the  United  States 
Government,  the  Annual  Report  of  the  Secretary  of  the  Treasury,  the 
Semiannual  Consolidated  Report  of  Balances  of  Foreign  Currencies 
Acquired  Without  Payment  of  Dollars,  the  semiannual  Report  on 
Foreign  Currencies  in  Custody  of  the  United  States,  and  the  monthly 
and  quarterly  reports  on  foreign  currency  transactions  under  Public 
Law  480,  as  amended.  In  an  effort  to  comply  with  the  requests  of 
the  users,  the  following  improvements  were  made. 

Monthly  Statement  of  Receipts  and  Expenditures  of  the  United  States 
Government. — The  format  was  revised  to  provide  for  the  reporting  of 
refunds  of  receipts  to  identify  their  application  to  budget  accounts 
or  trust  accounts,  with  the  refund  of  trust  account  receipts  reported 
in  amounts  reimbursed  from  trust  funds  as  deductions  from  trust 
receipts. 

Treasury  Bulletin. — Most  of  the  18  statistical  series  appearing 
monthly  which  were  not  already  covering  the  month  immediately 
preceding  the  month  of  publication  were  updated.  More  than  45 
tables  for  the  issues  of  November  and  December  1961  and  January 

1962  gradually  were  rescheduled  to  accelerate  their  publication  by  at 
least  one  month.  Statements  of  financial  condition  for  Government 
corporations  and  certain  other  business-type  activities  beginning 
with  the  February  1962  issue  have  been  published  a  month  sooner 
than  those  for  the  year  before. 

Four  new  tables  were  added.  Under  the  Exchange  Stabilization 
Fund,  information  on  current  stabilization  agreements  has  appeared 
quarterly  beginning  with  the  November  1961  issue.  U.S.  gold  stock, 
and   holdings  of  convertible  foreign   currencies  by  U.S.   monetary 


132       1962    REPORT    OF    THE    SECRETARY    OF   THE    TREASURY 

authorities  have  been  shown  monthly  beginning  with  July  1961  in  a 
table  of  international  financial  statistics.  A  new  series,  with  explana- 
tory headnote,  on  foreign  currencies  acquired  by  the  United  States 
without  purchase  with  dollars  was  begun  in  the  issue  for  February 
1962.  Transactions  and  balances  in  Treasury  accounts  were  sho^vn 
for  fiscal  years  beginning  with  1954,  and  for  agency  accounts  beginning 
with  the  fiscal  year  1958. 

Combined  Statement  oj  Receipts,  Expenditures  and  Balances  oj  the 
United  States  Government. — New  tables  added  showed:  Clearing- 
accounts  for  taxes  withheld  from  salaries  of  Government  employees, 
by  organizational  units;  interfund  transactions  excluded  from  receipts 
and  expenditures  of  certain  trust  accounts;  and  legislative  actions  on 
authorizations  to  expend  from  public  debt  receipts,  with  a  brief 
textual  statement  of  an  historical  and  explanatory  nature. 

Control  of  foreign  currencies 

The  operations  of  the  Division  of  Central  Reports  relating  to  the 
accounting  and  reporting  of  foreign  currencies  continued  to  expand 
during  fiscal  1962.  The  Foreign  Assistance  Act  of  1961,  approved 
September  4,  1961  (22  U.S.C.  2363(c)),  requires  each  department  and 
agency  to  submit  semiannually  to  the  Secretary  of  the  Treasury  an 
inventory  report  showing  by  country  of  origin  all  foreign  currencies 
on  hand  which  have  been  acquired  without  payment  of  dollars,  their 
consolidation  into  a  single  report,  and  its  transmittal  to  the  Congress. 
To  implement  this  legislation,  Department  Circular  No.  930  was 
revised  to  provide  for  central  accounting  for  foreign  currencies  and 
uniform  valuation  and  reporting  by  all  executive  agencies.  The 
consolidated  report  of  the  Treasury  which  is  submitted  to  the  Con- 
gress semiannually  shows  the  required  information  by  agencies, 
countries,  units  of  currenc}',  and  U.S.  dollar  equivalent.  During 
fiscal  1962,  the  first  two  semiannual  reports  required  were  submitted 
to  the  Congress  as  of  June  30,  1961,  and  December  31,  1961. 


Summary  of  holdings  oj  foreign  currencies  acquired  without  payment 

June  SO,  1962 

of  dollars, 

Holder 

U.S.  dollar 

equivalent 

(in  thousands) 

Agency  for  International  Development 

$1, 423, 992 

Department  of  Agriculture. 

Department  of  Defense 

17, 999 

Department  of  Justice .             .                                                       

467 

Department  of  State 

709 

Treasury  Department 

1,284,610 

United  States  Information  Agency 

556 

Total 

2,  728, 281 

Country-owned  counterpart  funds  held  in  foreign  government  accounts 

267, 518 

Total 

2, 995, 851 

Approximately  $2,142  million  of  the  total  hold  by  tlie  United  | 
States,  as  of  June  30,  1962,  was  generated  under  Title  I  of  the  Agi'icul- 
tural  Trade  Development  and  Assistance  Act  of  1954,  as  amended; 
$286  million  generated  under  the  Alutual  Security  Act  of  1954,  as 
amended,  and  the  Foreign  Assistance  Act  of  1961 ;  and  the  balance  of 
$300  million  generated  under  the  lend-lease,  surplus  property,  and 
other  legislation. 


ADMINISTRATIVE    REPORTS  133 

The  foreign  currency  transactions  occurring  during  the  year  in 
Treasury  custody  accounts  are  summarized  as  follows:  Collections 
generated  under  various  Government  programs  amounted  to  the 
equivalent  of  $1,318.2  million;  transfers  for  authorized  uses  without 
reimbursement  amounted  to  the  equivalent  of  $1,086.2  million;  and 
withdrawals  for  sales  to  Government  agencies  for  dollars  to  the 
equivalent  of  $242.1  million. 

Internal  auditing 

Audits  were  made  during  the  year  under  review  of  certain  major 
trust  funds,  including  the  unemployment  trust  fund,  Federal  old-age 
and  survivors  insurance  trust  fund,  and  the  highway  trust  fund.  The 
procedures  relative  to  administrative  accounting  and  the  various 
cash  funds  of  the  Bureau  also  were  audited,  and  comprehensive  audits 
were  made  of  regional  disbursing  offices  in  Chicago,  Denver,  Dallas, 
and  Portland.  Other  work  carried  out  during  the  year  included  an 
audit  of  unissued  stocks  of  Federal  Reserve  notes,  an  audit  of  adminis- 
trative accounts  and  records  in  the  Office  of  the  Comptroller  of  the 
Currency,  the  annual  confirmation  of  outstanding  loans  on  the  books 
of  the  Office  of  Defense  Lending,  and  the  verification  of  discount  rates 
applicable  to  the  weekly  offering  of  U.S.  Treasury  bills. 

Disbursing  Operations 

During  fiscal  1962  the  Division  of  Disbursement,  through  fifteen 
regional  disbursing  offices,  performed  disbursing  services  for  over  1,500 
offices  of  agencies  located  throughout  the  United  States,  its  possessions, 
and  the  Philippines.  The  Division  services  all  executive  agencies, 
except  the  Department  of  Defense,  the  Post  Office  Department,  and  a 
few  relatively  small  agencies.  Technical  supervision  also  is  exercised 
over  the  disbursing  operations  delegated  by  the  Chief  Disbursing 
Officer  to  U.S.  disbursing  officers  located  at  embassies  and  consulates 
in  foreign  countries,  and  to  assistant  disbursing  officers  and  cashiers 
attached  to  agencies  located  throughout  the  United  States  and  foreign 
countries.  Under  arrangements  with  the  Department  of  State  pay- 
ments are  made  also  in  behalf  of  domestic  civilian  agencies  requhing 
disbursing  services  in  foreign  countries. 

The  computer  system  in  the  Chicago  regional  disbursing  office, 
which  began  operation  in  January  1961,  continued  to  operate  through 
the  fiscal  year  1962  with  a  high  degree  of  productivity  and  efficiency. 
More  than  80  million  checks  were  produced  by  the  Chicago  computer 
system  during  the  year,  comprising  payments  for  veterans'  benefits, 
social  security  benefits,  income  tax  refunds,  national  service  life 
insurance  dividends.  Federal  employees'  salaries,  and  public  debt 
interest. 

Two  additional  computer  systems  of  more  advanced  design  began 
operation  in  January  1962  in  the  Philadelphia  and  Kansas  City 
regional  disbursing  offices.  Through  June  30,  1962,  these  two  systems 
had  produced  a  total  of  more  than  35,900,000  checks.  The  demon- 
strated capabiHty  and  lower  cost  of  the  Philadelphia  and  Kansas  City 
systems  have  resulted  in  a  decision  to  replace  the  Chicago  computer 
system  with  similar  equipment  next  year. 

After  a  review  of  the  workload  remaining  in  regional  disbursing 
offices  affected  by  the  conversion  of  a  high  volume  of  payments  to 


134   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

electronic  data  processing,  the  decision  was  made  to  close  the  Salt 
Lake  City  regional  disbursing  office  as  of  June  30,  1962. 

Significant  improvements  were  made  in  other  areas  also.  Further 
conversion  of  payment  files  was  made  from  addressograph  plates  to 
punched  cards.  Checks  were  prepared  from  punched  cards  furnished 
by  Social  Security  Administration  payment  centers  covering  new, 
adjusted,  or  reinstated  cases.  Machine  utilization  was  improved. 
Key  punch  machines  were  replaced  by  printing  key  punches,  and  the 
use  of  key  verifiers  was  substituted  for  manual  verification  of  punched 
cards.  A  new  method  was  employed  to  ship  Government  checks  to 
regional  disbursing  offices.  Work  was  realigned  and  work  methods 
revised  following  comprehensive  surveys  of  regional  disbursing  office 
operations.  Recurring  annual  savings  realized  during  the  year 
under  the  management  improvement  program  amounted  to  $546,698. 

The  average  unit  cost  of  processing  checks  and  bonds  in  fiscal  1962  was 
3.73  cents  compared  with  4.13  cents  in  1961,  exclusive  of  nonrecur- 
ring EDP  site  preparation  costs. 

The  volume  of  work  completed  in  fiscal  1962,  as  compared  with  that 
of  1961,  follows: 


Classification 

1961 

1962 

Number 

PajTnents: 

Social  security 

146, 249, 107 

62, 736,  556 

40,317,753 

7,  096,  822 

43,386,926 

250,  683 

3, 739,  793 

163,  629, 154 

Veterans'  benefits . 

63,256,915 

Income  tax  refunds.      .      .  

40, 470,  741 

Veterans'  national  service  life  insurance  dividend  program 

6,013,284 

Other 

44,113,436 

Adjustments  and  transfers 

178,  784 

Savings  bonds  issued ._ 

3,999,111 

Total. 

303, 777,  640 

321, 661, 425 

Deposits,  Investments,  and  Related  Operations 

Federal  depositary  system 

The  Federal  Reserve  Banks  and  commercial  banking  institutions  in 
the  United  States,  insular  possessions,  and  foreign  countries  are,  by 
designation  of  the  Secretary'  of  the  Treasury,  Government  deposi- 
taries authorized  to  furnish  Government  agencies  A\dth  a  variety  of 
banking  and  financial  services.  These  depositaries,  which  include 
more  than  11,500  commercial  banking  institutions  (some  of  which 
furnish  more  than  one  tj^pe  of  ])ankin2:  service)  supplement  the  services 
provided  by  the  Treasurer  of  the  United  States.  This  established 
depositary  system  provides  for  local  deposit  of  Government  collections 
by  various  Government  officers  and  the  su])scquent  transmission  of 
collections  to  the  Treasurer's  operating  accounts  maintained  in  Federal 
Reserve  Banks. 

The  various  types  of  depositary  services  and  the  number  of  com- 
mercial banking  institutions  which,  as  of  June  30,  1962,  were 
authorized  to  provide  these  services,  are  shown  in  the  following  table. 


ADMINISTRATIVE    REPORTS  135 


Type  of  service  provided  by  depositaries 


Number  of 

banking 
institutions 


Receive  proceeds  from  deposits  of  taxpayers  and  sale  of  public  debt  securities  for  credit  in 
Treasury  tax  and  loan  accounts 

Receive  deposits  from  directors  of  internal  revenue,  military  finance  officers,  and  other 
Govenunent  officers 

Maintain  official  checking  accoimts  of  postmasters,  clerks  of  United  States  courts,  and 
other  Government  officers 

Furnish  bank  drafts  to  Government  officers  in  exchange  for  collections 

Service  State  unemployment  compensation  benefit  payment  and  clearing  accounts 

Operate  limited  banking  facilities  at  military  installations: 

In  the  United  States  and  its  outlying  areas 

Overseas 


11, 439 

883 

4,127 

2,222 

59 

284 
173 


Investments 

The  Secretary  of  the  Treasury,  under  specific  provisions  of  law, 
is  responsible  for  investing  various  Government  trust  funds.  The 
Department  also  furnishes  investment  services  for  other  funds  of 
Government  agencies  (see  table  67). 

Trust  funds  are  invested  in  marketable  Government  securities  and, 
where  authorized  by  law,  in  special  pubhc  debt  obligations  issued 
specifically  to  the  fund.  The  legislative  authority  to  issue  special 
public  debt  obligations  applies  only  to  the  major  trust  funds  and  the 
law  usually  specifies  the  interest  rates;  however,  in  some  cases  the 
Secretary  has  discretionary  authority  to  establish  the  rates.  Where 
specified  by  law,  it  is  either  a  fixed  rate  or  is  based  on  a  formula 
using  the  average  coupon  rates  on  designated  classes  of  outstanding 
Government  securities. 

During  fiscal  1962,  further  uniformity  in  interest  rates  was  achieved 
by  relating  the  rates  on  special  obligations  to  market  yield  rates. 
The  Civil  Service  Retirement  Act,  as  amended  by  the  act  of  October 
4,  1961  (5  U.S.C.  2267(d)},  provides:  That  interest  rates  on  special 
obligations  issued  to  the  civil  service  retirement  and  disability  trust 
fund  shall  equal  the  average  market  yield,  computed  as  of  the  end  of 
the  month  immediately  preceding  the  date  of  issue,  on  all  marketable 
interest-bearing  public  debt  obligations  not  due  or  callable  until  4 
years  from  the  end  of  such  month;  and  that  beginning  with  the 
calendar  year  1962  special  issues  held  by  the  fund  prior  to  enactment 
of  the  amending  act  shall  be  redeemed  and  reinvested  as  nearly  as 
practicable  in  equal  annual  amounts  over  the  period  of  10  calendar 
years. 

Loans  and  advances  by  the  Treasury 

Under  provisions  of  law,  various  Government  corporations  and 
agencies  are  authorized  to  borrow  from  the  Treasury  to  finance 
certain  programs.  The  Bureau  of  Accounts  administers  the  loan 
agreements  and  maintains  accounts  for  the  loans,  advances,  and 
subscriptions  to  capital  stock  of  U.S.  Government  and  international 
corporations.  Tables  119  and  120  show  the  status  of  loans  and  ad- 
vances as  of  June  30,  1962. 

Panama  Canal  Company 

The  Panama  Canal  Company  Act,  approved  June  29,  1948  (62 
Stat.  1076;  2  Canal  Zone  Code  245-258),  created  the  Panama  Canal 
Company  and,  among  its  provisions,  directed  the  Company  to  pay 
interest  to  the  Treasury  on  the  net  direct  investment  of  the  Govern- 
ment in  the  Company.  Pursuant  to  section  246(b)  of  the  Code, 
the  direct  investment  of  the  Government  in  the  Company,  as  of  June 


136   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


29,  1948,  was  certified  to  the  Treasury  in  the  amount  of  $358,795,- 
305.36  on  which  the  interest  is  computed.  This  figure  is  subject  to 
change  on  the  basis  of  subsequent  certifications  to  the  Treasury  as  to 
the  value  of  increases  or  decreases  in  transfer  of  assets.  Cumulative 
net  reductions  in  the  Government's  direct  investment  had  reduced 
the  amount  thereof  to  $340,215,042  as  of  June  30,  1962,  including  a 
net  increase  of  $341,028  in  the  direct  investment  during  the  fiscal 
year  1962.  Section  246(c)  of  the  Code  provides  certification  by 
the  Secretary  of  the  Treasury  as  to  the  annual  rate  of  interest  to  be 
paid  by  the  Company.  Interest  payments  received  by  the  Treasury 
in  the  fiscal  year  1962  amounted  to  $9,364,406. 

Surety  bonds 

The  Secretary  of  the  Treasury,  under  the  act  of  July  30,  1947  (6 
U.S.C.  8),  issues  certificates  of  authority  to  qualified  corporate  sureties 
for  the  execution  of  bonds  in  favor  of  the  United  States.  These 
certificates  are  renewable  on  May  1  each  year,  and  a  hst  of  companies 
holding  such  certificates  is  published  annually  in  the  Federal  Begister 
(Department  Circular  No.  570,  Revised).  Applications  of  companies 
requesting  authority  to  write  Federal  bonds  are  examined  by  the 
Bureau,  and  the  qualifications  of  companies  so  authorized  are  re- 
viewed on  a  current  basis.  As  of  June  30,  1962,  a  total  of  236  com- 
panies held  certificates  of  authority.  During  the  year  a  total  of 
36,836  bonds  and  consent  agreements  were  approved  as  to  corporate 
surety. 

The  head  of  each  executive  agency  is  required  by  the  act  of  August 
9,  1955  (6  U.S.C.  14)  to  obtain  blanket,  position  schedule,  or  other 
types  of  surety  bonds  covering  employees  requhed  by  law  or  ad- 
ministrative ruling  to  be  bonded.  Premiums  are  paid  by  the  Govern- 
ment rather  than  by  the  employees.  The  law  permits  the  legislative 
and  judicial  branches  to  follow  the  same  procedure. 

A  summary  follows  of  the  information  reported  by  agencies  for 
transmittal  to  Congress  by  the  Secretary  of  the  Treasury,  sho^^'ing  the 
number  of  officers  and  employees  covered,  the  aggregate  penal  sums  of 
the  bonds  procured,  and  the  premiums  paid  by  the  Government  as 
of  June  30,  1961  and  1962. 


June  30,  1961 

June  30,  1962 

Number  of  officers  and  employees  covered: 

Executive  branch .      .  .    

1, 003, 613 
1,342 

1, 006, 059 

Legislative  and  judicial  branches 

1,522 

Total 

1, 004, 955 

1, 007,  581 

Aggregate  penal  sums  of  bonds  procured; 

Executive  branch 

$3,522,501,050 
10, 317, 000 

$3, 538, 697, 750 

Legislative  and  judicial  branches 

11.318,500 

Total ... 

3,532,818,050 

3, 550, 016, 250 

Annual  premium  paid  by  Government: 

Executive  branch 

285, 589 
2,  268 

280, 775 

Legislative  and  judicial  branches 

2,091 

Total 

287, 857 

2?2, 866 

Administrative  expenses: 

Executive  branch . 

38,  515 
595 

45, 295 

Legislative  and  judicial  branches ,.. 

582 

Total 

39, 110 

45,  877 

ADMINISTRATIVE    REPORTS  137 

Foreign  Indebtedness 
World  War  I 

A  total  of  $396,049.36  in  semiannual  payments  was  received  in 
fiscal  1962  by  the  Treasmy  from  the  Government  of  Finland  under 
the  funding  and  moratorium  agreements  covering  World  War  I 
indebtedness.  In  accordance  with  the  act  of  August  24,  1949  (20 
U.S.C.  222),  these  funds  were  used  to  finance  certain  educational 
exchange  programs  with  Finland.  The  status  of  World  War  I 
indebtedness  of  foreign  governments  to  the  United  States  is  shown  in 
tables  115  and  116. 

World  War  II 

Under  lend-lease  and  surplus  property  agreements,  debtor  govern- 
ments made  dollar  payments  during  the  year  aggregating  $119.7 
million  (including  the  dollar  value  of  silver  repayments) .  Payments 
made  in  local  currencies  were  equivalent  to  $26.2  miUion.  Since 
the  inception  of  these  programs,  total  payments  and  credits  against 
the  original  indebtedness  have  amounted  to  $3,552.2  million,  as 
indicated  in  table  118,  which  shows  the  status  as  of  June  30,  1962. 

The  Government  of  France,  under  agreement  of  January  30,  1958, 
was  granted  an  option  to  defer  certain  annual  installments  under  its 
lend-lease  and  surplus  property  agreements.  Accordingly,  the  1958 
and  1959  installments  were  postponed  until  1981  and  1982.  How- 
ever, on  April  19,  1962,  the  French  Government  made  an  accelerated 
payment  of  $59,622,516.54,  representing  both  of  the  postponed 
installments.  This  payment  was  additional  to  the  annual  installment 
of  principal  and  interest  due  and  paid  on  July  1,  1961. 

Credit  to  the  United  Kingdom 

Under  the  terms  of  the  financial  aid  agreement  of  December  6, 
1945,  the  United  Kingdom  borrowed  $3,750,000,000  from  the  United 
States  which  was  repayable  in  50  annual  installments,  beginning 
December  31,  1951,  with  interest  at  2  percent  per  annum.  The 
agreement  was  amended  March  6,  1957,  to  permit  deferral  of  any 
seven  principal  and  interest  installments  due  after  1956,  with  interest 
charged  at  the  same  rate  on  any  installments  of  principal  or  interest 
deferred.  The  United  Kingdom  elected  to  defer  payment  of  interest 
installments  due  in  1956  and  1957,  amounting  to  $70,385,447.48  and 
$69,406,431.45,  respectively.  Also,  payment  of  the  principal  install- 
ment of  $49,929,818.55,  due  in  1957,  was  deferred.  Payment  was 
made  of  the  amount  due  December  31,  1961,  consisting  of  $54,045,- 
641.36  as  principal  and  $65,290,608.64  as  interest.  Through  June  30, 
1962,  cumulative  payments  totaled  $489,585,390.49  as  principal, 
leavmg  a  principal  balance  of  $3,260,414,609.51  plus  deferred  interest 
installments  of  $139,791 ,878.93,  or  a  total  balance  of  $3,400,206,488.44. 

Germany,  postwar  (World  War  II)  economic  assistance 

Under  the  External  Debt  Settlement  Agreement,  as  amended,  the 
Federal  Republic  of  Germany  agreed  to  repay  to  the  United  States 
$1  biUion  for  postwar  (World  War  II)  economic  assistance.  The 
Treasury  received  payment  of  interest  during  the  fiscal  year  1962 
in  the  amount  of  $9,752,288.56.     As  of  June  30,  1962,  cumulative 


138   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

payments  on  principal  amounted  to  $799,629,452.21,  leaving:  a  prin- 
cipal balance  of  $200,370,547.79.  The  next  principal  installment  is 
not  due  until  Januar}'^  1,  1966,  because  of  the  advance  payments 
which  have  been  made. 

Claims  Against  Foreign  Governments  and  Nationals 

Forei<?n  Claims  Settlement  Commission 

Under  the  International  Claims  Settlement  Act  of  1949,  as  amended 
(22  U.S.C.  1 642-1 642p),  the  Foreign  Claims  Settlement  Commission 
has  docketed  over  4,000  claims  of  American  nationals  for  losses 
resulting  from  confiscation  of  property  by  the  Government  of  Czech- 
oslovakia. The  Commission  began  in  March  1960  to  certify  awards 
to  the  Secretary  of  the  Treasury.  Payments  made  on  awards  are 
within  the  limits  of  amounts  realized  from  the  sale  of  certain  blocked 
Czechoslovakian  assets,  following  a  prescribed  order  of  priority  as 
set  forth  in  the  act.  Initially,  all  awards  of  $1,000  or  less  are  paid 
in  full,  and  awards  m  excess  of  $1,000  are  paid  to  the  extent  of  $1,000; 
additional  pro  rata  payments  are  made  on  the  balance  of  awards 
until  the  fund  is  exhausted  or  until  all  awards  have  been  paid  in 
full.  The  Commission  had  until  September  15,  1962,  to  complete 
its  affairs  in  connection  with  the  settlement  of  these  claims. 

The  Foreign  Claims  Settlement  Commission  has  completed  adju- 
dication of  the  Bulgarian,  Hmigarian,  Rimianian,  Italian,  and  Soviet 
claims  programs,  pursuant  to  the  International  Claims  Settlement 
Act  of  1949,  as  amended  (22  U.S.C.  1641-1641q).  In  addition  to 
the  initial  payment  of  a  maximum  of  $1,000  on  all  awards  under 
these  programs,  pro  rata  pa3rnients  have  been  authorized,  consisting 
of  two  from  the  Rumanian  claims  fund,  four  from  the  Bulgarian 
claims  fund,  and  one  from  the  Soviet  claims  fmid.  The  Italian 
awards,  including  accrued  interest,  have  been  paid  in  full.  Addi- 
tional funds  for  further  payments  on  the  Soviet  awards  are  not 
expected. 

The  origin  and  history  of  the  claims  of  American  nationals  against 
these  five  governments  were  summarized  in  the  195S  annual  report, 
page  112.  For  the  status  of  the  claims  funds  as  of  June  30,  1962, 
see  table  106. 

The  Governments  of  Poland  and  the  United  States  signed  an 
agreement  on  July  16,  1960,  for  the  settlement  of  claims  of  American 
nationals.  Under  the  agreement  Poland  will  pay  $40,000,000  to 
the  United  States  in  twenty  annual  instaUments  of  $2,000,000  each. 
On  January  10,  1962,  the  second  mstallment  was  received.  The 
time  for  filing  claims  with  the  Foreign  Claims  Settlement  Commission 
against  the  Government  of  Poland  expired  March  31,  1962. 

Mixed  Claims  Commission,  United  States  and  Germany 

On  April  2,  1962,  the  Treasury  received  the  annual  payment  of 
$3,700,000  from  the  Federal  Repubhc  of  Germany  (on  World  War 
I  debts)  as  provided  for  by  the  External  Debt  Settlement  Agreement 
signed  with  the  Federal  Republic  on  February  27,  1953.  These 
funds  were  used  to  make  an  additional  distribution  to  award  holders 
amounting  to  8.9  percent  of  the  interest  accrued  on  Class  III  awards 


ADMINISTRATIVE    REPORTS  139 

(those  over  $100,000),  which  includes  the  award  under  Private  Law 
509,  approved  July  19,  1940.  The  status  of  the  claims  fund  as  of 
June  30,  1962,  is  shown  in  table  104. 

Divested  property  of  enemy  nationals 

As  of  June  30,  1962,  the  balance  on  deposit  in  the  Treasury  as 
the  net  proceeds  of  property  divested  by  the  Attorney  General  of 
the  United  States,  pursuant  to  the  act  of  August  9,  1955  (22  U.S.C. 
1631a(a)),  totaled  $694,625.  The  funds  are  being  held  in  the  names 
of  individuals  who  are  nationals  of  Bulgaria  ($94,144),  Hungary 
($408,907),  and  Rumania  ($191,574).  Through  June  30,  1962,  the 
Department  of  Justice  has  authorized  refunds  to  individuals  aggre- 
gating $170,252. 

Other  Operations 

Management  improvement  program 

Under  the  Bureau's  contmumg  program  to  bring  about  operating 
economies  through  management,  improvements  were  adopted  during 
the  year  which  created  annual  recurring  savings  of  $649,312.  This 
included  the  amount  of  $546,698  realized  in  disbursing  operations 
and  $94,686,  which  was  the  first-year  estimated  savings  realized  in 
the  central  accounting  modification,  both  of  which  were  referred  to 
earUer. 

Incentive  awards  program. — Efforts  were  continued  to  promote 
additional  employee  interest  in  the  program,  with  employees  en- 
couraged to  make  worthwhile  suggestions  for  the  improvement  of 
operations  and  reduction  of  operating  costs.  Of  the  160  suggestions 
made  during  the  year,  77  were  adopted  and  accounted  for  a  total  annual 
recurring  saving  of  $7,928. 

Safety  program. — Monthly  inspection,  by  designated  employees 
on  a  rotational  basis,  of  all  space  occupied  by  the  Bureau  continues 
to  eliminate  safety  hazards  and  create  widespread  awareness  of  the 
importance  of  an  effective  accident  prevention  program.  The 
success  of  the  monthly  inspection  program  is  evidenced  by  the  fact 
that  the  Bureau,  while  employing  approximately  2,000  employees, 
experienced  only  five  lost-time  accidents  during  calendar  1961. 

Personnel  administration. — Surveys  were  made  during  the  year  of 
the  personnel  administration  programs  in  the  Birmingham,  Chicago, 
Dallas,  Portland,  and  San  Francisco  regional  offices.  These  surveys 
were  part  of  the  biannual  program  initiated  in  fiscal  1961  in  which 
all  major  regional  offices  are  being  covered. 

Increased  emphasis  was  placed  on  recruiting  qualified  college  grad- 
uates for  employment  with  the  Bm-eau.  Additional  classification 
authority  (to  grade  GS-7)  was  delegated  to  four  additional  regional 
offices. 

Training. — Training  was  completed  of  programmers  to  staff  the 
EDP  computer  installations  in  Philadelphia  and  Kansas  City.  Simi- 
lar training  was  initiated  for  the  computer  installations  in  Bmningham 
and  San  Francisco.  In  conjunction  with  this  technical  training  the 
EDP  programmers  were  also  given  supervisory  training. 

The  scope  of  management  training  was  broadened  during  the  year, 
with  new  appointees  in  technical  and  professional  positions  afforded 
an  opportunity  to  develop  through  on  the  job  performance  and  through 


140   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

formal  training  in  a  variety  of  institutions.     Bureau  efforts  are  being 
directed  toward  a  further  refinement  of  the  estabhshed  program. 

Donations  and  contributions 

"Conscience  fund"  contributions  received  in  the  Bureau  of  Ac- 
counts during  the  year  and  deposited  into  the  Treasury  amounted  to 
$29,125.  Other  unconditional  donations  totaled  $102,027,  including 
$15,745  contributed  by  a  single  donor.  Such  receipts  by  other 
Government  agencies  amounted  to  $10,295  and  $17,258,  respectively. 
Conditional  gifts,  amounting  to  $5,685,  were  received  to  further  the 
defense  effort. 

In  accordance  with  the  act  of  June  27,  1961  (31  U.S.C.  901(a)), 
authorizing  the  Secretary  of  the  Treasury,  on  behalf  of  the  United 
States,  to  accept  gifts  of  money  or  property  to  reduce  the  public  debt, 
a  special  account  was  established  on  the  books  of  the  Treasury  for 
this  purpose.  Gifts  of  money  and  the  proceeds  of  real  or  personal 
property  credited  to  this  account  in  fiscal  1962  amounted  to  $8,962,  of 
which  $8,000  was  used  to  purchase  and  retu'e  public  debt  securities. 

Government  losses  in  shipment 

A  self-insurance  plan,  supplanting  contracts  with  private  insurance 
companies,  was  established  by  the  Government  Losses  in  Shipment 
Act,  as  amended  (5  U.S.C.  134-134h;  31  U.S.C.  528,  738a,  757c(i)), 
under  which  the  Government  assumes  the  risk  of  losses  on  its  ship- 
ments of  money,  bullion,  securities,  and  other  valuables.  Payments 
are  made  from  a  revolving  fund  for  valuables  lost,  destroyed,  or 
damaged  v/hile  in  shipment,  for  losses  incurred  in  the  erroneous  pay- 
ment of  U.S.  savings  bonds  by  paying  agents,  and  for  certain  losses 
by  the  Postal  Service.  Clamis  totaling  $67,271  were  paid  in  the  fiscal 
year  1962.  Table  126  shows  the  status  of  the  fund  and  details  of 
operations  under  the  act. 

Deposits  of  interest  charged  on  Federal  Reserve  notes 

The  Board  of  Governors  of  the  Federal  Reserve  System  is  authorized 
by  section  16  of  the  Federal  Reserve  Act,  as  amended  (12  U.S.C.  414), 
to  charge  Federal  Reserve  Banks  interest  on  the  unredeemed  Federal 
Reserve  notes  issued  to  the  Banks  in  excess  of  gold  certificates  held  as 
collateral  against  the  notes.  By  exercising  this  authority  annual 
interest  payments  from  1947  through  1958,  equal  to  approximately 
90  percent  of  the  net  earnings  of  the  Federal  Reserve  Banks,  have  been 
received  by  the  Treasury.  Beginning  with  the  calendar  year  1959, 
the  amount  paid  has  been  equal  to  100  percent  of  the  net  earnings, 
after  payment  of  statutory'-  dividends  to  member  banks. 

In  fiscal  1962  the  deposit  was  $718,350,488.38;  since  1947  total 
deposits  have  aggregated  $6,325,479,299.15  (see  table  23). 

Payment  of  pre-1934  Philippine  bonds 

In  accordance  with  the  act  of  August  7,  1939,  as  amended  (22 
U.S.C.  1393(g) (4) (5)),  the  Treasury  maintains  a  trust  account  for 
deposits  by  the  Philippine  Government,  representing  amounts  pa3^able 
as  principal  and  interest  on  pre-1934  bonds  of  the  Philippines.  For 
the  status  of  the  account  as  of  June  30,  1962,  see  table  86. 

Withheld  foreign  checks 

The  delivery  of  U.S.  Government  checks  to  payees  residing  in  certain 
foreign  areas  continued  to  be  prohibited  during  fiscal  1962  in  accord- 


ADMINISTRATIVE    REPORTS 


141 


ance  with  Department  Circular  No.  655,  dated  March  19,  1941,  as 
amended.  These  foreign  areas  are  listed  in  the  1960  annual  report, 
page  117. 

Depositary  receipts 

The  Internal  Revenue  Code  requires  employers  to  withhold  from 
the  salaries  of  employees  amounts  of  Federal  income  and  Federal 
insurance  contribution  act  (FICA)  taxes.  Regulations  provide  that 
where  the  total  taxes  withheld,  plus  the  FICA  tax  on  the  employer, 
exceed  $100  each  month,  the  taxes  must  be  paid  monthly  to  the 
Treasury  by  purchase  of  a  depositary  receipt  through  a  local  Govern- 
ment depositary  designated  for  that  purpose,  or  directly  to  a  Federal 
Reserve  Bank.  Depositary  receipts  are  validated  by  Federal  Reserve 
Banks  at  the  time  the  taxes  are  paid  and  returned  to  the  employers  for 
use  as  evidence  of  payment  in  filing  their  quarterly  tax  returns  with 
District  Directors  of  Internal  Revenue. 

When  the  depositary  receipt  procedure  was  established  in  1944,  its 
application  was  limited  to  the  deposit  of  withheld  individual  income 
taxes  (26  U.S.C.  3402).  Since  then  withholding  requirements  have 
been  extended  to  cover  FICA  taxes,  beginning  in  1950  (26  U.S.C, 
3101  and  3111) ;  railroad  retirement  taxes,  beginning  in  1951  (26  U.S.C. 
3201  and  3221);  and  certain  excise  taxes,  beginning  in  1953  (section 
477.2(b)  of  Treasury  Decision  No.  6025,  approved  July  31,  1953). 
The  increases  in  the  earlier  years  were  attributable  to  the  extension  of 
the  system  to  additional  tax  classes,  while  in  later  years  they  have  been 
due  to  increased  tax  rates,  a  greater  number  of  employers  and  employees, 
and  the  enforcement  activities  of  the  Internal  Revenue  Service. 
The  following  table  shows  the  volume  of  depositary  receipts  since 
inception  of  the  accelerated  collection  system. 


Fiscal  year 

Income  and 
social  secu- 
rity taxes 

Railroad 
retirement 

taxes 

Federal 
excise 
taxes 

Total 

1944 

3,516,012 
3,527,611 
3, 699, 158 
3, 887, 630 
3, 989, 195 
3,922,399 
4, 481, 451 
4, 664, 374 
4, 895, 784 
5, 600, 904 
5,425,723 
6,316,929 
7, 632, 789 
8, 142, 296 
8.481,465 
8, 961, 762 
9, 469, 057 
9,908,068 
10, 477, 119 

3, 516, 012 
3,  527, 611 
3,699,158 
3, 887, 630 
3, 989, 195 
3,922,399 
4, 481, 451 
4,664,374 
4,906,586 
5, 612, 299 
6,137,991 
6,981,028 
8, 338, 621 
8,837,086 
9,173,622 
9,577,446 
10,078,563 
10,537,763 
11,097,407 

1945 

1946 

1947 

1948 

1949 

1950 

1951 

1952 

10, 802 
11,395 
11,025 
11, 128 
11,707 
12,776 
10,947 
10,751 
10, 625 
10, 724 
10,262 

1953. 

1954 

701, 243 
652, 971 
694, 125 
682,014 
681, 210 
604,933 
598, 881 
618, 971 
610,026 

1955 

1956 

1957 

1958 

1959... 

1960 

1961 

1962 

BUREAU  OF  THE  PUBLIC  DEBT 


The  Bureau  of  the  Public  Debt,  in  support  of  the  management  of 
the  public  debt,  has  responsibility  for  the  preparation  of  Treasury 
Department  circulars  offering  public  debt  securities,  the  direction  of 
the  handling  of  subscriptions  and  making  of  allotments,  the  formula- 
tion of  instructions  and  regulations  pertaining  to  each  security  issue, 


142   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  issuance  of  the  securities,  and  the  conduct  or  direction  of  trans- 
actions in  those  outstanding.  The  Bureau  is  responsible  for  the  final 
audit  and  custody  of  retired  securities,  the  maintenance  of  the  control 
accounts  covering  all  public  debt  issues,  the  keeping  of  individual 
accounts  with  owners  of  registered  securities  and  authorizing  the 
issue  of  checks  in  pajonent  of  interest  thereon,  and  the  handling  of 
claims  on  account  of  lost,  stolen,  destroyed,  or  mutilated  secm-ities. 

Of  the  four  offices  maintained,  the  principal  one,  which  includes  the 
headquarters  of  the  Biu-eau,  is  in  Washington,  D.C.  This  office  is 
charged  with  the  receipt  and  custody  of  all  new  securities  and  their 
issuance  directly  to  owners  or  to  the  Federal  Reserve  Banks  and 
branches  or  other  authorized  issuing  agents.  Except  for  savings 
bonds,  the  office  conducts  transactions  in  all  outstanding  securities 
(including  securities  of  the  Government-owned  corporations  for  which 
the  Treasury  acts  as  agent),  and  audits  and  maintains  custody  of  the 
securities  when  retired  and  interest  coupons  when  paid.  An  office  in 
Chicago,  lU.,  conducts  transactions  relating  to  all  savings  bonds  out- 
standing and  maintains  the  issue  and  retirement  records  of  the  paper 
type  savings  bonds  except  the  retirement  records  of  Series  E  bonds 
reissued  since  January  1,  1962.  A  field  branch  audit  office  in  Cin- 
cinnati, Ohio,  audits  retired  paper  type  savings  bonds  except  Series  E 
bonds  retired  on  reissue  since  January  1,  1962,  and  transmits  retire- 
ment information  to  the  Chicago  office  for  recording.  All  issue  and 
retirement  records  of  the  punch-card  type  savings  bonds  and  retire- 
ment records  of  Series  E  paper  type  bonds  reissued  since  Januarj^  1, 
1962,  are  prepared  and  maintained  in  a  field  office  in  Parkersburg, 
W.  Va.,  where  the  major  auditing,  accounting,  and  record  keeping 
operations  are  performed  by  a  large  scale  electronic  data  processing 
(EDP)  sj^stem.  Decision  has  been  made  to  close  the  Cincinnati  office 
during  the  early  part  of  fiscal  1963  and  to  transfer  its  operations  to  the 
Parkersburg  and  Chicago  offices. 

Under  Bureau  supervision  many  transactions  in  public  debt 
securities  are  conducted  by  the  Federal  Reserve  Banks  and  their 
branches  as  fiscal  agents  of  the  United  States.  Selected  post  offices, 
private  financial  institutions,  industrial  organizations,  and  others 
(approximately  19,100  in  all)  cooperate  in  the  issuance  of  savings 
bonds.  About  15,600  private  financial  institutions  redeem  savings 
bonds. 

Management  improvement 

New  transistor  equipment  was  installed  in  the  Parkersburg  office  of 
the  Bureau  to  update  the  system  used  to  process  and  maintain  alpha- 
betical and  numerical  records  of  Series  E  savings  bonds  in  punch-card 
form.  The  new  equipment  was  placed  in  operation  on  a  rental  basis 
on  February  1,  1962.  All  stubs  and  bonds  shipped  to  the  Parkersbiu-g 
office  on  and  after  January  2,  1962,  have  been  processed  under  the 
new  system,  and  aU  alphabetical  and  numerical  tape  records  relating 
to  transmittals  before  that  date  have  been  converted.  The  updating 
of  the  system  will  result  in  annual  savings  of  approximately  $450,000, 
mainly  in  reduced  equipment  rental  fees  and  tape  costs.  The  greater 
speed,  flexibility,  and  capacity  of  the  new  equipment  also  made  it 
possible  to  plan  for  expansion  to  include  savings  bond  work  previously 
performed  in  other  Bm-eau  oflSces. 


ADMINISTRATIVE    REPORTS  143 

Effective  January  1,  1962,  the  use  of  a  punch-card  bond  of  single 
form  and  design  was  initiated  for  Series  E  savings  bond  transactions 
requiring  the  issue  of  a  replacement  bond  after  original  issue.  This 
new  type  eliminates  the  cumbersome  and  costly  procedures  involved 
in  maintaining  stocks  of  separate  bond  designs  for  each  change  in  the 
series  or  form  of  Series  E  bonds,  and  will  result  in  continuing  reduc- 
tions in  printing  and  storage  costs  and  substantial  savings  in  Federal 
Reserve  Bank  reimbursable  expenses.  This  will  also  free  the  elec- 
tronic equipment  in  the  Parkersburg  office  for  greater  use  in  processing 
issue  and  retirement  data,  and  enable  the  Bm'eau  to  replace  with 
automated  procedures  certain  operations  previously  performed 
manually  or  on  conventional  tabulating  equipment. 

The  closing  of  the  Cincinnati  Savings  Bond  Audit  Branch,  which 
has  been  auditing,  processing,  and  classifying  all  retired  paper  savings 
bonds,  was  approved  by  the  Secretary  of  the  Treasury.  The  final 
closing  of  the  office  is  scheduled  for  December  1962.  Effective  July  1, 
1962,  the  audit  and  classification  of  aU  Series  F,  G,  H,  J,  and  K 
savings  bonds  were  transferred  to  the  Chicago  office,  which  performs 
other  related  activities  in  connection  with  bonds  of  these  series. 
Effective  August  1,  1962,  the  audit  and  classification  of  Series  A,  B, 
C,  D,  and  E  bonds  in  paper  form  were  transferred  to  the  Parkersburg 
office.  These  bonds  constitute  the  bulk  of  the  paper  bond  workload 
and  wiU  be  processed  electronically  in  much  the  same  manner  as  the 
Series  E  card  bonds.  Programs  are  also  being  developed  to  establish 
and  maintain  numerical  records  of  Series  E  paper  bonds  on  magnetic 
tape  as  a  byproduct  of  the  audit  of  such  bonds  in  the  Parkersburg 
office.  The  manually  maintained  numerical  registers  of  the  Chicago 
office  will  be  closed  and  ffimed  sometime  during  the  fiscal  year  1963. 

Studies  in  the  Chicago  office  resulted  in  a  revision  of  certain  mail 
and  file  activities  and  the  simplification  of  the  system  used  to  control 
securities  on  hand  or  in  process  in  the  Division  of  Loans  and  Currency 
Branch.  These  changes  and  the  discontinuance  of  the  Series  E 
numerical  register  posting  activity  will  result  in  substantial  savings  in 
personnel  and  space  requirements  in  the  Chicago  office. 

The  procedure  for  granting  relief  on  claims  arising  from  the  loss, 
theft,  or  destruction  of  an  unmatured  savings  bond  was  modified  to 
permit  the  issuance  of  a  check  for  the  redemption  value  of  the  bond 
when  the  owner  requests  immediate  payment.  Before  this  change  it 
was  necessary  to  issue  a  new  bond  marked  "duplicate"  and  process 
the  bond  itself  for  redemption.  The  new  method  facilitates  the 
processing  of  claims  cases  and  improves  service  to  the  public. 

Revised  instructions  were  issued  to  the  Federal  Reserve  Banks  in 
connection  with  the  conduct  of  Treasury  bill  transactions  and  the 
processing  of  redeemed  interest  coupons.  The  instructions  dealing 
with  bills  provide  information  relating  to  strips  of  biUs  and  a  new 
$50,000  denomination,  which  was  placed  in  use  during  January  1962. 
The  instructions  dealing  with  coupons  simplify  paper  work  and  reduce 
the  number  of  shipping  records  that  Federal  Reserve  Banks  are 
required  to  maintain. 

The  Bureau  has  contmued  to  stress  its  training  program.  Bureau 
personnel  participated  in  such  outside  training  activities  as  a  Budget 
Bureau  conference  on  the  management  of  productivity,  the  annual 
symposium  of  the   Federal   Government  Accountants  Association, 


144   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

a  personnel  management  conference,  and  a  management  seminar. 
Other  personnel  received  technical  training  in  the  programming  and 
operation  of  the  new  electronic  data  processing  system,  in  manage- 
ment analysis,  and  in  the  application  of  audit  techniques  to  data 
processing  operations. 

Under  the  incentive  awards  program  103  suggestions  were  received 
and  62  were  adopted,  Avith  recurring  savings  estimated  at  $10,019. 
Cash  awards  totaling  $915  were  made  for  the  adopted  suggestions. 
Cash  awards  totaling  $11,900  were  given  to  88  employees  who  received 
outstanding  performance  ratings.  An  additional  $16,200  was  dis- 
tributed to  533  employees  for  sustained  superior  work  performance. 

Bureau  operations 

One  measure  of  the  work  of  the  Bureau  is  the  change  in  the  com- 
position of  the  public  debt.  The  debt  falls  into  two  broad  categories: 
public  issues  and  special  issues.  The  public  issues  consist  of  market- 
able Treasury  bills,  certificates  of  indebtedness,  notes,  and  bonds; 
and  nonmarketable  obligations,  chiefly  U.S.  savings  bonds  and  Treas- 
ury bonds  of  the  investment  series.  Special  issues  of  certificates, 
notes,  and  bonds  are  made  by  the  Treasury  dhectly  to  various  Govern- 
ment trust  and  certain  other  accounts  and  are  payable  only  for  these 
accounts. 

During  fiscal  1962  the  gross  public  debt  increased  by  $9,230  million 
and  the  guaranteed  obligations  not  owned  by  the  Treasury  increased 
by  $204  million.  The  most  significant  change  in  the  composition  of 
the  outstanding  debt  during  the  year  was  the  net  increase  of  $8,924 
million  in  interest-bearing  marketable  public  issues;  Treasury  bills 
and  notes  increased  a  total  of  $14,519  million  and  Treasury  bonds 
decreased  $5,804  million.  Total  public  debt  issues,  including  issues 
exchanged  for  other  securities,  amounted  to  $203,530  million  during 
1962,  and  retirements  amounted  to  $194,301  million. 

A  summary  of  public  debt  operations  handled  by  the  Bureau  appears 
on  pages  38  to  55  of  this  report,  and  a  series  of  statistical  tables  dealing 
with  the  public  debt  will  be  found  in  tables  26  to  58.  The  following 
statement  gives  a  comparison  of  the  changes  in  the  various  classes  of 
public  debt  issues  in  the  amounts  outstanding  at  the  close  of  the  fiscal 
years  1961  and  1962. 


Increase,  or  decrease( — ) 


Classification 


Interest-bearing  debt: 

Marketable  obligations 

Treasury  bonds,  investment  series 

U.S.  savings  bonds 

Special  issues 

other 

Total  interest-bearing  debt 

Matured  debt  and  debt  bearing  no  interest 

Total 


9,230 


ADMINISTRATIVE    REPORTS  145 

U.S.  savings  bonds. — The  large  volume  of  work  involved  in  the 
issuance  and  redemption  of  savings  bonds  creates  the  greatest  number 
of  administrative  problems  for  the  Bureau  of  the  Public  Debt.  These 
bonds  are  issued  in  registered  form  and  are  owned  by  tens  of  millions 
of  persons.  Both  alphabetical  and  numerical  ownership  records  have 
been  established  and  maintained  for  2.4  billion  bonds  issued  during 
the  past  twenty-seven  years.  The  adjudicatmg  of  claims  and  replac- 
ing lost,  stolen,  and  destroyed  bonds  (which  now  total  1.7  milhon 
pieces)  and  the  handling  and  recording  of  retired  bonds  also  contribute 
to  the  administrative  burdens. 

Receipts  from  sales  during  the  year  were  $4,411  million  and 
accrued  discount  charged  to  the  interest  account  and  credited  to  the 
savings  bonds  principal  account  amomited  to  $1,358  million,  a  total 
of  $5,769  million.  The  sales  include  $10  million  of  Series  H  bonds 
issued  in  exchange  for  Series  F  and  J  bonds,  but  exclude  $219  million 
of  Series  H  bonds  issued  in  exchange  for  Series  E  bonds.  Savings 
bond  redemptions  charged  to  the  Treasurer's  account  during  the 
year,  includmg  about  $2,585  million  of  matured  bonds,  amounted  to 
$5,716  million.  The  redemptions  include  $320  million  of  Series  F 
and  G  bonds  exchanged  for  marketable  Treasury  bonds  and  $10 
million  of  Series  F  and  J  bonds  exchanged  for  Series  H  bonds,  but 
exclude  $219  milhon  of  Series  E  bonds  exchanged  for  Series  H  bonds. 
The  amount  of  unmatured  and  matured  savings  bonds  of  all  series 
outstanding  on  June  30,  1962,  including  accrued  discount,  was 
$47,818  million,  an  increase  of  $64  million  from  the  amount  outstand- 
ing on  Jime  30,  1961.  Detailed  information  regarding  savings  bonds 
will  be  found  in  tables  46  to  49,  inclusive,  of  this  report. 

There  were  92.7  million  stubs  representing  issued  bonds  of  Series  E 
received  for  registration  making  a  grand  total  of  2,355.5  million, 
including  reissues,  received  through  Jime  30,  1962.  In  recent  years 
original  stubs  of  paper  type  bonds  were  arranged  alphabetically 
in  semiannual  blocks,  by  name  of  owner,  and  microfilmed.  The 
stubs  were  then  arranged  in  numerical  sequence  by  bond  serial  numbers 
for  a  full  calendar  year  file  and  microfihned,  after  which  they  were 
destroyed.  These  microfilms  are  permanent  registration  records. 
The  original  issue  of  paper  bonds  was  discontinued  in  fiscal  1958. 

The  issue  stubs  of  the  punch-card  type  bonds  are  microfilmed  in 
batches  as  they  are  received  by  the  Bureau.  Electronic  data  pro- 
cessing equipment  is  used  to  audit  the  stubs  and  develop  a  numerical 
and  alphabetical  register  on  magnetic  tape  showing  ownership  of 
bonds.  In  addition,  the  magnetic  tape  file  of  bonds  issued  serves  as  a 
locater  index  to  the  bond  stub  image  on  microfilm. 

The  following  tables  show  the  status  of  processing  operations  for 
registration  stubs  of  the  paper  type  and  card  type  Series  E  savings 
bonds.  The  table  on  card  type  bonds  also  shows  steps  taken  in 
processing  retired  card  type  bonds  and  paper  type  bonds  of  Series  E 
retired  on  reissue  transactions  since  January  1,  1962. 

661496—63 11 


146   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Stubs  of  issued  paper  type  Series  E  savings  bonds  in  Chicago  office 
(In  millions  of  pieces) 

Period 

Stubs 
received 

Alphabetically  sorted 

Alphabet- 
ically 
filmed 

Numeri- 
cally 
filmed 

Destroyed 

Restricted 
basis  sort 

Fine  sort 
prior  to 
fllming 

after 
filming 

Cumulative  through  June  30, 
1957 

1,896.9 

37.1 
2.1 
1.9 
1.9 
1.7 

1,871.5 

62.1 
2.5 

1, 825. 0 

85.7 

24.4 

2.3 

1.5 

2.1 

1,804.1 

89.9 

41.1 

1.9 

1.9 

2.1 

1, 655. 9 

178.3 
100.9 

1. 649. 1 

Fiscal  year: 

1958 

184.1 

1959 - 

101.9 

1960       -.- 

1961 

1.9 
1.9 

1.9 

1962 

1.9 

Total - 

1,941.6 

1.936.1 

1.941.0 

1.941.0 

1,938.9 

1. 938. 9 

All  retired  bonds  in  card  form,  issued  only  in  Series  E,  and  all 
Series  E  paper  bonds  retired  on  reissue  transactions  since  January  1, 
1962,  are  handled  in  the  Parkersburg  office.  There,  after  microfilming, 
the  bonds  are  audited  and  required  permanent  record  data  are 
prepared  by  an  electronic  data  processing  system  before  being 
destroyed.     The  following  table  shows  the  status  of  these  operations. 


Re- 
ceived 

Micro- 
filmed 

Key- 
punched 

Con- 
verted 
to  mag- 
netic 
tape 

Au- 
dited 
and 
classi- 
fied 

De- 
stroyed 

Balance 

Fiscal  year 

Un- 
filmed 

Not  key- 
punched 

Not 
con- 
verted 
to  mag- 
netic 
tape 

Unau- 
dited 

Stubs  of  issued  card  type  Series  E  savings  bonds  in  Parkersburg  office 
(in  millions  of  pieces) 

1958 

59.5 
87.5 
87.2 
88.7 
91.0 

57.8 
88.2 
84.7 
90.7 
90.2 

41.4 

103.4 

82.6 

92.4 

88.7 

5.7 

119.0 

102.5 

92.2 

89.1 

34.7 

106.9 

83.6 

92.9 

88.9 

58.3 
154.4 
154.1 

1.7 
1.0 
3.5 
1.5 
2.3 

18.1 
2.2 
6.8 
3.1 

5.4 

53.8 

22.3 

7.0 

3.5 

5.4 

24.8 

1959 

5.4 

1960 

9.0 

1961 

4.8 

1962 

6.9 

Total 

413.9 

411.6 

408.5 

408.5 

407.0 

306.8 

Retired  card  type  Series  E  savings  bonds  recorded  m  Parkersburg  office 
(in  millions  of  pieces) 

1958 

17.5 
45.2 
55.2 
59.7 
62.4 

16.7 
45.5 
54.3 
60.6 
61.3 

10.5 
51.4 
52.5 
61.5 
61,1 

.1 

53.2 
60.0 
62.4 
61.1 

7.3 

52.8 
52.4 
62.8 
60.3 

20.6 
93.0 
95.0 

.8 
.5 

1.4 
.5 

1.6 

7.0 
.8 
3.5 
1.7 
3.0 

17.4 
9.4 
4.6 
1.9 
3.2 

10.2 

1959. 

2.6 

1960 

5.4 

1961 

2.3 

1962 

4.4 

Total.. 

240.0 

238.4 

237.0 

236.8 

235.6 

208.6 

Retired  paper  type  Series  E  savings  bonds  processed  in  Parkersburg  office 
(in  thousands  of  pieces) 

Jan.    1-June   30, 
1962 

817.1 

774.7 

736.3 

736.3 

696.1 

42.4 

80.8 

80.8 

121.0 

1 


8        • 


Retired  savings   bonds  of  all   series  received  during  fiscal  1962 
numbered  91.6  million.     Retired  paper  bonds  of  all  series,  except 


ADMINISTRATIVE    REPORTS 


147 


Series  E  bonds  retired  on  reissue  transactions  between  January  1  and 
June  30,  1962,  were  processed  through  the  Cincinnati  office  where  they 
were  audited,  microfihned,  and  destroyed.  A  list  of  the  serial  numbers 
of  retu'ed  paper  bonds  audited  by  the  Cincinnati  office  was  transmitted 
to  the  Chicago  office  for  posting  of  retirement  reference  data  to  nu- 
merical ledgers  for  permanent  record.  The  following  tables  show  the 
status  of  these  operations  for  the  Chicago  and  Cincinnati  offices. 


Period 

Retired  paper  type  savings  bonds  of  all  series  in  the  branch  audit  offices  ' 
(in  millions  of  pieces) 

Bonds 
received 

Audited 

Micro- 
filmed 

Balance 

Destroyed 

Unaudited 

Unfllmed » 

Cumulative  through  June  30, 
1957 

1,063.2 

81.8 
48.7 
43.2 
32.6 
28.4 

1, 060. 2 

81.2 
49.1 
44.4 
32.9 
28.4 

1, 045.  4 

82.6 
47.7 
46.2 
34.0 
28.2 

3.0 

3.6 
3.2 

2.0 
1.7 
1.7 

6.7 

5.9 
6.9 
3.9 

2.5 

2.7 

997.5 

Fiscal  year; 

1958 - 

79.3 

1959    

72.4 

1960 

47.5 

1961             

32.2 

1962 

28.3 

Total 

1,297.9 

1,296.2 

1,284.1 

1,257.2 

1  There  is  only  one  audit  office  now  in  existence  but  prior  to  June  1958  there  were  five  such  offices  and 
this  table  includes  data  for  all  of  them. 

'  Excludes  9.4  million  pieces  of  unfilmed  spoiled  stock  transferred  to  permanent  storage  and  1.7  million 
pieces  of  unissued  stock  to  be  destroyed  without  microfilming. 


Retired  paper  type  savings  bonds  of  all  series  recorded  in 

Chicago  office 

(in  millions  of  pieces) 

Period 

Number 

of  retired 

bonds 

reported 

Status  of  posting 

Posted 

Verified 

Balance 

Unposted  i 

Unverified  i 

Cumulative  through  Jirne  30,  1957 

Fiscal  year: 

1958 

1,523.9 

84.6 
50.3 
45.3 
37.1 
28.6 

1,518.0 

87.2 
50.4 
45.7 
37.2 
29.2 

1, 435. 1 

64.0 
86.2 
55.5 
39.3 
32.6 

5.9 

3.3 
3.2 

2.8 
2.7 
2.1 

4.8 

28.0 

1959 

3.3 

1960  .                         

4.9 

1961- 

2.8 

1962 

1.2 

Total. 

1,769.8 

1,767.7 

1,712.6 

1  Excludes  53.9  million  pieces  received  in  1954  and  1955  which  were  not  verified. 

Of  the  84.7  million  Series  A-E  savings  bonds  redeemed  prior  to 
release  of  registration  and  received  in  the  audit  offices  during  the 
year,  82.6  million,  or  97.5  percent,  were  redeemed  by  approximately^ 
15,600  paying  agents.  These  agents  were  reimbursed  for  this  service 
in  each  quarter  year  at  the  rate  of  15  cents  each  for  the  first  1,000 
bonds  paid  and  10  cents  each  for  aU  over  the  first  1,000.  The  total 
amount  paid  to  agents  on  this  account  during  the  year  was  $10,641,374, 
which  was  at  the  average  rate  of  12.88  cents  per  bond. 

The  following  table  shows  the  number  of  savings  bonds  outstanding 
as  of  June  30,  1962,  by  series  and  denomination. 


148   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Series  ' 

Total 

Denomination  (in 

thousands  of  pieces) 

$10 

$25 

$50 

$100 

$200 

$500 

$1,000 

$5,000 

$10,000 

$100,000 

E 

441,864 

5,963 

3 

4 

13 

68 

292 

720 

444 

552 

884 

236,691 

96,270 

76, 120 

7,157 

11,854 

2,257 

(♦) 

(*) 

1 

4 

27 

140 

45 

148 

12, 848 

3,344 

(*) 

(*) 

1 

7 

69 

284 

124 

308 

""'285' 

38 

77 

1 

H 

A 

1 

2 

5 

24 

82 

(*) 
1 
2 
13 

1 

1 

4 

19 

93 

241 

150 

B 

c 

D 

F 

9 
27 
19 
47 

12 

28 
29 

48 

Q 

J 

76 

1 

K 

2 

Total..-. 

449, 923 

884 

236,881 

96,286 

76,629 

7,157 

14,476 

16, 985 

387 

232 

4 

•Less  than  500  pieces. 

»  Currently  only  bonds  of  Series  E  and  H  are  on  sale. 


The  following  table  shows  the  number  of  issuing  and  paying  agents 
for  Series  A-E  savings  bonds  by  classes. 


June  30 

Post 
offlces ' 

Banks 

Building 
and  sav- 
ings and 
loan  asso- 
ciations 

Credit 
unions 

Companies 

operating 

payroll 

plans 

All 
others 

Total 

Issuing  agents 

1945 

24,038 
25,060 
2,476 
1,178 
1,120 
1,093 
1,061 
1,046 

15,232 
15,  255 
15,  692 
16, 047 
16, 178 
16, 436 
13, 505 
13, 559 

3,477 
1,557 
1,555 
1,702 
1,778 
1,851 
1,617 
1,670 

2,081 
522 
428 
357 
336 
320 
285 
281 

s  9, 605 
3,052 
2,942 
2,640 
2,401 
2,3.52 
2,045 
1,978 

(2) 
550 
588 
587 
688 
643 
590 
573 

54,433 

1950 

45, 966 

1955 

23,681 

1958 -- 

22,511 

1959..- 

22.  501 

I960      

22. 695 

1961 

3 19, 103 

1962 

19, 107 

Paying  agents 

1945          

13,466 
15, 623 
16, 269 
16,744 
16,860 
17,127 
13. 670 
13,687 

13,466 

1950 

874 
1,188 
1,580 
1,690 
1,797 
1,605 
1,690 

137 
139 
171 
168 
169 
158 
160 

57 
56 
59 
60 
60 
16 
16 

16, 691 

1955 

17, 652 

1958  . 

18. 554 

1959 

18, 778 

1960 

19, 153 

1961 

'15,449 

1962 

15,653 

>  Estimated  by  the  Post  Office  Department  for  1955  and  thereafter.  Sale  of  Series  E  savings  bonds  was 
discontinued  at  post  offices  at  the  close  of  business  on  December  31, 1953,  except  in  those  localities  where  no 
other  public  facilities  for  their  sale  were  available. 

2  "All  others"  included  with  companies  operating  payroll  plans. 

«  Substantial  reduction  due  to  reclassification  by  Federal  Reserve  Banks  effective  Dec.  31, 1960,  to  include 
only  the  actual  number  of  entities  currently  qualified. 

Interest  checks  issued  on  current  income  type  savings  bonds  (Series 
G,  H,  and  K)  during  the  year  totaled  5,094,481  with  a  value  of 
$276,092,431,  an  increase  of  59,498  checks  from  those  issued  during 
1961,  and  an  increase  in  value  of  $17,645,004.  New  accounts  estab- 
lished totaled  235,881,  compared  with  212,235  in  1961.  As  of  June 
30,  1962,  there  were  1,798,976  active  accounts  with  owners  of  current 
income  savings  bonds,  a  decrease  of  45,052  accounts  durmg  the  year. 
There  were  reductions  of  114,367  accounts  of  Series  G  bonds,  which 
have  been  maturing  since  May  1,  1953,  and  31,584  accounts  of  Series 
K,  which  were  first  sold  on  May  1,  1952,  and  discontinued  effective 


ADMINISTRATIVE    REPORTS  149 

at  the  close  of  business  April  30,  1957.  An  increase  of  100,899  oc- 
curred in  accounts  of  Series  H  bonds,  which  were  first  sold  on  June 
1,  1952. 

Applications  durmg  the  year  for  the  issue  of  duplicates  of  lost,  stolen, 
or  destroyed  savings  bonds  amounted  to  40,534.  These,  together  with 
1,191  cases  on  hand  at  the  beginning  of  the  year,  totaled  41,725.  In 
24,805  cases  the  bonds  were  recovered,  and  in  15,922  cases  the  issuance 
of  duplicate  securities  was  authorized.  On  June  30,  1962,  there 
remained  998  cases  not  settled. 

Other  U.S.  securities. — During  the  year,  31,828  individual  accounts 
covering  publicly  held  registered  securities  were  opened  and  34,970 
were  closed.  This  reduced  the  total  of  open  accounts  on  June  30,  1962, 
to  245,536  covering  registered  securities  in  the  principal  amount  of 
$13,197  million.  There  were  471,021  interest  checks  with  a  value  of 
$426,209,097  issued  to  owners  of  record  during  the  year,  a  decrease  of 
283  checks  from  the  number  issued  in  1961,  and  a  decrease  in  value 
of  $1,204,256. 

Redeemed  and  canceled  securities  received  for  audit  included 
4,841,103  bearer  securities  and  350,466  registered  securities,  a  total  of 
5,191,569  as  compared  with  4,324,984  m  1961 ;  and  20,485,027  coupons 
were  received,  which  was  390,887  more  than  in  1961. 

OFFICE    OF    THE    TREASURER   OF    THE    UNITED    STATES 

The  Treasurer  of  the  United  States  is  responsible  for  the  receipt, 
custody,  and  disbursement,  upon  proper  order,  of  the  public  moneys 
and  for  maintaining  records  of  the  source,  location,  and  disposition 
of  these  funds.  The  Office  was  created  by  an  act  of  Congress  approved 
September  2,  1789,  as  amended  (31  U.S.C.  141,  147). 

The  Office  of  the  Treasurer  uses  the  facilities  of  the  Federal  Reserve 
Banks  as  fiscal  agents  of  the  United  States  to  perform  many  of  its 
fimctions  throughout  the  country.  These  include  the  verification 
and  destruction  of  U.S.  paper  currency;  the  redemption  of  public 
debt  securities;  the  keeping  of  cash  accounts  in  the  name  of  the 
Treasurer;  the  acceptance  of  deposits  made  by  Government  officers 
for  credit;  and  the  custody  of  bonds  held  to  secure  public  deposits  in 
commercial  banks. 

Commercial  banks  in  the  United  States  and  in  foreign  countries 
which  qualify  as  depositaries  provide  banking  facilities  for  activities 
of  the  Government  at  places  where  they  are  located.  Data  on  the 
transactions  handled  for  the  Treasurer  by  the  Federal  Reserve  Banks 
and  commercial  banks  are  reported  daily  to  the  Treasurer  and  are 
entered  in  the  Treasurer's  general  accounts. 

The  Treasurer  maintains  current  summary  accounts  of  all  receipts 
and  expenditiu"es;  pays  the  principal  and  interest  on  the  public  debt; 
provides  checking  account  facilities  for  Government  disbursing  officers, 
corporations,  and  agencies;  pays  checks  drawn  on  the  Treasurer  of 
the  United  States  and  reconciles  the  checking  accounts  of  the  dis- 
bursing officers;  procures,  stores,  issues,  and  redeems  U.S.  currency; 
audits  redeemed  Federal  Reserve  currency;  examines  and  determines 
the  value  of  mutilated  currency;  acts  as  special  agent  for  the  payment 
of  principal  and  interest  on  certain  obligations  of  corporations  of  the 
U.S.  Government  and  on  certain  obligations  of  Puerto  Rico  issued  on 


150   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

or  before  January  1,  1940.  The  Treasurer  also  acts  as  special  agent 
for  the  payment  of  principal  and  interest  on  certain  pre-1934  dollar 
bonds  of  the  PliUippine  Islands.  By  agreement  with  the  Post  Office 
Department,  the  electronic  installation  of  the  Office  of  the  Treasurer 
is  being  expanded  to  include  the  processing  of  postal  money  orders. 

The  Office  maintains  facilities  in  the  main  Treasury  building  to: 
Accept  deposits  of  public  moneys  by  Government  officers;  cash  U.S. 
savings  bonds  and  checks  drawn  on  the  Treasurer;  receive  excess  and 
unfit  currency  and  coins;  and  to  conduct  transactions  in  both  market- 
able and  nonmarketable  public  debt  securities.  The  Office  also 
prepares  the  Daily  Statement  of  the  United  States  Treasury  and  the 
monthly  Circulation  Statement  of  United  States  Money. 

Acting  under  authority  delegated  by  the  Comptroller  General  of 
the  United  States,  the  Treasurer  processes  claims  arising  from  forgery 
of  endorsements  and  other  irregularities  involving  checks  paid  by  the 
Treasurer  and  passes  upon  claims  for  substitute  checks  to  replace 
unpaid  checks  which  have  been  lost  or  destroyed. 

The  Treasurer  of  the  United  States  was  designated  Treasurer  of 
the  Board  of  Trustees  of  the  Postal  Savings  System  in  accordance 
with  Treasury  Order  No.  177-20,  dated  December  22,  1961  (see 
exhibit  51).  She  is  also  custodian  of  bonds  held  to  secure  pubhc 
deposits  in  commercial  banks,  bonds  held  to  secure  postal  savings 
on  deposit  in  such  banks,  and  miscellaneous  securities  and  trust 
funds. 

Management  improvement  program 

Many  changes  made  throughout  the  Treasurer's  Office  during  the 
year  increased  efficiency  and  financial  savings.  Several  of  the 
improvements  were  developed  and  eftected  in  cooperation  with  other 
bureaus  of  the  Fiscal  Service,  other  Government  agencies,  and 
Federal  Reserve  Banks.  The  more  significant  are  described  in  the 
following  paragraphs. 

Improved  programming  and  timely  installation  of  computers  of 
advanced  design  and  additional  capabilities  have  enabled  the 
Treasurer's  Electronic  Data  Processing  Division  to  meet  the  growing 
demand  for  its  services.  The  Division  processed  449  million  checks 
in  fiscal  1962  as  compared  with  430  million  the  previous  year  and 
expects  to  pay  and  reconcile  about  466  million  checks  in  1963.  Also, 
late  in  Jmie  1962,  the  Division  began  to  process  postal  money  orders 
and  it  expects  to  handle  an  estimated  133  million  during  fiscal  1963, 
and  244  million  annually  thereafter.  Although  the  large  monetary 
savings  anticipated  from  the  processing  of  money  orders  by  electronic 
equipment  will  not  be  fully  realized  by  the  Government  until  late  in 
fiscal  1963,  improvements  in  accounting  control  and  service  of  issued 
money  orders  will  be  immediate. 

Those  disbursing  officers  who  use  electronic  equipment  in  issuing 
checks  send  check  issue  information  on  magnetic  tape  to  the  Treasurer. 
This  tape  is  used  in  the  electronic  system  to  reconcile  automatically 
such  check  issues  with  payments,  thereby  speeding  reconciliation  and 
reducing  substantially  the  amount  of  manual  reconciliation.  It  is 
estunated  that  by  the  end  of  fiscal  1963,  about  65  percent  of  all  checks 
will  be  so  issued  and  reconciled. 


ADMINISTRATIVE    REPORTS  151 

The  use  of  these  check  issue  tapes  in  the  electronic  system  also 
results  in  the  earlier  detection  and  reporting  of  differences  between 
the  amounts  for  which  checks  are  issued  and  the  amounts  for  which 
they  are  paid,  thereby  making  possible  earlier  notification  to  banks 
and  the  U.S.  Secret  Service  of  any  checks  found  to  be  altered. 

Improved  procedures  have  reduced  the  time  elapsing  between  the 
receipt  of  mutilated  checks  from  the  Federal  Reserve  Banks  and  their 
entry  into  the  electronic  system,  have  put  the  Treasurer's  records  of 
the  checking  accounts  of  disbursing  officers  on  a  more  current  basis, 
and  enabled  the  Office  to  advise  the  banks  sooner  when  payment  on 
a  mutilated  check  is  declined. 

Revised  instructions  issued  to  disbursing  officers  on  the  remailing 
to  payees  of  recovered  original  checks  and  the  batching  of  documents 
relating  to  check  claims  have  greatly  reduced  the  number  of  duplicate 
payments  and  expedited  the  handling  of  correspondence  in  the  Check 
Claims  Division. 

The  bureau's  training  program  has  been  broadened  and  a  long- 
range  plan  is  being  expanded  to  give  qualified  employees  an  oppor- 
tunity to  achieve  their  highest  potential.  Approved  by  the  Civil 
Service  Commission  and  in  effect  are  two  continuing  bureau  pro- 
grams: the  check  claims  examiner  training  program  and  the  digital 
computer  programming  training  program.  Also,  a  regularly  scheduled 
supervisory  training  program  is  being  planned. 

Assets  and  liabilities  in  the  Treasurer's  account 

The  assets  of  the  Treasurer  consist  of  gold  and  silver  bullion,  coin 
and  paper  currency,  deposits  in  Federal  Reserve  Banks,  and  deposits 
in  commercial  banks  designated  as  Government  depositaries. 

A  summary  of  the  assets  and  liabilities  in  the  Treasurer's  account 
at  the  close  of  the  fiscal  years  1961  and  1962  is  shown  in  table  59. 

Gold. — The  gold  assets,  which  amounted  to  $17,550.1  million  on 
June  30,  1961,  on  the  daily  Treasury  statement  basis,  continued  to 
decline  tliroughout  most  of  the  year.  Receipts  were  $408.3  million 
and  disbursements  $1,523.3  million.  The  final  balance  of  $16,435.0 
million  on  June  30,  1962,  included  liabilities  of  $16,158.0  milhon  in 
gold  certificates  or  credits  payable  in  gold  certificates  and  $156.0 
million  for  the  gold  reserve  against  currency,  leaving  a  free  gold 
balance  of  $121.0  million. 

Silver. — Depletion  of  the  Treasury's  stocks  of  silver  bullion  avail- 
able for  coinage  prompted  the  President,  on  November  28,  1961,  to 
direct  that  further  sales  of  bullion,  at  the  fixed  price  of  90.5  cents  per 
ounce,  should  be  suspended,  except  to  Government  agencies.  As 
silver  certificates  become  unfit  for  further  circulation,  they  are  being 
replaced,  in  part,  by  Federal  reserve  notes.  Silver  bullion  at  the 
monetary  value  of  $1.29  H-  per  ounce,  held  to  secure  outstanding  certifi- 
cates, is  thus  made  available  and  is  released  from  time  to  time  to 
meet  the  Department's  increasingly  heavy  requirements  for  subsidiary 
silver  coinage. 

Transactions  in  silver  bullion  during  the  year  are  summarized,  in 
millions  of  dollars,  in  the  following  table. 


152   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Fiscal  year  1962 


Silver  bullion 


Held  to 

secure  silver 

certificates 


Monetary 
value 


Held  for  coinage,  etc. 


Monetary 
value 


Cost  value 


Recoinage 
value 


On  hand  July  1,  1961 

Received  (+)  or  disbursed  (— ),  net. 

Revalued 

Released  for  coinage 

Used  in  coinage 


On  hand  June  30,  1962. 


$2, 252. 3 


+0.2 
-69.4 


-$2.0 


$57.1 

-15.4 

-0.1 


+69.4 
-59.0 


-20.0 


2, 183. 1 


8.4 


21.6 


+$2.0 


-1.9 


0.1 


The  closing  balance  of  $2,183.1  million  in  silver  bullion  at  the 
monetary  value,  was  held,  together  with  $115.7  million  in  silver 
dollars,  to  secure  outstanding  silver  certificates  of  $2,276.6  million  on 
June  30,  1962.  A  free  balance  of  $22.2  million  in  monetized  silver 
remained. 

Balances  with  depositaries. — The  following  table  shows  the  nmnber 
of  each  class  of  depositaries  and  balances  on  June  30,  1962. 


Class 


Number  of 
accounts  with 
depositaries ' 


Deposits  to  the 

credit  of  the 

Treasurer  of  the 

United  States 

June  30,  1962 


Federal  Reserve  Banks  and  branches 

Other  domestic  depositaries  reporting  directly  to  the  Treasurer.. 

Domestic  depositaries  reporting  through  Federal  Reserve  Banks 

General  depositaries. 

Special  depositaries,  Treasury  tax  and  loan  accounts... 

Foreign  depositaries  s.. 

Total. 


2  $915, 195,  508 
39,  519,  920 

265,  381,  804 

8, 814,  673,  942 

135,  755, 629 


13, 354 


10, 170, 526, 802 


'  Includes  only  depositaries  having  balances  with  the  Treasurer  of  the  United  States  on  June  30,  1962. 
E.xcludes  depositaries  duly  designated  for  this  purpose  but  having  no  balances  on  that  date  and  those  desig- 
nated to  furnish  official  checking  account  facilities  or  other  services  to  Government  officers  but  which  are  not 
authorized  to  maintain  accounts  with  the  Treasurer.  Banking  institutions  designated  as  general  deposi- 
taries are  frequently  also  designated  as  special  depositaries,  hence  the  total  number  of  accounts  exceeds  the 
number  of  institutions  involved. 

2  Includes  checks  for  $303,269,291  in  process  of  collection. 

3  Principally  branches  of  U.S.  banks  and  of  the  American  E.xpress  Company,  Inc. 

Bureau  operations 

Receiving  and  disbursing  public  moneys.- — ^Moneys  collected  by 
Government  officers  are  deposited  with  the  Treasurer  at  Washington, 
in  Federal  Reserve  Banks,  and  in  designated  Government  deposi- 
taries for  credit  to  the  account  of  the  Treasurer  of  the  United  States. 
All  payments  are  withdrawn  from  this  account.  Moneys  deposited 
and  withdrawn  in  the  fiscal  years  1961  and  1962,  exclusive  of  certain 
intragovernmental  transactions,  are  shown  in  the  following  table  on 
the  basis  of  the  Daily  Statement  of  the  United  States  Treasury. 


ADMINISTRATIVE    REPORTS 


153 


Deposits,  withdrawals,  and  balances  in  the  Treasurer's  account 


1961 


1962 


Cash  deposits  (net)    (including  internal  revenue,  customs,  trust 

funds,  etc.) -- - --. 

Public  debt  receipts  ' --- -. 

Less  accrued  discount  on  U.S.  savings  bonds  and  Treasury  biUs.. 

Total  net  deposits 

Balance  at  beginning  of  fiscal  year 

Total - - - - 

Cash  withdrawals  (includes  budget  and  trust  accounts,  etc.) 

Net  transactions  in: 

Investments  of  Government  agencies  in  public  debt  securities, 

excess  of  investments 

Sales  and  redemptions  of  obligations  of  Government  agencies  in 

market,  excess  of  redemptions,  or  sales  (— ) 

Public  debt  redemptions  ' 

Less  redemptions  included  in  cash  withdrawals 

Total  net  withdrawals 

Balance  at  close  of  fiscal  year 


$96,  897, 026,  794 
176, 247,  926,  563 
-2, 309,  768,  703 


$101,  608, 057, 928 
203,  530, 446,  854 
-2,571,113,247 


270, 835, 184,  654 
8, 004,  740, 998 


302,  567, 391,  535 
6, 694, 119, 954 


278,  839,  925, 652 


309, 261, 511, 489 


98, 283, 877, 037 


921,  036,  604 

1,107,286,500 
173,  607,  748, 801 
-1,774,143,244 


106,  626, 338,  957 


502, 677, 061 

-950,  771,  810 
194, 300,  562,  743 
-1,647,689,011 


272, 145,  805,  698 
6, 694, 119,  954 


298,  831, 117, 940 
10,  430, 393,  549 


»  For  details  for  1962  see  table  38. 

Old  series  currency. — The  Old  Series  Currency  Adjustment  Act, 
approved  June  30,  1961  (31  U.S.C.  912-916)  (see  annual  report  for 
1961,  exhibit  10,  p.  297),  authorizes  and  directs  the  Secretary  of  the 
Treasury  to  make  certain  adjustments  and  to  take  certain  other 
action  with  respect  to  all  large  size  currency  outstanding  which  was 
issued  prior  to  July  1,  1929,  and  with  respect  to  small  size  gold  certifi- 
cates outstanding  which  were  issued  between  July  1,  1929,  and 
January  30,  1934,  the  date  of  enactment  of  the  Gold  Reserve  Act  of 
1934  (31  U.S.C.  440-446).  Any  such  old  series  currency  presented  to 
the  Treasmy  is  now  being  redeemed  from  the  general  fund  of  the 
Treasury  and  the  amount  of  the  public  debt  outstanding  is  corre- 
spondingly reduced. 

In  accordance  with  the  provisions  of  the  act,  gold  and  silver  reserves 
in  the  aggregate  amount  of  $61,059,919  were  released  as  of  July  1, 
1961.  These  reserves  had  been  held  as  security  for  gold  certificates 
issued  before  January  30,  1934,  and  as  security  for  or  for  the  redemp- 
tion of  Treasury  notes  of  1890  and  of  silver  certificates  issued  before 
July  1,  1929.  The  freeing  of  these  reserves  resulted  in  an  equivalent 
increase  in  the  free  gold  balance  and  the  free  silver  balance  in  the 
general  fund  available  for  the  issuance  of  gold  certificates  to  Federal 
Reserve  Banks  and  for  the  issuance  of  additional  amounts  of  silver 
certificates. 

The  amount  of  each  of  these  old  series  currency  issues  outstanding 
on  July  1,  1961,  was  credited  as  a  public  debt  receipt  and  established 
as  a  public  debt  liability  bearing  no  interest  as  follows: 

Gold  certificates $29,  959,  809 

Silver  certificates 29,  958,  443 

Treasury  notes  of  1890 1,  141,  667 

Also,  as  provided  by  section  4  of  the  act,  each  Federal  Reserve 
Bank  paid  into  the  Treasury  an  amount  equal  to  its  Federal  Reserve 


154   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

notes  of  any  series  prior  to  the  Series  of  1928  outstanding  as'of  July  1, 
1961.  These  payments  were  made  on  July  28,  1961,  in  the  aggregate 
amount  of  $36,419,050.  This  amount  was  credited  to  public  debt 
receipts  and  established  as  a  public  debt  liability  bearing  no  interest 
(section  6(b)  of  the  act).  The  amount  received  from  each  Federal 
Reserve  Bank  was  as  follows: 


Federal  Reserve  Bank 


Boston 

New  York.. 
Philadelphia 
Cleveland... 
Richmond.. 

Atlanta 

Chicago 


Amount 


$2, 397, 025 
9, 259, 995 
2, 704,  685 
3, 756, 435 
1,  547, 845 
2, 054, 150 
5, 637, 450 


Federal  Reserve  Bank 


St.  Louis 

Minneapolis.. 
Kansas  City.. 

Dallas 

San  Francisco 

Total... 


Amount 


$1, 385, 645 

1,307,395 

1, 561, 510 

972, 515 

3, 834, 400 


36, 419, 050 


In  accordance  with  section  6(c)  of  the  act,  the  Secretary  of  the 
Treasury,  from  time  to  time,  may  determine  the  amount  of  each 
denomination  of  each  kind  of  old  series  currency  outstanding  which 
in  his  judgment  has  been  destroyed  or  irretrievably  lost  and  so  will 
never  be  presented  for  redemption.  The  public  debt  liability  for 
these  currencies  is  thereupon  reduced  by  the  amount  of  the  determina- 
tions with  corresponding  credit  to  miscellaneous  receipts  of  the 
Treasury.  Under  this  provision,  the  Secretary  on  October  20,  1961, 
determined  that  $1,000,000  of  Treasury  notes  of  1890  would  never  be 
presented  and  the  public  debt  was  reduced  accordingly  on  October  27, 
1961. 

The  act  also  authorizes  the  establishment  of  a  historical  collection 
of  the  paper  currency  issues  of  the  United  States. 

Issuing  and  redeeming  paper  currency. — By  law  the  Treasurer  is  the 
agent  for  the  issue  and  redemption  of  U.S.  paper  currency.  The 
Treasurer's  Office  procures  all  U.S.  paper  currency  from  the  Bureau 
of  Engraving  and  Printing  and  places  it  in  circulation  as  needed, 
chiefly  through  the  facilities  of  the  Federal  Reserve  Banks  and  their 
branches. 

The  Federal  Reserve  Banks  and  branches,  as  agents  of  the  Treasury, 
redeem  and  destroy  the  major  portion  of  the  U.S.  currency  as  it 
becomes  unfit  for  circulation.  A  small  amount  is  handled  directly  by 
the  Treasurer's  Office. 

Federal  Reserve  notes  are  issued  by  Federal  Reserve  Banks. 
The  Federal  Reserve  Banks  also  redeem  these  notes,  cut  them  in 
half,  and  forward  the  halves  separately  to  Washington  where  the 
Currency  Redemption  Division  of  the  Treasurer's  Office  verifies  the 
lower  halves  and  the  Office  of  the  Comptroller  of  the  Currenc}^  verifies 
the  upper  halves.  Both  halves  are  then  destroyed  under  the  direction 
of  a  special  committee. 

The  Currency  Redemption  Division  also  redeems  unfit  paper 
currency  of  all  types  received  from  local  som'ces  in  Washington  and 
from  Government  officers  abroad;  and  examines  and  identifies  for 
lawful  redemption  all  burned  and  mutUated  currency  received  from 
any  source.  The  last  operation  requires  special  techniques  and  un- 
limited patience  on  the  part  of  skilled  examiners  as  the  currency  re- 


ADMINISTRATIVE    REPORTS 


155 


ceived  may  be  charred,  discolored,  moldy,  in  fragments,  or  in  claylike 
chunks.  During  fiscal  1962,  such  currency  was  examined  for  43,595 
claimants  and  pajmient  made  therefor  to  the  extent  of  $6,918,664. 
A  comparison  of  the  amounts  of  paper  currency  of  all  classes, 
including  Federal  Reserve  notes,  issued,  redeemed,  and  outstanding 
during  the  fiscal  years  1961  and  1962  follows. 


1961 

1962 

Pieces 

Amount 

Pieces 

Amount 

Outstanding  July  1           

3,  568, 125, 302 
1,  687, 618,  740 
1, 623, 060, 302 
3, 632, 683,  740 

$34, 162,  802,  793 

8, 224, 217, 983 

7, 698, 190, 987 

34, 688,  829,  789 

3, 632, 683,  740 
1,720,343,853 
1,  569,  251, 054 
3,  783,  776,  539 

$34, 688,  829,  789 
8  834  281  203 

Issues  during  vear 

Redemptions  during  year 

7, 674,  837, 133 
35, 848, 273, 859 

Outstanding  June  30      

Table  66  shows  by  class  and  denomination  the  value  of  paper  cur- 
rency issued  and  redeemed  during  the  fiscal  year  1962,  and  the  amounts 
outstanding  at  the  end  of  the  year.  Tables  61  through  65  give  further 
details  on  the  stock  and  circulation  of  money  in  the  United  States. 

Checking  accounts  of  disbursing  officers  and  agencies. — As  of  June  30, 
1962,  the  Treasurer  maintained  2,393  checking  accounts  as  compared 
with  2,290  on  June  30,  1961.  The  number  of  checks  paid,  by  cate- 
gories of  disbursing  officers,   during  fiscal   1961    and   1962  follows. 


Disbursing  officers 

Number  of  checks  paid 

1961 

1962 

Treasury 

301, 031, 795 
27,943,028 
35, 388, 109 
32, 163, 458 
33, 655, 044 

319,  558, 152 
28, 670,  953 
33, 834, 057 
33  152  049 

Army . 

Navy . 

Air  Force 

other.  .- - 

33,  770, 098 

Total 

430, 181,  434 

448,985,309 

Settling  check  claims. — During  the  fiscal  year  the  Treasurer  acted 
upon  374,000  requests  to  stop  payment  on  Govermnent  checks,  in- 
cluding approximately  53,000  requests  for  information  and  for  photo- 
static copies  of  paid  checks.  In  addition,  52,000  requests  for  removal 
of  stop  payments  were  processed. 

The  Treasurer  acted  upon  227,000  paid  check  claims  during  the  year, 
including  those  referred  to  the  U.S.  Secret  Service  for  investigation 
which  involved  the  forger}^,  alteration,  counterfeiting,  or  fraudulent 
issuance  and  negotiation  of  Government  checks.  Reclamation  was 
requested  from  those  having  liability  to  the  United  States  on  33,000 
claims,  and  $3,312,000  was  recovered.  Settlements  and  adjustments 
totaling  $3,564,000  were  made  on  32,000  forgery  cases.  Disburse- 
ments from  the  check  forgery  insurance  fund,  established  to  enable  the 
Treasurer  to  expedite  settlement  of  check  claims,  totaled  $263,000. 
As  recoveries  are  made,  these  moneys  are  restored  to  the  fund.  Settle- 
ments totaling  $3,000,000  have  been  made  from  this  $50,000  revolving 
fund  established  by  the  act  of  November  21,  1941  (31  U.S.C.  561-564). 


156   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Claims  involving  97,000  outstanding  checks  were  acted  upon.  Of 
this  number,  77,000  were  certified  for  issuance  of  substitute  checks 
valued  at  $26,304,000  to  replace  checks  that  were  not  received  or 
were  lost,  stolen,  or  destroyed. 

Collecting  checks  deposited. — Government  officers  during  the  year 
deposited  more  than  6,700,000  commercial  checks,  drafts,  money 
orders,  etc.,  with  the  Cash  Division  in  Washington  for  collection. 

Sale  of  uncirculated  coin  sets. — The  Cash  Division  packaged  and 
sold  to  collectors  37,000  sets  of  uncirculated  coins  minted  in  1960  and 
192,000  sets  minted  in  1961.  This  service  is  rendered  at  no  expense 
to  the  Government  as,  in  addition  to  the  face  value  of  the  coins,  a 
fee  of  58  cents  a  set  is  charged  for  the  cost  of  assembling,  handling, 
and  mailing  the  coins.  Treasury  Order  No.  179-3,  dated  October  16, 
1961  (see  exhibit  51),  transferred  all  functions  and  responsibilities  for 
the  sale  and  distribution  of  uncirculated  coins  other  than  over-the- 
counter  sales  to  the  Bureau  of  the  Mint  effective  with  coins  minted 
in  calendar  1962.  The  Cash  Division  will  continue  to  sell  such  sets 
over  the  counter. 

Custody  oj  securities. — The  face  value  of  securities  held  in  the 
custody  of  the  Treasiu-er  as  of  June  30,  1961,  and  June  30,  1962,  is 
shown  in  the  following  table : 


Purpose  for  which  held 


As  collateral: 

To  secure  deposits  of  public  moneys  in  depositary  banks 

To  secure  postal  savings  funds 

In  lieu  of  sureties 

In  custody: 

For  the  Secretary  of  the  Treasury  '... 

For  Board  of  Trustees,  Postal  Savings  System 

For  the  Comptroller  of  the  Currency -- 

For  the  Federal  Deposit  Insurance  Corporation 

For  the  Rural  Electrification  Administration 

For  the  District  of  Columbia 

For  the  Commissioner  of  Indian  Affairs 

Foreign  obligations  2 

other' 

For  servicing  outstanding  government  issues: 

Unissued  bearer  securities 

Total - - -.- 


Juno  30 


1961 

1962 

$134, 161, 600 

$133, 025, 100 

17. 848. 500 

18, 728,  500 

4, 038, 900 

4, 832, 050 

31, 260,  583, 684 

34, 888,  248, 969 

344, 137, 000 

286,  G37, 000 

12, 157, 000 

12. 341, 000 

1,385,297,830 

1,357,097,830 

97,  984, 184 

99,  576,  759 

51,  501, 866 

93, 563, 935 

38, 358,  725 

36.  549, 150 

12, 068,  244, 132 

12,064,388,132 

67,  710,  576 

65,127,646 

1, 968, 817, 900 

1,853,438.750 

47, 450, 841, 896 

50, 913, 554, 820 

'  Includes  those  securities  listed  in  table  119  as  in  custody  of  the  Treasury. 

2  Issued  by  foreign  governments  to  the  United  States  for  indebtedness  arising  from  World  War  I. 

'  Includes  U.S.  savings  bonds  in  safekeepmg  for  individuals. 


Servicing  securities  for  Federal  agencies  and  for  certain  other  govern- 
ments.— In  accordance  with  agreements  between  the  Secretary  of  the 
Treasury  and  various  Government  corporations  and  agencies  and 
Puerto  Rico,  the  Treasurer  of  the  United  States  acts  as  special  agent 
for  the  payment  of  principal  of  and  interest  on  their  securities.  The 
amounts  of  these  payments  during  the  fiscal  year  1962,  on  the  basis 
of  the  Daily  Statement  of  the  United  States  Treasury  were  as  follows: 


ADMINISTRATIVE    REPORTS 


157 


Payment  made  for 


Principal 


Interest 
paid  witli 
principal 


Registered 
interest ' 


Coupon 
interest 


Federal  home  loan  banks 

Federal  land  banks 

Federal  Farm  Mortgage  Corporation 

Federal  Housing  Administration. 

Federal  National  Mortgage  Association. 

District  of  Columbia  Armory  Board 

Home  Owners'  Loan  Corporation 

Philippine  Islands 

Puerto  Rico 


Total. 


$1, 641, 660, 000 

336,  247, 800 

3,800 

144, 016, 100 

346, 546, 000 


$31, 790, 704 

468, 052 

15 

1, 482, 452 

404 


$7, 360, 244 


13, 439, 377 


21, 125 

12,000 

412, 000 


5,250 


14, 875 


$7, 704, 099 

86, 218, 113 

481 


81, 590, 025 

825, 825 

-5, 178 

3,037 

79, 323 


2,468,918,825 


33, 746, 877 


20, 814, 496 


176, 415, 725 


1  On  the  basis  of  checks  issued. 


Internal  Revenue  Service  ^ 

The  Internal  Revenue  Service  is  responsible  for  collecting  internal 
revenue  and  for  administering  the  internal  revenue  laws.  One  of  the 
primary  objectives  of  the  Service  is  to  sustain  public  confidence  in  the 
revenue  system  and  to  encourage  voluntary  compliance  with  the  tax 
laws.  The  Service  is  also  responsible  for  administering  certain  other 
statutes  including  the  Federal  Alcohol  Administration  Act  (27  U.S.C. 
201-212),  the  Liquor  Enforcement  Act  of  1936  (18  U.S.C.  1261,  1262, 
3615),  and  the  Federal  Firearms  Act  (15  U.S.C.  901-909). 

Internal  revenue  collections  and  refunds 

Collections. — Internal  revenue  collections  in  the  fiscal  year  1962 
totaled  $99.4  billion,  an  increase  of  $5.0  billion  over  1961.  Individual 
income  taxes  increased  $4.4  billion,  89  percent  of  the  increase  in  total 
revenue  collections,  and  reflected  a  continued  rise  in  the  national  level 
of  personal  income,  particularly  in  wages  and  salaries.  Corporation 
income  tax  collections  decreased  2  percent  from  last  year.  This 
decline  is  attributed  to  significantly  lower  payments  from  corporations 
whose  tax  liabilities  were  affected  adversely  by  the  lower  profit  levels 
of  1960-1961. 

Employment  taxes  increased  slightly  more  than  $0.2  billion,  2  per- 
cent over  1961 .  Gains  in  these  taxes  reflected  not  only  the  higher  level 
of  personal  income,  but  also  increases  in  tax  rates.  The  old-age,  dis- 
ability, and  survivors  insurance  tax  rate,  payable  by  both  employers 
and  employees,  increased  from  3  to  3}^  percent  on  the  first  $4,800  of 
taxable  wages,  effective  January  1,  1962.  The  Federal  unemploy- 
ment insurance  tax  rate  on  employers  of  4  or  more  increased  from  3 
percent  on  the  first  $3,000  of  wages  paid  during  the  calendar  year 
1960  to  3.1  percent  on  the  first  $3,000  of  wages  paid  during  calendar 
1961. 

Excise  tax  collections  increased  $0.7  billion,  or  6  percent,  in  1962. 
Gains  from  this  source  reflect,  for  the  most  part,  the  general  rise  in 
business  activity.  There  was  a  sizable  increase  in  collections  of  the 
Federal  use  tax  on  highway  motor  vehicles,  mainly  due  to  the  higher 

'  Additional  information  will  be  found  in  the  separate  Annual  Report  of  the  Commisgioner  of  Internal 
Revenue. 


158   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

tax  rate  effective  \vith  the  taxable  year  beginning  July  1,  1961,  pur- 
suant to  the  Federal-Aid  Highway  Act  of  1961  (26  U.S.C.  4481). 

A  comparison  of  collections  in  the  fiscal  years  1961  and  1962  by 
principal  types  of  tax  is  shown  below.  Collections  from  1929  through 
1962  by  detailed  categories  are  given  in  table  19. 

Refunds. — During  fiscal  1962  refunds  of  internal  revenue,  comprising 
both  principal  and  interest,  totaled  $6.3  billion  compared  with  $6.0 
billion  in  1961.  Gross  collections,  less  refunds,  were  $93.1  billion  in 
fiscal  1962  and  $88.4  billion  in  1961.  These  amounts  wall  differ  from 
net  budget  receipts  which  not  only  exclude  refunds  and  amounts 
transferred  to  trust  funds,  but  also  include  collections  from  customs 
and  miscellaneous  sources. 


Source 


Income  taxes: 

Corporation 

Individual: 

Withheld  by  employers 

other 

Total  individual  income  taxes 

Total  income  taxes 

Employment  taxes: 

Old-age  and  disability  insurance 

Unemployment  insurance 

Railroad  retirement 

Total  employment  taxes 

Estate  and  gift  taxes 

Excise  taxes: 

Alcohol  taxes 

Tobacco  taxes 

Other  excise  taxes 

Total  excise  taxes 

Total  collections 


1961 


1%2 


In  thousands  of  dollars 


21,  764, 940 

32, 977, 654 
13, 175, 346 


46. 153, 001 
67, 917, 941 

11,586,283 
345,  356 
570,  812 


12,  502,  451 
1, 916, 392 

3, 212, 801 
1,991,117 
6,  860, 384 


12, 064, 302 
94,401,086 


21,295,711 

36, 246, 109 
14, 403, 485 


50,  649,  594 
71, 945, 305 

11,686,231 
457, 629 
564,311 


12,  708, 171 
2, 035, 187 

3,341,282 
2. 025,  736 
7, 385, 158 


12,  752, 176 
99, 440, 839 


Interpretation  and  communication  of  tax  law  to  taxpayers 

The  Service  prepares  and  distributes  basic  regulations,  rulings,  tax 
forms,  and  instructions  to  assist  taxpayers  in  understanding  their 
rights  and  responsibilities.  It  also  publishes  a  series  of  tax  guides 
and  disseminates  information  through  the  various  news  media. 
Additional  assistance  needed  by  taxpayers  to  prepare  their  tax  returns 
correctly,  compl}^  Avith  filing  requirements,  and  to  meet  payment 
deadlines,  is  provided  at  district  and  local  offices. 

Taxpayer  imhlications. — This  is  basically  a  self-help  program  for 
taxpayers.  The  Service  issues  approximately  50  publications  in  plain 
everyday  language  for  the  guidance  of  taxpayers  on  practically  all 
aspects  of  Federal  taxation.  Several  of  the  most  widely  used  taxpayer 
publications  are  the  detailed  tax  guides  prepared  for  different  classes 
of  taxpaj^ers,  such  as  individuals,  small  businesses,  farmers,  and  aliens. 
During  1962  the  "Mr.  Businessman's  Kit,"  which  contains  all  the  tax 
forms  and  related  instructions  needed  by  a  businessman  to  comply 
with  the  requirements  of  the  Federal  tax  laws,  was  developed  for 
presentation  to  new  business  entities.  This  package  is  intended  to 
save  the  taxpayer  the  time  and  effort  required  to  inquire  about  his 


ADMINISTRATIVE    REPORTS  159 

various  tax  obligations,  to  encourage  voluntary  compliance,  and  to 
help  him  avoid  inadvertent  noncompliance.  Other  publications  cover 
the  tax  effect  of  special  problems  common  to  broad  segments  of  the 
population. 

Public  information  program. — ^Recognizing  that  tax  information  is 
vital  to  maintaining  and  strengthening  the  self-assessment  tax  system, 
the  Service  conducted  a  nationwide  public  information  program 
through  the  press,  radio,  and  television,  theater  and  group  showings  of 
films,  and  speeches  made  by  Internal  Revenue  officials.  In  addition 
more  than  185  technical  and  general  news  releases  were  issued  in 
fiscal  1962  by  the  national  office  including  reports  on  the  Service's 
nationwide  gambling  raids,  developments  in  the  conversion  to  auto- 
matic data  processing,  and  articles  about  the  Service's  centennial. 

Taxpayer  assistance. — The  purpose  of  this  program  is  to  give 
courteous  and  competent  help  to  each  taxpayer  who  seeks  assistance 
from  the  Service.  It  is  of  paramount  importance  that  employees 
assigned  to  the  program  create  and  maintain  favorable  relations  with 
the  public,  since  personal  contact  is  made  with  more  taxpayers 
through  this  program  than  through  all  other  Service  programs  com- 
bined. Thus,  the  1962  taxpayer  assistance  program  placed  emphasis 
on  quality,  as  well  as  quantity,  of  assistance  rendered.  Over  11 
million  taxpayers  visited  or  telephoned  the  field  offices  for  assistance 
during  the  1962  filing  period,  an  increase  of  8  percent  over  1961. 
Internal  revenue  personnel  gave  assistance  to  6.4  million  taxpayers 
by  telephone  and  fully  prepared  the  returns  of  509,000  other  taxpayers. 
In  general  the  assistance  provided  the  public  went  beyond  the  point 
of  merely  aiding  the  taxpayer  in  entering  income  and  deduction  items 
on  the  return.  Sufficient  time  was  taken  by  assistors  to  explain  to 
the  taxpayer  the  status  of  items  of  income,  deductions,  and  exemptions. 

Tax  return  forms  program. — ^The  Service  continued  its  efforts  to 
simplify  and  improve  the  tax  return  forms  and  instructions.  Members 
of  the  Tax  Return  Forms  Committee  visited  certain  service  centers 
and  selected  regional  and  district  offices  to  observe  firsthand  the 
problems  encountered  in  the  processing  systems.  As  the  result  of 
the  Service's  conversion  to  an  automatic  data  processing  system  in 
the  Atlanta  Region,  several  forms  were  recast  and  the  method  of 
distribution  changed.  Numerous  suggestions  and  recommendations 
for  revising  the  forms  and  instructions  were  received  during  the  year 
from  taxpayers,  practitioners,  and  Service  employees.  These  were 
studied  and  many  valuable  suggestions  were  adopted.  More  than  250 
forms,  instructions,  and  documents  were  revised  or  reviewed.  In- 
creased emphasis  was  placed  on  inventory  valuations  and  methods, 
and  five  questions  relating  to  these  items  were  added  to  all  business 
income  tax  return  forms. 

Regulations  program. — During  the  year,  32  Treasury  decisions, 
5  Executive  orders,  and  19  notices  of  proposed  rulemaking,  relating 
to  matters  other  than  alcohol  and  tobacco  taxes,  were  published  in 
the  Federal  Register.  These  regulations  were  issued  under  provisions 
of  the  Internal  Revenue  Code  of  1954  as  originally  enacted,  subsequent 
public  laws,  or  on  the  basis  of  an  administrative  determination. 

Eight  hearings  on  the  provisions  of  the  proposed  regulations,  which 
were  published  in  1962,  were  held  in  accordance  with  the  provisions 


160   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

of  the  Administrative  Procedure  Act.  Approximately  250  taxpayers 
or  their  representatives  participated. 

Depreciation  reform  program. — The  Service  cooperated  with 
Treasury  representatives  in  their  studies  on  depreciation  and  in  the 
development  of  the  Department's  depreciation  reform  program. 

On  May  2,  1961,  the  President  announced  a  program  of  assistance 
to  the  textile  industry  designed  to  meet  a  Avide  range  of  problems 
resulting  from  rapid  technological  changes,  shifts  in  consumer  prefer- 
ence, and  increasing  international  competition.  The  Treasury  De- 
partment was  directed  as  part  of  the  overall  program  to  expedite 
review  of  existing  depreciation  allowances  on  textile  machinery. 

To  carry  out  this  directive,  an  intensive  review  was  made  by 
Treasury  officials  of  the  schedule  of  average  useful  lives  of  machinery 
and  equipment  used  in  the  domestic  textile  industry.  Included  were 
studies  by  Service  engineers,  inspection  trips  to  several  textile  mills 
and  textile  machinery  manufacturing  plants,  meetings  with  represent- 
atives of  the  industry,  and  a  careful  evaluation  of  recent  techno- 
logical innovations.  As  a  result  of  these  studies,  revised  average 
useful  lives  for  machinery  and  equipment  used  in  the  textile  industry 
were  announced  by  the  President  on  October  11,  1961,  and  published 
by  the  Internal  Revenue  Service  in  Bulletin  F. 

Service  engineers  made  studies  of  seven  additional  industries  at 
the  direction  of  the  Secretary  of  the  Treasury,  to  aid  in  the  overall 
consideration  of  depreciation  reform:  Aircraft,  automobile,  electrical 
machinery  and  equipment,  machine  tool,  railroad,  steel,  and  mining 
and  beneficiation  of  low-grade  iron  ore.  A  three-man  team  was 
assigned  to  conduct  the  study  of  each  industry.  Their  reports  and 
recommendations  were  submitted  to  the  Secretary  early  in  calendar 
1962. 

In  addition,  the  Service  worked  with  Treasury  representatives  in 
completing  their  studies  on  depreciation  and  in  developing  the  revenue 
procedure  set  forth  in  the  new  Depreciation  Guidelines  and  Rules 
released  on  July  11,  1962.     (See  exhibit  22.) 

Receipt  and  processing  of  returns 

Number  oj  returns  filed. — In  the  1962  fiscal  year,  96.4  million  tax 
returns  of  all  classes  were  received.  This  was  0.6  million,  or  0.6 
percent,  more  than  the  number  received  in  1961.  Individual  income 
tax  returns  increased  0.2  million;  while  declarations  of  estimated 
individual  income  tax  decreased  almost  0.1  million.  Employment 
tax  returns  increased  0.3  million,  with  almost  three-fourths  of  the 
increase  in  employers'  returns  for  household  employees.  Information 
returns  received  in  1962  totaled  more  than  340  million,  compared  with 
330  million  in  1961. 

Processing  oj  returns. — The  three  area  service  centers  located  at 
Lawrence,  Mass.;  Kansas  City,  Mo.;  and  Ogden,  Utah,  processed 
60.5  million  individual  income  tax  returns.  Of  these,  49.5  million 
were  1961  returns  filed  during  the  1962  filing  period  and  11.0  million 
were  1960  returns  filed  during  the  1961  filing  period  but  processed 
after  June  30,  1961.  This  was  an  increase  of  0.5  million,  or  nearly 
one  percent  above  fiscal  1961.  In  addition,  4.8  million  declarations  of 
estimated  individual  income  tax  were  processed.  Accounts  receivable 
were  established  for  appropriate  mdividual  income  and  estimated 


ADMINISTRATIVE    REPORTS  161 

tax  returns.  Mailing  and  delinquency  check  operations  were  per- 
formed on  all  employers'  returns,  forms  940  and  941,  except  calendar 
year  1961  forms  940,  and  forms  941  for  the  quarter  ended  March  31, 
1962,  required  of  taxpayers  located  in  the  Atlanta  region.  The 
initial  transfer  of  work  from  the  present  area  service  centers  to  regional 
service  centers  under  the  automatic  data  processing  program  occurred 
during  the  year.  Mailing  and  delinquency  check  operations  on 
forms  940  and  941  filed  in  districts  of  the  Atlanta  region  were 
transferred  from  the  Midwest  Service  Center  to  the  new  Atlanta 
Regional  Service  Center.  During  the  first  half  of  the  year  new 
high-speed  magnetic  tape  computers  were  installed  in  the  midwest 
and  western  service  centers.  Completion  of  this  conversion  program, 
initiated  in  fiscal  1961  in  the  Northeast  Service  Center,  made  it 
possible  for  all  area  service  centers  to  process  individual  income  tax 
returns  filed  for  the  1961  tax  year  on  this  advanced  equipment  during 
the  1962  filing  period. 

In  the  6-month  period  ended  June  30,  1962,  nearly  36.8  million 
refunds  were  scheduled  on  individual  income  tax  returns  filed  for  the 
1961  tax  year.  This  was  an  increase  of  over  0.8  million,  or  2.4  percent, 
above  the  same  period  in  1961. 

Automatic  data  processing. — Automatic  machine  processing  of  tax 
returns  is  being  installed  by  the  Service  in  order  to  keep  abreast  of 
its  ever-growing  returns  processing  and  revenue  enforcement  work- 
load. Installation  of  the  system  is  proceeding  on  a  carefully  phased 
basis,  with  major  attention  being  given  to  avoiding  adverse  effects  on 
employees  to  be  redeployed.  Some  of  the  significant  highlights  during 
the  year  were :  Establishment  of  the  Office  of  Assistant  Commissioner, 
Data  Processing;  completion  of  systems  design  and  programs  for 
processing  business  returns;  timely  completion  and  dedication  of  the 
National  Computer  Center  at  Martinsburg,  W.  Va.,  and  the  new 
Atlanta  Regional  Service  Center  building ;  activation  of  the  Philadelphia 
Regional  Service  Center;  processing  of  business  returns  in  the  Atlanta 
Regional  Service  Center  and  the  National  Computer  Center;  initiation 
of  systems  design  for  processing  individual  returns;  selection  of  sites 
for  the  Dallas,  Tex.,  Cincinnati,  Ohio,  and  Omaha,  Nebr.,  regional 
service  centers,  and  continuation  and  improvement  of  the  plan  for 
personnel  redeplo3rnient. 

The  automatic  data  processing  master  file  was  started  during  the 
year  when  the  Atlanta  Regional  Service  Center  began  processing 
corporation  income  tax  returns  and  certain  employer  and  excise 
returns.  As  a  result,  throughout  the  seven  southeastern  states  com- 
prising the  Atlanta  region,  the  Service  is  now  able  to :  Make  automatic 
checks  on  compliance  by  business  entities]  in]  filing  required  returns; 
electronically  verify  the  mathematical  accuracy  of  the  returns,  the 
credits  claimed,  and  the  balance  of  tax  due  or  any  allowable  credit 
or  refund;  and  mechanically  apply  overpayments  to  any  other  taxes 
due  from  the  taxpayers.  Progress  has  been  made  on  systems  develop- 
ment for  returns  filed  by  individual  taxpayers.  This  phase  of  the 
system  is  scheduled  for  installation  in  the  Atlanta  region  in  1963. 
As  the  automatic  data  processing  program  has  progressed,  the  Service 
has  continued  and  intensified  its  massive  effort  to  redeploy  district 
office  employees  whose  work  is  affected. 

661496—63 12 


162   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Enforcement  activities 

The  enforcement  activities  include  correcting  errors  in  tax  liability 
on  returns  voluntarily  filed,  securing  delinquent  returns,  collecting 
delinquent  accounts,  investigating  evidence  or  allegation  of  fraud, 
suppressing  the  traffic  in  illicit  liquor,  conducting  a  firearms  control 
program,  providing  collection  litigation  services  to  district  offices, 
administering  a  taxpayer  appeals  system,  processing  civil  litigation 
cases  and  those  involving  criminal  prosecution,  conducting  the 
Federal-State  cooperative  exchange  program,  and  managing  the 
Service's  tax  program  abroad. 

Examination  of  returns. — During  1962,  nearly  3.5  million  returns 
were  examined,  approximately  the  same  number  as  were  examined 
in  1961.  A  comparison  of  the  number  examined  during  the  two 
years  follows: 


Type  of  return 


Fiscal 
year 
1962 


Income  tax: 
Corporation 

Individual  and  fiduciary 

Total  income  tax 

Estate  and  gift  taxes 

Excise  and  employment  taxes  ' 
Grand  totaL 


127 

3,120 

3,248 

30 

195 
3,473 


•  Excludes  examinations  resulting  in  no  tax  change  where  such  examination  was  made  from  the 
taxpayers'  copies  of  returns  in  the  course  of  an  audit  covering  both  income  and  excise  and/or  employment 
taxes. 

Adjustments  on  returns  examined  during  the  year  resulted  in  the 
recommendation  of  additional  tax  and  penalties  amounting  to  $1,884.5 
million,  a  decrease  of  $66.4  million  from  the  $1,950.9  million  recom- 
mended in  fiscal  1961.  The  amounts  recommended  are  the  result  of 
examinations  and  informal  conferences  with  taxpayers  by  audit  field 
personnel.  In  some  instances  further  adjustments  are  made  as  a 
result  of  appeals  action  or  court  decision. 

Mathematical  veriiication. — Nearly  58.8  million  individual  income 
tax  returns  were  mathematically  verified  during  fiscal  1962,  a  decrease 
of  0.7  million,  or  1  percent  from  the  year  before.  The  number  of 
error  cases  disclosed  by  mathematical  verification  was  2.4  million,  a 
decrease  of  2.8  percent.  The  number  with  a  tax  increase  dropped  4.3 
percent,  while  the  number  with,  a  tax  decrease  was  about  the  same  as 
in  1961.  The  tax  increases  averaged  $90,  while  the  tax  decreases 
averaged  $70.  The  aggregate  amount  of  tax  increases  was  $134.6 
million,  compared  with  $132.0  million  in  1961;  tax  decreases  totaled 
$69  million,  compared  with  $66  million. 

Delinquency  investigations  and  delinquent  returns  secured. — During 
1962,  the  Service  made  1.5  million  delinquency  investigations  com- 
pared with  1.3  million  in  1961.     The  number  of  delinquent  returns 


ADMINISTRATIVE    REPORTS 


163 


secured  was  935,000,  a  decrease  of  3  percent.  The  amount  of  tax, 
penalties,  and  interest  due  on  these  returns  amounted  to  $165  mil- 
lion compared  with  $159  million  in  1961.  It  was  necessary  during 
the  year  to  redeploy  some  manpower  from  work  on  delinquent  returns 
to  the  collection  of  past-due  accounts  because  of  an  increased  bacldog. 
This  redeployment  of  personnel  resulted  in  a  sizable  increase  in  the 
number  of  past-due  accounts  closed.  The  increase  more  than  offset 
the  decline  in  the  number  of  delinquent  returns  secured.  In  addition, 
in  examining  tax  returns,  district  audit  divisions  secured  73,000 
delinquent  retm'ns  compared  with  95,000  in  1961.  Tax,  penalties, 
and  interest  on  these  returns  amounted  to  $39.2  miUion,  a  decrease  of 
23  percent. 

Summary  oj  additional  tax  Jrom  direct  enforcement. — Additional  tax, 
penalties,  and  interest  assessed  in  1962  as  a  result  of  direct  enforce- 
ment activities  amounted  to  $1,969  million  compared  with  $2,130 
miUion  assessed  in  1961.  A  comparison  of  additional  tax  from  direct 
enforcement  during  the  last  two  fiscal  years  is  shown  in  the  following 
table. 


Sources 

1961 

1962 

In  thousands  of  dollars 

Additional  tax,  interest,  and  penalties  resulting  from  examination      --    _ 

■•  1,  788, 305 
131,981 
209,  873 

'  2, 130, 159 
649,  471 

1,631,236 

Increase  in  individual  income  tax  resulting  from  mathematical  verification.. 
Tax,  interest,  and  penalties  on  delinquent  returns 

134, 583 
203,  679 

Total  additional  tax,  interest,  and  penalties 

Claims  disallowed    .  

1,  969,  498 
352, 285 

••  Revised. 

Tax  fraud  investigations,  indictments,  and  convictions. — In  1962, 
preliminary  investigations  totaled  10,229,  compared  with  12,866  in 
1961,  and  full-scale  investigations  totaled  3,469,  compared  with  3,677 
in  1961.  Prosecution  was  recommended  in  2,128  cases,  32  more  than 
in  1961.  Indictments  were  returned  against  1,702  defendants  in 
1962  compared  with  1,709  in  1961.  In  cases  reaching  the  courts, 
1,013  pleaded  guilty  or  nolo  contendere,  178  were  convicted,  65  ac- 
quitted, and  181  cases  were  dismissed.  These  compare  with  1,129 
pleas  of  guilty  or  nolo  contendere,  102  convictions,  49  acquittals,  and 
194  dismissals  in  the  preceding  year. 

In  enforcement  of  the  wagering  and  coin-operated  gaming  device  tax 
statutes,  special  agents  of  the  Service  in  1962  conducted  raids  at  630 
locations  in  277  cities.  These  raids  resulted  in  the  seizure  of  151 
automobiles,  $377,000  in  currency,  and  considerable  gambling  equip- 
ment, and  the  arrest  of  743  tax  violators.  The  Service  continued  its 
cooperation  with  the  Department  of  Justice  drive  on  organized 
crime  through  the  initiation  of  a  number  of  tax  investigations  involving 
racketeers.  The  number  of  convictions  in  the  past  ten  fiscal  years 
is  shown  in  the  following  table. 


164   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Fiscal  year 

Number  of 
individuals 
convicted 

1953 

929 

1954 

1,291 

1955 

1,339 

1956 

1,572 

1957 

1,256 

1958 

1,096 

1959 

909 

I960— 

1,086 

1961 

1,231 

1962 

1,191 

Alcohol  and  tobacco  tax  administration. — Significant  progress  was 
made  in  eliminating  the  well-organized  illicit  alcohol  traffic  which  has 
flourished  in  the  metropohtan  areas  of  the  eastern  seaboard.  The  east 
coast  plan  has  proved  highly  effective  against  the  principals  and  key 
subordinates  of  the  syndicates  engaged  in  large-scale  production  of 
nontaxpaid  alcohol  by  reducing  the  incidence  of  such  violations 
through  the  location  and  prompt  seizure  of  most  of  their  distilling 
plants.  As  a  result,  the  major  operating  groups  have  sustained  severe 
monetary  losses,  and  have  been  forced  to  abandon  or  curtail  operations 
and  to  seek  outside  financial  support  for  new  ventures.  The  manda- 
tory preventive  raw  materials  program  has  continued  to  be  an  effec- 
tive method  of  curtailing  the  production  of  nontaxpaid  spirits  by 
means  of  soliciting  the  voluntary  cooperation  of  dealers  in  refusing  to 
sell  the  essential  materials  to  known  violators  or  suspected  persons, 
placing  noncooperating  dealers  under  demand  to  report  dispositions 
thereof,  and  prosecuting  those  who  violate  the  regulations. 

Seizures  and  arrests  for  violations  of  alcohol  tax  laws  are  shown  in 
the  following  table. 


Fiscal  year 

Number  of 
stills  seized 

Gallons  of 
mash  seized 

Number  of 
arrests 
made  ' 

1940 

10, 663 

8,344 

10, 030 

12,  509 

14, 499 

11,820 

9,272 

9,225 

8,290 

6,826 

6,886 

6,480,200 
2, 945, 000 
4,  892, 600 
7, 375, 300 
8, 643, 200 
6,  756, 600 
5, 140,  800 
4,  655,  600 
4, 274,  400 
3,  669,  500 
3, 424,  500 

25, 638 

1945 

11,104 

1950 .                 -     . 

10, 236 

1955.. 

10,545 

1956 

11,380 

1957  .... 

11,513 

1958 

11,631 

1959 

10,912 

1960 

10,  376 

1961 

9,503 

1962 

9,126 

1  Includes  arrest  for  firearms  violations  and,  beginning  with  1955,  tobacco  tax  violations, 
ing  these  two  classes  of  violations  during  1962  numbered  398  and  2,  respectively. 


Arrests  involv- 


The  continued  study  and  development  of  improved  and  streamlined 
methods  of  Government  supervision  of  distilled  spirits  plants,  followed 
by  pilot  operations  to  test  the  conclusions,  has  resulted  in  a  decrease 
of  89  inspectors  (on-premises)  by  eliminating  positions  which  became 
vacant  dui'ing  the  j^ear.  The  feasibility  of  still  further  reductions  in 
the  on-premises  supervision  force,  without  unacceptable  risks  of  reve- 


ADMINISTRATIVE    REPORTS  165 

nue  losses,  is  being  tested  by  additional  pilot  operations  initiated  near 
the  close  of  the  year. 

PUot  operations  to  test  new  or  revised  procedures  and  techniques 
used  in  conducting  selected  inspections  at  breweries  and  bonded  wine 
cellars  were  completed.  The  preparation,  testing,  and  institution  of 
these  new  procedures  required  considerable  time  and  contributed  to 
the  reduction  in  the  number  of  inspections  made  from  36,044  in  1961 
to  32,260  in  fiscal  1962. 

Collection  oj past-due  accounts. — -Nearly  3.2  million  accounts  became 
past  due  in  fiscal  1962,  about  9  percent  more  than  the  unusually  high 
number  in  1961.  However,  the  amount  of  delinquent  tax  involved, 
$1.5  billion,  was  less  than  in  1961.  Although  the  increased  emphasis 
on  reducing  the  inventory  of  past-due  accounts  resulted  in  the  closing 
of  3.1  million,  6  percent  more  than  in  the  preceding  year,  those  closed 
have  not  kept  pace  with  the  new  accounts.  On  June  30,  1962,  the 
inventory  of  1.1  million  past-due  accounts  was  10  percent  above  last 
year.  The  total  tax  on  these  accounts,  however,  amounted  to  $1,036 
million,  an  increase  of  only  one  percent.  The  nominal  percentage 
increase  in  amount  compared  with  the  10  percent  increase  in  number 
reflects  the  emphasis  on  closing  large  accounts. 

Revised  procedures  initiated  late  in  fiscal  1961  to  accelerate  the 
assessment  and  collection  of  trust  fund  taxes  were  improved  and  fully 
implemented  during  fiscal  year  1962.  WhUe  these  procedures  account 
for  much  of  the  increase  in  new  taxpayer  past-due  accounts  during 
1962,  the  increased  emphasis  on  prompt  collection  of  withholding  and 
similar  taxes  from  employers  and  excise  taxpayers  is  expected  to  result 
in  increased  compliance.  Under  the  revised  procedures,  immediate 
contacts  are  made  to  collect  taxes  from  taxpayers  who  fail  to  pay  the 
tax  due  on  returns  filed  or  fail  to  obtain  depositary  receipts  evidencing 
timely  payment  to  the  Government  of  employment  or  excise  taxes. 

Appeals  and  civil  litigation. — ^District  audit  divisions  referred  15,513 
protested  income,  estate,  and  gift  tax  cases  to  regional  appellate  divi- 
sions at  the  request  of  taxpayers.  This  was  an  increase  of  642  cases, 
or  four  percent,  over  the  14,871  protested  cases  referred  to  appellate 
divisions  in  1961.  The  appellate  divisions  disposed  of  14,921  pre-90- 
day  and  90-day  cases  during  fiscal  1962  compared  with  16,135  such 
cases  the  year  before.  On  June  30,  1962,  pre-90-day  and  90-day  case 
inventory  in  appellate  divisions  numbered  11,805  compared  with 
10,922  a  year  ago.  Petitions  filed  with  the  Tax  Court  of  the  United 
States  numbered  4,752,  compared  with  5,451  filed  in  1961.  The 
Supreme  Court  decided  seven  tax  cases,  sustaining  the  position  of  the 
Government  in  five  cases.  The  circuit  courts  of  appeals  decided  414 
tax  cases  (exclusive  of  bankruptcy,  receivership,  insolvency,  compro- 
mise, and  liquor  cases).  Of  these,  the  Government's  position  was 
supported  in  268  cases. 

Taxpayers  who  have  paid  a  disputed  tax  may  sue  for  refund  in  the 
Court  of  Claims  or  in  a  U.S.  district  court.  The  district  com-ts  de- 
cided 192  cases  for  the  Government,  213  for  the  taxpayers,  and  44 
cases  partly  for  the  Government  and  partly  for  the  taxpayer.  The 
Court  of  Claims  decided  27  cases  for  the  Government,  23  cases  for  the 
taxpayer,  and  6  partly  for  each. 


166   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Major  administrative  improvements 

Benefits  from  management  improvements. — -The  progressive  manage- 
ment environment  of  the  Service  and  the  vigor  of  leadership  exercised 
by  its  executives  and  supervisors  at  all  levels  are  reflected  in  part  by 
results  achieved  through  the  management  improvement  program. 
Although  total  tangible  recurring  savings  of  nearly  $5  million  were 
specifically  identified,  the  large  majority  of  benefits  were  of  an  intan- 
gible nature.  Regardless  of  the  category,  management  actions  have 
strengthened  the  enforcement  effort,  reduced  backlogs  of  work,  im- 
proved taxpayer  service,  and  otherwise  contributed  to  the  successful 
attainment  of  the  Service  mission. 

Organizational  changes  in  the  national  office. — On  September  19,  1961, 
less  than  a  year  after  its  establishment  as  a  separate  division,  the 
Automatic  Data  Processing  Division  was  converted  to  the  Office  of 
Assistant  Commissioner  (Data  Processing).  This  new  office  was  as- 
signed responsibility  for  the  implementation  and  operation  of  the  auto- 
matic data  processing  system  and  the  closely  related  returns  process- 
ing, revenue  accounting,  and  service  center  operations.  The  functions 
of  the  Reports  Di\asion  formerly  attached  to  the  Office  of  Assistant 
Commissioner  (Administration)  were  also  placed  under  the  jurisdiction 
of  the  new  Assistant  Commissioner  (Data  Processing). 

At  the  same  time,  the  Assistant  Commissioner  (Operations)  was 
redesignated  as  the  Assistant  Commissioner  (Compliance). 

On  December  20,  1961,  the  Fiscal  Management  Division  was  trans- 
ferred from  the  Office  of  the  Commissioner  to  the  Office  of  the  Assistant 
Commissioner  (Administration) . 

On  May  1,  1962,  the  International  Tax  Relations  Division,  in  the 
Office  of  Assistant  Commissioner  (Technical),  was  abolished  and  the 
Foreign  Tax  Assistance  Staff  established  in  the  Office  of  the 
Commissioner. 

Personnel 

The  personnel  administration  program  continued  to  respond  to  the 
needs  of  management  and  employees  for  better  manpower  utilization, 
more  effective  communications,  and  assistance  in  carrying  out  organ- 
izational and  program  changes  with  efficiency  and  high  morale. 
Major  areas  of  attention  included:  Recruitment;  data  processing 
staffing  and  redeployment;  occupational  standards  studies;  and  note- 
worthy advances  in  employee-management  relations,  including  prep- 
aration for  more  formalized  dealings  with  organized  groups  under 
the  President's  Executive  Order  10988. 

On  June  30,  1962,  employees  on  the  rolls  numbered  56,510,  com- 
pared with  53,680  a  year  before.  There  were  3,357  employees  in  the 
national  office  and  53,153  employees  in  field  offices  including  service 
centers,  regional,  district,  and  local  offices,  and  the  Office  of  Interna- 
tional Operations. 

An  analysis  of  the  personnel  structure  by  type  of  position  for  the 
fiscal  years  1961  and  1962  is  shown  in  the  following  table. 


ADMINISTRATIVE    REPORTS 


167 


Location  and  type 


Personnel 


June  30, 1961 


June  30, 1962 


By  Location 

National  office 

Regional  and  district  offices  ' 

By  Type 
Permanent  personnel: 

Supervisory  personnel 

Enforcement  personnel: 

Revenue  officers 

Office  auditors 

Tax  examiners 

Revenue  agents 

Special  agents 

Alcohol  tax  inspectors 

Alcohol  tax  investigators 

Storekeeper-gangers 

Total  enforcement  personnel- — 

Legal  personnel 

Other  technical  personnel 

Clerical  personnel,  messengers,  and  laborers  2 

Total  permanent  personnel 

Temporary  personnel 

Grand  total 


3,031 
50, 649 


3,357 
53, 153 


553 


572 


5,769 

2,657 

4,502 

11,289 

1,558 

425 

915 

611 


5,861 

3,028 

4,650 

11,  942 

1,624 

441 

978 

522 


27,  726 

29, 046 

599 

630 

5,101 

5,566 

17, 492 

18, 114 

51,471 

2,209 

53,  680 


53, 928 

2,582 

56,  510 


1  Includes  Office  of  International  Operations  personnel  (headquarters  and  field  offices)  numbering  391 
for  1961  and  428  for  1962. 

2  Includes  4  overseas  employees  hired  locally  for  1961  and  3  for  1962. 

Training 

Training  programs  were  expanded  to  insure  smooth  conversion  to 
automatic  data  processing.  Seminars  were  held  to  famiharize  man- 
agement personnel  with  the  conversion  plan;  51  employees  were 
trained  as  digital  computer  programmers;  programs  were  developed 
and  conducted  for  employees  of  the  pilot  regional  service  center  in 
Atlanta;  and  guidelines  were  issued  to  field  offices  for  retraining  em- 
ployees whose  jobs  will  be  eliminated  or  changed.  The  growing 
number  of  users  of  automatic  data  processing  equipment  in  private 
industry  also  led  to  increased  emphasis  on  training  enforcement  person- 
nel in  techniques  of  examining  the  returns  of  such  taxpayers.  A 
program  was  developed  for  training  auditors  of  the  Inspection  Service 
in  conducting  audits  of  the  automatic  data  processing  service  centers. 

The  fiscal  year  1962  marked  the  first  full  year  of  management  train- 
ing under  the  new  management  development  program.  Sixteen  exec- 
utives completed  the  11-week  executive  course;  125  managers  com- 
pleted the  5-week  managerial  course;  and  690  supervisors  completed 
the  2-week  supervisory  course.  In  addition,  through  a  specially 
designed  centralized  2-week  course,  27  regional  analysts  received  train- 
ing in  the  techniques  of  management  analysis  and  coordination. 

In  July  1961  the  first  national  office  administrative  intern  progra-m 
began.  Under  a  training  agreement  with  the  Civil  Service  Comniis- 
sion  the  program  provides  for  developing  top  quality  administrative 
technicians  through  recruiting  and  training  applicants  of  high  poten- 


168   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

tial.     The  program  has  proved  highly  successful  and  steps  were  taken 
to  provide  for  regional  participation. 

A  Special  Training  Advisory  Committee  was  appointed  by  the 
Commissioner  in  August  1961  to  survey  the  entire  collection  training 
program  and  develop  a  comprehensive  career  training  plan  for  that 
activity.  Its  report  and  recommendations  were  to  be  completed  by 
October  1,  1962. 

Space  and  equipment 

Through  close  cooperation  with  the  General  Services  Administra- 
tion, the  Service  was  successful  in  obtaining  new  space  and  improving 
space  conditions  in  many  offices  throughout  the  country.  The  follow- 
ing offices  were  moved  into  new  buildings  in  1962:  Jackson,  Miss.; 
Springfield,  111.;  Little  Rock,  Ark.;  Phoenix,  Ariz.;  Oklahoma  City, 
Okla.;  Richmond,  Va.;  and  Houston,  Tex,  Additional  space  was  ac- 
quired at  206  locations  to  relieve  crowded  conditions  and  to  accom- 
modate new  employees.  After  three  years  of  extensive  studies,  a 
long-range  equipment  replacement  plan  was  begun,  based  on  a  com- 
prehensive set  of  furniture  and  equipment  standards  which  are  believed 
to  be  the  first  of  their  kind  in  Government. 

Cost  of  administration 

Expanding  operations  for  1962  were  financed  by  a  congressional 
appropriation  of  $452  million,  $38.1  million  above  the  1961  appropria- 
tion. Total  obligations  amounted  to  $450.1  million  compared  with 
$413.3  million  in  1961.  Man-years  realized  totaled  56,481  compared 
with  53,206  in  1961.  The  additional  funds  over  1961  were  used 
mainly  to  finance  the  second  step  of  development  under  the  long- 
range  plan,  to  inaugurate  the  organized  crime  drive,  to  cover  costs  of 
the  automatic  data  processing  program  including  the  National  Com- 
puter Center,  to  cover  increases  in  travel  per  diem  allowances  author- 
ized by  Congress,  and  to  reimburse  the  Social  Security  Administration 
for  assignment  of  taxpayer  account  numbers. 

Long-range  planning 

The  long-range  plan  was  updated  in  the  light  of  improved  workload 
projections,  current  work  performance  rates,  and  new  research  results 
to  provide  the  basis  for  the  1964  budget  request.  The  plan  comprises 
estimates  of  the  additional  manpower  and  other  resources  needed 
each  year  from  1963  through  1968  to  eliminate  operating  deficiencies 
and  meet  the  constant  growth  in  tax  administration  workload. 

During  the  past  two  years,  substantial  progress  was  made  toward 
the  long-range  objectives  established  in  the  plan.  The  installation  of 
an  automatic  data  processing  system  is  well  under  way,  with  regional 
service  centers  activated  in  the  Atlanta  and  Philadelphia  regions  and 
the  National  Computer  Center  in  operation  at  Martinsburg,  W.  Va. 
Personnel  increases  in  the  audit  area  have  provided  for  the  initial 
phases  of  a  program  to  expand  the  capacity  to  examine  tax  returns 
and  to  improve  the  quaUty  of  examinations,  thereby  increasing  volun- 
tary compliance.  Investigations  of  racketeers  and  other  persons  sus- 
pected of  tax  frauds  have  been  expanded  through  the  organized  crime 
drive.  Additions  to  the  collection  staff  have  enabled  tbe  Service  to 
increase  the  number  of  delinquent  accounts  closed  and  to  cope  with 


ADMINISTRATIVE    REPORTS  169 

an  upward  trend  in  the  number  of  accounts  becoming  delinquent. 
At  the  same  time  that  these  improvements  were  being  made  in  the 
data  processing  and  enforcement  areas,  steps  were  being  taken  to 
promote  a  better  understanding  of  the  tax  laws,  regulations,  and  forms. 
These  actions  provided  for  widening  the  dissemination  of  tax  informa- 
tion, expanding  the  facilities  for  taxpayer  assistance,  and  making 
greater  use  of  personal  contacts  with  taxpayers  to  explain  their  tax 
responsibilities. 

Resources  utilization 

During  the  year  the  Service  placed  special  emphasis  on  efficiency 
and  economy,  in  keeping  with  the  President's  call  for  a  lean  and  fit 
Federal  establishment.  Specifically,  in  April  1962,  at  a  regional  com- 
missioners' conference,  the  Commissioner  called  for  a  three-phase 
program  to  strengthen  resources  utilization.  Phase  I,  referred  to  as 
"belt-tightening,"  involved  a  short-range  search  for  positions  in  the 
national  office  and  regional  offices  which  could  be  eliminated  or  re- 
allocated to  direct  tax  enforcement  operations  in  the  field.  This  was 
accomplished  in  May  and  June  and  resulted  in  the  elimination  of  280 
positions  originally  scheduled  to  be  filled  in  fiscal  1962  at  an  annual 
cost  of  $2.4  million. 

Phase  II,  being  carried  out  by  a  high-level  ad  hoc  Committee  on 
Resources  Utilization  at  the  close  of  the  fiscal  year  was  scheduled  to 
complete  its  examination  of  the  following  matters  by  December  31, 
1962:  A  study  of  the  organization  and  functions  of  the  national  office 
to  ascertain  whether  any  operations  can  be  eliminated,  reassigned  to  a 
different  component  or  level,  or  accomplished  in  a  better  way;  a  num- 
ber of  studies  affecting  regional  and  district  office  organization  and 
functions;  a  study  of  manpower  planning  and  control  in  selected  ac- 
tivities; and  collateral  studies  to  determine  how  effectively  the  Serv- 
ice is  using  its  resources. 

Phase  III  is  to  be  the  implementation  of  the  recommendations 
which  may  be  approved  on  the  basis  of  Phase  II  studies. 

Inspection  activities 

Internal  audit. — -The  internal  audit  program  provides  for  an  annual 
independent  review  and  appraisal  of  Service  operations  as  a  protec- 
tive and  constructive  service  to  the  Commissioner  and  all  other  levels 
of  management.  This  broad  program  covers  all  field  organizations 
and  activities  of  the  Revenue  Service  and  provides  for  a  determina- 
tion as  to  whether  the  policies,  practices,  procedures,  and  controls 
are  adequate,  efficient,  and  effective.  Audit  responsibilities  have  been 
increased  recently  as  a  result  of  the  adoption  of  automatic  data  proc- 
essing. At  present  this  involves  the  Service's  computer  center  and 
four  service  centers,  which  utilize  high-speed  electronic  computers 
and  related  peripheral  equipment.  Emphasis  in  the  Internal  Audit 
Division  is  placed  on  the  examination  of  the  Service  functions  most 
closely  related  to  tax  collection  and  enforcement  of  the  tax  laws.  It 
also  cooperates  with  the  Internal  Security  Division  in  carrying  out 
the  integrity  programs  of  the  Service. 

During  the  year  303  internal  audit  reports  were  issued  compared 
with  253  in  1961. 

Internal  security. — The  fiscal  year  1962  marked  one  of  the  most 
intensive  programs  in  the  history  of  the  Service  to  insure  the  integrity 


170   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASTJRT 

of  its  employees.  The  Service  investigated  allegations  of  corruption 
or  attempted  corruption  of  its  employees  by  non-Service  persons  and 
also  investigated  charges  of  unethical  or  corrupt  practices  on  the  part 
of  enrolled  practitioners.  In  the  administration  of  the  voluntary  self- 
assessment  system  of  taxation,  the  Service  is  largely  dependent  on  the 
integrity  of  taxpayers  and  their  representatives.  These  persons  in 
turn  have  the  right  to  demand  the  utmost  integrity  and  impartiality 
from  Internal  Revenue  Service  officials  and  employees.  During  the 
year  top  Service  officials  made  vigorous  efforts  to  promote  under- 
standing among  employees,  taxpayers,  and  practitioners  as  to  the 
importance  of  integrity  and  the  need  to  expose  corruption  wherever 
discovered.  As  a  result  a  series  of  meetings  were  held  with  tax  prac- 
titioner groups.  These  meetings  indicated  a  resurgence  of  interest 
by  the  tax  profession  in  the  matter  of  ethical  standards  of  practice 
and  are  expected  to  result  in  revitalization  and  tightening  of  codes 
of  ethics  among  professional  groups.  During  this  fiscal  year  inspec- 
tion assmiied  primary  responsibility  for  the  investigation  of  attempts 
to  bribe  Service  employees.  Instructions  were  issued  to  strengthen 
procedures  to  be  followed  by  employees  when  a  bribe  offer  or  over- 
ture is  made. 

During  the  year  50  cases  of  actual  or  suspected  bribery  attempts 
by  taxpayers  or  their  representatives  were  reported  by  Service  em- 
ployees. Nineteen  of  these  cases  were  closed  and  resulted  in  initiation 
of  prosecution  of  10  taxpayers  or  their  representatives. 

A  total  of  8,956  investigations  of  employees  and  applicants  for 
employment  were  completed,  which  was  23  percent  more  than  in  the 
preceding  fiscal  year,  and  the  highest  on  record.  In  addition,  police 
checks  were  made  on  3,955  employees  given  short-term  temporary 
appointments. 

Enrollment  of  practitioners 

During  the  year  the  Office  of  Director  of  Practice  commenced  a 
period  of  revitalization  of  its  enrollment  and  disciplinary  functions. 
Increased  production  was  generated  by  more  adequate  staffing  and 
better  utilization  of  personnel.  More  disciplinary  actions  were  con- 
cluded, either  by  resignations,  suspensions,  or  reprimands,  than  during 
the  1960  and  1961  fiscal  years  combined.  There  was  increased 
surveillance  of  activities  of  persons  enrolled  to  practice  before  the 
Internal  Revenue  Service,  applicants  for  enrollment,  and  preparers 
of  tax  returns  exercising  the  privilege  of  limited  practice.  Emphasis 
was  placed  on  the  high  ethical  standards  expected  of  practitioners. 

The  issuance  of  enrollment  cards  for  persons  entitled  to  practice 
before  the  Internal  Revenue  Service  good  for  a  period  of  five  years 
was  inaugurated  in  1952.  Before  that  time  all  enrollment  cards  were 
of  unlimited  duration.  In  1952  each  enroUee  was  required  to  apply 
for  a  new  card,  and  55,632  such  cards  were  issued.  When  these  cards 
expired  in  1957,  renewal  applications  were  required  from  the  enrollees 
whose  eligibility  to  practice  had  lapsed.  At  that  time  29,673  cards 
were  issued.  In  the  cycle  which  ended  for  the  second  time  in  the 
1962  fiscal  year,  22,838  enrollment  cards  were  renewed,  exceeding  by 
20,316  those  renewed  in  the  nonpeak  year,  1961.    At  the  end  of  fiscal 


ADMINISTRATIVE    REPORTS  171 

1962  approximately  70,000  persons  were  eligible  to  practice  before 
the  Internal  Revenue  Service. 

Technical  assistance  to  foreign  government  officials 

The  Commissioner  of  Internal  Revenue  and  the  Deputy  Com- 
missioner went  to  Buenos  Aires  in  October  1961  to  attend  a  conference 
of  North  and  South  American  tax  officials  held  to  work  on  tax  ad- 
ministration goals  for  Alliance  for  Progress  countries.  SLxty  repre- 
sentatives from  17  countries  were  present,  as  well  as  representatives 
of  the  Organization  of  American  States,  the  United  Nations,  the 
Economic  Commission  for  Latin  America,  the  International  Develop- 
ment Bank,  and  the  U.S.  Treasury  Department.  At  this  conference 
the  Commissioner  stated  that  the  U.S.  Government  would  be  willing, 
upon  request,  to  send  Internal  Revenue  Service  men  to  Latin  America 
to  give  technical  advice,  and  to  provide  training  in  the  United  States 
for  visiting  Latin  American  tax  officials.  Since  October  1,  1961,  the 
Service  has  given  technical  training  in  the  United  States  to  tax 
officials  from  Brazil,  Chile,  Colombia,  Guatemala,  and  Peru,  and  has 
sent  tax  administration  experts  to  Chile,  Colombia,  Ecuador,  and 
Peru. 

The  President's  emphasis  on  tax  administration  and  tax  reform  as 
a  basic  objective  of  the  Alliance  for  Progress  has  brought  a  number 
of  Latin  American  visitors  to  the  United  States  and  seems  to  have 
stimulated  a  greater  interest  in  tax  matters  on  the  part  of  many  other 
countries.  During  the  year,  156  officials  representing  41  foreign 
governments  visited  the  Service  to  observe  and  study  its  management 
and  operating  techniques. 

Office  of  International  Finance 

The  Office  of  International  Finance  assists  the  officers  of  the  Depart- 
ment in  the  formulation  and  execution  of  policies  and  programs  in 
international  financial  and  monetary  matters. 

By  direction  of  the  Secretary,  the  responsibilities  of  the  Office  of 
International  Finance  include  the  Treasury's  activities  in  relation  to 
international  financial  and  monetary  problems,  covering  such  matters 
as  the  U.S.  balance  of  payments,  the  convertibility  of  currencies,  ex- 
change rates  and  restrictions,  and  the  extension  of  stabilization 
credits;  gold  and  silver  policy;  the  Bretton  Woods  Agreements  Act, 
and  the  operations  of  the  International  Monetary  Fund,  the  Inter- 
national Bank  for  Reconstruction  and  Development,  the  International 
Finance  Corporation,  the  Inter-American  Development  Bank,  and  the 
International  Development  Association;  foreign  lending  and  assist- 
ance; the  North  Atlantic  Treaty  Organization;  the  Anglo-American 
Financial  Agreement;  the  U.S.  Exchange  Stabilization  Fund;  and  the 
Foreign  Assets  Control. 

The  responsibilites  of  the  Office  of  International  Finance  also 
include  activities  of  the  Treasury  in  relation  to  the  National  Advisory 
Council  on  International  Monetary  and  Financial  Problems.  The 
Secretary  of  the  Treasury  is  Chairman  of  the  Council,  which  was 
estabhshed  in  1945  by  the  Bretton  Woods  Agreements  Act  (22  U.S.C. 


172   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

286b)  in  order  to  coordinate  the  policies  and  operations  of  the  U.S. 
representatives  on  the  International  Monetary  Fund,  and  the  Inter- 
national Bank,  and  of  all  the  agencies  of  the  Government  which  make 
or  participate  in  making  foreign  loans  or  which  engage  in  foreign 
financial,  exchange,  or  monetary  transactions.  The  acts  authorizing 
U.S.  membership  in  the  International  Finance  Corporation,  the 
Inter-American  Development  Bank,  and  the  International  Develop- 
ment Association  also  provide  for  the  coordination  by  the  National 
Advisory  Council  of  the  U.S.  representatives  to  these  institutions. 

The  Office  also  acts  for  the  Treasury  on  the  financial  aspects  of 
international  treaties,  agreements,  and  organizations  in  which  the 
United  States  participates,  and  it  takes  part  in  negotiations  with 
foreign  governments  with  regard  to  matters  included  within  its 
responsibilities.  It  assists  the  Secretary  on  international  financial 
aspects  of  problems  arising  in  connection  with  his  responsibilities 
under  the  Tariff  Act. 

The  Office  of  International  Finance  advises  Treasmy  officials  and 
other  departments  and  agencies  of  the  Government  concerning 
exchange  rates  and  other  financial  problems  encountered  in  operations 
involving  foreign  currencies.  In  particular,  it  advises  the  Depart- 
ment of  State  and  the  Department  of  Defense  on  financial  matters 
related  to  their  normal  operations  in  foreign  countries  and  on  the 
special  financial  problems  arising  from  defense  preparation  and 
military  operations.  In  conjunction  with  its  other  activities  the 
Office  studies  the  financial  policies  of  foreign  countries,  exchange  rates, 
balances  of  payments,  the  flow  of  capital,  and  other  related  problems. 
It  serves  the  Secretary  in  connection  with  his  continuing  responsibili- 
ties to  review  for  the  President  the  entire  range  of  administration 
programs  and  policies  for  achieving  a  lasting  equilibrium  in  the  U.S. 
balance  of  payments  and  a  stronger  international  payments  system, 
and  prepares  reports  to  the  President  on  the  balance-of-payments 
situation  and  on  administration  measures  in  this  area. 

The  Office  administers  the  Treasury  foreign  exchange  reporting 
system.  The  reporting  system  collects  through  the  Federal  Reserve 
Banks  statistical  data  on  capital  movements  between  the  United 
States  and  foreign  countries. 

The  Division  of  Foreign  Assets  Control  administers  regulations 
and  orders  issued  under  section  5(b)  of  the  Trading  with  the  Enemy 
Act.  The  Foreign  Assets  Control  Regulations  block  all  property  in 
the  United  States  in  which  any  Communist  Chinese  or  North  Korean 
interest  exists  and  prohibit  all  trade  or  other  financial  transactions 
with  those  areas  or  their  nationals.  The  Cuban  Import  Regulations 
govern  imports  into  the  United  States  of  goods  of  Cuban  origin, 
goods  containing  Cuban  components,  or  goods  from  or  tlu"ough  Cuba. 
(See  exhibit  50.)  These  regulations  were  issued  initially  under 
authority  of  the  Foreign  Assistance  Act  of  1961  approved  September  4, 
1961  (22  U.S.C.  2370)  and  Proclamation  3447,  and,  as  amended, 
under  section  5(b)  of  the  Trading  with  the  Enemy  Act. 

The  Control  also  administers  regulations  which  prohibit  persons  in 
the  United  States  from  purchasing,  selling,  or  arranging  the  purchase 
or  sale  of  strategic  commodities  outside  the  United  States  for  ulti- 


ADMINISTRATIVE    REPORTS  173 

mate  shipment  to  the  Soviet  bloc.  The  latter  regulations  supplement 
the  export  control  laws  administered  by  the  Department  of  Commerce. 
The  Control  carries  on  licensing  activities  in  connection  with 
transactions  otherwise  prohibited  by  the  regulations  mentioned  above 
and  takes  action  to  enforce  these  regulations. 

Bureau  of  the  Mint  ^ 

The  major  functions  of  the  Bureau  of  the  Mint  are  the  manufac- 
ture, distribution,  and  redemption  of  domestic  coins;  the  receipt, 
processing,  custody,  disbursement  and  movement  of  gold  and  silver 
bullion ;  the  manufacture  of  medals  of  a  national  character  and  special 
medals  for  other  U.S.  Government  agencies;  the  manufacture  of 
foreign  coins;  and  other  technical  services. 

Two  organizational  changes  which  modified  the  Mint's  duties  in 
the  fiscal  year  1962  were  made  by  the  Treasury.  Department 
Order  No.  179-3,  dated  October  16,  1961  (see  exhibit  51),  trans- 
ferred all  functions  and  responsibilities  for  the  sale  and  distribution 
of  sets  of  uncirculated  coins,  other  than  over-the-counter  sales,  from 
the  Office  of  the  Treasurer  of  the  United  States  to  the  Bureau  of 
the  Mint.  Department  Order  No.  193,  dated  October  9,  1961, 
established  within  the  Office  of  the  Under  Secretary  for  Monetary 
Affairs  an  Office  of  Domestic  Gold  and  Silver  Operations,  and  trans- 
ferred to  it  from  the  Bureau  of  the  Mint  the  administration  of  gold 
and  silver  regulations. 

The  Office  of  the  Director  of  the  Mint  located  in  Washington,  D.C., 
administers  all  activities  of  the  Bureau  of  the  Mint.  Six  field  insti- 
tutions were  in  operation  during  the  fiscal  year  1962,  the  Philadelphia, 
Denver,  and  San  Francisco  mints;  the  New  York  Assay  Office;  the 
silver  bullion  depository  in  West  Point,  N.Y.,  which  is  an  adjunct  of 
the  Assay  Office;  and  the  gold  bullion  depository  in  Fort  Knox,  Ky. 
The  gold  and  silver  depositories  are  solely  for  the  storage  of  bullion. 
Each  of  the  other  four  institutions  also  handles  and  has  custody  of 
gold  and  silver  and  performs  several  different  types  of  operations. 
All  coins  have  been  manufactured  at  the  Philadelphia  and  Denver 
mints  since  March  1955  when  coinage  operations  were  suspended  at 
the  San  Francisco  Mint.  The  latter  institution  continued  to  func- 
tion as  an  assay  office  and  bullion  depository  and  Public  Law  87-534, 
approved  July  11,  1962,  authorized  that  its  official  designation  be 
the  United  States  assay  office  at  San  Francisco.  Electrolytic  refin- 
eries for  refining  precious  metals  are  located  in  the  Denver  Mint 
and  the  New  York  Assay  Office.  The  engraving  and  the  proof  coin 
and  medal  production  divisions  are  in  Philadelphia.  Because  of  an 
increased  coinage  workload,  the  number  of  employees  in  the  Bureau 
rose  from  927  on  June  30,  1961,  to  1,051  on  June  30,  1962. 

Domestic  coinage 

The  production  of  U.S.  coins  reached  3.5  billion  in  the  fiscal  year 
1962,  an  alltime  record,  and  the  second  successive  year  in  the  Mint's 

•  Additional  information  concerning  the  Bureau  of  the  Mint  is  contained  in  the  separate  annual  report 
of  the  Director  of  the  Mint. 


174   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

history  in  which  domestic  output  exceeded  three  billion  pieces. 
Compared  with  1961  the  number  of  coins  manufactured  was  13  per- 
cent higher,  but  the  quantity  of  metals  processed  was  20  percent 
larger,  because  of  an  increase  in  the  higher  denominations.  The 
one-cent  piece,  as  usual,  was  produced  in  greatest  volume,  represent- 
ing 73  percent  of  the  five  denominations  coined.  No  silver  dollars 
were  coined,  as  the  stock  on  hand,  last  augmented  in  1935,  continued 
to  be  adequate  both  for  circulation  and  for  the  redemption  of  silver 
certificate  currency  b}^  the  public.  The  1962  output  of  3.5  billion 
subsidiary  silver  and  minor  coins  required  a  total  of  13,448  short 
tons  of  metals,  including  2,577  tons  of  silver  (75,149,179  fine  troy 
ounces),  9,972  tons  of  copper,  462  tons  of  nickel,  and  437  tons  of 
zinc  and  tin.  Although  the  two  mints  operated  around  the  clock, 
the  demand  was  so  great  that  finished  coins  were  shipped  out  as  soon 
as  they  were  struck;  therefore  it  was  not  possible  to  build  up  an  in- 
ventory of  coins  in  mint  vaults  at  any  time  during  the  year.  A 
summary  of  domestic  coin  production  during  fiscal  1962  is  sho^vn  in 
the  following  table. 


Production  of  U.S.  coins 


Denomination 

Number 

Face 
value 

Standard 

gross 

weight 

Distri- 
bution 
(based  on 
pieces) 

Metallic  composition 

In  millions 

Short  tons 

Percent 

1-cent  pieces 

2,  547. 8 
335.7 
372.5 

173.9 
46.4 

$25.  5 
16.8 
37.2 

43.5 
23.2 

8,734 
1,850 
1, 027 

1,198 
639 

73.3 

9.7 
10.7 

5.0 
1.3 

Bronze  (95%  copper,  6%  zinc  and  tin) 
Cupronickel  (75%  copper,  25%  nickel) 

5-cent  Dieces         

Dimes 

Silver    (900    parts    silver,    100    parts 

Quarter  dollars 

Half  dollars.— 

copper). 
Do. 
Do. 

Total 

3, 476. 3 

146.2 

13, 448 

100.0 

1  Includes  3,151,805  sets  of  proof  coins  manufactured  at  Philadelphia. 

Foreign  coinage 

U.S.  Government  mints  have  manufactured  coins  for  foreign 
governments  since  authorized  to  preform  this  service  by  the  Congress 
in  1874  (31  U.S.C.  367).  As  this  law  provides,  foreign  coins  are  manu- 
factured on  a  reimbursable  basis  at  actual  cost.  From  time  to  time 
37  countries  throughout  the  world  have  availed  themselves  of  U.S. 
minting  facilities.  The  Philadelphia  Mint  made  coins  for  Costa  Rica, 
Korea,  Liberia,  and  the  Philippines  during  fiscal  1962.  According  to 
the  logall}''  prescribed  standards  and  devices  of  the  respective  countries 
12  different  denominations  were  produced.  Approximately  900  tons 
of  metals  were  processed  in  1962  into  a  total  of  214.2  million  foreign 
coins,  representing  an  increase  of  94  percent  over  the  110.4  million 
pieces  produced  in  1961. 


ADMINISTRATIVE    REPORTS 


175 


Foreign  coinage  by  the  Philadelphia  Mint,  fiscal  1962 

Government 

Denomination 

Number  of 
coins  pro- 
duced (in 
millions) 

Metallic  composition 

Costa  Rica 

2  colones 

1.0 
1.0 

75%  copper,  25%  nickel. 
Do. 

German  silver  (70%  copper,  18%  zinc 
95%  copper,  5%  zinc. 

900  parts  silver,  100  parts  copper. 

Do. 

Do. 

Do. 
75%  copper,  25%  nickel. 
95%  copper,  5%  zinc. 

German  silver  (70%  copper,  18%  zinc 
80%  copper,  20%  zinc. 

1  colon 

Total 

2.0 

50  hwan 

Korea             -  - 

20.0 
100.0 

12%  nickel). 

in  hwftn 

Total 

120.0 

1  dollar 

Liberia 

1.2 
.8 
1.2 
1.0 
3.0 
5.0 

50  cents 

25  cents 

10  cents    

5  cents 

Icent 

Total 

12.2 

25  centavos 

5  centavos 

Philippines 

40.0 
40.0 

12%  nickel). 

Total    

80.0 

Grand  total 

214.2 

Issue  and  stock  of  coins 

Production  schedules  for  domestic  coins  are  geared  to  meet  the  antic- 
ipated business  requirements  of  the  Nation.  Although  the  two  mints 
operated  at  top  speed  throughout  the  fiscal  year,  continuing  large  coin 
requisitions  beyond  the  customary  heavy  seasonal  demand  exceeded 
the  mints'  output  for  the  12-month  period.  The  channels  thi-ough 
which  the  mints  issue  coins  for  circulation  include  facilities  in  37  cities. 
They  are  the  Office  of  the  Treasm-er  of  the  United  States  in  Washing- 
ton, D.C.,  and  the  12  Federal  Reserve  Banks  and  their  24  branches. 
These  facilities  deliver  the  coins,  as  required,  to  commercial  banks, 
which  place  them  in  actual  circulation.  Proof  coins  and  uncirculated 
coins  of  interest  principally  from  a  numismatic  standpoint  rather  than 
as  circulating  media,  are  sold  in  specially  packaged  sets  by  the  mint 
offices  and  the  Office  of  the  Ti'easurer  of  the  United  States. 

The  demand  for  coins  for  general  circulation  was  greatest  in  the 
three  smallest  denominations.  The  most  significant  changes  in  de- 
mand from  fiscal  1961,  however,  were  for  half  doUars  (138.8  percent 
increase)  and  quarter  dollars  (118.3  percent  increase).  A  factor 
contributing  to  this  was  the  expanded  development  and  use  of  new 
types  of  coin-operated  machines.  Some  of  these  are  coin-operated 
dry  cleaning  machines,  automatic  food  dispensing  machines  in  com- 
mercial, industrial,  and  recreation  areas,  and  bill  and  coin  changing 
machines.  The  foUowing  table  shows  the  various  denominations 
issued  during  the  fiscal  year. 


176   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Issue  of  U.S.  coins  • 

Denomination 

Number 

Face  value 

Standard 
gross  weight 

Distribution 

(based  on 

pieces) 

In  m 

llions 

Short  tons 

Percent 

1-cent  pieces 

2, 554. 9 
338.3 
374.5 
175.0 

48.1 
26.9 

$25.5 
16.9 
37.4 
43.8 
24.1 
26.9 

8,758 
1,865 
1, 032 
1,206 
663 
792 

72.6 

5-cent  pieces                        - 

9  6 

Dimes.   .     

10  6 

Quarter  dollars 

5.0 

Half  dollars - 

1.4 

Silver  dollars 

.8 

Total 

3,  517.  8 

174.6 

14, 316 

100  0 

1  Includes  3,151,854  sets  of  proof  coins  sold  by  the  Philadelphia  Mint, 
denomination  currently  minted  (10,  50,  100,  250,  and  500). 


A  set  consists  of  one  coin  of  each 


The  total  stock  of  domestic  coins  in  the  United  States,  estimated 
monthly  by  the  Office  of  the  Director  of  the  Mint,  is  grouped  according 
to  face  value  into  (1)  minor  coins  (1  and  5  cent  pieces),  (2)  subsidiary 
silver  (half  dollars,  quarter  dollars,  and  dimes),  and  (3)  standard 
silver  dollars.  The  estimate  is  based  on  new  coins  manufactured, 
uncurrent  (worn)  coins  withdrawn  from  cu'culation,  certain  exports 
and  hiiports,  and  general  disappearance.  The  stock  includes  coin 
held  by  the  mints  and  other  Treasury  offices,  by  Federal  Reserve 
Banks  and  theu^  agents,  and  in  cu'culation  (which  includes  coins  in 
commercial  banks  as  well  as  in  the  hands  of  the  public).  The  total 
stock  is  compared  at  the  close  of  the  fiscal  years  1961  and  1962,  in  the 
following  table. 


Face  value  (in  millions) 

Stock  of  U.S.  coins 

June  30,  1961 

June  30,  1962 

Increase,  or 
decrease  (— ) 

Minor  coins 

$594. 1 

1, 608.  7 

487.6 

$636. 0 
1,710.8 

487.4 

$42.0 

Subsidiary  silver  coins 

102.1 

Silver  dollars.. 

1  -.2 

Total 

2, 690.  3 

2, 834. 1 

143.8 

1  Decrease  represents  the  amount  of  uncurrent  (worn)  silver  dollars  withdrawn  from  circulation  and 
returned  to  the  mints  during  fiscal  1962.    The  last  silver  dollar  coinage  was  in  September  1935. 

Gold  transactions 

The  Treasury's  stocks  of  gold  bullion  held  in  the  custody  of  the 
Philadelphia,  San  Francisco,  and  Denver  mints,  the  New  York  Assay 
Office,  and  the  Fort  Knox  Gold  Bullion  Depository  were  increased  by 
$112.1  million  during  the  year  and  decreased  by  $1,244.4  million, 
effecting  a  net  decrease  of  $1,132.3  million.  Gold  movements  between 
mint  institutions  in  1962  totaled  37.4  million  ounces  (1,283  tons) 
valued  at  $1,309.4  million,  including  14.4  million  ounces  (494  tons) 
valued  at  $504.1  million  transferred  between  the  Assay  Office  and 
Fort  Knox.  Since  the  amount  moved  to  Fort  Knox  equaled  the 
amount  moved  from  there,  yearend  holdings  at  the  Depository 
remained  at  356.7  million  ounces  (12,229  tons)  valued  at  $12,483.4 


ADMINISTRATIVE    REPORTS 


177 


million.     Opening  and  closing  stocks  and  transactions  for  the  year  are 
shown  in  the  following  table. 


Quantity 

Value  at  $35 

Gold  holdings  and  transactions  (excluding  intcrmint 
transfers  ') 

Short  tons 

Fine  ounces 

per  ounce 

In  mj 

llions 

Holdings  on  June  30,  1961... 

16, 968 

494.9 

$17,321.5 

Receipts  in  fiscal  year  1902: 

Newlv  mined  domestic  gold 

25 
13 

72 

.7 

.4 

2.1 

25.  fi 

Scrap  gold  from  domestic  sources .  ... 

13.  ."i 

Foreign  and  otlier  miscellaneous  deposits 

73.  1 

Total  receipts 

110 

3.2 

112.1 

Issues  in  fiscal  year  1962: 

Sales  for  domestic  industrial,  professional,  and  artistic  use. 
Exchanges  for  scrap  gold ... 

86 

2 

71 

1,060 

2.5 

.1 

2.1 

30.9 

88.0 
2.1 

Exchanges  for  other  than  scrap  gold _  . 

72.6 

Other  monetary  issues.  .......                      .... 

1, 081. 7 

Total  issues..  ... ...                         .-.-. 

1,219 

35.6 

1, 244.  4 

Holdings  on  June  30,  1962 

15, 859 

462.5 

16, 189. 2 

Net  decrease  in  holdings. 

1,109 

32.4 

1,132.3 

ilntermint  transfers  amounted  to  37.4  million  ounces  (1,283  tons)  valued  at  $1,309.4  million  during  fiscal 
1962. 

Silver  transactions 

The  mint  institutions  in  Denver,  Philadelphia,  New  York  City,  and 
San  Francisco  received  a  total  of  20.3  million  fine  ounces  of  silver 
bullion  from  various  som'ces  during  the  fiscal  3^ear  1962.  Of  this 
amount,  15 .6  million  ounces  were  returns  of  lend-lease  silver  by  foreign 
governments,  with  3.6  million  ounces  returned  by  India,  and  12.0 
million  by  Pakistan.  Approximately  0.1  million  ounces  of  newly 
mined  domestic  silver  were  received  under  the  act  of  July  31,  1946 
(31  U.S.C,  316d).  Bullion  from  uncm-rent  U.S.  silver  coins  with- 
drawn from  circulation  and  melted  for  recoinage  provided  0.3  million 
ounces  from  worn  standard  silver  dollars  and  1.2  million  ounces  from 
worn  fractional  silver  coins.  Deposits  of  silver,  principally  in  the 
form  of  scrap  from  domestic  som'ces,  in  exchange  for  fine  bars 
amounted  to  2.6  million  ounces.  The  other  0.5  million  ounces  were 
purchases  of  domestic  and  foreign  silver  contained  in  gold  deposits. 

The  Philadelphia  and  Denver  mints  processed  a  total  of  75.1 
million  fine  ounces  of  silver  into  U.S.  subsidiary  coins  diu-ing  the  fiscal 
year.  The  classes  of  silver  included  28.1  million  ounces  of  bullion 
ordinary;  1.4  million  ounces  of  recoinage  bullion  from  uncurrent 
domestic  coins;  and  45.6  million  ounces  of  silver  bullion  at  monetary 
value  of  $1.29+  per  fine  ounce  which  was  made  available  under  the 
Presidential  du-ective  of  November  28,  1961,  by  the  retirement  of 
five  and  ten  dollar  silver  certificates.  Sales  of  Treasm^y  silver  for 
domestic  industrial,  professional,  and  artistic  use  by  mint  offices 
totaled  38.7  million  ounces  dming  the  year.  Opening  and  closing- 
stocks  and  transactions  for  the  year  are  summarized  in  the  following 
table. 


GG1496     G3- 


1.3 


178   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Silver  bullion  holdings  and  transactions  (excluding  intermint 

Quantity  ' 

transfers) 

Fine  ounces 
(in  millions) 

Short  tons 

Holdings  on  June  30, 1961 

1,756.2 

60,214 

Receipts  in  fiscal  1962: 

Lend-lease  silver  from  foreign  governments 

15.6 

.1 

1.5 

2.6 

.5 

535 

Newly  mined  domestic,  act  of  July  31,  1946  (31  U.S.C.  316d) 

3 

Recoinage  bullion  from  uncuirent  U.S.  silver  coins 

51 

Deposits^ in  exchange  for  fine  bars _. 

88 

Other  miscellaneous  receipts- 

20 

Total  receipts 

20.3 

697 

Issues  In  fiscal  1962: 

Manufactured  into  U.S.  subsidiary  silver  coins 

75.1 

38.7 

2.7 

2,576 

Sales  for  domestic  industrial,  professional,  and  artistic  use 

1,328 

Other  miscellaneous  issues ._. 

91 

Total  issues 

116.5 

3,995 

Holdings  on  June  30, 1962 

1, 660.  0 

56, 916 

1  Does  not  include  64.7  million  fijie  ounces  (2,220  tons)  of  Treasury  silver  held  by  other  agencies  of  the 
U.S.  Government. 

Revenue  and  monetary  assets  and  liabilities 

Revenue  deposited  by  the  Bureau  of  the  ]\Imt  into  the  general  fund 
of  the  Treasury  totaled  $67.4  million  in  the  fiscal  3-ear  1962,  a  $5.1 
million  increase  over  the  previous  year.  Seigniorage  accounted  for 
$57.5  million,  as  follows:  Seigniorage  on  the  592.8  million  subsidiary 
silver  coins  manufactured  amounted  to  $22.7  million,  on  the  2,883.5 
million  minor  coins,  $34.8  milhon,  and  on  the  155,000  fine  ounces  of 
silver  bullion  revalued  from  cost  to  monetary  value  as  secmity  for 
silver  certificates,  $0.1  million.  Profit  on  sale  of  silver  bullion 
amomited  to  $7.4  million,  and  other  miscellaneous  deposits  were 
$2.5  million. 

Monetary  assets  and  liabilities  of  the  mint  institutions  on  June  30, 
1961,  and  June  30,  1962,  are  compared  in  the  follo^ving  statement. 


Item 

June  30,  1961 

June  .30,  1962 

In  millions 

Gold  bullion 

Assets 

$17,32L5 

2,225.2 

93.4 

.2 

.9 

$16, 189.  2 

Silver  bullion 

2, 129. 6 

Silver  coin 

66.8 

Minor  coin _ 

.2 

Minor  coinage  metal,  etc.. 

1.0 

Total  assets. 

19,64L3 

18, 386.  7 

Liabilities 

Bullion  fund 

19,640.1 
.8 
.4 

18, 385. 6 

Minor  coinage  metal  fund 

.6 

Other  miscellaneous 

.5 

Total  liabilities 

19,64L3 

18, 386. 7 

ADMINISTRATIVE    REPORTS  179 

U.S.  gold  and  silver  production  and  consumption 

The  estimates  of  U.S.  gold  and  silver  prodiictio]i  and  consumption, 
made  annually  by  the  Office  of  the  Director  of  the  Mint,  are  on  a 
calendar  year  basis. 

The  refuiery  production  of  newly  mined  domestic  gold  totaled 
1,566,800  fine  ounces  valued  at  $54,838,000  in  1961,  compared  with 
1,679,800  fine  ounces  valued  at  $58,793,000  in  1960.  Among  the 
sixteen  States'where'goldlwas  produced,  South  Dakota  continued  as 
the  major  producing  State  accounting  for  36  percent  of  the  total. 
Utah  ranked  second,  followed  by  Arizona,  Washington,  and  Alaska. 

The  refinery  production  of  newly  mined  domestic  silver  totaled 
34,900,000  fine  ounces  in  20  States  in  1961,  compared  with  36,800,000 
ounces  the  previous  year.  Idaho  accounted  for  one-half  of  the  total 
production  with  Arizona,  Utah,  Alontana,  and  Colorado  following. 

Gold  and  silver  issued  for  domestic  industrial,  professional,  and 
artistic  use  m  calendar  1961  amounted  to  2,775,000  fine  ounces  and 
105,500,000  fine  ounces,  respectively.  Comparative  issues  in  1960 
were  3,000,000  ounces  of  gold  and  102,000,000  ounces  of  silver. 

Management  improvement 

In  accordance  with  its  longstanding  policy,  the  Bureau  of  the  Mint 
continued  an  active  management  program  during  fiscal  1962.  A 
sustained  demand  for  domestic  coins  resulted  in  an  extremely  heavy 
manufactming  worldoad,  and  efforts  were  made  to  attain  maximum 
production  with  available  funds.  Coinage  operations  at  the  Denver 
Mint  were  started  on  an  overtime  basis  and  by  September  1961, 
three  8-hour  shifts  operated  six  days  per  week.  The  Philadelphia 
Mint,  also  on  overtime,  operated  much  of  the  year  with  two  12-hour 
shifts  five  days  a  week  for  all  divisions  except  the  proof  coin  production 
section  which  operated  three  shifts  seven  days  a  week,  and  the  melting 
room  which  operated  two  additional  8-hoiu"  shifts  on  Saturdays. 

Philadelphia  produced  a  total  of  214.2  million  foreign  coins  in  1962, 
permitting  the  use  of  appropriated  fmids  for  the  production  of 
additional  domestic  coins  at  Denver,  where  unit  costs  are  lower, 
thereby  increasing  the  total  production  of  domestic  coins.  A  total 
of  2.5  billion  domestic  coins  struck  at  Denver  and  1  billion  at  Philadel- 
phia resulted  in  a  record  annual  output  of  3.5  billion  pieces.  The 
increase  in  manpower  requirements  amounted  to  124  additional 
employees. 

Representative  management  actions  at  Denver  included  increased 
blank  storage  facilities ;  the  mstallation  of  a  coil  conveyor  to  facilitate 
entry  to  the  annealing  fm^nace  and  reentry  to  the  main  line  for  the 
finish  rolling  mill;  improved  sweeps  processing  equipment;  and 
improvements  in  the  weighing  of  silver  clips  for  makeup  by  per- 
forming that  operation  in  the  mgot  melting  room,  resulting  in  savings 
of  eight  man-hours  per  day  during  periods  of  silver  production. 

Improvements  made  at  Philadelphia  included  the  rebuilding  of 
upsetting  mills,  with  increased  production  and  reduced  maintenance 
costs;  the  installation  of  blank  storage  bins  to  provide  for  opera- 


180   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

tions  during  periods  when  one  of  the  rolling  mills  may  be  shut  down 
for  repairs;  a  new  ventilating  system  for  the  rolling  room;  the  instal- 
lation of  electronic  gauges  and  controls  to  control  the  thickness  of 
strip  and  eliminate  blanks  which  may  be  over  or  under  weight;  and 
the  installation  of  additional  melting  capacity,  to  bring  it  into  line 
with  rolling  capacity.  The  shipping  and  receiving  entrance  was 
enlarged  to  accommodate  large  motor  trucks. 

Because  of  the  tremendous  demand  for  proof  coins,  additional 
presses  and  other  equipment  were  purchased  for  that  operation. 
Late  in  the  year  the  proof  coin  operation  was  moved  from  a  basement 
location  to  larger  quarters  with  better  lighting.  Air-conditioning 
of  the  room,  installed  to  reduce  dust  and  dirt,  will  unprove  the  quality 
of  proof  coins.  It  is  expected  that  there  will  be  fewer  rejects,  and 
productive  capacity  will  be  substantially  increased.  The  processing 
of  proof  coin  orders  was  facilitated  greatly  by  the  use  of  automatic 
data  processing  equipment. 

In  the  New  York  Assay  Office  improvements  were  made  in  the 
refinery  operations  by  mechanizing  the  removal  of  bottom  silver  and 
foul  electrolyte  from  the  cells  and  by  installing  water-cooled  molds 
for  casting  silver  anodes. 

The  annual  recurring  savings  from  these  improvements  thi'oughout 
mint  institutions  amounted  to  $7,200,  all  related  to  appropriation 
items.  The  savings  were  applied  to  partially  offset  increased  costs 
of  wages,  supplies,  and  materials. 

Continuing  attention  was  given  to  the  incentive  awards  program, 
records  management,  safety,  control  of  communication  cost,  and 
forms  and  reports  control.  Cash  awards  amounting  to  $3,315  were 
granted  to  employees  for  suggestions  made  and  effectuated  in  prior 
years  which  have  resulted  in  annual  recurring  savings  of  $77,169. 

From  a  number  of  private  management  firms  invited  to  suljmit 
proposals,  one  was  selected  to  survey  cm-rent  and  long-range  coinage 
requh'cments,  and  the  operations  and  facilities  of  the  Bureau  of  the 
Mint  in  relation  to  those  requu-ements.  The  objective  of  the  study 
begun  in  fiscal  1962  is  to  insure  that  Mint  operations  are  conducted 
as  effectively  and  economically  as  possible  and  that  proper  advance 
provisions  are  made  for  gi-owth  needs.  It  will  cover  coinage  requhe- 
ments  for  the  next  25  years  with  consideration  of  all  possible  factors 
which  may  affect  demand  for  coins  including  population  and  economic 
changes,  sales  taxes,  coin  machines,  credit  cards,  and  increases  in 
coin  collection  activities. 

Bureau  of  Narcotics  ^ 

The  Bureau  of  Narcotics  administers  the  Federal  laws  governing 
narcotic  di'ugs  and  marihuana  and  carries  out  the  responsibilities 
of  the  Government  under  the  international  conventions  and  protocols 
relating  to  these  drugs. 

The  Bureau  supervises  U.S.  imports  and  exports  of  narcotic  drugs 
as  well  as  the  manufacture  and  domestic  trade  in  these  drugs  to 

'  Further  information  is  available  in  the  separate  report  of  the  Bureau  of  Narcotics  entitled,  Traffic  in 
Opium  and  Other  Dangerous  Drufis  for  the  Year  Ended  December  51,  1901. 


ADMINISTRATIVE    REPORTS 


181 


prevent  theii-  diversion  for  abuse.  It  apprehends  interstate  and 
international  violators  of  narcotic  laws.  It  cooperates  with  State 
and  local  law  enforcement  authorities  in  the  United  States.  At  the 
request  of  law  enforcement  authorities  in  foreign  countries  Bureau 
agents  assist  in  international  narcotic  trafficking  investigations  of 
mutual  interest.  These  cooperative  efforts  have  reduced  the  smug- 
gling of  illicit  narcotics  into  this  country. 

Law  enforcement 

The  Bureau  concentrates  its  enforcement  emphasis  on  suppressing 
international  and  interstate  traffic  in  narcotic  drugs  and  marihuana. 
While  its  targets  are  the  wholesale  traffickers,  its  cooperation  with 
State  and  local  authorities  is  designed  to  eliminate  retail  peddling 
and  promote  treatment  of  addicts. 

In  Europe  and  the  Middle  East  during  1962  Bureau  of  Narcotics 
agents  assisted  police  in  the  seizure  of  more  than  a  ton  of  opium  and 
intermediate  base  morphine  from  the  illegal  traffic. 

Number  of  violators  of  the  narcotic  and  marihuana  laws  prosecuted  during  the  fiscal 
year  1962  with  their  dispositions  and  penalties 


Narcotic  laws 

Marihuana  laws 

Registered  persons 

Nonregistered  persons 

Nonregistered  persons 

Federal 
court 

State 
court 

Federal 
court 

State 
court 

P^ederal 
court 

State 
court 

Convicted 

3 

751 
37 

257 
13 

100 
5 

39 

Acquitted . 

Total  '- 

3 

1,058 

144 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos, 

Sentences  imposed 

9 

4,932 

9 

986 

1 

523 

6 

144 

11 

Fines  imposed 

$53, 402 

$16, 810 

$4, 151 

$2, 850 

Average  sentence  per  con- 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

Yrs. 

Mos. 

viction: 
1962 - 

3 
4 

6 
6 

6 
6 

3 
3 

11 
10 

5 
5 

1 
2 

3 
3 

10 

1961 

5 

11 

Average    fine    per    con- 
viction: 
1962 

$71 

$65 

$42 

$75 

1961 

$1,600 

$3,020 

1 

27 

21 

6 

e 

)4 

1  Some  cases  tried  in  Federal  courts  and  some  cases  tried  in  State  courts  are  made  by  Federal  and  State 
officers  worlring  in  cooperation. 


182   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Within  the  United  States,  the  Bureau  has  intensified  its  efforts  in 
the  areas  of  organized  crime,  with  encouraging  results.  In  February 
1962,  for  example,  11  high  echelon  international  traffickers  were 
convicted  in  a  single  case  in  New  York,  N.Y.,  for  conspiracy  to  violate 
the  narcotic  statutes.  Their  operation  extended  from  France,  Italy, 
and  Canada  to  the  United  States.  Then-  conviction,  climaxing  a 
lengthy  trial,  resulted  from  extended  cooperative  eft'ort  Avith  the 
Organized  Crune  and  Racketeering  Section  of  the  Department  of 
Justice,  In  June  1962,  another  huge  narcotic  conspiracy  case  was 
brought  to  a  successful  conclusion  in  New  York,  N.Y.,  with  the  con- 
viction of  1.)  top-level  gangsters.  Their  operation  involved  France, 
Canada,  and  the  United  States. 

During  fiscal  1962  the  Bureau  seized  a  total  of  86,345  grams  of 
narcotics,  principally  heroin,  in  the  illicit  traffic,  as  compared  with 
157,358  grams  in  1961.  Seizures  of  marihuana  amounted  to  145,230 
grams  bulk  as  compared  with  620,437  grams  bulk  in  1961. 

The  immber  of  violators  of  the  narcotic  laws  reported  by  Federal 
narcotic  enforcement  officers  is  shown  in  the  accompanying  table. 

The  Narcotic  Control  Act  of  1956  (21  U.S.C.  174)  continues 
be  an  important  and  effective  aid  in  discouraging  the  illicit  traffic  in 
the  United  States,  as  reflected  in  the  longer  sentences  imposed.  In 
jmisdictions  where  heavier  sentences  have  been  imposed  they  have 
acted  as  a  steadily  increasing  deterrent  to  illicit  traffic. 

Control  of  manufacture  and  medical  distribution 

In  its  control  of  the  legitunate  trade  the  Bm*eau  issues  permits 
for  imports  of  the  crude  materials,  for  exports  of  finished  drugs, 
and  for  the  intransit  movement  of  narcotic  drugs  and  preparations 
passing  through  the  United  States  from  one  foreign  country  to  another. 
It  supervises  the  manufactm'e  and  distribution  of  narcotic  medicines 
within  the  country  and  has  authority  to  license  the  growing  of  opium 
poppies  to  meet  the  medicinal  needs  of  the  country  if  and  when  their 
production  might  become  necessar}^  in  the  public  interest. 

Under  the  Narcotics  Manufacturing  Act  of  1960  (21  U.S.C.  501-517; 
26  U.S.C.  4702,  4731)  the  Bureau  determines,  in  the  interest  of  public 
health  and  safet}^,  what  narcotic  drugs  shall  be  manufactured  and 
used  by  establishhig  "basic  classes"  for  those  which  are  authorized. 
It  licenses  the  manufacture  of  such  drugs  and  fixes  annual  manufac- 
turing quotas  for  each  producer,  thus  keeping  total  production  within 
predetermined  medical  and  scientific  requirements.  Under  that  act 
the  Bureau,  witli  the  assistance  of  an  advisory  committee,  also 
classifies  pharmaceutical  preparations  containing  narcotic  drugs 
according  to  various  control  categories,  applying  to  each  category 
that  degree  of  control  which  is  found  to  be  warranted  by  its  risk  of 
addiction  or  abuse. 

The  importation,  manufacture,  and  distribution  of  opium  and 
coca  leaves  and  their  derivatives  are  subjected  to  a  system  of  quotas 
and  allocations  designed  to  insure  their  proper  distribution  for  medical 
needs.  Dming  the  year,  209,736  kilograms  of  raw  opium  were  im- 
ported from  Burma,  Turkey,  and  India  and  180,380  kilograms  of  coca 
leaves  were  imported  from  Peru  to  meet  medical  requirements  for 
opium  derivatives  and  cocaine  and  to  supply  nonnarcotic  coca  flavor- 
ing extracts.  The  latter  were  obtained  as  a  byproduct  from  the  same 
leaves  from  wliich  the  cocaine  was  simultaneously  extracted. 


ADMINISTRATIVE    REPORTS  183 

The  quantity  of  narcotic  drugs  exported  during  1962  was  less  than 
that  exported  the  year  before.  The  export  total,  however,  never 
has  been  significant  in  comparison  with  the  quantity  used  within  the 
United  States.  The  manufacture  of  narcotics  continued  to  be  exten- 
sive principally  because  of  the  large  medical  consumption  of  pethidine, 
codeine,  and  papaverine. 

There  were  1,695  thefts  of  narcotics,  amounting  to  70,289  grams, 
reported  during  1962  from  persons  authorized  to  handle  the  drugs, 
compared  with  1,671  thefts  amounting  to  65,406  grams  in  1961. 

Practically  all  of  the  approximately  343,092  persons  registered 
to  engage  in  lawful  narcotic  and  marihuana  activities  were  employed 
in  the  manufacture,  wholesale  or  retail  distribution,  or  dispensing 
or  prescribing  of  narcotic  drugs  for  legitimate  medical  uses.  As 
industrial  and  scientific  users  of  narcotic  substances  are  few,  the 
quantities  used  for  these  purposes  are  insignificant. 

International  control  and  cooperation 

Opium,  coca  leaves,  marihuana,  and  their  more  important  deriva- 
tives have  been  internationally  controlled  by  the  terms  of  the  Opium 
Conventions  of  1912,  1925,  and  1931.  In  addition,  under  Article  II 
of  the  1931  Convention  and  the  international  Protocol  of  November  19, 
1948,  nine  secondary  derivatives  of  opium  and  57  synthetic  drugs 
have  been  found  by  the  World  Health  Organization  to  have  addicting 
qualities  similar  to  morphine  or  cocaine  and  have  been  brought  under 
the  controls  provided  by  the  treaties. 

For  each  calendar  year  the  Bureau  submits  to  appropriate  agencies 
of  the  United  Nations  advance  estimates  of  requirements  for  each 
basic  drug  covered  by  the  several  international  conventions,  and  after 
the  year  has  ended,  complete  statistics  of  their  manufacture,  distri- 
bution, imports,  exports,  and  stocks.  The  Bureau  applies  a  system 
of  import,  export,  and  mtransit  permits  which  conforms  to  the  re- 
quirements of  these  conventions  as  well  as  to  our  own  Narcotic  Drugs 
Import  and  Export  Act.  It  exchanges,  directly  with  the  narcotics 
control  authorities  of  other  governments,  information  relating  to 
movements  of  drugs  mider  the  permits,  as  well  as  information  relating 
to  illicit  traffickers  and  illicit  movements  of  narcotics  between  coun- 
tries. Through  the  State  Department  the  Bm-eau  cooperates  in 
matters  of  narcotic  policy  with  other  governments  and  with  the 
United  Nations. 

The  former  Commissioner  of  Narcotics,  Air.  Harry  J.  Anslinger, 
now  retired,  is  the  U.S.  representative  on  the  United  Nations  Com- 
mission on  Narcotic  Drugs,  which  meets  annually  to  review  the  work 
of  the  various  international  agencies  concerned  with  narcotics  and  to 
make  recommendations  on  narcotic  matters  to  the  Economic  and 
Social  Council. 

An  agreement  to  limit  the  production  of  opium  to  world  medical 
and  scientific  needs,  signed  at  the  United  Nations  on  June  23,  1953, 
was  approved  by  the  United  States  Senate  August  20,  1954,  and  was 
followed  by  Senate  Resolution  290  of  June  14,  1956,  urging  other 
governments  to  ratify  it.  This  Protocol  requires  the  ratifications  of 
25  states  including  any  three  of  seven  named  producing  countries  and 
any  three  of  nine  named  manufacturing  countries.  As  of  June  30, 
1962,  42  ratifications  had  been  deposited  including  six  from  manufac- 
turing countries  and  two  from  producing  countries.  When  one 
additional  producing  country  has  deposited  its  ratification  the  Proto- 


184   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

col  will  become  effective  and  should  then  accomplish  a  much  further 
reduction  in  the  quantity  of  opium  available  to  the  illicit  traffic. 

At  the  request  of  authorities  of  France,  Lebanon,  Turkey,  and 
Syria,  Bureau  agents  during  the  year  assisted  in  the  apprehension  of 
major  international  narcotic  traffickers  who  were  sources  of  supply 
for  criminal  groups  in  the  United  States. 

Several  cases  were  developed  in  Turkey  in  which  Turkish  authorities 
seized  large  quantities  of  morphine  base,  heroin,  and  opium  and 
arrested  many  defendants.  Major  narcotic  conspiracy  investigations 
were  successfully  conducted  with  police  authorities  of  Canada,  Italy, 
France,  and  Mexico.  The  continued  joint  narcotic  law  enforcement 
program  with  Mexican  authorities  has  significantly  curtailed  illicit 
narcotic  traffic  from  Mexico  to  Texas  and  southern  California. 

Cooperation  with  States,  counties,  and  local  authorities 

Excellent  cooperation  continues  between  Federal,  State,  and  local 
narcotic  law  enforcement  agencies  in  the  exchange  of  law  enforcement 
information.  Many  types  of  minor  violations  and  routine  inspections 
formerly  handled  by  the  Bureau  are  now  referred  to  State  or  local 
authorities  for  investigation  and  prosecution,  or  are  investigated 
jointly  with  them. 

Training  schools 

The  Bureau  of  Narcotics  Training  School  was  established  in  1956 
to  meet  the  need  for  State  and  local  law  enforcement  officers  trained 
in  narcotic  enforcement  techniques.  The  school  provides  2-week 
intensive  courses  in  narcotic  law  enforcement  procedures  through 
lectures,  demonstrations,  and  technical  instruction  in  methods  of 
detection  and  prevention  of  illicit  narcotic  trafficking.  Police  officers 
from  foreign  countries  who  visit  the  United  States  to  receive  training 
in  general  law  enforcement  methods  and  procedures  also  attend  this 
school. 

The  training  school,  staffed  by  20  experts  in  narcotic  law  enforce- 
ment, has  now  graduated  948  State  and  municipal  law  enforcement 
officers  representing  393  separate  agencies  from  47  States,  the  District 
of  Columbia,  and  Puerto  Rico.  Ninety  foreign  law  enforcement 
officers,  representing  22  separate  agencies,  from  Afghanistan,  Belgium, 
Bolivia,  Canada,  Ceylon,  Ecuador,  Egypt,  Ethiopia,  Indonesia,  Iran, 
Iraq,  Japan,  Jordan,  Korea,  Lebanon,  Mexico,  the  Netherlands, 
Peru,  the  Philippines,  Thailand,  Turkey,  and  Venezuela  also  have  at- 
tended. Twenty-five  Federal  narcotic  agents  attended  the  Treasury 
Law  Enforcement  School  and  five  attended  its  technical  equipment 
operators'  school. 

The  names  of  47,303  active  addicts,  many  of  whom  were  reported 
by  State  and  local  agencies,  were  recorded  in  the  Bureau's  central 
index  as  of  June  30,  1962. 

Management  improvement 

During  the  fiscal  year  the  Bureau  improved  the  internal  audit 
program  by  appointing  an  additional  field  supervisor.  The  United 
States  was  divided  into  eastern  and  western  divisions,  and  the  field 
supervisors  were  assigned  an  area  of  responsibility.  This  appoint- 
ment enables  yearly  audits  to  be  made  of  all  field  offices  as  well  as 
of  Bureau  headquarters. 


ADMINISTRATIVE    REPORTS  185 

With  departmental  assistance,  the  internal  audit  program  was  re- 
viewed, new  policies  established,  and  an  internal  audit  manual  pre- 
pared. This  document  and  the  revised  progi-am  provide  available 
reference  sources  for  all  interested  personnel  as  well  as  instructions 
for  execution  of  the  entu^e  program. 

A  new  system  of  property  accountability  was  placed  in  operation 
on  June  30,  1962.  This  program  was  designed  to  simplify  property 
accountability  in  the  field  and  to  provide  more  adequate  property 
control  at  headquarters. 

Nineteen  employees  were  paid  cash  awards  totaling  $3,265  under 
the  incentive  awards  program  for  adopted  suggestions  or  special  acts 
and  services. 

United  States  Coast  Guard 

The  U.S.  Coast  Guard  is  responsible  for  enforcing  or  assisting  in 
the  enforcement  of  Federal  laws  on  the  high  seas  and  waters  subject 
to  the  jurisdiction  of  the  United  States.  These  laws  govern  naviga- 
tion, shipping,  and  other  maritmie  operations,  and  the  related  protec- 
tion of  life  and  property.  The  Service  also  coordinates  and  provides 
maritime  search  and  rescue  facilities  for  marine  and  air  commerce, 
and  the  Armed  Forces.  Other  functions  include  promoting  the  safety 
of  merchant  vessels,  fm'nishing  ice  breaking  services,  and  developing, 
installing,  maintaining,  and  operating  aids  to  maritime  navigation. 
The  Coast  Guard  has  a  further  responsibility  for  maintaining  a  state 
of  readiness  to  function  as  a  specialized  Service  of  the  Navy  in  time 
of  war  or  national  emergency. 

Search  and  rescue 

The  National  Search  and  Rescue  Plan  of  1956  was  updated  in  1961 
and  approved  by  the  Secretary  of  the  Treasury  and  the  heads  of  other 
Government  agencies  concerned.  The  plan  has  been  promulgated  as 
an  interagency  agi-eement.  As  a  part  of  this  program  the  Coast 
Guard  again  held  exercises  concerning  survival  and  search  and  rescue 
procedures  for  military  and  airlines  personnel  in  Miami,  Fla.,  and 
Honolulu,  Hawaii.  Each  session  was  attended  by  approximately  200 
persons. 

The  Atlantic  Merchant  Vessel  Reporting  System  (AMVER)  was 
used  successfully  many  times  during  the  year  in  coordinating  the 
services  of  merchant  vessels  assistmg  in  search  and  rescue  cases.  An 
estimated  90  percent  of  the  domestic  merchant  ships  and  65  percent 
of  the  foreign  vessels  traveling  the  AMVER  region  are  participating 
in  the  progi'am.  The  AMVER  brochure  has  been  printed  in  10 
foreign  languages  to  promote  gi'eater  participation  by  foreign  vessels. 

Typical  examples  of  assistance  rendered  by  the  Coast  Guard  during 
fiscal  1962  are  described  below. 

Air  evacuation  of  injured  crewman. — In  November  1961  a  crewman 
of  the  SS  Conde  De  Fontanar,  suffering  from  a  severe  head  injury 
after  fallmg  into  a  hold,  was  transferred  to  another  ship,  the  SS 
Jerusalem,  for  exammation  by  a  doctor.  The  doctor's  diagnosis  m- 
dicated  that  the  patient  required  neurosurgery  and  to  save  his  life 
should  be  removed  to  a  hospital  without  delay.  This  evacuation 
was  carried  out  by  an  amphibious  aircraft  from  the  Coast  Guard  Air 
Detachment,  Bermuda,  which  landed  at  sea  and  transferred  the  pa- 
tient to  a  Bermuda  hospital. 


186   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Rescue  of  dredge  crew. — Ten  men,  who  had  abandoned  ship  from 
the  dredge  Cartagena,  were  rescued  by  the  U.S.C.G.C.  Acushnet  on 
December  26,  19G1.  The  breakmg  of  the  dredge's  tow  Une  from  a 
commercial  tug  had  set  it  adi'ift  about  260  miles  east  of  Cape  Cod, 
Mass. 

Overdue  cabin  cruiser  located. — The  cabin  cruiser  Alarina,  with  two 
persons  on  board,  departed  Clearwater,  Fla.,  on  Februarj^  19,  1962, 
for  Apalachicola.  When  it  failed  to  arrive  on  schedule,  two  Coast- 
Guard  au'craft  and  a  patrol  boat  began  a  search,  which  was  hampered 
by  fog  and  a  low  ceilmg.  As  weather  permitted,  additional  aircraft 
joined  the  search.  On  February  23  the  Marina,  disabled  and  an- 
chored, was  sighted  by  a  Coast  Guard  plane.  The  Marina  was  then 
towed  to  safety  by  another  cabin  cruiser. 

Injured  Russian  crewman  evacuated. — On  March  17,  1962,  the  Coast 
Guard  was  requested  to  evacuate  a  seriously  injured  crewman  from 
the  Russian  M/V  Dbitelny  on  the  Bering  Sea.  A  Coast  Guard  au'- 
craft transported  a  Navy  doctor  and  hospital  corpsman  to  a  pre- 
arranged rendezvous  at  the  Coast  Guard  Loran  Station,  St.  Paul 
Island,  where  the  injured  man  had  been  transferred  by  the  Dbitelny. 
After  an  emergency  operation,  the  patient  was  flown  to  Ehnendorf 
Air  Force  Base  and  admitted  to  a  U.S.  Air  Force  hospital. 

Search  for  missing  B-52  aircraft. — An  Air  Force  B-52,  with  eight 
persons  on  board,  was  reported  overdue  and  possibly  down  in  the 
Atlantic  Ocean  on  October  14,  1961.  The  Commander,  Eastern  Area, 
coordinated  a  search  effort  participated  in  by  79  Coast  Guard,  Navy, 
Air  Force,  and  Canadian  aircraft,  five  Coast  Guard  cutters,  and  two 
merchant  ships.  In  spite  of  an  intensive  search  thi-ough  October  18, 
covering  286,225  square  miles,  no  trace  of  the  ahcraft  was  found. 

A  statistical  summary  of  search  and  rescue  assistance  comparing 
the  fiscal  years  1961  and  1962  follows. 


Rescue  operations 

By  aviation 
units 

By  vessels 

By  other 
equipment 

Total 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

Vessels  assisted: 

Refloated  (number) 

Towed  (number) 

83 

379 

1,004 

74 
280 
975 

202 
2,219 
1,063 

227 
2,385 
1,210 

1,625 
8,666 
3,454 

1,908 

10, 928 

2,891 

1,910 

11,  264 

5,521 

$627, 395 
119, 696 

390 
391 

$1,090,938 

61,883 

2,776 

1,261 

8,822 

2,806 

2,392 
79, 199 

$16, 991 

2,209 
13, 593 

Otherwise  aided  (number) . 

Property  involved  (value 
including  cargo  in  thou- 
sands)          ... 

5,076 
$776, 226 

Miles  towed 

138, 085 

Aircraft  assisted: 

Escorted  (number).... 

Otherwise  aided  (number). 
Property  involved  (value 
including  cargo  in  thou- 
sands) ..      -    .... 

383 

168 

303 
160 

2 
44 

4 
45 

5 
179 

9 

174 

316 
379 

$710, 668 

Miles  escorted 

52, 469 

Personnel  assisted. 

668 

87 

1,874 

724 

114 

2,171 

403 

159 

1,535 

456 

201 

1,741 

1,705 
1,015 
5,413 

1,986 
1,056 
5,826 

3,166 

Miscellaneous  assisted  (floods, 
forest  fires,  etc.) 

1,371 

Attempts  to  assist  (no  physi- 
cal assistance  rendered) 

Persons  involved  (number) : 
Lives    saved    or    rescued 
from  peril 

9,738 
2,597 

Medical    assistance    fur- 
nished..  

2,622 

Other  assistanrai 

85, 519 

Miscellaneous    property    in- 
volved (value  in  thousands') 

$46,440 

ADMINISTRATIVE    REPORTS 


187 


Marine  inspection  and  allied  safety  measures 

During  the  fiscal  year,  4,200  marine  casualties  were  reported  and 
investigated.  Marine  boards  of  investigation  looked  into  six  of  these 
cases  which  were  considered  major.  The  investigations  disclosed 
that  166  persons  lost  their  lives  from  vessel  casualties,  136  from  per- 
sonal accidents,  and  243  deaths  were  from  miscellaneous  causes. 
These  figures  do  not  include  pleasure  vessels  covered  by  the  Federal 
Boating  Act  of  1958  (46  U.S.C.  527). 

The  most  serious  casualty  of  the  year  resulted  from  the  collision 
of  the  Norwegian  Tanker  Berean  and  the  Nationalist  Chinese  Freighter 
Union  Reliance  in  the  Houston  Ship  Channel.  Eleven  crewmembers 
and  the  pilot  of  the  Union  Reliance  were  lost. 

National  motorboat  numbering  program. — Forty-one  States  are  now 
numbering  motorboats  under  plans  approved  by  the  Coast  Guard. 
The  approval  by  the  Coast  Guard  of  a  numbering  system  for  the 
State  of  New  Jersey  is  pending.  Numbering  legislation  is  under 
consideration  in  five  other  States  and  Puerto  Rico.  A  press  release 
issued  in  May  1962  outlined  the  important  features  of  the  Federal 
Boating  Act  and  interpreted  certain  provisions  of  Coast  Guard 
numbering  regulations.  This  publicity  is  expected  to  help  reduce 
violations  as  well  as  to  improve  the  quality  of  applications  for  number. 

On  December  31,  1961,  there  were  3,085,732  boats  numbered  in  the 
United  States,  of  which  2,826,690  were  issued  through  approved 
State  systems.  The  Coast  Guard  handled  the  remainder  which  were 
for  States  not  having  approved  programs. 

During  the  calendar  3'ear,  there  were  4,095  pleasure  craft  involved 
in  reportable  accidents  which  led  to  1,101  fatalities,  1,088  injuries, 
and  property  damage  estimated  at  $4,372,200. 

A  digest  of  certain  marine  inspection  activities  for  comparing  the 
fiscal  years  1961  and  1962  follows. 


Inspection  activities 


Inspections  for  certification 

Drydockings 

Reinspections 

Factory  inspections 

Miscellaneous  inspections 

Merchant  vessel  plans  reviewed 

Violations  of  navigation  and  inspection  laws  2 


Number 


1961 


5,433 

5,810 

6,204 

607,  245 

22, 801 

32, 300 

11,412 


1962 


4,218 

5,731 

5,855 

1 1, 558, 399 

25, 107 

35, 915 

28, 059 


Gross  tonnage 


1961 


11, 301, 814 

13, 654, 872 

8, 201, 551 


1962 


8, 532, 734 
13, 413, 450 
13, 320, 800 


1  Includes  sucli  items  as  life  rafts,  life  jackets,  and  flares. 

*  Administrative  penalty  action  completed,  year  ending  April  30. 

Merchant  m,arine  technical  activities. — During  the  fiscal  year,  the 
plans  for  the  construction  of  23  large  cargo  ships,  five  tankers,  and 
123  barges  were  approved  by  the  Coast  Guard.  The  preceding 
table  shows  the  total  number  of  plans  reviewed  during  1961  and 
1962. 

The  Coast  Guard  reviewed  many  plans  for  vessels  of  novel  and 
unique  design  which  are  to  be  used  to  transport  bulk  chemicals.  An 
estimated  400  new  chemical  compounds  are  developed  each  year, 
requiring   new   concepts    of    transportation.     The   Coast    Guard   is 


188   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

constantly  formulating  new  regulations  or  revising  those  in  effect 
to  keep  abreast  of  these  new  concepts  and  to  establish  safeguards 
against  the  hazards  involved  in  the  water-borne  movement  of  bulk 
chemicals. 

After  dockside  tests  of  its  nuclear  power  plant  the  N.S.  Savannah 
went  to  sea  under  nuclear  power  for  a  complete  test  of  its  reactor. 
The  nuclear  characteristics  of  the  power  plant  were  essentially  as 
predicted,  and  the  vessel  was  accepted  by  the  Government  on  May  1, 
1962. 

A  new  technical  branch  was  established  by  the  Coast  Guard  at 
New  York  City,  N.Y.,  to  review  plans  for  all  new  marine  construction, 
conversion,  and  alteration  on  vessels  subject  to  Coast  Guard  inspec- 
tion along  the  eastern  coast  from  North  Carolina  to  Maine.  The 
new  branch  is  expected  to  speed  up  and  improve  vessel  plan  approval 
procedures  and  facilitate  the  solution  of  related  problems. 

Merchant  Marine  Council  meetings,  con-ferences ,  and  jmhlications. — 
The  Merchant  Marine  Council  held  eight  regular  committee  meetings 
and  one  public  hearing  to  consider  proposed  regulations  which  would 
amend  present  requirements  for  merchant  marine  safety. 

Coast  Guard  representatives  participated  in  several  meetings  of 
the  Intergovernmental  Maritime  Consultative  Organization  to  discuss 
various  matters  relating  to  international  maritime  safety.  Other 
international  conferences  attended  by  Coast  Guard  officials  included 
consideration  of:  carriage  of  dangerous  goods  by  sea;  navigational 
lights  for  the  Red  Sea;  prevention  of  pollution  of  the  sea  by  oil; 
and  standards  for  electrical  installations  on  ships. 

To  promote  marine  safety  the  Coast  Guard  participated  in  numerous 
meetings  and  conferences  held  within  the  United  States  during  the 
year.  Two  million  copies  of  the  pamphlet,  Pleasure  Craft,  containing 
highlights  of  the  Federal  Boating  Act  of  1958,  were  printed  and  dis- 
tributed to  the  public.  Another  educational  publication,  the  Recrea- 
tional Boating  Guide,  for  the  novice  boatman  proved  popular,  with 
some  98,000  being  sold  to  date  through  the  Government  Printing 
Office. 

Merchant  marine  personnel. — During  the  fiscal  year,  6.3,182  docu- 
ments were  issued  to  merchant  marine  personnel,  and  Coast  Guard 
shipping  commissioners  supervised  the  execution  of  7,871  sets  of 
shipping  articles  involving  494,926  individual  transactions  relating 
to  the  shipment  and  discharge  of  seamen. 

Merchant  marine  investigating  sections  in  major  l^.S.  ports  and 
merchant  marine  details  in  foreign  ports  investigated  15,572  cases 
involving  negligence,  incompetence,  and  misconduct.  Charges  were 
preferred  and  hearings  conducted  before  civilian  examiners  in  1,031 
of  these  cases.  Security  checks  were  made  of  17,122  persons  desiring 
employment  on  merchant  vessels. 

Law  enforcement 

Coast  Guard  law  enforcement  activities  include  the  port  security 
program  and  routine  and  special  patrols  to  enforce  safety,  conserva- 
tion, water  pollution,  and  treaty  laws. 

The  Coast  Guard  has  set  up  special  patrols  in  the  North  Pacific 
Ocean  and  the  Bering  Sea  to  observe  the  increased  fishing  and  whaling 


ADMINISTRATIVE    REPORTS 


189 


activities  of  Japanese  and  Kussian  fleets.  The  Coast  Guard  patrols 
are  being  conducted  alternately  by  three  cutters,  each  spending  six 
weeks  in  the  patrol  area  during  the  period  April  15  to  September  15. 
Their  presence  should  lessen  the  possibility  of  treaty  violations  and 
illegal  incursions  into  U.S.  territorial  waters  in  pursuit  of  fish  or 
whales.  Although  no  violations  have  been  observed,  the  patrols 
should  assure  American  fishermen  that  the  Federal  Government  is 
effectively  protecting  their  rights.  Recent  minor  incidents  in  the 
Northwest  Atlantic,  apparently  resulting  from  the  presence  of  large 
Russian  fishing  fleets  on  the  traditionally  American  fishing  areas  of 
Georges  Bank,  indicate  that  similar  patrols  may  be  needed  in  that 
area. 

The  following  statistics  reflect  the  volume  of  enforcement  work  by 
the  Coast  Guard  during  the  fiscal  year  1962  compared  with  1961. 


Enforcement  work 


1961 


1962 


Number 


Vessels  boarded 

Waterfront  facilities  inspected 

Reported  violations  of: 

Motorboat  Act 

Port  security  regulations 

Oil  Pollution  Act 

Other  laws 

Explosives: 

Loading  permits  Issued 

Loadings  supervised 

Tons  covered  by  issued  permits 

other  hazardous  cargoes  inspected.. 

Anchorage  violations 


152, 441 
24, 254 

25, 125 
714 
462 
498 

801 

701 

116, 601 

7,465 

23 


171, 160 
29, 294 

53, 706 

1,244 

524 

642 

756 

513 

279,  689 

6,801 

19 


Cooperation  with  other  Federal  agencies 

The  Coast  Guard  assisted  other'Federal'agencies  during  the  last 
two  fiscal  years  as  foUows: 

1961  1962 

Alcohol  Tax  Unit,  Treasury  (aircraft  days) 27  36 

Coast  and  Geodetic  Survey  (aerial  survey  days) 138  225 

Fish  and  Wildlife  (censuses  taken) 220  237 

Weather  Bureau: 

Reports  furnished 84,490  95,588 

Warnings  disseminated 19,299  17,928 

Aids  to  navigation 

The  new  Buzzards  Bay,  Mass.,  Light  Station  was  placed  in  opera- 
tion during  the  fiscal  year,  replacing  a  lightship.  Constructed  in 
73  feet  of  water,  the  offshore  station  is  operated  by  seven  men  and  has 
a  9,000,000  candlepower  light.  A  second  oft'shore  light  station 
is  in  the  final  stages  of  construction  at  Brenton  Reef,  R.I.,  to  replace 
another  lightship.  The  Overfalls  Lightship  has  been  discontinued, 
because  of  major  improvements  to  other  aids  to  navigation  in  the  area. 
A  new  lighthouse  with  a  28,000,000  candlepower  light  was  placed  in 
operation  at  the  entrance  to  the  Charleston,  S.C.,  harbor. 

The  following  statistics  reflect  the  volume  of  aids  to  navigation 
maintained  at  the  close  of  the  last  two  fiscal  years. 


190 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Navigational  aids 


Loran  transmitters 

Radiobeacons.. 

Fog  signals  (except  sound  buoys) 

Lights  (including  lightships) 

Day  beacons 

Buoys: 

Lighted  (including  sound)... 

Unlighted  sound 

Unlighted 

River  type 

Total 


40, 891 


1  Includes  three  experimental  loran-C  stations. 

2  Includes  118  spar  buoys. 

Ocean  stations 

The  Coast  Guard  continued  to  operate  foui"  ocean  stations  in  the 
North  Atlantic  and  two  in  the  North  Pacific.  These  ships,  during 
their  cruises  of  approximately  507,477  miles,  provided  meteorological, 
navigational,  communication,  and  rescue  services  for  air  and  marine 
commerce,  and  collected  various  scientific  data. 

International  ice  patrol 

The  international  ice  patrol,  made  up  of  an  aircraft  detachment,  a 
radio  station,  and  an  oceanographic  vessel,  operated  in  the  North 
Atlantic  between  March  3  and  June  22,  1962.  The  ice  menace  to 
shipping  during  the  1962  season  was  relatively  mild. 

Bering  Sea  patrol 

The  1961  Bering  Sea  patrol  was  carried  out  by  the  cutters  North- 
wind  and  Storis  from  May  20  to  September  30,  1961.  This  patrol  is 
principally  concerned  with  law  enforcement,  search  and  rescue,  aids 
to  navigation,  logistics,  oceanography,  and  the  furnishing  of  medical 
and  dental  treatment  to  Alaskan  natives. 

Coast  Guard  intelligence 

Internal  security  investigations  involving  3,039  cases  were  con- 
ducted, and  7,916  military  national  agency  checks  were  made  during 
the  year.  In  addition  18,625  merchant  mariners  and  25,606  applicants 
for  port  security  cards  were  screened  before  issuance  of  their 
documents. 

Facilities,  equipment,  construction,  and  development 

Floating  units. — Ships  in  active  commission  on  June  30,  1962,  con- 
sisted of  174  cutters,  74  patrol  boats,  27  lightships,  38  tugs,  and  13 
buoy  boats.  Construction  has  begun  on  two  of  the  newly  designed 
210-foot  WPC  Class  medium  patrol  cutters  as  part  of  the  program  to 
replace  overage  and  obsolete  ships. 

Shore  establishments. — Damage  to  Coast  Guard  installations  from 
hurricane  Caiia  and  the  severe  March  storm  exceeded  $3,000,000. 
Three  shore  stations,  extensively  damaged,  requhe  replacement. 
Eleven  light  stations  were  converted  from  manned  to  automatic 
operation.  Five  facilities,  including  light  stations  and  light  attendant 
stations,   were   disestablished.     Fifteen   additional  mobile    boarding 


ADMINISTRATIVE    REPORTS  191 

teams  were  established,  and  other  shore  units  were  reorganized  to 
provide  better  service  to  the  pubhc  and  to  improve  economy. 

Aviation  and  aircraft  .—The.  Coast  Guard  operated  134  aircraft,  in- 
cludino;  38  heUcopters,  during  fiscal  1962.  Nine  SC-130  long  range 
aii'craft  are  now  in  service,  three  of  which  were  procured  during  the 
fiscal  year.  Action  was  taken  to  procure  several  turbine-powered, 
amphibious  S-62  helicopters  as  replacements  for  the  older  H04S  type. 

Communications. — A  study  to  improve  search  and  rescue  landline 
communications  facilities  along  the  Atlantic  and  Gulf  coasts  made  it 
possible  to  combine  the  east  coast  search  and  rescue  teletype  network 
with  that  of  the  Atlantic  merchant  vessel  reporting  system.  The 
savings  realized  permitted  expansion  of  the  search  and  rescue  com- 
munications capabilit}^  at  no  added  expense  to  the  Government. 

Engineering  developments 

Aeronautical  engineering. — All  of  the  Coast  Guard's  UF  amphibian 
aircraft  have  now  been  converted  to  the  longer-winged  UF-2G  type. 
This  has  led  to  improvements  in  safety,  speed,  range,  and  payload. 
The  reliability  of  the  engines  on  Coast  Guard  SC-130  aucraft  has 
improved  so  markedly  that  the  authorized  time  between  overhauls 
has  been  increased  from  1200  to  1800  hom's.  Specifications  have  been 
developed  to  adapt  the  commercial  S-62  helicopter  for  use  in  Search 
and  Rescue  operations.  This  new  helicopter,  to  be  manufactm-ed  by 
Sikorskj^  Aii-craft,  will  be  knoAvn  as  type  HU2S-1G  when  placed  in 
service. 

Civil  engineering. — Dm*ing  the  fiscal  year,  100  unlighted  fibrous-glass 
buoys  were  manufactured  and  placed  on  station  m  western  rivers  for 
feasibility  tests.  In  addition,  conventional  steel  buoys  were  com- 
pletely redesigned  to  improve  serviceability,  maintenance,  and  safety. 

The  loran  construction  program  made  considerable  progress,  with 
three  new  loran  transmitting  stations  along  the  eastern  coast  now 
nearing  completion.  These  stations  have  been  tested  and  are  being 
calibrated  before  bemg  placed  in  service.  A  new  transmitting  station 
as  an  addition  to  an  existing  loran  chain  was  also  completed. 

Electronics  engineering. — The  New  York  harbor  RATAN  station  at 
Sandy  Hook,  N.J.,  was  placed  in  experimental  operation  in  December 
1961.  This  RATAN  station  employs  a  harbor  surveillance  radar  and 
television  broadcast  station,  which  permits  conversion  of  radar  in- 
formation for  broadcasting  to  users  having  ordinary  TV  receivers. 
The  user  is  thus  supplied  with  radar  service  without  investing  in 
costly  radar  equipment. 

The  loran-C  stations  now  in  use  and  those  under  construction  will 
provide  much  better  service  for  military  and  civilian  users  than 
loran-A,  the  first  of  the  long-range  aids  to  navigation  systems.  The 
signals  generated  by  loran-C  have  greater  range  and  are  more  precise 
for  navigational  purposes.  The  Coast  Guard  recently  contracted  for 
18  loran-C  aucraft  receivers  to  take  advantage  of  this  advanced  all- 
weather  navigational  system. 

Naval  engineering. — The  manufacture  of  fourteen  82-foot  B  class 
WPB  steel  patrol  boats  has  been  completed,  and  ten  similar  vessels 
of  the  class  C  type  are  under  construction.  These  new  steel  vessels 
are  to  replace  83-foot  wooden  patrol  boats.  The  Coast  Guard  has 
placed  in  service  an  82-foot  patrol  boat  powered  b}^  two  gas  turbine 


192 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


engines.  This  is  the  first  operational  installation  of  such  a  power 
plant  on  a  patrol  vessel.  Six  steel  65-foot  WYT  harbor  tugs  were 
constructed,  and  six  more  are  nearing  completion.  The  last  of  four 
65-foot  pusher-tender  barge  combinations  was  completed  for  use  in 
aids-to-navigation  work  on  rivers  in  the  Second  District. 

Testing  and  development.— K  new  primary  dry  battery  power  sj'stem 
for  buoys  has  been  accepted  for  Service-wide  use.  The  new  system 
will  double  the  available  power  and  largely  ehminate  the  installation 
of  batteries  in  buoys  whde  at  sea.  Several  advanced  power  systems 
for  unattended  aids-to-navigation  are  undergoing  test  and  evaluation. 
These  include  nuclear  and  propane  thermoelectric  power  supplies. 
A  radar  data  computer,  capable  of  reducing  ship  collision  hazards,  is 
being  evaluated  for  the  Maritime  Administration.  Early  reports  on 
this  system  indicate  a  very  satisfactory  performance. 

Coast  Guard  Reserve 

Dm'ing  the  fiscal  year,  112  organized  Reserve  training  units  (port 
security)  were  designated  as  operational.  These  units  were  organized 
and  trained  to  establish  port  security  units  in  all  key  ports  of  the 
United  States,  including  Hawaii,  Alaska,  and  Puerto  Rico.  A  ma- 
chine system  for  matching  mobilization  billets  with  Reserve  personnel 
is  scheduled  for  implementation  in  fiscal  1963.  This  will  permit  the 
issuance  of  preassignment  mobilization  orders  to  reservists  and  avail- 
able retired  personnel. 

Personnel 

The  following  table  illustrates  the  personnel  strength  of  the  Coast 
Guard  as  of  June  30,  1961  and  1962. 


Personnel 

1%1 

1962 

Nur 

Qber 

Military  personnel: 

Commissioned  officers  -.  -            .      .  . 

3,061 

812 

205 

385 

27,  100 

3,122 

Chief  warrant  officers 

849 

Warrant  officers                                 .           -      ......      -  

178 

Cadets        

372 

Enlisted  men..    .  .  . 

27, 200 

Total - 

31, 563 

31,721 

Civilian  personnel: 

Salaried  (General  Service)                                 --      --      ....... 

2,477 

2,219 

220 

2,539 

Wageboard      -  -      -      - - 

2,148 

Lamplighters .  -  

207 

Total  (exclusive  of  vacancies)  .  

4,916 

4,894 

Ready  reservists: 

Officers 

3,650 
27,399 

3,570 

Enlisted  men               .      .  .  _      .  . .  .  .  .  .  

24, 638 

Total                                                            

31,049 

28, 208 

The  following  table  shows  the  changes  in  the  numbers  of  officers 
on  active  dutv  as  of  Juno  30,  1961  and  1962.  The  net  gain  of  61 
was  sufficient  to  meet  the  increased  commitments  at  the  beginning  of 
fiscal  1963. 


ADMINISTRATIVE    REPORTS 


193 


Officers 


Additions  of  commissioned  officers: 

Coast  Guard  Academy  graduates 

Officer  Candidate  School  graduates 

Reserve  officers  called  to  active  duty 

Former  merchant  marine  officers  appointed- 


Total. 


Losses  of  commissioned  officers: 

Regular  i 

Reserve  on  completion  of  obligated  service- 


Total. 
Net  gain 


1961 

1962 

Number 

119 

204 

17 

5 

115 

208 

18 

5 

345 

346 

88 
210 

135 
150 

298 

285 

47 

61 

1  Through  retirements,  resignations,  revocations,  and  deaths. 

Recruiting  and  training. — Fifty-four  main  recruiting  stations  and 
approximately  50  substations  were  manned  by  226  recruiters.  During 
the  fiscal  year  there  were  13,231  applications  for  enlistment  in  the 
regular  Coast  Guard  and  3,314  were  enlisted.  The  Reserve  received 
6,708  applications  and  enlisted  2,763.  The  Receiving  Center,  Cape 
May,  N.J.,  trained  3,550  recruits  and  the  Receiving  Center,  Alameda, 
Calif.,  an  additional  2,768. 

Training  for  foreign  visitors. — Appro.ximately  105  visitors  from  21 
foreign  countries,  under  the  sponsorship  of  other  Government  agencies, 
were  extended  the  use  of  Coast  Guard  facilities  for  training  in  aids-to- 
navigation,  loran,  search  and  rescue  procedures,  merchant  marine 
safety,  vessel  inspection,  port  security,  law  enforcement,  and  aviation. 

Coast  Guard  education  program. — -The  education  and  training 
programs  participated  in  and  sponsored  by  the  Service  are  summarized 
for  1961  and  1962  as  follows. 


Education  and  training  programs 


Coast  Guard  Academy: 

Applications 

Applications  approved — 

Appointments 

Cadets 

Graduates  (bachelor  of  science  degrees) 

Officer  training  completed: 

Officer  Candidate  School  graduates 

Postgraduate.- — 

Flight  training 

Helicopter  pilot  training 

C-130-B  aircraft  training 

Short  term  specialized  courses 

Off  duty  courses  at  civilian  schools 

Enlisted  training  completed: 

Coast  Guard  basic  petty  officer  schools 

Navy  basic  petty  officer  schools. 

Advanced  schools  (Coast  Guard  and  Navy)... 

Specialized  courses  (Service  and  civilian  schools) 

Correspondence  courses  completed: 

Coast  Guard  Institute  courses  completed 

U.S.  Armed  Forces  Institute  courses  completed. 
Naval  correspondence  schools  courses  completed 


1961 

1962 

Number 

5,128 

5,436 

5,101 

5,352 

224 

235 

385 

372 

119 

115 

262 

208 

52 

57 

47 

35 

25 

25 

20 

34 

289 

318 

230 

288 

1,487 

1,561 

394 

'208 

1,023 

1  1,084 

382 

567 

6,107 

10, 691 

253 

261 

2,641 

5,724 

»  Estimate. 

661496- 


-63- 


-14 


194   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Public  Health  Service  support. — On  June  30,  1962,  there  were  92 
Public  Health  Service  personnel  on  duty  with  the  Coast  Guard 
serving  at  22  shore  stations  and  aboard  ships  assigned  to  ocean 
stations,  the  Bering  Sea  patrol,  and  Arctic  and  Antarctic  operations. 

Fiscal  and  supply  management 

The  Coast  Guard  indoctrmated  its  personnel  at  Headquarters  and 
field  units  in  the  use  of  the  new  Military  Standard  Requisitioning  and 
Issue  Procedures  (MILSTRIP),  which  went  into  effect  in  all  Defense 
agencies  and  the  General  Services  Administration  on  July  1,  1962. 

Tlirougli  an  agreement  with  the  Department  of  Defense,  the  Coast 
Guard  can  now  use  the  facilities  of  that  agenc}^  to  obtain  usable 
material  declared  excess  as  well  as  to  dispose  of  its  o"s\ti  surplus  items. 

Coast  Guard  Auxiliary 

The  Auxiliary',  a  voluntary  nonmilitary  organization  functioning  in 
more  than  575  communities,  conducted  numerous  public  instruction 
courses  in  safe  boating  during  fiscal  1962.  These  courses  had  an 
enrollment  of  approximately  125,000  persons.  Courtesy  examina- 
tions of  the  safety  equipment  of  approxhnately  126,000  motorboats 
were  made  by  specially  qualified  auxiliarists.  The  Auxiliary  also 
assisted  the  Coast  Guard  in  patrollmg  1,270  regattas,  and  responded 
to  an  estimated  5,000  calls  for  assistance.  On  June  30,  1962,  the 
organization  had  some  21,700  members  and  14,000  facilities,  including 
boats,  aircraft,  and  radio  stations  in  760  flotillas. 

Funds  available,  obligations,  and  balances 

The  following  table  shows  the  amount  of  funds  available  for  the 
Coast  Guard  during  fiscal  1962  and  the  amounts  of  obligations  and 
unobligated  balances. 


1 


Funds 
available ' 

Net  total 
obligations 

Unobligated 
balances ' 

Appropriated  funds: 

Operating  expenses 

$211,877,681 
16, 000. 000 
31.350,000 
49, 962. 293 

$211,614,481 
15.9.50,735 
30, 866, 678 
33,754,815 

$263, 200 

Reserve  training . 

49, 265 

Retired  pav          .-  . 

483, 322 

Acquisition,  construction,  and  improvements 

16,207,478 

Total  appropriated  funds..            ..      

309, 189, 974 

292, 186. 709 

17, 003, 265 

Reimbursements: 

Operating  expenses .           .. ..       .    . 

30,910,135 
25,621,221 

30, 910, 135 
16,367,140 

Acquisition,  construction,  and  improvements 

9,254,081 

Total  reimbursements 

56, 531, 356 

47,277,275 

9, 254, 081 

Trust  fund,  U.S.  Coast  Guard  gift  fund 

18. 182 

5,993 

12, 189 

Grand  total 

365,739,512 

339,469,977 

26, 269, 635 

I  Funds  available  include  unobligated  balances  brought  forward  from  prior  year  appropriations  as  follows: 
Acquisition,  construction,  and  improvements: 

Appropriated  funds $10,962,293 

Reimbursements 15,349,984 

U.S.  Coast  Guard  gift  fund 11,238 

*  Unobligated  balance  of  $25,461,559  imder  the  acquisition,  construction,  and  improvement  appropriation 
remains  available  for  obligation  in  the  fiscal  year  1963.  These  funds  are  programmed  for  obligation  in  fiscal 
1963  for  the  following  general  purposes: 

Coast  Guard  Department 
projects       of  Defense 
projects 

For  projects  deferred  in  fiscal  1962  to  be  subsequently  accomplished $2,920,000 

For  completion  of  projects  started  in  fiscal  1962 13,287,478       $9,254,081 


Total. 


16, 207. 478  9, 254, 081 


ADMINISTRATIVE    REPORTS  195 

Management  improvement 

The  Coast  Guard  management  improvement  program  continues 
to  be  an  effective  means  of  enlisting  the  collective  efforts  of  military 
and  civilian  personnel  in  furthering  efficiency  and  improving  service 
to  the  public.  Recurrent  savings  estimated  at  more  than  $2.7 
million  resulted  from  improvements  in  the  use  of  manpower,  facilities 
and  space,  and  I'eductions  in  the  costs  of  materials  and  services  during 
the  fiscal  year.  Of  these  savings  approximately  $257,000  was 
credited  to  military  and  civilian  suggestions  and  superior  work 
performance.  Numerous  other  improvements,  although  not  measur- 
able in  a  tangible  way,  contributed  to  better  safety,  morale,  and 
worldng  conditions. 

A  comprehensive  management  study  was  made  of  the  Coast  Guard 
Reserve  program  in  the  fiscal  year  1962.  The  recommendations  arising 
from  this  survey  are  now  under  consideration.  A  financial  manage- 
ment task  force  was  organized  and  began  an  analysis  and  evaluation 
of  the  Coast  Guard's  accounting  functions  and  systems,  A  primary 
goal  of  this  group  is  to  investigate  the  possibilities  of  converting, 
where  practicable,  manual  operations  to  machine  processes.  Coast 
Guard  officials  and  staff  personnel  also  participated  in  a  recently 
completed  study  of  the  roles  and  missions  of  this  Service.  The  study 
group  was  made  up  of  representatives  from  the  Treasury  and  Defense 
departments  and  the  Bureau  of  the  Budget. 

[United  States  Savings  Bonds  Division 

The  primary  responsibility  of  the  U.S.  Savings  Bonds  Division  is  to 
promote  the  sale  and  retention  of  U.S.  savings  bonds  and  the  sale  of 
savings  stamps.  Comparatively  small  in  staff,  the  Division  concen- 
trates its  activities  on  planning  and  directing  the  sales  promotional 
efforts  of  a  large  corps  of  volunteers.  This  corps  is  comprised  of  thou- 
sands of  public-spirited  men  and  women  who  serve  as  a  sales  promo- 
tional force  and  as  issuing  agents.  Over  the  years  they  have  been 
primarily  responsible  for  the  success  of  the  savings  bonds  program. 

Thousands  of  banks  and  other  financial  institutions  sell  savings 
bonds  without  compensation.  As  a  public  service,  private  industry 
finances  advertising  time  and  space  costs  of  the  program,  which 
amount  to  more  than  $50  million  annually.  The  promotional  ex- 
penses of  the  payroll  savings  campaigns  in  the  more  than  40,000  partic- 
ipating businesses  and  industries,  as  well  as  the  operating  costs  of  the 
plans,  are  likewise  borne  by  the  businessmen  of  the  Nation.  Thanks 
to  this  nationwide  volunteer  support,  the  cost  to  the  Government  of 
promoting  the  sale  of  savings  bonds  is  only  slightly  over  one  dollar  for 
every  one  thousand  dollars  of  E  and  H  bonds  sold. 

The  savings  bonds  program  not  only  makes  a  major  contribution 
to  Government  financing — -Series  E  and  H  savings  bonds  now  total  15 
percent  of  the  public  debt — but  since  its  inception  it  has  also  proved 
to  be  a  vital  instrument  in  promoting  thrift  and  regular  saving  on  the 
part  of  millions  of  Americans.  The  payroll  savings  plan  has  been 
especiall}^  effective  both  in  developing  the  thrift  habit  among  the 
Nation's  wage  earners  and  in  channeling  systematic  savings  into 
Series  E  bonds,  the  most  popular  Government  security.  More  than 
eight  million  Americans  at  work  in  industry  and  Government  partici- 


196   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

pate  in  payroll  savings  programs,  accounting  for  more  than  40  percent 
of  current  E  and  H  bond  purchases. 

Despite  the  increased  competition  for  the  savings  dollar  since 
January  1962,  the  savings  bonds  program  continued  to  show  gains 
during  fiscal  19G2  as  thousands  of  new  savers  enrolled  in  the  plan. 
Paj^roll  savings  campaigns  in  more  than  7,000  American  fu'ms  were 
completed  during  the  January- August  1962  period  with  a  total  of  over 
850,000  new  enrollments,  nearly  40  percent  more  than  the  number  of 
new  "sign-ups"  a  3-ear  earlier.  Sales  of  small  denommation  E  bonds, 
bought  mainh'  by  payroll  savers,  are  at  record  or  near-record  levels 
for  peacetime.  From  Januarv-Jul}''  1962,  for  example,  purchases  of 
the  $50  denomination  attained  the  post  World  War  II  record  for  any 
correspondmg  period,  and  sales  of  the  $25  and  $50  denominations 
combined  were  running  at  a  five-year  high. 

To  launch  the  1962  savings  bonds  program,  the  Secretary  of  the 
Treasury  invited  800  executives  to  a  conference  with  top  Government 
officials  in  Washington  on  January  19,  1962.  He  announced  a  Freedom 
Bond  Drive  for  May  and  June  1962,  the  fu'st  nationwide  savings  bonds 
campaign  since  the  Korean  war.  Addressing  the  conference,  President 
Kennedy  stated  that  promoting  the  sale  of  savings  bonds  "  .  .  .  is  an 
effort  that  has  been  gomg  on  for  a  number  of  3'ears,  but  I  am  sure  3''ou 
realize  that  it  is  our  task  to  emphasize  to  the  American  people  how 
important  a  contribution  they  can  make  to  theu*  countr}'  and  also  to 
theu'  own  personal  welfare."  The  executives  were  asked  to  conduct 
personal  solicitation  payroll  savings  campaigns  among  tlieu"  employees 
as  a  part  of  the  Freedom  Bond  Drive,  thus  providing  every  employee 
a  new  opportunity  to  save  systematical!}"  for  his  own  and  liis  country's 
security. 

Much  of  the  year's  success  is  due  to  the  Freedom  Bond  Drive,  to 
the  payroll  savings  campaigns  in  industry  throughout  the  country', 
and  to  the  Mercury  7  spacecraft  exliibits,  replicas  of  the  famous  "Free- 
dom 7",  "Liberty  Bell  7",  and  "Friendship  7",  which  carried  America's 
fu'st  astronauts  into  space.  During  the  Treasury's  Freedom  Bond 
Drive  m  May  and  June  these  spacecraft  toured  all  States  except 
Alaska  and  Hawaii,  and  were  exhibited  in  259  cities  and  towns. 
The  three  capsules  were  made  available  to  the  savmgs  bonds  program 
through  the  cooperation  of  the  McDonnell  Corporation,  which  de- 
signed and  built  the  Mercur}?-  capsules  for  the  National  Aeronautics 
and  Space  Administration,  and  General  Motors  Corporation,  which 
provided  the  transportation. 

The  Division  also  promotes  the  sale  of  savings  stamps,  a  plan  which 
allows  students  and  other  small  savers  to  buy  savings  bonds  over  a 
period  of  time.  The  sale  of  savings  stamps  in  fiscal  1962  amounted  to 
$18.0  million,  2  percent  below  the  preceding  year.  The  sales  volume 
represented  purchases  of  104  million  stamps.  As  part  of  the  Division's 
promotional  program  a  "Junioi-  Astronaut"  campaign  for  savings 
stamps  was  scheduled  for  the  1962-63  school  3'ear.  "Wlien  bu^'ing  his 
first  stamp  of  the  school  year,  each  student  will  receive  a  certificate 
designating  him  as  a  "Junior  Astronaut"  pledged  to  keep  his  country 
strong  and  free.  The  Treasury  Department  aclcnowledges  with  appre- 
ciation the  cooperation  of  the  National  Aeronautics  and  Space 
Admmistration  in  this  promotion. 


ADMINISTRATIVE    REPORTS  197 

Management  improvement 

Headed  by  a  National  Director  and  an  Assistant  National  Director, 
the  U.S.  Savings  Bonds  Division  is  composed  of  three  principal 
branches:  Sales,  Planning,  and  Advertising  and  Promotion.  The 
chiefs  of  these  three  branches,  together  with  the  National  Director 
and  Assistant  National  Director,  comprise  the  Division's  Management 
Committee,  whose  main  purpose  is  the  improvement  of  services  by  the 
Division. 

Constant  attention  is  given  to  improvement  in  operation,  organi- 
zation, and  the  utilization  of  manpower.  During  the  year,  three  posi- 
tions were  abolished  with  savings  of  $32,698  annually. 

Administration  of  nonexpendable  property  and  approval  of  acqui- 
sitions for  all  offices  of  the  Division,  departmental  and  field,  are 
centralized  in  the  headquarters  office  in  Washington,  D.C.  Under 
this  arrangement  during  fiscal  1962  the  Division  kept  new  purchases  to 
a  minimum  and  acquired  excess  property  with  an  estimated  inventory 
value  of  approximately  $2,500  which  the  General  Services  Adminis- 
tration made  available  from  other  Federal  agencies. 

United  States  Secret  Service 

The  major  functions  of  the  United  States  Secret  Service  as  defined 
by  section  3056  of  Title  18,  United  States  Code,  are  the  protection  of 
the  President  of  the  United  States  and  members  of  his  family,  the 
President-elect,  and  the  Vice  President  at  his  request;  the  detection 
and  arrest  of  persons  committing  any  offenses  against  the  laws  of  the 
United  States  relating  to  obligations  and  securities  of  the  United 
States  and  of  foreign  governments;  and  the  detection  and  arrest 
of  persons  violating  certain  laws  relating  to  the  Federal  Deposit 
Insm'ance  Corporation,  Federal  land  banks,  and  national  farm  loan 
associations. 

Management  improvement 

The  study  has  been  continued  of  the  feasibility  of  applying  auto- 
matic data  processing  to  the  system  of  classification  and  coding  of 
handwriting  of  suspected  forgers  of  Government  checks  and  bonds. 
The  use  of  high-speed  electronic  equipment  to  aid  in  the  rapid  associa- 
tion of  forgeries  of  common  authorship,  and  in  the  early  identification 
of  multiple  and  interstate  forgers  is  believed  to  have  great  potential 
in  solvmg  the  increasing  number  of  such  cases.  Application  of  auto- 
matic processing  to  payroll  and  time  and  leave  records  also  is  being 
studied,  as  is  a  plan  for  electronically  processing  other  statistical 
records  and  reports. 

An  improved  form  to  report  the  technical  analysis  of  new  counterfeit 
notes,  the  product  of  a  joint  study  with  the  Bureau  of  Engraving  and 
Printing,  has  been  adopted.  The  technique  and  procedure  for 
analyzing  these  notes  have  been  revised,  thereby  expediting  the 
reports  and  mcreasing  the  value  of  the  information  developed. 

A  significant  nimiber  of  check  and  bond  forgery  investigations  were 
complicated  by  the  overprinting  of  endorsements  which,  in  some  cases, 
obliterated  the  forged  writing.  To  remedy  this  difficulty,  a  filtered 
photograph,  deleting  the  overprinting  and  retaining  the  questioned 
writing,  now  accompanies  such  cases  referred  to  the  field. 


198   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Formal  request  has  been  made  to  Con2:i'ess  to  amend  the  law  (31 
U.S.C.  529a)  to  enable  the  Secret  Service  to  use  again  the  funds 
expended  for  the  purchase  of  evidence,  in  those  instances  of  recovery 
of  the  funds.  With  such  authority  the  Secret  Service  would  be  in  a 
position  to  negotiate  with  a  higher  degree  of  flexibility  m  seeking  and 
purchasing  evidence  leading  to  makers  of  counterfeit  notes. 

A  comprehensive  plan  was  initiated  and  is  being  developed  to 
appraise  the  organization  and  management  of  the  field  activities. 
This  plan,  in  use  on  a  trial  basis  by  a  special  study  group,  is  related 
to  the  inspection  program.  At  the  conclusion  of  an  inspection,  each 
inspector  submits  a  progress  report  on  areas  being  studied,  including 
any  area  of  particular  interest  where  economies  or  improved  operations 
can  be  made.  Current  studies  include  the  Secret  Service  Manual, 
automatic  data  processing,  field  participation  in  budget  development, 
daily  reporting  procedures,  improved  protective  devices  and  com- 
munication methods  relating  thereto,  staffing  standards,  and 
workloads. 

The  entire  range  of  field  reporting  requirements  has  been  reviewed. 
Some  nonessential  paperwork  has  been  eliminated  and  certain  reports 
were  changed  from  a  monthly  to  a  quarterh^,  semiannual,  or  annual 
basis. 

Certain  field  offices  have  been  designated  as  centers  for  which  the 
latest  polygraph  equipment  is  being  provided  and  from  which  poly- 
graph services  can  be  obtained.  Because  of  the  strategic  location  of 
these  centers,  the  field  can  derive  maximum  benefits  from  operators 
and  equipment. 

Ways  and  means  were  explored  of  utilizing  excess  Government 
property  to  the  greatest  extent  practicable  before  purchasing  new 
items.  A  program  was  inaugurated  and  instructions  were  issued  to 
all  field  offices  on  methods  of  participation.  As  a  result,  a  significant 
amount  of  needed  propert}^  and  equipment  were  acquired. 

After  an  appraisal  of  the  format  and  technique  of  preparing  The 
Record,  a  Secret  Service  weekly  publication,  a  number  of  innovations 
were  adopted  to  simplify  its  preparation  and  to  streamline  the  general 
makeup.  As  a  result  of  other  studies  and  survejT^s  related  to  The 
Eecord  and  allied  material,  considerable  saving  of  clerical  time  was 
made  throughout  the  field  offices. 

An  extensive  analysis  of  financial  reporting  requirements  was 
completed  and  documented  for  inclusion  in  the  Financial  Management 
Manual  as  Chapter  VII — Reports  and  Statements.  A  form  was 
developed  for  the  internal  reporting  monthly  of  administrative 
expenses. 

A  new  financial  management  regulation  was  prepared  and  issued. 
Among  other  things,  this  regulation  provided  for  the  establishment  of 
a  budget  committee,  which  has  been  effective  in  developuig  and 
coordinating  information  and  for  establishing  policy  in  the  preparation 
of  the  budget. 

Protective  and  security  activities 

The  protection  of  the  First  Family  and  the  Vice  President,  when 
requested,  continued  to  be  the  most  important  responsibility  of  the 
Secret   Service.     Security    arrangements    were    effected    within    and 


ADMINISTRATIVE    REPORTS 


199 


outside  the  United  States  during  the  fiscal  year  1962  without  signifi- 
cant incident. 

Investigations  concerning  protective  activities  increased  from  870 
in  1961  to  882  in  1962,  a  rise  of  1.4  percent.  There  were  46  such 
cases  pending  at  the  close  of  fiscal  1962,  which  was  19  less  than 
a  year  earher.  Arrests  resultmg  from  investigation  of  these  cases 
increased  from  86  to  109,  or  26.7  percent. 

Enforcement  activities 

Despite  the  entry  of  organized  criminals  into  the  field,  counter- 
feiting was  an  unprofitable  crmie  in  the  year  under  review.  Persons 
arrested  for  counterfeiting  offenses  totaled  737  and  44  counterfeiting 
plants  were  captured. 

The  following  table  summarizes  seizures  of  counterfeit  money 
during  fiscal  1961  and  1962: 


Counterfeit  money  seized,  fiscal  years  1961  and  1962 


Notes  and  coins 

1961 

1962 

Percentage 

increase,  or 

decrease  (— ) 

Counterfeit  and  altered  notes: 

After  circulation. ..  _  .                   .                .  .  . 

$547,076.50 
1, 632, 070. 00 

$548, 756. 35 
3, 565, 567. 00 

3.1 

Before  circulation 

118.5 

Total 

2, 179, 146.  50 

16,501.94 
5, 795.  20 

4,114,323.35 

19, 140. 00 
1,453.43 

88.8 

Counterfeit  coins  seized: 

After  circulation      ...      ._.        .     . 

16.0 

Before  circulation 

-74.9 

Total 

22,  297. 14 
2,201,443.64 

20, 593. 43 
4,134,916.78 

-7.7 

Grand  total ..  -.    . 

87.8 

Seven  out  of  every  eight  counterfeits  manufactm-ed  were  seized 
before  they  could  be  passed  to  the  public.  Yet,  new  counterfeit  note 
issues  have  been  unproving  consistently  with  the  development  of  the 
graphic  arts,  and  with  increasing  ease  of  production.  These,  together 
with  the  wide  geographic  distribution  made  by  organized  criminals, 
have  increased  the  enforcement  problem  and  have  requhed  the  Secret 
Service  to  originate  newer  and  faster  methods  to  protect  the  public 
from  loss. 

As  a  result  of  intensive  investigation,  and  constant  sm-veillance  and 
undercover  work,  special  agents  in  New  York  in  February  1962, 
recovered  a  million  dollars  in  counterfeit  notes  in  the  largest  domestic 
seizure  in  the  history  of  the  Secret  Service.  This  issue  of  counterfeit 
currency  was  controlled  by  a  group  with  nationwide  underworld  con- 
nections. While  being  held  for  distribution  to  gangsters  in  other 
areas,  the  notes  were  being  safeguarded  by  a  comparatively  minor 
figure  in  the  syndicate.  The  same  group  controlled  six  other  types  of 
counterfeit  notes  which  were  actively  passed  along  the  eastern  sea- 
board. Information  was  received  that  $2,500,000  of  one  of  the  six 
new  counterfeits  was  destined  for  Cuba  and  Puerto  Rico,  but  such 
activity  did  not  materialize. 

Four  men  were  arrested  in  New  York,  N.Y.,  in  October  1961,  and 
$25,000  in  counterfeits  was  recovered.  Shortly  thereafter,  the 
arrests  in  Georgia  of  three  men  from  Brooklyn,  N.Y.,  resulted  in 
another  large  seizure  of  counterfeit  currency. 


200   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

In  September  1961,  a  $10  counterfeit  note  appeared  in  New  York 
City,  N.Y.  Within  30  days,  although  12  persons  had  been  arrested, 
the  circulation  of  these  counterfeits  had  spread  to  Massachusetts, 
Connecticut,  Rhode  Island,  New  Jersey,  PennsAdvania,  Maryland, 
the  District  of  Columbia,  Virginia,  North  Carolina,  Florida,  Ohio,  and 
Nebraska. 

A  man  who  was  arrested  in  Seattle,  Wash.,  in  January  1962,  for 
passing  a  $20  note  was  found  to  have  $4,800  in  counterfeit  money 
which  was  seized.  Four  additional  arrests  and  seizures  amounting  to 
$480,000  of  these  same  counterfeits  followed.  While  the  seizures 
amounted  to  almost  the  entire  $500,000  printed,  the  notes  had  been 
passed  in  Washington,  California,  Nevada,  New  Alexico,  Michigan, 
Nebraska,  Missouri,  Illinois,  and  Oregon  in  the  short  time  the  venture 
had  been  in  operation. 

Soon  after,  two  men  and  a  woman  were  arrested  in  Seattle,  Wash., 
for  passing  another  issue  of  counterfeit  $20  notes  and  a  similar  coun- 
terfeit $100  note.  The  supplier  of  these  notes  was  quickly  apprehended 
in  Casper,  Wyo.,  and  the  manufacturing  plant  was  seized.  When  the 
counterfeit  note  maker  was  arrested  in  Dickinson,  N.  Dak.,  an  ad- 
ditional $350,000  in  $20  and  $100  notes  was  seized. 

One  issue  of  another  new  $20  counterfeit  note  was  traced  to  Cuba. 
The  fo-st  note  appeared  in  Cuba  in  July  1961.  These  notes  and 
counterfeit  $100  notes  of  Cuban  origin  frequently  are  confiscated  in 
the  United  States  from  Cuban  exiles  who  converted  their  pesos  into 
dollars  before  leaving  Cuba  and  thus  are  defrauded  by  black  market 
money  exchangers.  The  amount  of  $27,560  in  these  counterfeit  notes 
was  seized  in  this  country  in  fiscal  1962, 

Counterfeit  money  seized,  fiscal  years  1961  and  1962 


Counterfeit  currency 

1961 

1962 

Percent 
increase 

Loss  to  the  public -- 

$563. 678. 44 
1,637,865.20 

$567, 896.  35 
3, 567, 020. 43 

0.8 

Before  circulation..                                    - 

117.8 

Total 

2,201,443.64 

4,134,916.78 

87.8 

The  forgery  of  Government  checks  continued  to  represent  a  major 
enforcement  problem.  Dm-ing  fiscal  1962  the  Secret  Service  investi- 
gated 40,351  cases  involving  an  amount  of  $4,244,133.16,  an  increase 
of  15.8  percent  over  1961 .  Arrests  of  persons  for  check  forgery  totaled 
3,414,  an  increase  of  15.1  percent. 

The  Secret  Service  also  investigated  7,804  cases  involving  the 
forgery  of  $758,715  worth  of  U.S.  savings  bonds,  an  mcrease  of  2.6 
percent  over  1961.     For  this  offense,  82  persons  were  arrested. 

A  few  of  the  more  flagiant  cases  investigated  during  1962  are 
described  in  the  following  paragi-aphs. 

In  New  York,  N.Y.,  a  man  and  a  woman,  the  woman  an  old  offender, 
were  arrested  and  admitted  steahng  and  forging  340  checks  in  a  10- 
month  period.  They  realized  about  $17,000  from  their  criminal  efforts 
and  when  arrested  had  only  $10  in  their  possession.  The  money 
received  from  this  illegal  activity  was  spent  to  satisfy  a  $400-a-week 
narcotic  habit. 


ADMINISTRATIVE    REPORTS 


201 


In  Greenwood,  Miss.,  an  arrested  forger  admitted  stealing  and 
forging  100  checks  in  a  four-month  period.  The  checks  were  stolen 
and  forged  in  Greenwood  and  Jackson,  Miss.,  Little  Rock,  Ark.,  and 
Memphis,  Tenn. 

Also  in  Greenwood,  a  multiple  forger  was  arrested  who  was  respon- 
sible for  the  forgery  of  more  than  100  checks.  While  awaiting  trial, 
he  escaped  from  jail  on  September  16,  1961,  vowing  to  continue  steal- 
ing checks  as  long  as  he  was  free.  He  was  traced  by  his  forgeries 
through  the  States  of  Mississippi,  Illinois,  Ai'kansas,  and  Florida.  He 
was  arrested  in  Jacksonville,  Fla.,  on  December  18  after  forging  and 
cashing  100  more  Government  checks  which  he  had  stolen  from  rural 
mailboxes  since  his  escape. 

In  Indianapolis,  Ind.,  a  33-year-old  woman  was  arrested  for  forging 
a  $1,023.88  check.  This  was  her  fourth  arrest  for  multiple  theft  and 
check  forgery. 

In  1961  there  were  passed  in  the  United  States  121  stolen  and  forged 
money  orders  of  the  Canadian  Pacific  Railway.  In  August  1961,  the 
wSecret  Service  followed  the  trial  of  the  forgers  through  Virginia,  West 
Virginia,  Michigan,  Ohio,  Illinois,  Indiana,  Maryland,  and  New  York, 
before  identifying  and  arresting  them  and  identifying  the  thief  who  was 
by  that  time  in  jail  in  Ontario,  Canada. 

The  Secret  Service  in  September  1961  arrested  six  persons  in  Chi- 
cago who  admitted  realizing  about  $30,000  in  eight  months  by  forging 
Government  checks.  One  of  those  arrested  had  acted  as  a  clearing 
house  for  the  ring,  accepting  the  checks  which  were  stolen  from  the 
mail  and  assigning  them  to  persons  who  forged  the  endorsements.  To 
others  went  the  task  of  passing  the  forged  checks.  The  proceeds  were 
divided  among  the  entire  ring. 

In  Shelby,  N.C.,  a  man  was  arrested  for  forging  50  Government 
checks  while  on  parole  from  a  1957  conviction  for  forgery. 

Three  persons  arrested  in  Buffalo,  N.Y.,  in  December  1961,  ad- 
mitted the  forgery  and  passing  of  over  200  checks  in  that  area. 

The  following  table  shows  the  number  of  cruninal  and  noncriminal 
investigations  completed  in  fiscal  1961  and  1962.  This  table  reflects 
the  arrest  of  169  persons  in  1962  for  crunes  other  than  counterfeiting 
and  forgery,  bringing  the  total  of  persons  arrested  to  4,402,  an  increase 
of  15.7  percent  over  those  in  1961.  Cases  of  all  types  investigated, 
which  included  counterfeiting  and  forgery,  totaled  63,791,  an  increase 
of  12.1  percent. 

Criminal  and  noncriminal  cases  investigated,  fiscal  years  1961  and  1962 


Cases  investigated 

1961 

19G2 

Percentage 

increase,  or 

decrease  (— ) 

Counterfeiting _       ._.,_.  ,     .  ._ 

11,004 

34, 846 

7,603 

1,226 

2,223 

10, 052 

40,351 

7,804 

1,187 

4,397 

-8.7 

Forged  Government  clieclrs 

+15.8 

Forged  Government  bonds .      .  -  .  -          .._      . 

+2.6 

Miscellaneous  criminal 

Miscellaneous  noncriminal 

-3.2 

+97.8 

Total 

56,902 

63,  791 

+12.1 

202       1962    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Number  of  arrests,  fiscal  years  1961  and  1962 


Offenses 


1961 


1962 


Percentage 
increase 


Counterfeiting. 

Forged  Go\  ernment  checks 

Forged  or  stolen  bonds 

Miscellaneous-  - -. 

Total 


595 

2,967 

75 

169 


3,806 


737 

3,414 

82 

169 


4,402 


23.9 

15.1 

9.3 


15. 


Convictions  of  3,923  persons  in  Secret  Service  cases  in  fiscal  year 
1962  represented  an  increase  of  13.9  percent  over  1961.  In  all  Secret 
Service  cases  brought  to  trial  in  this  period,  98.3  percent  resulted 
in  convictions. 

The  rising  tide  of  lawlessness  as  shown  by  these  statistics  is  also 
reflected  in  the  general  crime  picture  throughout  the  country. 


EXHIBITS 


1 


Public  Debt  Operations,  Calls  of  Guaranteed  Obligations,  Regulations, 

and  Legislation 

Treasury   Certificates  of  Indebtedness,    Treasury   Notes,   and   Treasury  Bonds 

Offered  and  Allotted 

Exhibit  1. — Treasury  certificates  of  indebtedness 

A  Treasury  circular  containing  a  representative  certificate  offering  during  the 
fiscal  year  1962  is  reproduced  in  this  exhibit.  The  circular  pertaining  to  the  other 
exchange  offering  is  similar  in  form  and  therefore  is  not  reproduced  in  this  report. 
However,  the  essential  details  for  the  two  issues  are  summarized  in  the  first  table 
following  the  circular  and  the  final  allotments  of  new  certificates  issued  in  exchange 
are  shown  in  the  second  table. 

DEPARTMENT  CIRCULAR  NO.  2-62.     PUBLIC  DEBT 

Treasury  Department, 
Washington,  February  5,  1962. 

I.  offering  of  certificates 

L  The  Secretary  of  the  Treasury,  ijursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  par,  from  the  people  of 
the  United  States  for  certificates  of  indebtedness  of  the  United  States,  designated 
3}^  percent  Treasury  certificates  of  indebtedness  of  Series  A-1963,  in  exchange  for 
any  of  the  following  notes: 

3)^  percent  Treasury  notes  of  Series  A-1962,  maturing  February  15,  1962 
4  percent  Treasury  notes  of  Series  D-1962,  matiiring  February  15,  1962 
3^4  percent  Treasury  notes  of  Series  F-1962,  maturing  February  15,  1962 
V-/i  percent  Treasury  notes  of  Series  EA-1962,  maturing  April  1,  1962 
Interest  will  be  adjusted  in  the  case  of  the  1?.^  percent  Treasury  notes  of  Series 
EA-1962  as  set  forth  in  section  IV  hereof.     The  amount  of  the  offering  under  this 
circular  will  be  limited  to  the  amount  of  eligible  notes  tendered  in  exchange  and 
accepted.     The  books  will  be  open  only  on  February  5  through  February  7,  1962,  for 
the  receipt  of  subscriptions  for  this  issue. 

2.  In  addition  to  the  offering  under  this  circular,  holders  of  the  eligible  notes  are 
offered  the  privilege  of  exchanging  all  or  any  part  of  such  notes  for  4  percent 
Treasury  notes  of  Series  A-1966,  which  offering  is  set  forth  in  Department 
Circular,  Public  Debt  Series,  No.  3-62,  issued  simultaneously  with  this  circular. 

II.    DESCRIPTION    OF    CERTIFICATES 

1.  The  certificates  will  be  dated  February  15,  1962,  and  will  bear  interest  from 
that  date  at  the  rate  of  ?>}{  percent  per  annum,  payable  semiannually  on  August  15, 
1962,  and  February  15,  1963.  They  will  mature  February  15,  1963,  and  will  not 
be  subject  to  call  for  redemption  prior  to  maturity. 

2.  The  income  derived  from  the  certificates  is  subject  to  all  taxes  imposed  under 
the  Internal  Revenue  Code  of  1954.  The  certificates  are  subject  to  estate, 
inheritance,  gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt 
from  all  taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by 
any  State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

3.  The  certificates  will  be  acceptable  to  secure  deposits  of  public  moneys. 
They  will  not  be  acceptable  in  payment  of  taxes. 

4.  Bearer  certificates  with  interest  coupons  attached  will  be  issued  in  denomi- 
nations of  $1,000,  $5,000,  $10,000,  $100,000,  $1,000,000,  $100,000,000,  and 
$500,000,000.     The  certificates  will  not  be  issued  in  registered  form. 

5.  The  certificates  will  be  subject  to  the  general  regulations  of  the  Treasury 
Department,  now  or  hereafter  prescribed,  governing  United  States  certificates. 

205 


206        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 

III.    SUBSCRIPTION    AND    ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington  25,  D.C. 
Banking  institutions  generally  may  submit  subscriptions  for  account  of  customers, 
but  only  the  Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized 
to  act  as  official  agencies. 

2.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  and  to  allot  less  than  the  amount  of  certificates  applied  for;  and 
any  action  he  may  take  in  these  respects  shall  be  final.  Subject  to  tliese  reserva- 
tions, all  subscriptions  will  be  allotted  in  full.  Allotment  notices  will  be  sent  out 
promptly  upon  allotment. 

IV.    PAYMENT 

1.  Payment  for  the  face  amount  of  certificates  allotted  hereunder  must  be 
made  on  or  before  February  15,  1962,  or  on  later  allotment,  and  may  be  made 
only  in  notes  of  the  four  series  enumerated  in  section  I  hereof,  which  will  be 
accepted  at  par,  and  should  accompany  the  subscription.  Coupons  dated 
February  15,  1962,  should  be  detached  and  cashed  when  due  by  holders  of  the 
maturing  notes  of  Series  A-1962,  Series  D-1962,  and  Series  F-1962  in  coupon 
form.  In  the  case  of  registered  notes  of  Series  F-1962,  the  final  interest  due  on 
February  15,  1962,  will  be  paid  by  check  drawn  in  accordance  with  the  assignments 
on  the  notes  surrendered,  or  by  credit  in  any  account  maintained  by  a  baukina; 
institution  with  the  Federal  Reserve  Bank  of  its  district.  Coupons  dated  April  1, 
1962,  must  be  attached  to  the  IH  percent  Treasury  notes  of  Series  EA-1962  when 
surrendered  and  accrued  interest  from  October  1,  1961,  to  March  1,  1962 
($6.22253  per  $1,000),  will  be  credited,  accrued  interest  from  February  15,  1962, 
to  March  1,  1962  ($1.35359  per  $1,000),  on  the  certificates  to  be  issued  will  be 
charged,  and  the  difference  ($4.86894  per  $1,000),  will  be  paid  to  subscribers 
following  acceptance  of  the  notes. 

V.    ASSIGNMENT  OF  REGISTERED  NOTES 

1.  Treasury  notes  of  Series  F-1962  in  registered  form  tendered  in  payment 
for  certificates  offered  hereunder  should  be  assigned  by  tlie  registered  payees  or 
assignees  thereof  to  "The  Secretar.v  of  the  Treasury  for  exchange  for  3J^  percent 

Treasury  certificates  of  indebtedness  of  Series  A-1963  to  be  delivered  to ", 

in  accordance  with  the  general  regulations  of  the  Treasury  Department  govern- 
ing assignments  for  transfer  or  e.xchange,  and  thereafter  should  be  surrendered 
with  the  subscription  to  a  Federal  Reserve  Bank  or  branch  or  to  the  Office  of  the 
Treasurer  of  the  United  States,  Washington  25,  D.C.  The  notes  must  be  de- 
livered at  the  expense  and  risk  of  the  holder. 

VI.    GENERAL    PROVISIONS 

J.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  to  make  allotments  on  the  basis  and  up 
to  the  amounts  indicated  by  the  Secretary  of  the  Treasury  to  the  P'ederal  Reserve 
Banks  of  the  res])ective  districts,  to  issue  allotment  notices,  to  receive  payment 
for  certificates  allotted,  to  make  delivery  of  certificates  on  full-paid  subscriptions 
allotted,  and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive 
certificates. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time, 
prescribe  supplemental  or  amendatory  rules  and  regulations  governing  the 
offering,  which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


EXHIBITS 


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210   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  2. — Treasury  notes 

Two  Treasury  circulars,  one  containing  an  exchange  offering  and  the  other  a 
cash  note  offering  during  the  fiscal  year  1962,  are  reproduced  in  this  exhibit. 
The  circulars  pertaining  to  the  other  note  offerings  during  1962  are  similar  in 
form  and  therefore  are  not  reproduced  in  this  report.  However,  the  essential 
details  for  each  issue  are  summarized  in  the  first  table  following  the  circulars  and 
the  final  allotments  of  the  new  notes  issued  for  cash  or  in  exchange  are  shown  in 
the  second  table. 

DEPARTMENT  CIRCULAR  NO.  1062.     PUBLIC  DEBT 

Treasury  Department, 
Washington,  July  17,  1961. 

I.    OFFERING    OF    NOTES 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  par  and  accrued  interest, 
from  the  people  of  the  United  States  for  notes  of  the  United  States,  designated 
^)i  percent  Treasury  notes  of  Series  H-1962,  in  exchange  for  which  any  of  the 
following  eligible  securities,  singly  or  in  combinations  aggregating  $1,000  or 
multiples  thereof,  may  be  tendered: 

Z}i  percent  Treasury  certificates  of  indebtedness  of  Series  C-1S61,  maturing 

August  1,  1961 
4  percent  Treasury  notes  of  Series  A-1961,  maturing  August  1,  1961 
2%  percent  Treasury  bonds  of  1961,  maturing  September  15,  1961 
V/i  percent  Treasury  notes  of  Series  EO-1961,  maturing  October  1,  1961. 
Interest  will  be  adjusted  in  the  case  of  the  2^4  percent  Treasury  bonds  of  1961, 
and  in  the  case  of  the  1}^  percent  Treasury  notes  of  Series  EO-1961,  as  set  forth 
in  section  IV  hereof.     The  amount  of  the  offering  under  this  circular  will  be 
limited  to  the  amount  of  eligible  securities  tendered  in  exchange  and  accepted. 
The  books  will  be  open  only  on  July  17  through  July  19,  1961,  for  the  receipt  of 
subscriptions  for  this  issue. 

2.  In  addition  to  the  offering  under  this  circular,  holders  of  the  eligible  securities 
are  offered  the  privilege  of  exchanging  all  or  any  part  of  such  securities  for 

3%  percent  Treasury  notes  of  Series  E-1964,  or 

3J^  percent  Treasury  bonds  of  1968  (additional  issue) 
which  offerings  are  set  forth  in  Department  Circulars  Nos.  1063  and  1064,  respec- 
tively, issued  simultaneously  with  this  circular. 

II.    DESCRIPTION    OF    NOTES 

1.  The  notes  will  be  dated  August  1,  1961,  and  will  bear  interest  from  that 
date  at  the  rate  of  ^Yi  percent  per  annum,  payable  on  a  semiannual  basis  on 
November  15,  1961,  and  on  May  15  and  November  15,  1962.  They  will  mature 
November  15,  1962,  and  will  not  "be  subject  to  call  for  redemption  prior  to  maturity. 

2.  The  income  derived  from  the  notes  is  subject  to  all  taxes  imposed  under  the 
Internal  Revenue  Code  of  1954.  The  notes  arc  subject  to  estate,  inheritance, 
gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exemj^t  from  all 
taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any 
State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

3.  The  notes  will  be  acceptable  to  secure  deposits  of  public  moneys.  They 
will  not  be  acceptable  in  payment  of  taxes. 

4.  Bearer  notes  with  interest  coupons  attached,  and  notes  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $1,000,  $5,000,  $10,000, 
$100,000,  $1,000,000,  $100,000,000,  and  $500,000,000.  Provision  will  be  made 
for  the  interchange  of  notes  of  different  denominations  and  of  coupon  and  regis- 
tered notes,  and  for  the  transfer  of  registered  notes,  under  rules  and  regulations 
prescribed  by  the  Secretary  of  the  Treasury. 

5.  The  notes  will  be  subject  to  the  general  regulations  of  the  Treasury  Depart- 
ment, now  or  hereafter  prescribed,  governing  United  States  notes. 

III.    SUBSCRIPTION    AND    ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington,  D.C.     Bank- 


EXHIBITS  211 

ing  institutions  generally  may  submit  subscriptions  for  account  of  customers,  but 
only  the  Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized  to 
act  as  official  agencies. 

2.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  and  to  allot  less  than  the  amount  of  notes  applied  for;  and  any 
action  he  may  take  in  these  respects  shall  be  final.  Subject  to  these  reservations, 
all  subscriptions  will  be  allotted  in  full.  Allotment  notices  will  be  sent  out 
promptly  upon  allotment. 

IV.    PAYMENT 

1.  Payment  at  par  for  notes  allotted  hereunder  must  be  made  on  or  before 
August  1,  1961,  or  on  later  allotment,  and  may  be  made  only  in  the  securities  of 
the  four  issues  enumei'ated  in  section  I  hereof,  which  will  be  accepted  at  par,  and 
should  accompany  the  subscription. 

2.  Coupons  dated  August  1,  1961,  should  be  detached  from  the  3}i  percent 
certificates  of  indebtedness  of  Series  C-1961,  and  the  4  percent  Treasury  notes 
of  Series  A-1961,  maturing  August  1,  1961,  by  holders  and  cashed  when  due. 

3.  Coupons  dated  September  15,  1961,  must  be  attached  to  the  2%  percent 
Treasury  bonds  of  1961  in  coupon  form  when  surrendered,  and  accrued  interest 
from  March  15,  1961,  to  August  1,  1961  (.S10.38723  per  $1,000)  will  be  paid  to 
subscribers.  Payment  to  subscribers  will  be  made  in  the  case  of  bearer  bonds 
following  their  acceptance  and  in  the  case  of  registered  bonds  following  discharge 
of  registration.  In  the  case  of  registered  bonds,  the  payment  will  be  made  by 
check  drawn  in  accordance  with  the  assignments  on  the  bonds  surrendered,  or  by 
credit  in  any  account  maintained  by  a  banking  institution  with  the  Federal 
Reserve  Bank  of  its  district. 

4.  Coupons  dated  October  1,  1961,  must  be  attached  to  the  1}2  percent  Treasury 
notes  of  Series  EO-1961  when  surrendered,  and  accrued  interest  from  April  1, 
1961,  to  September  1,  1961  ($6.27049  per  $1,000)  will  be  credited;  accrued  interest 
from  August  1,  1961,  to  September  1,  1961  ($2.73777  per  $1,000),  on  the  notes  to 
be  issued  will  be  charged,  and  the  difference  ($3.53272  per  $1,000)  will  be  paid  to 
subscribers  following  acceptance  of  the  notes. 

V.    ASSIGNMENT    OF    REGISTEBED    BONDS 

1.  The  2%,  percent  Treasury  bonds  of  1961  in  registered  form  tendered  in 
payment  for  notes  offered  hereunder  should  be  assigned  by  the  registered  payees 
or  assignees  thereof,  in  accordance  with  the  general  regulations  of  the  Treasury 
Department  governing  assignments  for  transfer  or  exchange,  in  one  of  the  forms 
hereafter  set  forth,  and  thereafter  should  be  surrendered  with  the  subscription  to 
a  Federal  Reserve  Bank  or  branch  or  to  the  Office  of  the  Treasurer  of  the  United 
States,  Washington,  D.C.  The  bonds  must  be  delivered  at  the  expense  and  risk 
of  the  holder.  If  the  notes  are  desired  registered  in  the  same  name  as  the  bonds 
surrendered,  the  assignment  should  be  to  "The  Secretary  of  the  Treasury  for 
exchange  for  Syi  percent  Treasury  notes  of  Series  H-1962";  if  the  notes  are 
desired  registered  in  another  name,  the  assignment  should  be  to  "The  Secretary 
of  the  Treasury  for  exchange  for  3}i  percent  Treasury  notes  of  Series  H-1962  in 

the  name  of ";  if  notes  in  coupon  form  are  desired,  the  assignment 

should  be  to  "The  Secretary  of  the  Treasury  for  exchange  for  3}!  percent  Treasury 
notes  of  Series  H-1962  in  coupon  form  to  be  delivered  to ". 

VI.    GENEEAL    PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  notes  allotted,  to  make  delivery  of  notes  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  notes. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time, 
prescribe  supplemental  or  amendatory  rules  and  regulations  governing  the  offering, 
which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


212        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 

DEPARTMENT  CIRCULAR  NO.   1068.     PUBLIC  DEBT 

Treastjky  Department, 
Washington,  October  2,  1961. 

I.    OFFERING    OF    NOTES 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  99.875  percent  of  their 
face  value  and  accrued  interest,  from  the  people  of  the  United  States  for  notes 
of  the  United  States,  designated  Z]i  percent  Treasury  notes  of  Series  D-1963. 
The  amount  of  the  offering  under  this  circular  is  $2,000,000,000,  or  thereabouts. 
In  addition  to  the  amount  offered  for  public  subscription,  the  Secretary  of  the 
Treasury  reserves  the  right  to  allot  up  to  $100,000,000  of  these  notes  to  Govern- 
ment investment  accounts.  The  books  will  be  open  only  on  October  2,  1961,  for 
the  receipt  of  subscriptions  for  this  issue. 

II.    DESCRIPTION    OF    NOTES 

1.  The  notes  now  offered  will  be  an  addition  to  and  will  form  a  part  of  the  3}i 
percent  Treasury  notes  of  Series  D-1963  issued  pursuant  to  Department  Cir- 
cular No.  1061,  dated  May  1,  1961,  will  be  freely  interchangeable  therewith,  and 
are  identical  in  all  respects  therewith  except  that  interest  on  the  notes  to  be  issued 
under  this  circular  will  accrue  from  October  11,  1961.  Subject  to  the  provisions 
for  the  accrual  of  interest  from  October  11,  1961,  on  the  notes  now  offered,  the 
notes  are  described  in  the  following  quotation  from  Department  Circular  No.  1061: 

"1.  The  notes  will  be  dated  May  15,  1961,  and  will  bear  interest  from  that 
date  at  the  rate  of  3}1  percent  per  annum,  payable  semiannually  on  November  15, 
1961,  and  thereafter  on  May  15  and  November  15  in  each  year  until  the  principal 
amount  becomes  payable.  They  will  mature  May  15,  1963,  and  will  not  be 
subject  to  call  for  redemption  prior  to  maturity. 

"2.  The  income  derived  from  the  notes  is  subject  to  all  taxes  imposed  under 
the  Internal  Revenue  Code  of  1954.  The  notes  are  subject  to  estate,  inheritance, 
gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt  from  all 
taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any 
State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

"3.  The  notes  will  be  acceptable  to  secure  deposits  of  public  moneys.  They 
will  not  be  acceptable  in  payment  of  taxes. 

"4.  Bearer  notes  with  interest  coupons  attached,  and  notes  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $1,000,  $5,000,  $10,000, 
$100,000,  $1,000,000,  $100,000,000,  and  $500,000,000.  Provision  will  be  made 
for  the  interchange  of  notes  of  different  denominations  and  of  coupon  and  registered 
notes,  and  for  the  transfer  of  registered  notes,  under  rules  and  regulations  pre- 
scribed by  the  Secretary  of  the  Treasury. 

"5.  The  notes  will  be  subject  to  the  general  regulations  of  the  Treasury  Depart- 
ment, now  or  hereafter  prescribed,  governing  United  States  notes." 

III.      SUBSCRIPTION    AND    ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington.  Only  the 
Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized  to  act  as 
official  agencies.     Commercial  banks,  which  for  this  purpose  are  defined  as  banks 


EXHIBITS  213 

accepting  demand  deposits,  may  submit  subscriptions  for  account  of  customers 
provided  the  names  of  the  customers  are  set  forth  in  such  subscriptions.  Others 
than  commercial  banks  will  not  be  permitted  to  enter  subscriptions  except  for 
their  own  account.  Subscriptions  from  commercial  banks  for  their  own  account 
will  be  received  without  deposit,  but  will  be  restricted  in  each  case  to  an  amount 
not  exceeding  50  percent  of  the  combined  capital,  surplus,  and  undivided  profits, 
of  the  subscribing  bank.  Subscriptions  from  all  others  must  be  accompanied  by 
payment  of  2  percent  of  the  amount  of  notes  applied  for,  not  subject  to  withdrawal 
until  after  allotment.  Following  allotment,  any  portion  of  the  2  percent  payment 
in  excess  of  2  percent  of  the  amount  of  notes  allotted  may  be  released  upon  the 
request  of  the  subscribers. 

2.  All  subscribers  are  required  to  agree  not  to  purchase  or  to  sell,  or  to  make  any 
agreements  with  respect  to  the  purchase  or  sale  or  other  disposition  of  any  notes 
of  this  additional  issue,  until  after  midnight  October  2,  1961. 

3.  Commercial  banks  in  submitting  subscriptions  will  be  required  to  certify 
that  they  have  no  beneficial  interest  in  any  of  the  subscriptions  they  enter  for  the 
account  of  their  customers,  and  that  their  customers  have  no  beneficial  interest 
in  the  banks'  subscriptions  for  their  own  account. 

4.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  to  allot  less  than  the  amount  of  notes  applied  for,  and  to  make 
different  percentage  allotments  to  various  classes  of  subscribers;  and  any  action 
he  may  take  in  these  respects  shall  be  final.  The  basis  of  the  allotment  will  be 
publicly  announced,  and  allotment  notices  will  be  sent  out  promptly  upon  allot- 
ment. 

IV.      PAYMENT 

1.  Payment  at  99.875  percent  of  their  face  value  and  accrued  interest  from 
May  15  to  October  11,  1961  ($13.15897  per  $1,000),  for  notes  allotted  hereunder 
must  be  made  or  completed  on  or  before  October  11,  1961,  or  on  later  allotment. 
The  total  amount  of  such  payment  will  be  $1,011.90897  per  $1,000  face  amount. 
In  every  case  where  payment  is  not  so  completed,  the  payment  with  application 
up  to  2  percent  of  the  amount  of  notes  allotted  shall,  upon  declaration  made  by 
the  Secretary  of  the  Treasury  in  his  discretion,  be  forfeited  to  the  United  States . 
Any  qualified  depositary  will  be  permitted  to  make  payment  by  credit  in  its 
Treasury  Tax  and  Loan  Account  for  not  more  than  75  percent  of  the  amount  of 
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. 

V.      GENERAL   PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  notes  allotted,  to  make  delivery  of  notes  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  notes. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time, 
prescribe  supplemental  or  amendatory  rules  and  regulations  governing  the 
offering,  which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


214   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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EXHIBITS  219 

ExmBiT  3. — Treasury  bonds 

Four  Treasury  circulars  representative  of  the  fourteen  bond  offerings  during  the 
fiscal  year  1962  are  reproduced  in  this  exhibit:  an  exchange  offering  (additional 
issue)  for  maturing  issues;  an  exchange  offering  (additional  issue)  for  U.S.  savings 
bonds  of  Series  F  and  G  maturing  during  the  calendar  year  1962;  a  cash  offering 
(additional  issue) ;  and  an  advance  refunding  exchange  offering.  Circulars  per- 
taining to  the  other  bond  offerings  are  similar  in  form  and  therefore  are  not 
reproduced  in  this  report.  However,  the  essential  details  for  each  issue  are 
summarized  in  the  first  table  following  the  circulars  and  the  final  allotments  of  the 
new  bonds  issued  for  cash  and  in  exchange  for  maturing  or  outstanding  securities 
are  shown  in  the  second  table. 

DEPARTMENT  CIRCULAR  NO.  1064.     PUBLIC  DEBT 

Treasury  Department, 
Washington,  July  17,  1961. 

I.  offering  of  bonds 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  99.375  percent  of  their 
face  value  and  accrued  interest,  from  the  people  of  the  United  States  for  bonds  of 
the  United  States,  designated  3%  percent  Treasury  bonds  of  1968,  in  exchange  for 
which  any  of  the  following  securities  may  be  tendered: 

334  percent  Treasury  certificates  of  indebtedness  of  Series  C-1961,  maturing 

August  1,  1961 
4  percent  Treasury  notes  of  Series  A-1961,  maturing  August  1,  1961 
2%  percent  Treasury  bonds  of  1961,  maturing  September  15,  1961 
IJ^  percent  Treasury  notes  of  Series  EO-1961,  maturing  October  1,  1961. 
A  cash  adjustment,  as  provided  in  section  IV  hereof  will  be  made  in  favor  of 
subscribers  for  the  discount  from  the  face  value  of  the  new  bonds.    Interest  will 
be  adjusted  in  the  case  of  the  2^4  percent  Treasury  bonds  of  1961,  and  in  the  case 
of  the  \Yi  percent  Treasury  notes  of  Series  EO-1961,  as  set  forth  in  section  IV 
hereof.     The  amount  of  the  offering  under  this  circular  will  be  limited  to  the 
amount  of  eligible  securities  tendered  in  exchange  and  accepted.    The  books  will 
be  open  only  on  July  17  through  July  19,  1961,  for  the  receipt  of  subscriptions  for 
this  issue. 

2.  In  addition  to  the  offering  under  this  circular,  holders  of  the  eligible  securities 
are  offered  the  privilege  of  exchanging  all  or  any  part  of  such  securities  for 

3K  percent  Treasury  notes  of  Series  H-1962,  or 

3%  percent  Treasury  notes  of  Series  E-1964 
which  offerings  are  set  forth  in  Department  Circulars  Nos.  1062  and  1063,  respec- 
tively, issued  simultaneously  with  this  circular. 

II.  description  of  bonds 

1.  The  bonds  now  offered  will  be  an  addition  to  and  will  form  a  part  of  the  series 
of  'iy%  percent  Treasury  bonds  of  1968  issued  pursuant  to  Department  Circulars 
Nos.  1044  and  1049,  dated  June  8  and  August  1,  1960,  respectively.  They  will  be 
freely  interchangeable  therewith,  and  are  identical  in  all  respects  therewith  except 
that  interest  on  the  bonds  to  be  issued  under  this  circular  will  accrue  from  August  1, 
1961,  in  the  case  of  the  certificates  and  notes  maturing  August  1  and  the  bonds 
maturing  September  15,  and  from  September  1,  1961,  in  the  case  of  the  notes 
maturing  October  1.  Subject  to  the  provisions  for  the  accrual  of  interest  on  the 
bonds  now  offered,  the  bonds  are  described  in  the  following  quotation  from 
Department  Circular  No.  1044: 

"1.  The  bonds  will  be  dated  June  23,  1960,  and  will  bear  interest  from  that  date 
at  the  rate  of  3%  percent  per  annum,  payable  on  a  semiannual  basis  on  November 
15,  1960,  and  thereafter  on  May  15  and  November  15  in  each  year  until  the 
principal  amount  becomes  payable.  They  will  mature  May  15,  1968,  and  will 
not  be  subject  to  call  for  redemption  prior  to  maturity. 

"2.  The  income  derived  from  the  bonds  is  subject  to  all  taxes  imposed  under  the 
Internal  Revenue  Code  of  1954.  The  bonds  are  subject  to  estate,  inheritance,  gift, 
or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt  from  all  taxation 
now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any  State,  or  any 
of  the  possessions  of  the  United  States  or  by  any  local  taxing  authority. 


220   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

"3.  The  Vjonds  will  be  acceptable  to  secure  deposits  of  public  moneys.  They 
will  not  be  acceptable  in  payment  of  taxes. 

"4.  Bearer  bonds  with  interest  coupons  attached,  and  bonds  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $500,  $1,000,  $5,000, 
$10,000,  $100,000,  and  $1,000,000.  Provision  will  be  made  for  the  interchange  of 
bonds  of  different  denominations  and  of  coupon  and  registered  bonds,  and  for  the 
transfer  of  registered  l)onds,  under  rules  and  regulations  prescribed  by  the  Secretary 
of  the  Treasury. 

"5.  The  bonds  will  be  subject  to  the  general  regulations  of  the  Treasury  Depart- 
ment, now  or  hereafter  prescribed,  governing  United  States  bonds." 

III.    SUBSCRIPTION    AND    ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches  and 
at  the  Office  of  the  Treasurer  of  the  United  States,  Washington,  D.C.  Banking 
institutions  generally  may  submit  subscriptions  for  account  of  customers,  but  only 
the  Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized  to  act 
as  official  agencies. 

2.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  and  to  allot  less  than  the  amount  of  bonds  appHed  for;  and  any 
action  he  may  take  in  these  respects  shall  be  final.  Subject  to  these  reservations, 
all  subscriptions  will  be  allotted  in  full.  Allotment  notices  will  be  sent  out  promptly 
upon  allotment. 

IV.    PAYMENT 

1.  Payment  at  99.375  percent  of  their  face  value  and  accrued  interest  for  bonds 
allotted  hereunder  must  be  made  on  or  before  August  1,  1961,  or  on  later  allot- 
ment. Payment  for  the  face  amount  of  the  bonds  allotted  may  be  made  only  in 
the  securities  of  the  four  issues  enumerated  in  section  I  hereof,  which  will  be 
accepted  at  par,  and  should  accompany  the  subscription.  Accrued  interest  on 
the  bonds  allotted  will  be  collected  from,  and  interest  on  the  securities  to  be 
exchanged  and  the  cash  adjustment  for  the  discount  on  the  bonds  to  be  allotted 
will  be  paid  to,  subscribers  as  follows: 

S}i  percent  certificates  of  indebtedness  of  Series  C-1961 — Coupons  dated  August  1, 
1961,  must  be  attached  to  the  certificates  when  surrendered.  Accrued  interest 
from  February  1,  1961,  to  August  1,  1961  ($15,625  per  $1,000)  on  the  certificates 
surrendered  plus  the  discount  ($6.25  per  $1,000)  on  the  bonds  allotted  will  be 
credited;  accrued  interest  from  May  15,  1961,  to  August  1,  1961  ($8.21332  per 
$1,000)  on  the  bonds  allotted  will  be  charged,  and  the  difference  ($13.66168  per 
$1,000)  will  be  paid  to  subscribers  following  acceptance  of  the  certificates. 

4  percent  Treasury  notes  of  Series  A-1961 — Coupons  dated  August  1,  1961, 
must  be  attached  to  the  notes  when  surrendered.  Accrued  interest  from  February 
1,  1961,  to  August  1,  1961  ($20.00  per  $1,000)  on  the  notes  surrendered  plus  the 
discount  ($6.25  per  $1,000)  on  the  bonds  allotted  will  be  credited;  accrued  interest 
from  May  15,  1961,  to  August  1,  1961  ($8.21332  per  $1,000)  on  the  bonds  allotted 
will  be  charged,  and  the  difference  ($18.03668  per  $1,000)  will  be  paid  to  subscribers 
following  acceptance  of  the  notes. 

Sy4  percent  Treasury  bonds  of  1961 — Coupons  dated  September  15,  1961,  must 
be  attached  to  the  bonds  in  coupon  form  when  surrendered.  Accrued  interest  from 
March  15,  1961,  to  August  1,  1961  ($10.38723  per  $1,000)  on  the  bonds  surrendered 
plus  the  discount  ($6.25  per  $1,000)  on  the  bonds  allotted  will  be  credited;  accrued 
interest  from  May  15,  1961,  to  August  1,  1961  ($8.21332  per  $1,000)  on  the  bonds 
allotted  will  be  charged,  and  the  difference  ($8.42391  per  $1,000)  will  be  paid 
to  subscribers.  Payment  to  subscribers  will  be  made  in  the  case  of  bearer  bonds 
following  their  acceptance  and  in  the  case  of  registered  bonds  following  discharge 
of  registration.  In  the  case  of  registered  bonds,  the  payment  will  be  made  by 
check  drawn  in  accordance  with  the  assignments  on  the  bonds  surrendered,  or  by 
credit  in  any  account  maintained  by  a  banking  institution  with  the  Federal 
Reserve  Bank  of  its  district. 


EXHIBITS  221 

l}i  percent  Treasury  notes  of  Series  EO-1961 — -Coupons  dated  October  1,  1961, 
must  be  attached  to  the  notes  when  surrendered.  Accrued  interest  from  April  1 , 
1961,  to  September  1,  1961  ($6.27049  per  $1,000)  on  the  notes  surrendered  plus 
the  discount  ($6.25  per  $1,000)  on  the  bonds  allotted  will  be  credited;  accrued 
interest  from  May  15,  1961,  to  September  1,  1961  ($11.47758  per  $1,000)  on  the 
bonds  allotted  will  be  charged,  and  the  diflference  ($1.04291  per  $1,000)  will  be 
paid  to  subscribers. 

V.    ASSIGNMENT    OF    REGISTERED    BONDS 

1.  2^4  percent  Treasury  bonds  of  1961  in  registered  form  tendered  in  payment 
for  bonds  offered  hereunder  should  be  assigned  by  the  registered  payees  or  assignees 
thereof,  in  accordance  with  the  general  regulations  of  the  Treasury  Department 
governing  assignments  for  transfer  or  exchange,  in  one  of  the  forms  hereafter  set 
forth,  and  thereafter  should  be  surrendered  with  the  subscription  to  a  Federal 
Reserve  Bank  or  branch  or  to  the  Office  of  the  Treasurer  of  the  United  States, 
Washington,  D.C.  The  bonds  must  be  delivered  at  the  expense  and  risk  of  the 
holder.  If  the  new  bonds  are  desired  registered  in  the  same  name  as  the  bonds 
surrendered,  the  assignment  should  be  to  "The  Secretary  of  the  Treasury  for 
exchange  for  3%  percent  Treasury  bonds  of  1968";  if  the  new  bonds  are  desired 
registered  in  another  name,  the  assignment  should  be  to  "The  Secretary  of  the 
Treasury  for  exchange  for  V/%  percent  Treasury  bonds  of  1968  in  the  name  of 

";  if  new  bonds  in  coupon  form  are  desired,  the  assignment  should  be 

to  "The  Secretary  of  the  Treasury  for  exchange  for  3%  percent  Treasury  bonds  of 
1968  in  coupon  form  to  be  delivered  to ". 

VI.    GENERAL    PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  bonds  allotted,  to  make  delivery  of  bonds  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  bonds. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time, 
prescribe  supplemental  or  amendatory  rules  and  regulations  governing  the  offer- 
ing, which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


DEPARTMENT  CIRCULAR  NO.   1072.     PUBLIC  DEBT 

Treasury  Department, 

Washington,  November  17,  1961. 

I.    OFFERING  OF  BONDS 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  99.50  percent  of  their 
face  value  and  accrued  interest,  for  bonds  of  the  United  States,  designated  V/i 
percent  Treasury  bonds  of  1968,  in  exchange  for  a  like  face  amount  of  United 
States  savings  bonds  of  Series  F  and  G  maturing  in  the  calendar  year  1962, 
which  will  be  accepted  at  exchange  values  as  provided  in  section  IV  hereof. 
Holders  of  Series  F  and  G  bonds  aggregating  less  than  an  even  multiple  of  $500 
maturity  value  (the  lowest  denomination  of  new  bonds  available)  may  exchange 
such  bonds  with  payment  of  the  difference  in  cash  to  make  up  the  next  higher 
$500  multiple.     Interest  on  the  bonds  will  be  adjusted  as  of  December  15,  1961, 


222   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

and  an  adjustment  in  favor  of  subscribers  representing  the  discount  from  the 
face  value  of  the  bonds  will  be  made  as  provided  in  section  IV  hereof.  The 
amount  of  the  offering  under  this  circular  will  be  limited  to  the  amount  of  securi- 
ties, together  with  cash  adjustments,  tendered  in  exchange  and  accepted.  The 
books  will  be  open  for  the  receipt  of  subscriptions  for  this  issue  from  all  classes 
of  subscribers  from  November  20  through  November  24,  1961,  and  in  addition, 
subscriptions  may  be  submitted  by  individuals  through  November  30,  1961. 
For  this  purpose  individuals  are  defined  as  natural  persons  in  their  own  right. 
Delivery  of  the  new  bonds  will  be  made  on  December  20,  1961. 

II.  DESCRIPTION  OF  BONDS 

1.  The  bonds  now  offered  will  be  an  addition  to  and  will  form  a  part  of  the  3ji 
percent  Treasury  bonds  of  1968  issued  pursuant  to  Department  Circulars  Nos. 
1044,  1049,  and  1064,  dated  June  8,  1960,  August  1,  1960,  and  July  17,  1961, 
respectively,  will  be  freely  interchangeable  therewith,  and  are  identical  in  all 
respects  therewith  except  that  interest  on  the  bonds  to  be  issued  under  this  circular 
will  accrue  from  December  15,  1961.  Subject  to  the  provision  for  the  accrual 
of  interest  from  December  15,  1961,  on  the  bonds  now  offered,  the  bonds  are 
described  in  the  following  quotation  from  Department  Circular  No.  1044: 

"1.  The  bonds  will  be  dated  June  23,  1960,  and  will  bear  interest  from  that 
date  at  the  rate  of  3%  percent  per  annum,  payable  on  a  semiannual  basis  on 
November  15,  1960,  and  thereafter  on  May  15  and  November  15  in  each  year 
until  the  principal  amount  becomes  payable.  They  will  mature  May  15,  1968, 
and  will  not  be  subject  to  call  for  redemption  prior  to  maturity. 

"2.  The  income  derived  from  the  bonds  is  subject  to  all  taxes  imposed  under  the 
Internal  Revenue  Code  of  1954.  The  bonds  are  subject  to  estate,  inheritance, 
gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt  from  all 
taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any 
State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

"3.  The  bonds  will  be  acceptable  to  secure  deposits  of  public  moneys.  They 
will  not  be  acceptable  in  payment  of  taxes. 

"4.  Bearer  bonds  with  interest  coupons  attached,  and  bonds  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $500,  $1,000,  $5,000, 
$10,000,  $100,000,  and  $1,000,000.  Provision  will  be  made  for  the  interchange 
of  bonds  of  different  denominations  and  of  coupon  and  registered  bonds,  and 
for  the  transfer  of  registered  bonds,  under  rules  and  regulations  prescribed  by 
the  Secretary  of  the  Treasury. 

"5.  The  bonds  will  be  subject  to  the  general  regulations  of  the  Treasury  De- 
partment, now  or  hereafter  prescribed,  governing  United  States  bonds." 

III.  SUBSCRIPTION  AND  ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington,  D.C.  Bank- 
ing institutions  generally,  and  paying  agents  eligible  to  process  bonds  under 
Treasury  Department  Circular  No.  888,  Revised,  may  submit  exchange  sub- 
scriptions for  account  of  customers,  but  only  the  Federal  Reserve  Banks  and  the 
Treasury  Department  are  authorized  to  act  as  official  agencies. 

2.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  and  to  allot  less  than  the  amount  of  bonds  applied  for;  and  any 
action  he  may  take  in  these  respects  shall  be  final.  Subject  to  these  reservations, 
all  subscriptions  will  be  allotted  in  full.  Allotment  notices  will  be  sent  out 
promptly  upon  allotment. 

IV.  PAYMENT 

1.  Payment  for  the  face  amount  of  bonds  allotted  hereunder  must  be  made 
on  or  before  December  20,  1961,  or  on  later  allotment,  and  may  be  made  only 
in  a  like  face  amount  of  United  States  savings  bonds  of  Series  F  and  Series  G 
maturing  from  January  1  to  December  1,  1962,  inclusive,  and  any  cash  difference 
necessary  to  make  up  an  even  $500  multiple,  which  bonds  and  cash  should  ac- 


EXMIBITIS 


223 


company  the  subscription,  together  with  the  net  amount,  if  any,  to  be  collected 
from  the  subscriber  as  set  forth  in  tables  I  and  II  at  the  end  of  this  circular. 
The  Series  F  and  G  bonds  will  be  accepted  in  the  exchange  at  amounts  set  forth 
thereunder  for  their  respective  months  of  maturity.  These  exchange  values  are 
higher  than  present  redemption  values.  They  have  been  set  so  that  holders 
of  Series  F  and  G  bonds  who  elect  to  accept  this  exchange  offer  will  receive,  in 
effect,  an  investment  yield  approximately  one  percent  per  annum  more  than 
would  otherwise  accrue  from  December  15,  1961,  to  the  maturity  dates  of  their 
bonds,  and  will  receive  an  investment  yield  of  approximately  3.96  percent  on  the 
3%  percent  marketable  bonds  received  in  exchange  for  the  period  from  the  maturity 
dates  of  their  Series  F  and  G  bonds  to  May  15,  1968.  All  subscribers  will  be 
charged  the  interest  from  November  15,  1961,  to  December  15,  1961  ($0.32  per 
$100)  on  the  bonds  allotted.  Other  adjustments  with  respect  to  bonds  accepted 
in  exchange  will  be  made  as  set  forth  in  tables  I  and  II,  which  also  show  the  net 
amounts  to  be  collected  from  or  paid  to  subscribers  for  each  $100  (face  amount) 
of  bonds  accepted  in  exchange. 

(a)  Series  F  bonds. — The  exchange  values  of  Series  F  bonds,  the  differences 
between  such  values  and  the  offering  price  of  the  y/s  percent  bonds,  the  interest 
which  will  accrue  on  the  new  bonds  and  the  total  amounts  to  be  collected  from 
or  paid  to  holders  of  Series  F  bonds  per  $100  (face  amount)  are  as  set  forth  in 
table  I. 

Table  I. — For  Series  F  bonds 


Exchange 

values  of 

F  bonds 

per  $100 

(face  amt.) 

COL.  1 

Charge  or  credit  for 
differences   between 
$99.50  (offering  price 
per    $100    of    new 

Interest 
Nov.  15  to 

Dec.  15, 
1961,  to  be 
charged  on 
new  bonds 

per  $100 

(face  amt.) 

of  F 

bonds 

COL.  4 

1  Total    amounts    per 
$100  (face  amt.)  of  F 
bonds  accepted 

2  Interest 
accruing 

F  bonds  matur- 
ing in  1962  on 

bonds)  and  exchange 
values  of  F  bonds 

3  TO  BE 
PAID  TO 
SUB- 
SCRIB- 
ERS 
(COLS.  3 
minus  4) 

COL.  5 

TO  BE 
COL- 
LECTED 
FROM 
SUB- 
SCRIB- 
ERS 
(COLS.  2 

plus  4 
minus  3) 

COL.  6 

per  $100  on 
new  bonds 
from  Nov. 

the  first  day 
of— 

Charge 
COL.  2 

Credit 
COL.  3 

15,  1961,  to 
maturity 
dates  of  F 
bonds  in 
1962 

COL.  7 

January 

$99. 88 
99.64 
99.40 
99.16 
98.92 
98.64 
98.40 
98.16 
97.92 
97.68 
97.44 
97.20 

$0.38 
0.14 

$0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 

$0.06 

$0.50 

February     . 

$0.18 
0.42 
0.66 
0.90 
1.18 
1.42 
1.66 
1.90 
2.14 
2.38 
2.62 

0.83 

March..    

$0.10 
0.34 
0.58 
0.86 
1.10 
1.34 
1.58 
1.82 
2.06 
2.30 

1.13 

AprU 

1.47 

May. 

1.79 

.T^inft 

2.12 

July 

2.43 

Aueust 

2.76 

September 

3.09 

October 

3.40 

November 

3.73 

December 

4.05 

•  In  addition,  for  each  $100,  or  multiple  or  fraction  thereof,  between  the  face  amount  of  Series  F  bonds 
submitted  and  the  face  amount  of  bonds  subscribed  (to  next  higher  multiple  of  $500)  the  subscriber  must 
pay  $99.82  ($99.50  issue  price  plus  $0.32  accrued  interest). 

2  Including  $0.32  per  $100  paid  by  subscriber  as  accrued  interest  from  November  15, 1961,  to  December  15, 
1961  (COL.  4).    This  data  is  included  for  information  only. 

3  The  net  amount  to  be  paid  to  subscribers  will  be  paid  following  acceptance  of  the  bonds  by  the  agency 
through  which  the  exchange  is  made. 


(b)  Series  G  bonds. — The  exchange  values  of  Series  G  bonds,  the  differences 
between  such  values  and  the  offering  price  of  the  3%  percent  bonds,  the  accrued 
interest  to  be  credited  on  the  Series  G  bonds,  the  interest  which  will  accrue  on  the 
new  bonds  and  the  total  amounts  to  be  collected  from  or  paid  to  holders  of  Series 
G  bonds  per  $100  (face  amount)  are  as  set  forth  in  table  II. 


224   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  II. — For  Series  G  bonds 


'  Total    amounts    per 

$100  (face  amt.)  of  G 

Credit  for 

Interest 

bonds  accepted 

2  Interest 

differences 
between 

Nov.  15  to 
Dec.  15. 

accurmg 

per  $100  on 

Exchange 

$99.50 

Interest  to 

1961, to  be 

TO  BE 

new  bonds 

G  bonds  matur- 

values of 

(offering 

be  credited 

charged  on 

3  TO  BE 

COL- 

from Nov. 

ing  in  1962  on 

G  bonds 

price  per 

on  G  bonds 

new  bonds 

PAID  TO 

LECTED 

15,  1961,  to 

the  first  day  of— 

per  $100 

$100)  of  new 

per  $100 

per  $100 

SUB- 

FROM 

maturitv 

(face  amt.) 

bonds  and 

(face  amt.) 

(face  amt.) 

SCRIB- 

SUB- 

dates of  G 

e.xchange 

of  G 

ERS 

SCRIB- 

bonds in 

values  of 

bonds 

(COLS.  2 

ERS 

1962 

G  bonds 

plus  3 
minus  4) 

(COLS.  4 

minus  2 

and  3) 

COL.  1 

COL.  2 

COL.  3 

COL.  4 

COL.  5 

COL.  6 

COL.  7 

January 

$99. 98 

$0.48 

$1.15 

$0.32 

$1.31 

$0.50 

February 

99.94 
99.90 
99.86 
99.82 
99.  79 
99.76 
99.71 
99.68 
99.64 
99.60 
99.56 

0.44 
0.40 
0.36 
0.32 
0.29 
0.26 
0.21 
0.18 
0.14 
0.10 
0.06 

0.94 
0.73 
0.52 
0.31 
0.10 

0.94 
0.73 
0.52 
0.31 
0.10 

0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 
0.32 

1.06 
0.81 
0.56 
0.31 
0.07 

0.83 

March..      _.     .. 

1.13 

April 

1.47 

May 

1.79 

June 

2.12 

July 

$0.16 

2.43 

August 

0.83 
0.59 
0.34 
0.09 

2.76 

September 

3.09 

October 

3.40 

November 

3.73 

December 

0.16 

4.05 



•  In  addition,  for  each  $100,  or  multiple  thereof,  between  the  face  amount  of  Series  G  bonds  submitted  and 
the  face  amount  of  bonds  subscribed  (to  next  higher  multiple  of  $500)  the  subscriber  must  pay  $99.82  ($99.50 
issue  price  plus  $0.32  accrued  interest). 

2  Including  -$0.32  per  $100  paid  by  subscriber  as  accrued  interest  from  November  15, 1961,  to  December  15, 
1961  (COL.  4).    This  data  is  included  for  information  only. 

3  The  net  amount  to  be  paid  to  subscribers  will  he  paid  following  acceptance  of  the  bonds  by  the  agency 
through  which  the  e.xchange  is  made. 

<  Interest  will  be  paid  to  January  1,  1962,  on  bonds  maturing  July  1,  1962,  in  regular  course  on  January  1, 
1962,  by  checks  mailed  by  the  Treasury  Department.  As  these  checks  will  include  unearned  interest  for 
the  period  from  December  15,  1961,  to  January  1,  1962,  each  subscriber  who  tenders  those  bonds  will  be 
required  to  make  an  interest  refund  of  $0.10  per  $100  (face  amount).  The  above  amount  of  $0.16  in  COL.  6 
includes  such  refund. 

2.  Any  qualified  depositary  will  be  permitted  to  make  payment  by  credit  in 
its  Treasury  tax  and  loan  account  for  any  cash  payments  authorized  or  required 
to  be  made  under  this  circular  for  bonds  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. 

3.  Series  F  and  G  bonds  tendered  in  exchange  must  bear  appropriate  requests 
for  payment  in  accordance  with  the  provisions  of  Treasury  Department  Circular 
No.  530,  Eighth  Revision,  as  amended,  or  the  special  endorsement  provided  for 
in  Treasury  Department  Circular  No.  888,  Revised.  In  any  case  in  which  bonds 
in  bearer  form,  or  registered  bonds  in  another  name,  are  desired,  requests  for 
payment  must  be  supplemented  by  specific  instructions  signed  by  the  owner  who 
signed  the  request  for  payment.  An  owner's  instructions  for  bearer  or  registered 
bonds  may  be  recorded  on  the  surrendered  bonds  by  typing  or  otherwise  recording 
on  the  back  thereof,  or  by  changing  the  existing  request  for  payment  form  to 
conform  to  one  of  the  two  following  forms: 

(a)  I  am  the  owner  of  this  bond  and  hereby  request  exchange  for  3%% 
Treasury  bonds  of  1968  in  bearer  form  to  be  delivered  to  (insert  name  and  address 
of  person  to  whom  delivery  is  to  be  made) . 

(b)  I  am  the  owner  of  this  bond  and  hereby  request  exchange  for  3%% 
Treasury  bonds  of  1968  registered  in  the  name  of  (insert  exact  registration  de- 
sired—see section  V  hereof). 

V.  REGI.STRATION   OF  BONDS 

1.  Treasury  bonds  may  be  registered  only  as  authorized  in  Treasury  Depart- 
ment Circular  No.  300,  Revised,  as  supplemented.  Registration  in  the  name  of 
one  person  payable  on  death  to  another  is  not  authorized.  Registered  Treasury 
bonds  may  be  transferred  to  a  purchaser  only  upon  proper  assignment.  Treasury 
bonds  registered  in  the  form  "A  or  B"  may  be  transferred  only  upon  assignment 


EXHIBITS  225 

by  or  on  behalf  of  both,  except  that  if  one  of  them  is  deceased,  an  assignment  by 
or  on  behalf  of  the  survivor  will  be  accepted.  Since  Treasury  bonds  are  not 
redeemable  before  maturity  at  the  option  of  the  owners,  the  effects  of  registering 
them  in  the  names  of  two  or  more  persons  are  important.  Information  concerning 
the  effects  of  various  forms  of  registration  may  be  obtained  from  any  Federal 
Reserve  Bank  or  branch,  the  Office  of  the  Treasurer  of  the  United  States,  Wash- 
ington, D.C.,  or  from  banking  institutions  generally. 

VI.   GENEEAL  PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  bonds  allotted,  to  make  delivery  of  bonds  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  bonds. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time, 
prescribe  supplemental  or  amendatory  rules  and  regulations  governing  the  offering, 
which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Robert  V.  Roosa, 
Acting  Secretary  of  the  Treasury. 


DEPARTMENT  CIRCULAR  NO.  1-62.     PUBLIC  DEBT 

Treasury  Department, 
Washington,  January  15,  1962. 

I.    OFFERING  OF  BONDS 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions,  at  99.75  percent  of  their 
face  value  and  accrued  interest,  from  the  people  of  the  United  States  for  bonds 
of  the  United  States,  designated  4  percent  Treasury  bonds  of  1969.  The  amount 
of  the  offering  under  this  circular  is  $1,000,000,000,  or  thereabouts.  In  addition 
to  the  amount  offered  for  public  subscription,  the  Secretary  of  the  Treasury 
reserves  the  right  to  allot  up  to  $100,000,000  of  these  bonds  to  Government 
investment  accounts.  The  books  will  be  open  only  on  January  15,  1962,  for  the 
receipt  of  subscriptions  for  this  issue. 

II.    DESCRIPTION  OF  BONDS 

1.  The  bonds  now  offered  will  be  an  addition  to  and  will  form  a  part  of  the 
series  of  4  percent  Treasury  bonds  of  1969  issued  pursuant  to  Department  Cir- 
culars Nos.  996,  1024,  and  1056,  dated  September  16, 1957,  March  23,  1959,  and  No- 
vember 18,  1960,  respectively,  will  be  freely  interchangeable  therewith,  and  are 
identical  in  all  respects  therewith  except  that  interest  on  the  bonds  to  be  issued 
under  this  circular  will  accrue  from  January  24,  1962.  Subject  to  the  provision 
for  the  accrual  of  interest  from  January  24,  1962,  on  the  bonds  now  offered,  the 
bonds  are  described  in  the  following  quotation  from  Department  Circular  No.  996: 

"1.  The  bonds  will  be  dated  October  1,  1957,  and  will  bear  interest  from  that 
date  at  the  rate  of  4  percent  per  annum,  payable  semiannually  on  April  1  and 
October  1  in  each  year  until  the  principal  amount  becomes  payable.  They 
will  mature  October  1,  1969,  and  will  not  be  subject  to  call  for  redemption  prior 
to  maturity. 

"2.  The  income  derived  from  the  bonds  is  subject  to  all  taxes  imposed  under 
the  Internal  Revenue  Code  of  1954.  The  bonds  are  subject  to  estate,  inheritance, 
gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt  from  all 
taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any 
State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

"3.  The  bonds  will  be  acceptable  to  secure  deposits  of  public  moneys. 

"4.  Bearer  bonds  with  interest  coupons  attached,  and  bonds  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $500,  $1,000,  $5,000, 
$10,000,  $100,000,  and  $1,000,000.  Provision  will  be  made  for  the  interchange 
of  bonds  of  different  denominations  and  of  coupon  and  registered  bonds,  and  for 

667496—63 16 


226   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  transfer  of  registered  bonds,  under  rules  and  regulations  prescribed  by  the 
Secretary  of  the  Treasury. 

"5.  Any  bonds  issued  hereunder  which  upon  the  death  of  the  owner  constitute 
part  of  his  estate,  will  be  redeemed  at  the  option  of  the  duly  constituted  repre- 
sentatives of  the  deceased  owner's  estate,  at  par  and  accrued  interest  to  date  of 
payment,  '  provided: 

(a)  that  the  bonds  were  actually  owned  by  the  decedent  at  the  time  of  his 
death;  and 

(b)  that  the  Secretary  of  the  Treasury  be  authorized  to  apply  the  entire 
proceeds  of  redemption  to  the  payment  of  Federal  estate  taxes. 

Registered  bonds  submitted  for  redemption  hereunder  must  be  duly  assigned 
to  'The  Secretary  of  the  Treasury  for  redemption,  the  proceeds  to  be  paid  to  the 

District  Director  of  Internal  Revenue  at for  credit  on  Federal  estate 

taxes  due  from  estate  of '     Owing  to   the  periodic   closing  of  the 

transfer  books  and  the  impossibility  of  stopping  payment  of  interest  to  the  reg- 
istered owner  during  the  closed  period,  registered  bonds  received  after  the  closing 
of  the  books  for  payment  during  such  closed  period  will  be  paid  only  at  par  with 
a  deduction  of  interest  from  the  date  of  payment  to  the  next  interest  payment 
date;  ^  bonds  received  during  the  closed  period  for  payment  at  a  date  after  the 
books  reopen  will  be  paid  at  par  plus  accrued  interest  from  the  reopening  of  the 
books  to  the  date  of  payment.  In  either  case  checks  for  the  full  six  months' 
interest  due  on  the  last  day  of  the  closed  period  will  be  forwarded  to  the  owner 
in  due  course.  All  bonds  submitted  must  be  accompained  by  Form  PD  1782,^ 
properly  completed,  signed  and  sworn  to,  and  by  proof  of  the  representatives' 
authority  in  the  form  of  a  court  certificate  or  a  certified  copy  of  the  representatives' 
letters  of  appointment  issued  by  the  court.  The  certificate,  or  the  certification 
to  the  letters,  must  be  under  the  seal  of  the  court,  and  except  in  the  case  of  a 
corporate  representative,  must  contain  a  statement  that  the  appointment  is 
in  full  force  and  be  dated  within  six  months  prior  to  the  submission  of  the  bonds, 
unless  the  certificate  or  letters  show  that  the  appointment  was  made  within  one 
year  immediately  prior  to  such  submission.  Upon  payment  of  the  bonds  appro- 
priate memorandum  receipt  will  be  forwarded  to  the  representatives,  which  will 
be  followed  in  due  course  by  formal  receipt  from  the  District  Director  of  Internal 
Revenue. 

"6.  The  bonds  will  be  subject  to  the  general  regulations  of  the  Treasury  Depart- 
ment, now  or  hereafter  prescribed,  governing  United  States  bonds." 

III.    SUBSCRIPTION  AND  ALLOTMEXT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington.  Only  the 
Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized  to  act  as 
official  agencies.  Commercial  banks,  which  for  this  purpose  are  defined  as  banks 
accepting  demand  deposits,  may  submit  subscriptions  for  account  of  customers 
provided  the  names  of  the  customers  are  set  forth  in  such  subscriptions.  Others 
than  commercial  banks  will  not  be  permitted  to  enter  subscriptions  except  for 
their  own  account.  Subscriptions  from  commercial  banks  for  their  own  account 
will  be  restricted  in  each  case  to  an  amount  not  exceeding  5  percent  of  the  combined 
amount  of  time  and  savings  deposits,  including  time  certificates  of  deposit, 
or  15  percent  of  the  combined  capital,  surplus,  and  undivided  profits,  of  the 
subscribing  bank,  whichever  is  greater.  Subscriptions  from  banking  institutions 
generally  for  their  own  account  and  from  States,  political  subdivisions  or  instru- 
mentalities thereof,  public  pension  and  retirement  and  other  public  funds,  and 
dealers  who  make  primary  markets  in  Government  securities  and  report  daily  to 
the  Federal  Reserve  Bank  of  New  York  their  positions  with  respect  to  Govern- 
ment securities  and  borrowings  thereon,  will  be  received  without  deposit.  Sub- 
scriptions from  all  others  must  be  accompanied  by  payment  of  25  percent  of  the 
amount  of  bonds  applied  for,  not  subject  to  withdrawal  until  after  allotment. 
Following  allotment,  any  portion  of  the  25  percent  payment  in  excess  of  25  percent 
of  the  amount  of  bonds  allotted  may  be  released  upon  the  request  of  the  subscribers. 

•  An  exact  half-year's  interest  is  computed  for  each  full  half-year  period  irrespective  of  the  actual  number 
of  days  in  the  half  year.  For  a  fractional  part  of  any  half  year,  computation  is  on  the  basis  of  the  actual 
number  of  days  in  such  half  year. 

2  The  tnmsfer  books  are  closed  from  March  2  to  April  1  and  from  September  2  to  October  1  (both  dates 
Inclusive)  in  each  year. 

'  Copies  of  Form  PD  1782  may  be  obtained  from  any  Federal  Reserve  Bank  or  from  the  Treasury  Depart- 
ment, Washington,  D.C. 


1 


EXHIBITS  227 

2.  All  subscribers  are  required  to  agree  not  to  purchase  or  to  sell,  or  to  make 
any  agreements  with  respect  to  the  purchase  or  sale  or  other  disposition  of  any 
bonds  of  this  additional  issue,  until  after  midnight  January  15,  1962. 

3.  Commercial  banks  in  submitting  subscriptions  wiU  be  required  to  certify 
that  they  have  no  beneficial  interest  in  any  of  the  subscriptions  they  enter  for  the 
account  of  their  customers,  and  that  their  customers  have  no  beneficial  interest 
in  the  banks'  subscriptions  for  their  own  account. 

4.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  to  allot  less  than  the  amount  of  bonds  applied  for,  and  to  make 
different  percentage  allotments  to  various  classes  of  subscribers;  and  any  action 
he  may  take  in  these  respects  shall  be  final.  The  basis  of  the  allotment  wiU  be 
publicly  announced,  and  allotment  notices  will  be  sent  out  promptly  upon  allot- 
ment. 

IV.    PAYMENT 

1.  Payment  at  99.75  percent  of  their  face  value  and  accrued  interest  from 
October  1,  1961,  to  January  24,  1962  ($12.63736  per  $1,000),  for  bonds  allotted 
hereunder  must  be  made  or  completed  on  or  before  January  24,  1962,  or  on  later 
allotment.  The  total  amount  of  such  payment  will  be  $1,010.13736  per  $1,000 
face  amount  of  bonds  allotted.  In  every  case  where  payment  is  not  so  completed, 
the  payment  with  application  up  to  25  percent  of  the  amount  of  bonds  allotted 
shall,  upon  declaration  made  by  the  Secretary  of  the  Treasury  in  his  discretion, 
be  forfeited  to  the  United  States.  Any  qualified  depositary  will  be  permitted  to 
make  payment  by  credit  in  its  Treasury  tax  and  loan  account  for  bonds  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. 

v.    GENERAL  PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  bonds  allotted,  to  make  delivery  of  bonds  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  bonds. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time,  pre- 
scribe supplemental  or  amendatory  rules  and  regulations  governing  the  offering, 
which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


DEPARTMENT  CIRCULAR  NO.  4-62.     PUBLIC  DEBT 

Treasury  Department, 
Washington,  February  19,  1962. 

I.    OFFERING  OF  BONDS 

1.  The  Secretary  of  the  Treasury,  pursuant  to  the  authority  of  the  Second 
Liberty  Bond  Act,  as  amended,  invites  subscriptions  from  the  people  of  the 
United  States  for  bonds  of  the  United  States,  designated  4  percent  Treasury 
bonds  of  1971: 

(1)  at  par  in  exchange  for  3  percent  Treasury  bonds  of  1964,  dated  Feb- 
ruary 14,  1958,  due  February  15,  1964;  or 

(2)  at  102  percent  of  their  face  value  in  exchange  for  2^^  percent  Treasury 
bonds  of  1965,  dated  June  15,  1958,  due  February  15,  1965.  The  cash 
payment  due  from  the  subscriber  on  account  of  the  issue  price  of  the  new 
bonds  ($20.00  per  $1,000)  will  be  payable  by  the  subscriber  as  set  forth  in 
section  IV  hereof. 

Interest  will  be  adjusted  as  of  March  1,  1962,  as  set  forth  in  section  IV  hereof. 
Delivery  of  the  new  bonds  will  be  made  on  March  9,  1962.  The  amount  of  the 
offering  under  this  circular  will  be  limited  to  the  amount  of  the  ehgible  securities 
tendered  in  exchange  and  accepted.  The  books  will  be  open  for  the  receipt  of 
subscriptions  for  this  issue  from  all  classes  of  subscribers  from  February  19  through 


228   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

February  21,  1962,  and,  in  addition,  subscriptions  may  be  submitted  by  indi- 
viduals through  February  28,  1962.  For  this  purpose  individuals  are  defined  as 
natural  persons  in  their  own  right. 

2.  In  addition  to  the  offering  under  this  circular,  holders  of  the  2^^  percent 
Treasury  bonds  of  1965  are  offered  the  privilege  of  exchanging  all  or  any  part  of 
such  bonds  for  4  percent  Treasury  bonds  of  1980,  which  offering  is  set  forth  in 
Department  Circular,  Public  Debt  Series — Xo.  5-62,  issued  simultaneously  with 
this  circular. 

3.  Nonrecognition  of  gain  or  loss  for  Federal  income  tax  purposes. — Pursuant  to 
the  provisions  of  section  1037(a)  of  the  Internal  Revenue  Code  of  1954  as  added 
by  Public  Law  86-346  (approved  September  22,  1959),  the  Secretary  of  the 
Treasury  hereby  declares  that  no  gain  or  loss  shall  be  recognized  for  Federal 
income  tax  purposes  upon  the  exchange  with  the  United  States  of  the  eligible 
bonds  enumerated  in  paragraph  one  of  this  section  solely  for  the  4  percent  Treas- 
ury bonds  of  1971.  Gain  or  loss,  if  any,  upon  the  obligations  surrendered  in 
exchange  will  be  taken  into  account  upon  the  disposition  or  redemption  of  the 
new  obligations. 

II.    DESCRIPTION   OF  BONDS 

1.  The  bonds  will  be  dated  INIarch  1,  1962,  and  will  bear  interest  from  that  date 
at  the  rate  of  4  percent  per  annum,  payable  on  a  semiannual  basis  on  August  15, 
1962,  and  thereafter  on  February  15  and  August  15  in  each  year  until  the  principal 
amount  becomes  payable.  They  will  mature  August  15,  1971,  and  will  not  be 
subject  to  call  for  redemption  prior  to  maturity. 

2.  The  income  derived  from  the  bonds  is  subject  to  all  taxes  imposed  under 
the  Internal  Revenue  Code  of  1954.  The  bonds  are  subject  to  estate,  inheritance, 
gift,  or  other  excise  taxes,  whether  Federal  or  State,  but  are  exempt  from  all 
taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by  any 
State,  or  any  of  the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority. 

3.  The  bonds  will  be  acceptable  to  secure  deposits  of  public  moneys.  They 
will  not  be  acceptable  in  payment  of  taxes. 

4.  Bearer  bonds  with  interest  coupons  attached,  and  bonds  registered  as  to 
principal  and  interest,  will  be  issued  in  denominations  of  $500,  $1,000,  $5,000, 
$10,000,  $100,000,  and  $1,000,000.  Provision  will  be  made  for  the  interchange 
of  bonds  of  different  denominations  and  of  coupon  and  registered  bonds,  and  for 
the  transfer  of  registered  bonds,  under  rules  and  regulations  prescribed  by  the 
Secretary  of  the  Treasury. 

5.  The  bonds  will  be  subject  to  the  general  regulations  of  the  Treasury  Depart- 
ment, now  or  hereafter  prescribed,  governing  United  States  bonds. 

III.    SUBSCRIPTION  AND   ALLOTMENT 

1.  Subscriptions  will  be  received  at  the  Federal  Reserve  Banks  and  branches 
and  at  the  Office  of  the  Treasurer  of  the  United  States,  Washington  25,  D.C. 
Banking  institutions  generally  may  submit  subscriptions  for  account  of  customers, 
provided  the  names  of  the  customers  are  set  forth  in  such  subscriptions,  but  only 
the  Federal  Reserve  Banks  and  the  Treasury  Department  are  authorized  to  act 
as  official  agencies. 

2.  The  Secretary  of  the  Treasury  reserves  the  right  to  reject  or  reduce  any 
subscription,  and  to  allot  less  than  the  amount  of  bonds  applied  for;  and  any 
action  he  may  take  in  these  respects  shall  be  final.  Subject  to  these  reservations, 
all  subscriptions  will  be  allotted  in  full.  Allotment  notices  will  be  sent  out 
promptly  upon  allotment. 


EXHIBITS  229 

IV.    PAYMENT 

1.  Payment  for  the  face  amount  of  bonds  allotted  hereunder  must  be  made  on 
or  before  March  9,  1962,  or  on  later  allotment,  and  may  be  made  only  in  a  like 
face  amount  of  the  two  series  of  bonds  enumerated  in  paragraph  one  of  section  I 
hereof,  which  should  accompany  the  subscription. 

2.  S  percent  bonds  of  1964- — Coupons  dated  August  15,  1962,  and  all  subse- 
quent coupons,  must  be  attached  to  the  3  percent  Treasury  bonds  of  1964,  in 
bearer  form,  when  surrendered.  Accrued  interest  from  February  15  to  March  1, 
1962  ($1.16022  per  $1,000)  will  be  paid  to  subscribers,  in  the  case  of  bearer  bonds 
following  their  acceptance  and  in  the  case  of  registered  bonds  following  discharge 
of  registration.  In  the  case  of  registered  bonds,  the  payment  will  be  made  by 
check  drawn  in  accordance  with  the  assignments  on  the  bonds  surrendered,  or  by 
credit  in  any  account  maintained  by  a  banking  institution  with  the  Federal 
Reserve  Bank  of  its  district. 

3.  SYs  percent  bonds  of  1965.- — Coupons  dated  August  15,  1962,  and  all  subse- 
quent coupons,  must  be  attached  to  the  2%  percent  Treasury  bonds  of  1965,  in 
bearer  form,  when  surrendered.  Accrued  interest  from  February  15  to  March  1, 
1962  ($1.01519  per  $1,000)  on  the  2%  percent  bonds  will  be  credited,  the  payment 
($20.00  per  $1,000)  due  the  United  States  on  account  of  the  issue  price  of  the 
new  bonds  will  be  charged,  and  the  difference  ($18.98481  per  $1,000)  must  be 
paid  by  subscribers  and  should  accompany  the  subscription. 

V.    ASSIGNMENT    OP    REGISTERED    BONDS 

1.  Treasury  bonds  of  the  two  eligible  series  in  registered  form  tendered  in 
payment  for  bonds  offered  hereunder  should  be  assigned  by  the  registered  payees 
or  assignees  thereof,  in  accordance  with  the  general  regulations  of  the  Treasury 
Department  governing  assignments  for  transfer  or  exchange,  in  one  of  the  forms 
hereafter  set  forth,  and  thereafter  should  be  surrendered  to  a  Federal  Reserve 
Bank  or  branch  or  to  the  Office  of  the  Treasurer  of  the  United  States,  Washing- 
ton 25,  D.C.  If  the  new  bonds  are  desired  registered  in  the  same  name  as  the 
bonds  surrendered  in  exchange,  the  assignment  should  be  to  "The  Secretary  of 
the  Treasury  for  exchange  for  4  percent  Treasury  bonds  of  1971";  if  the  new  bonds 
are  desired  registered  in  another  name,  the  assignment  should  be  to  "The  Secre- 
tary of  the  Treasury  for  exchange  for  4  percent  Treasury  bonds  of  1971  in  the 

name  of ";  if  new  bonds  in  coupon  form  are  desired,  the  assignment 

should  be  to  "The  Secretary  of  the  Treasury  for  exchange  for  4  percent  Treasury 
bonds  of  1971  in  coupon  form  to  be  delivered  to ". 

VI.    GENERAL    PROVISIONS 

1.  As  fiscal  agents  of  the  United  States,  Federal  Reserve  Banks  are  authorized 
and  requested  to  receive  subscriptions,  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,  to  issue  allotment  notices,  to  receive  payment 
for  bonds  allotted,  to  make  delivery  of  bonds  on  full-paid  subscriptions  allotted, 
and  they  may  issue  interim  receipts  pending  delivery  of  the  definitive  bonds. 

2.  The  Secretary  of  the  Treasury  may  at  any  time,  or  from  time  to  time,  pre- 
scribe supplemental  or  amendatory  rules  and  regulations  governing  the  offering, 
which  will  be  communicated  promptly  to  the  Federal  Reserve  Banks. 

Douglas  Dillon, 
Secretary  of  the  Treasury, 


230   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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240   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Treasury  Bills  Offered  and  Accepted 

Exhibit  4. — Treasury  bills 

During  the  fiscal  year  1962  there  were  52  weekly  issues  each  of  13-week  and 
26-week  Treasury  bills  (the  13-week  bills  represent  additional  issues  of  bills  with 
an  original  maturity  of  26  weeks),  3  issues  of  tax  anticipation  series,  4  one-year 
issues  (one  364-day  and  three  365-day  bills),  and  one  issue  of  a  strip  of  weekly 
bills  issued  November  15,  1961,  representing  additional  amounts  of  8  series  of 
outstanding  Treasury  bills.  Four  press  releases  inviting  tenders  and  four  releases 
announcing  the  acceptance  of  tenders  are  reproduced  in  this  exhibit.  The  press 
releases  of  June  13  and  June  19,  1962,  are  in  a  form  representative  of  a  weekly 
double  issue  of  regular  bills  (91-  and  182-day)  in  which  there  is  an  additional 
issue  of  a  currently  outstanding  issue  of  182-day  bills  having  91  days  remaining 
before  maturity  and  a  new  issue  of  182-day  bills.  The  details  of  the  issue  of 
strip  bills  are  explained  in  the  releases  of  November  2  and  November  10,  1961. 
The  tax  anticipation  series  is  represented  by  the  releases  of  March  13  and  March 
21,  1962,  and  the  one-year  bill  issues  are  represented  by  the  releases  of  April  3 
and  April  11,  1962.  The  essential  details  regarding  each  issue  of  Treasury 
bills  during  the  fiscal  year  1962  are  summarized  in  the  table  following  the  releases. 

PRESS  RELEASE  OF  JUNE  13,  1962 

The  Treasury  Department,  by  this  public  notice,  invites  tenders  for  two 
series  of  Treasury  bills  to  the  aggregate  amount  of  $2,000,000,000,  or  thereabouts, 
for  cash  and  in  exchange  for  Treasury  bills  maturing  June  21,  1962,  in  the  amount 
of  $1,802,246,000,  as  follows: 

91-day  bills  (to  maturity  date)  to  be  issued  June  21,  1962,  in  the  amount  of 
$1,300,000,000,  or  thereabouts,  representing  an  additional  amount  of  bills  dated 
March  22,  1962,  and  to  mature  September  20,  1962,  originally  issued  in  the  amount 
of  $600,081,000,  the  additional  and  original  bills  to  be  freely  interchangeable. 

182-day  bills,  for  $700,000,000,  or  thereabouts,  to  be  dated  June  21,  1962, 
and  to  mature  December  20,  1962. 

The  bills  of  both  series  will  be  issued  on  a  discount  basis  under  competitive 
and  noncompetitive  bidding  as  hereinafter  provided,  and  at  maturity  their  face 
amount  will  be  payable  without  interest.  They  will  be  issued  in  bearer  form 
only,  and  in  denominations  of  $1,000,  $5,000,  $10,000,  $50,000,  $100,000,  $500,000, 
and  $1,000,000  (maturity  value). 

Tenders  will  be  received  at  Federal  Reserve  Banks  and  branches  up  to  the 
closing  hour,  one-thirty  p.m.,  eastern  dayhght  saving  time,  Monday,  June  18, 
1962.  Tenders  will  not  be  received  at  the  Treasury  Department,  Washington. 
Each  tender  must  be  for  an  even  multiple  of  $1,000,  and  in  the  case  of  competitive 
tenders  the  price  offered  must  be  expressed  on  the  basis  of  100,  with  not  more 
than  three  decimals,  e.g.,  99.925.  Fractions  may  not  be  used.  It  is  urged  that 
tenders  be  made  on  the  printed  forms  and  forwarded  in  the  special  envelopes 
which  will  be  supplied  by  Federal  Reserve  Banks  or  branches  on  application 
therefor. 

Banking  institutions  generally  may  submit  tenders  for  account  of  customers 
provided  the  names  of  the  customers  are  set  forth  in  such  tenders.  Others  than 
banking  institutions  will  not  be  permitted  to  submit  tenders  except  for  their 
own  account.  Tenders  will  be  received  without  deposit  from  incorporated  banks 
and  trust  companies  and  from  responsible  and  recognized  dealers  in  investment 
securities.  Tenders  from  others  must  be  accompanied  by  payment  of  2  percent 
of  the  face  amount  of  Treasury  bills  applied  for,  unless  the  tenders  are  accom- 
panied by  an  express  guaranty  of  payment  by  an  incorporated  bank  or  trust 
company. 

Immediately  after  the  closing  hour,  tenders  will  be  opened  at  the  Federal 
Reserve  Banks  and  branches,  following  which  public  announcement  will  be  made 
by  the  Treasury  Department  of  the  amount  and  price  range  of  accepted  bids. 
Those  submitting  tenders  will  be  advised  of  the  acceptance  or  rejection  thereof. 
The  Secretary  of  the  Treasury  expressly  reserves  the  right  to  accept  or  reject  any  or 
all  tenders,  in  whole  or  in  part,  and  his  action  in  any  such  respect  sliall  be  final. 
Subject  to  these  reservations,  noncompetitive  tenders  for  $200,000  or  less  for  the 


EXHIBITS 


241 


additional  bills  dated  March  22,  1962  (91  days  remaining  until  maturity  date  on 
September  20,  1962),  and  noncompetitive  tenders  for  $100,000  or  less  for  the  182- 
day  bills  without  stated  price  from  any  one  bidder  will  be  accepted  in  full  at  the 
average  price  (in  three  decimals)  of  accepted  competitive  bids  for  the  respective 
issues.  Settlement  for  accepted  tenders  in  accordance  with  the  bids  must  be 
made  or  completed  at  the  Federal  Reserve  Bank  on  June  21,  1962,  in  cash  or  other 
immediately  available  funds  or  in  a  like  face  amount  of  Treasury  bills  maturing 
June  21,  1962.  Cash  and  exchange  tenders  will  receive  equal  treatment.  Cash 
adjustments  will  be  made  for  differences  between  the  par  value  of  maturing 
bills  accepted  in  exchange  and  the  issue  price  of  the  new  bills. 

The  income  derived  from  Treasury  bills,  whether  interest  or  gain  from  the  sale 
or  other  disposition  of  the  bills,  does  not  have  any  exemption,  as  such,  and  loss 
from  the  sale  or  other  disposition  of  Treasury  bills  does  not  have  any  special 
treatment,  as  such,  under  the  Internal  Revenue  Code  of  1954.  The  bills  are  sub- 
ject to  estate,  inheritance,  gift,  or  other  excise  taxes,  whether  Federal  or  State, 
but  are  exempt  from  all  taxation  now  or  hereafter  imposed  on  the  principal  or 
interest  thereof  by  any  State,  or  any  of  the  possessions  of  the  United  States, 
or  by  any  local  taxing  authority.  For  purposes  of  taxation  the  amount  of  discount 
at  which  Treasury  bills  are  originally  sold  by  the  United  States  is  considered  to  be 
interest.  Under  sections  454(b)  and  1221(5)  of  the  Internal  Revenue  Code  of 
1954  the  amount  of  discount  at  which  bills  issued  hereunder  are  sold  is  not  con- 
sidered to  accrue  until  such  bills  are  sold,  redeemed,  or  otherwise  disposed  of,  and 
such  bills  are  excluded  from  consideration  as  capital  assets.  Accordingly,  the 
owner  of  Treasury  bills  (other  than  life  insurance  companies)  issued  hereunder 
need  include  in  his  income  tax  return  only  the  difference  between  the  price  paid 
for  such  bills,  whether  on  original  issue  or  on  subsequent  purchase,  and  the  amount 
actually  received  either  upon  sale  or  redemption  at  maturity  during  the  taxable 
year  for  which  the  return  is  made,  as  ordinary  gain  or  loss. 

Treasury  Department  Circular  No.  418  (current  revision)  and  this  notice 
prescribe  the  terms  of  the  Treasury  bills  and  govern  the  conditions  of  their  issue. 
Copies  of  the  circular  may  be  obtained  from  any  Federal  Reserve  Bank  or  branch . 


PRESS  RELEASE  OF  JUNE  19,  1962 

The  Treasury  Department  announced  last  evening  that  the  tenders  for  two 
series  of  Treasury  bills,  one  series  to  be  an  additional  issue  of  the  bills  dated  March 
22,  1962,  and  the  other  series  to  be  dated  June  21,  1962,  which  were  offered  on 
June  13,  were  opened  at  the  Federal  Reserve  Banks  on  June  18.  Tenders  were 
invited  for  $1,300,000,000,  or  thereabouts,  of  91-day  bills  and  for  $700,000,000, 
or  thereabouts  of  182-day  bills.     The  details  of  the  two  series  are  as  follows: 


Range  of  accepted  competitive  bids 


91-day  Treasury  bills  maturing 
September  20, 1962 


Price 


Approximate 
equivalent 
annual  rate 


182-day  Treasury  bills  maturing 
December  20, 1962 


Price 


Approximate 
equivalent 
annual  rate 


High.... 

Low 

Average 


»  99. 320 
99. 310 
99. 312 


2. 690% 

2. 730% 

'2.721% 


2  98.  592 
98.  580 
98.  585 


2.  785% 

2. 809% 

3  2. 800% 


(73  percent  of  the  amount  of  91-day  bills  bid  for  at  the  low  price  was  accepted  and  8  percent  of  the  amount  of 
182-day  bills  bid  for  at  the  low  price  was  accepted.) 

>  Excepting  2  tenders  totaling  $1,200,000. 

'  Excepting  2  tenders  totaling  $250,000. 

3  On  a  coupon  issue  of  the  same  length  and  for  the  same  amoimt  invested,  the  return  on  these  bills  would 
provide  yields  of  2.78  percent  for  the  91-day  bills,  and  2.88  percent  for  the  182-day  bills.  Interest  rates  on 
bills  are  quoted  in  terms  of  bank  discount  with  the  return  related  to  the  face  amount  of  the  bills  payable  at 
maturity  rather  than  the  amoimt  invested  and  their  length  in  actual  number  of  days  related  to  a  360-day 
year.  In  contrast,  yields  on  certificates,  notes,  and  bonds  are  computed  in  terms  of  interest  on  the  amount 
invested,  and  relate  the  number  of  days  remaining  in  an  interest  payment  period  to  the  actual  number  of 
days  in  the  period,  with  semiannual  compounding  if  more  than  one  coupon  period  is  involved. 


661496r-63- 


-17 


I 


242        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Total  tenders  applied  for  and  accepted  by  Federal  Reserve  districts 


District 


Applied  for 


Accepted 


Applied  for 


Accepted 


Boston 

New  York 

Philadelphia. 

Cleveland 

Richmond 

Atlanta 

Chicago 

St.  Louis 

Minneapolis.. 
Kansas  City.. 

Dallas 

San  Francisco 

Total... 


$50, 558, 000 
,  958, 235, 000 
28, 380, 000 
45,  932, 000 
18,  %9, 000 
25, 867, 000 

223, 649, 000 
32, 618, 000 
21, 336, 000 
36,  711, 000 
26,  709, 000 

125,921,000 


$44, 158, 000 
896,  909, 000 
13, 380, 000 
24, 932, 000 
18, 699, 000 
21,632,000 
148,  489, 000 
26, 348, 000 
13,  958, 000 
33,179,000 
17,385,000 
42,  774, 000 


$5,715,000 

976,921,000 

8, 066, 000 

25, 822, 000 
6, 878, 000 
9,169,000 

83, 884, 000 
7,119,000 
7, 197, 000 

17,316,000 
9,  522, 000 

27,707,000 


$5,115,000 

583,  421, 000 

2, 698, 000 

20, 822, 000 
2, 038, 000 
7,177,000 

42, 204, 000 
5,159,000 
5, 422, 000 
9, 048, 000 
4, 522, 000 

12, 387, 000 


2,  594, 885, 000 


1,301,843,000 


1,185,316,000 


2  700, 013, 000 


'  Includes  $229,036,000  noncompetitive  tenders  accepted  at  the  average  price  of  99.312. 
» Includes  $59,866,000  noncompetitive  tenders  accepted  at  the  average  price  of  98.585. 


PRESS  RELEASE  OF  NOVEMBER  2,  1961 

The  Treasury  Department,  by  this  pubHc  notice,  invites  tenders  for  additional 
amounts  of  eight  series  of  Treasury  bills  to  an  aggregate  amount  of  $800,000,000, 
or  thereabouts,  for  cash.  The  additional  bills  will  be  issued  November  15,  1961, 
will  be  in  the  amounts,  and  will  be  in  addition  to  the  bills  originally  issued  and 
maturing,  as  follows: 


Amount  of 
additional  issue 

Original  issue  dates  1961 

Maturity  dates 

Days  from 
Nov.  15,  1961, 
to  maturity 

Amount 
outstanding 
(in  millions) 
Nov.  2,  1961 

$100, 000,  000 

June  8. 

Dec.  7,  1961 

22 
29 
36 
43 
60 
57 
64 
71 

$1,609 

100, 000,  000 

June  15 .      .  .. 

Dec.  14,  1961 

1,601 

100,  000,  000 

June  23 

Dec.  21.  1961 

1,601 

100,  000,  000 

June  29    . 

Dec.  28,  1961 

1,600 

100,  000,  000 

July  6 

Jan.  4,  1962 

1,600 

100,  000,  000 

July  13.. 

Jan.  11,  1962 

1,601 

100,  000, 000 

July  20 

Jan.  18,  1962 

1,600 

100, 000, 000 

July  27. 

Jan.  25,  1962 

1,601 

$800, 000, 000 

The  additional  and  original  bills  will  be  freely  interchangeable. 

Each  tender  submitted  must  be  in  the  amount  of  $8,000,  or  an  even  multiple 
thereof,  and  the  amount  tendered  will  be  applied  to  each  of  the  above  series  of 
bills  on  the  basis  of  the  ratio  of  each  series  to  the  total  of  all  series.  (For  example, 
an  accepted  tender  for  $40,000  will  be  applied  $5,000  to  the  issue  with  original 
date  of  June  8,  1961,  and  $5,000  to  each  of  the  additional  weekly  issues  tlii'ough 
the  issue  with  original  date  of  July  27,  1961.) 

The  bills  offered  hereunder  will  be  issued  on  a  discount  basis  under  competitive 
and  noncompetitive  bidding  as  hereinafter  provided,  and  at  maturity  their  face 
amount  will  be  pavable  without  interest.  They  will  be  issued  in  bearer  form  only, 
and  in  denominations  of  $1,000,  $5,000,  $10,000.  $100,000,  $500,000,  and 
$1,000,000  (maturity  value). 

Tenders  will  be  received  at  Federal  Reserve  Banks  and  branches  up  to  the 
closing  hour,  one-thirty  o'clock  p.m.,  eastern  standard  time,  November  9,  1961. 
Tenders  will  not  be  received  at  the  Treasury  Department,  Washington.  In  the 
case  of  competitive  tenders  the  price  offered  must  be  expressed  on  the  basis  of 
100,  with  not  more  than  three  decimals,  e.g.,  99.925.     Fractions  may  not  be  used. 


EXHIBITS  243 

A  single  price  must  be  submitted  for  each  unit  of  $8,000,  or  even  multiple  thereof. 
A  unit  represents  $1,000  face  amount  of  each  issue  of  bills  offered  hereunder,  as 
previously  described.  It  is  urged  that  tenders  be  made  on  the  printed  forms  and 
forwarded  in  the  special  envelopes  which  will  be  supplied  by  Federal  Reserve 
Banks  and  branches  on  application  therefor. 

Others  than  banking  institutions  will  not  be  permitted  to  submit  tenders 
except  for  their  own  account.  Tenders  will  be  received  without  deposit  from  in- 
corporated banks  and  trust  companies  and  from  responsible  and  recognized  dealers 
in  investment  securities.  Tenders  from  others  must  be  accompanied  by  payment 
of  2  percent  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,  tenders  will  be  opened  at  the  Federal 
Reserve  Banks  and  branches,  following  which  public  announcement  will  be  made 
by  the  Treasury  Department  of  the  amount  and  price  range  of  accepted  bids. 
Those  submitting  tenders  will  be  advised  of  the  acceptance  or  rejection  thereof. 
The  Secretary  of  the  Treasury  expressly  reserves  the  right  to  accept  or  reject  any 
or  all  tenders,  in  whole  or  in  part,  and  his  action  in  any  such  respect  shall  be 
final.  Noncompetitive  tenders  for  $80,000  or  less  (in  even  multiples  of  $8,000) 
without  stated  price  from  any  one  bidder  will  l)e  accepted  in  full  at  the  average 
price  (in  three  decimals)  of  accepted  competitive  bids,  provided,  however,  that 
if  the  total  of  noncompetitive  tenders  exceeds  $400,000,000,  the  Secretary  of  the 
Treasury  reserves  the  right  to  allot  less  than  the  amount  apphed  for  on  a  straight 
percentage  basis  with  adjustments  where  necessary  to  the  next  higher  multiple 
of  $8,000.  Settlement  for  accepted  tenders  in  accordance  with  the  bids  must  be 
made  or  completed  at  the  Federal  Reserve  Bank  in  cash  or  other  immediately 
available  funds  on  November  15,  1961. 

The  income  derived  from  Treasury  bills,  whether  interest  or  gain  from  the  sale 
or  other  disposition  of  the  bills,  does  not  have  any  e.xemption,  as  such,  and  loss 
from  the  sale  or  other  disposition  of  Treasury  bills  does  not  have  any  special 
treatment,  as  such,  under  the  Internal  Revenue  Code  of  1954.  The  bills  are  sub- 
ject to  estate,  inheritance,  gift,  or  other  e.xcise  taxes,  whether  Federal  or  State, 
but  are  exempt  from  all  taxation  now  or  hereafter  imposed  on  the  principal  or 
interest  thereof  by  any  State,  or  any  of  the  possessions  of  the  United  States,  or 
by  any  local  taxing  authority.  For  purposes  of  taxation  the  amount  of  discount 
at  which  Treasury  bills  are  originally  sold  by  the  United  States  is  considered  to  be 
interest.  Under  sections  454(b)  and  1221(5)  of  the  Internal  Revenue  Code  of 
1954  the  amount  of  discount  at  which  bills  issued  hereunder  are  sold  is  not  con- 
sidered to  accrue  until  such  bills  are  sold,  redeenied,  or  otherwise  disposed  of,  and 
such  bills  are  excluded  from  consideration  as  capital  assets.  Accordingly,  the 
owner  of  Treasury  bills  (other  than  life  insurance  companies)  issued  hereunder 
need  include  in  his  income  tax  return  only  the  difference  between  the  price  paid 
for  such  bills,  whether  on  original  issue  or  on  subsequent  purchase,  and  the 
amount  actually  received  either  upon  sale  or  redemption  at  maturity  during  the 
taxable  year  for  which  the  return  is  made,  as  ordinary  gain  or  loss. 

Treasury  Department  Circular  No.  418,  Revised,  and  this  notice,  prescribe 
the  terms  of  the  Treasury  bills  and  govern  the  conditions  of  their  issue.  Copies 
of  the  circular  may  be  obtained  from  any  Federal  Reserve  Bank  or  branch. 


PRESS  RELEASE  OF  NOVEMBER  10,  1961 

The  Treasury  Department  announced  last  evening  that  tenders  for  additional 
amounts  of  eight  series  of  Treasury  bills  to  an  aggregate  amount  of  $800,000,000, 
or  thereabouts,  to  be  issued  November  15,  1961,  which  were  offered  on  November 
2,  were  opened  at  the  Federal  Reserve  Banks  on  November  9.  The  amount  of 
accepted  tenders  will  be  equally  divided  among  the  eight  regular  weekly  issues  of 
outstanding  Treasury  bills  maturing  December  7,  1961,  to  January  25,  1962, 
inclusive.     The  details  of  the  offering  are  as  follows: 

Total  applied  for $1,  519,424,000 

Total  accepted  (includes  $8,984,000  entered  on  a  noncompetitive 

basis  and  accepted  in  full  at  the  average  price  shown  below).  800,  136,  000 


244   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Range  of  accepted  competitive  bids 


Approximate  equivalent  annual  rate  of 
discount  based  on  46.5  days  (average 
number  of  days  to  maturity) 


High... 
Low 

Average 


2.175% 

2.323% 

1  2.  277% 


(79  percent  of  the  amount  bid  for  at  the  low  price  was  accepted.) 

•  On  a  coupon  issue  of  the  same  length  as  the  average  for  the  bOls  and  for  the  same  amount  invested,  the 
return  on  these  bills  would  provide  a  yield  of  2.31  percent.  Interest  rates  on  bills  are  quoted  in  terms  of 
bank  discount  with  the  return  related  to  the  face  amount  of  the  bills  payable  at  maturity  rather  than  the 
amount  invested  and  their  length  in  actual  number  of  days  related  to  a  360-day  year.  In  contrast,  yields 
on  certificates,  notes,  and  bonds  are  computed  in  terms  of  interest  on  the  amount  invested,  and  relate  the 
number  of  days  remaining  in  an  interest  payment  period  to  the  actual  number  of  days  in  the  period,  with 
semiannual  compounding  if  more  than  one  coupon  period  is  involved. 

Total  tenders  applied  for  and  accepted  by  Federal  Reserve  Districts 


District 


Applied  for 


Accepted 


Boston.. 

New  York 

Philadelphia. 

Cleveland 

Richmond 

Atlanta 

Chicago 

St.  Louis 

Minneapolis.. 
Kansas  City.. 

Dallas 

San  Francisco 

Total 


$24, 

,  098, 

11, 

14, 

1, 

5, 

274, 

2, 

11, 
2, 

72, 


640, 000 
448, 000 
080, 000 
584, 000 
168, 000 
392, 000 
552, 000 
352. 000 
880, 000 
384, 000 
944, 000 
000, 000 


$7, 968, 000 

603, 648, 000 

11,080,000 

13,  744, 000 

1, 168, 000 

3,  792, 000 

108, 384, 000 

2, 184, 000 

5, 680, 000 

2, 384, 000 

944, 000 

39, 160, 000 


1,519,424,000 


800, 136, 000 


PRESS  RELEASE  OF  MARCH  13,  1962 

The  Treasury  Department,  by  this  pubHc  notice,  invites  tenders  for 
$1,800,000,000,  or  thereabouts,  of  182-day  Treasury  bills,  for  cash  and  in  exchange 
for  Treasury  tax  anticipation  series  bills  maturing  March  23,  1962,  in  the  amount 
of  $3,502,886,000.  The  bills  will  be  issued  on  a  discount  basis  under  competitive 
and  noncompetitive  bidding  as  hereinafter  provided.  The  bills  of  this  series 
will  be  designated  tax  anticipation  series,  they  will  be  dated  March  23,  1962, 
and  they  will  mature  September  21,  1962.  They  will  be  accepted  at  face  value 
in  payment  of  income  and  profits  taxes  due  on  September  15,  1962,  and  to  the 
extent  they  are  not  presented  for  this  purpose  the  face  amount  of  these  bills  will 
be  payable  without  interest  at  maturity.  Taxpayers  desiring  to  apply  these 
bills  in  payment  of  September  15,  1902,  income  and  profits  taxes  have  the  privilege 
of  surrendering  them  to  any  Federal  Reserve  Bank  or  branch  or  to  the  Office  of 
the  Treasurer  of  the  United  States,  Washington,  not  more  than  fifteen  days  before 
September  15,  1962,  and  receiving  receipts  therefor  showing  the  face  amount  of 
the  bills  so  surrendered.  These  receipts  may  be  submitted  in  lieu  of  the  bills 
on  or  before  September  15,  1962,  to  the  District  Director  of  Internal  Revenue 
for  the  district  in  which  such  taxes  are  pavable.  The  bills  will  be  issued  in  bearer 
form  only,  and  in  denominations  of  $1,000,  $5,000,  $10,000,  $50,000,  $100,000, 
$500,000,  and  $1,000,000  (maturity  value). 

Tenders  will  be  received  at  Federal  Reserve  Banks  and  branches  up  to  the 
closing  hour,  one-thirty  p.m.,  eastern  standard  time,  Tuesday,  March  20,  1962. 
Tenders  will  not  be  received  at  the  Treasury  Department,  Washington.  Each 
tender  must  be  for  an  even  multiple  of  $1,000,  and  in  the  case  of  competitive 
tenders  the  price  o8"ered  must  be  expressed  on  the  basis  of  100,  with  not  more  than 
three  decimals,  e.g.,  99.925.  Fractions  may  not  be  used.  It  is  urged  that 
tenders  be  made  on  the  printed  forms  and  forwarded  in  the  special  envelopes 
which  will  be  supplied  by  Federal  Reserve  Banks  or  branches  on  apphcation 
therefor. 

Banking  institutions  generally  may  submit  tenders  for  account  of  customers 
provided  the  names  of  the  customers  are  set  forth  in  such  tenders.  Others  than 
banking  institutions  will  not  be  permitted  to  submit  tenders  except  for  their 


EXHIBITS  245 

own  account.  Tenders  will  be  received  without  deposit  from  incorporated  banks 
and  trust  companies  and  from  responsible  and  recognized  dealers  in  investment 
securities.  Tenders  from  others  must  be  accompanied  by  payment  of  2  percent 
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,  tenders  will  be  opened  at  the  Federal 
Reserve  Banks  and  branches,  following  which  pubUc  announcement  will  be  made 
by  the  Treasury  Department  of  the  amount  and  price  range  of  accepted  bids. 
Those  submitting  tenders  will  be  advised  of  the  acceptance  or  rejection  thereof. 
The  Secretary  of  the  Treasury  expressly  reserves  the  right  to  accept  or  reject 
any  or  all  tenders,  in  whole  or  in  part,  and  his  action  in  any  such  respect  shall  be 
final.  Subject  to  these  reservations,  noncompetitive  tenders  for  $400,000  or  less 
without  stated  price  from  any  one  bidder  will  be  accepted  in  full  at  the  average 
price  (in  three  decimals)  of  accepted  competitive  bids.  Settlement  for  accepted 
tenders  in  accordance  with  the  bids  must  be  made  or  completed  at  the  Federal 
Reserve  Bank  on  March  23,  1962,  in  cash  or  other  immediately  available  funds 
or  in  a  hke  face  amount  of  tax  anticipation  series  bills  maturing  on  March  23,  1962. 
Cash  and  exchange  tenders  will  receive  equal  treatment.  Cash  adjustments 
will  be  made  for  differences  between  the  par  value  of  maturing  bills  accepted  in 
exchange  and  the  issue  price  of  the  new  bills. 

The  income  derived  from  Treasury  bills,  whether  interest  or  gain  from  the  sale 
or  other  disposition  of  the  bills,  does  not  have  any  exemption,  as  such,  and  loss 
from  the  sale  or  other  disposition  of  Treasury  bills  does  not  have  any  special 
treatment,  as  such,  under  the  Internal  Revenue  Code  of  1954.  The  bills  are 
subject  to  estate,  inheritance,  gift,  or  other  excise  taxes,  whether  Federal  or 
State,  but  are  exempt  from  all  taxation  now  or  hereafter  imposed  on  the  principal 
or  interest  thereof  by  any  State,  or  any  of  the  possessions  of  the  United  States, 
or  by  any  local  taxing  authority.  For  purposes  of  taxation  the  amount  of  dis- 
count at  which  Treasury  bills  are  originally  sold  by  the  United  States  is  considered 
to  be  interest.  Under  sections  454(b)  and  1221(5)  of  the  Internal  Revenue  Code 
of  1954  the  amount  of  discount  at  which  bills  issued  hereunder  are  sold  is  not 
considered  to  accrue  until  such  bills  are  sold,  redeemed,  or  otherwise  disposed  of, 
and  such  bills  are  excluded  from  consideration  as  capital  assets.  Accordingly,  the 
owner  of  Treasury  bills  (other  than  life  insurance  companies)  issued  hereunder 
need  include  in  his  income  tax  return  only  the  difference  between  the  price  paid 
for  such  bills,  whether  on  original  issue  or  on  subsequent  purchase,  and  the  amount 
actually  received  either  upon  sale  or  redemption  at  maturity  during  the  taxable 
year  for  which  the  return  is  made,  as  ordinary  gain  or  loss. 

Treasury  Department  Circular  No.  418  (current  revision)  and  this  notice, 
prescribe  the  terms  of  the  Treasury  bills  and  govern  the  conditions  of  their  issue. 
Copies  of  the  circular  may  be  obtained  from  any  Federal  Reserve  Bank  or  branch. 


PRESS  RELEASE  OF  MARCH  21,  1962 

The  Treasury  Department  announced  last  evening  that  the  tenders  for  $1,800,- 
000,000,  or  thereabouts,  of  tax  anticipation  series  182-day  Treasury  bills  to  be 
dated  March  23,  1962,  and  to  mature  September  21,  1962,  which  were  offered  on 
March  13,  were  opened  at  the  Federal  Reserve  Banks  on  March  20. 
The  details  of  this  issue  are  as  follows : 

Total  appUed  for $3,  592,  711,000 

Total  accepted   (includes  $145,718,000  entered  on  a  non- 
competitive basis  and  accepted  in  full  at  the  average  price 

shown  below) 1,  800,  936,  000 

Range  of  accepted  competitive  bids:  (Excepting  one  tender  of  $100,000) 
High,  equivalent  rate  of  discount  approximately  2.870%  per 

annum 98.  549 

Low,  equivalent  rate  of  discount  approximately  2.910%  per 

annum 98.  529 

Average,  equivalent  rate  of  discount  approximately  2.896%  per 

annum  i 98.  536 

(85  percent  of  the  amount  bid  for  at  the  low  price  was  accepted.) 

1  On  a  coupon  issue  of  the  same  length  and  for  the  same  amount  invested,  the  return  on  these  bills  would 
provide  a  yield  of  2.98  percent.  Interest  rates  on  bills  are  quoted  in  terms  of  bank  discount  vi^ith  the  return 
related  to  the  face  amoimt  of  the  bills  payable  at  maturity  rather  than  the  amount  invested  and  their  length 
in  actual  number  of  days  related  to  a  360-day  year.  In  contrast,  yields  on  certificates,  notes,  and  bonds  are 
computed  in  terms  of  interest  on  the  amount  invested,  and  relate  the  number  of  days  remaining  in  an  interest 
payment  period  to  the  actual  number  of  days  in  the  period,  with  semiannual  compounding  if  more  than 
one  coupon  period  is  involved. 


246   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Federal  Reserve  district 


Total  applied 
for 


Total  accepted 


Boston 

New  York 

Philadelphia- 
Cleveland 

Richmond 

Atlanta 

Chicago 

St.  Louis 

]VI  innea  polls. - 
Kansas  City.. 

Dallas 

San  Francisco 

Total— 


$61, 

2, 629, 

57, 

151, 
29, 
36, 

332, 
25, 
25, 
28, 
15, 

198, 


164,  000 
743, 000 
550, 000 
173, 000 
085, 000 
622, 000 
978, 000 
790,000 
500,000 
264, 000 
957, 000 
885, 000 


3,592,711,000 


$19, 464, 000 

1,346,988,000 

14,260,000 

55,  573, 000 

9,  785, 000 

24, 232, 000 

144,348,000 

16,270,000 

7,550,000 

19, 039, 000 

12, 382, 000 

131,045,000 


1,800,936,000 


PRESS  RELEASE  OF  APRIL  3,  1962 

Tlie  Treasury  Department,  by  this  public  notice,  invites  tenders  for  $2,000,000,- 
000,  or  thereabouts,  of  365-dav  Treasury  bills,  for  cash  and  in  exchange  for 
Treasury  bills  maturing  April  15,  1962,  in  the  amount  of  $2,000,462,000,  to  be 
issued  on  a  discount  basis  under  competitive  and  noncompetitive  bidding  as 
hereinafter  provided.  The  bills  of  this  series  will  be  dated  April  15,  1962,  and 
will  mature  April  15,  1963,  when  the  face  amount  will  be  payable  without  inter- 
est. Thev  will  be  issued  in  bearer  form  only,  and  in  denominations  of  $1,000, 
$5,000,  $10,000,  $50,000,  $100,000,  $500,000,  and  $1,000,000  (maturity  value). 

Tenders  will  be  received  at  Federal  Reserve  Banks  and  branches  up  to  the 
closing  hour,  one-thirty  p.m.,  eastern  standard  time,  Tuesday,  April  10,  1962. 
Tenders  will  not  be  received  at  the  Treasury  Department,  Washington.  Each 
tender  must  be  for  an  even  multiple  of  $1,000,  and  in  the  case  of  competitive 
tenders  the  price  offered  must  be  expressed  on  the  basis  of  100,  with  not  more 
than  three  decimals,  e.g.,  99.925.  Fractions  may  not  be  used.  (Notwithstand- 
ing the  fact  that  these  bills  will  run  for  365-days,  the  discount  rate  will  be  com- 
puted on  a  bank  discoTUit  basis  of  360-days,  as  is  currently  the  practice  on  all 
issues  of  Treasury  bills.)  It  is  urged  that  tenders  be  made  on  the  printed  forms 
and  forwarded  in  the  special  envelopes  which  will  be  supplied  by  Federal  Reserve 
Banks  or  branches  on  application  therefor. 

Banking  institutions  generally  may  submit  tenders  for  account  of  customers 
provided  the  names  of  the  customers  are  set  forth  in  such  tenders.  Others  than 
banking  institutions  will  not  be  permitted  to  submit  tenders  except  for  their 
own  account.  Tenders  will  be  received  without  deposit  from  incorporated  })anks 
and  trust  companies  and  from  responsible  and  recognized  dealers  in  investment 
securities.  Tenders  from  others  must  be  accompanied  by  payment  of  2  percent 
of  the  face  amount  of  Treasury  bills  applied  for,  luiless  the  tenders  are  accompanied 
by  an  express  guaranty  of  payment  by  an  incorporated  bank  or  trust  company. 

Immediately  after  the  closing  hour,  tenders  will  be  opened  at  the  Federal 
Reserve  Banks  and  branches,  following  which  public  announcement  will  be  made 
by  the  Treasury  Department  of  the  amount  and  price  range  of  accepted  bids. 
Those  submitting  tenders  will  be  advised  of  the  acceptance  or  rejection  thereof. 
The  Secretary  of  the  Treasury  expressly  reserves  the  right  to  accept  or  reject 
any  or  all  tenders,  in  whole  or  in  part,  and  his  action  in  any  such  respect  shall 
be  final.  Subject  to  these  reservations,  noncompetitive  tenders  for  $400,000  or 
less  without  stated  price  from  any  one  bidder  will  be  accepted  in  full  at  the 
average  price  (in  three  decimals)  of  accepted  competitive  bids.  Settlement  for 
accepted  tenders  in  accordance  with  the  bids  must  be  made  or  completed  at  the 
Federal  Reserve  Bank  on  April  16,  1962,  in  cash  or  other  immediately  available 
funds  or  in  a  like  face  amount  of  Treasury  bills  maturing  April  15,  1962.  Cash 
and  exchange  tenders  will  receive  equal  treatment.  Cash  adjustments  will  be 
made  for  differences  between  the  par  value  of  maturing  bills  accepted  in  exchange 
and  the  issue  price  of  the  new  bills. 

The  income  derived  from  Treasury  bills,  whether  interest  or  gain  from  the 
sale  or  other  disposition  of  the  bills,  does  not  have  any  exemption,  as  such,  and 


3 


EXHIBITS 


247 


loss  from  the  sale  or  other  disposition  of  Treasury  bills  does  not  have  any  spe- 
cial treatment,  as  such,  under  the  Internal  Revenue  Code  of  1954.  The  bills 
are  subject  to  estate,  inheritance,  gift,  or  other  excise  taxes,  whether  Federal  or 
State,  but  are  exempt  from  all  taxation  now  or  hereafter  imposed  on  the  principal 
or  interest  thereof  by  any  State,  or  any  of  the  possessions  of  the  United  States, 
or  by  any  local  taxing  authority.  For  purposes  of  taxation  the  amount  of  dis- 
count at  which  Treasury  bills  are  originally  sold  by  the  United  States  is  consid- 
ered to  be  interest.  Under  sections  454(b)  and  1221(5)  of  the  Internal  Revenue 
Code  of  1954  the  amount  of  discount  at  which  bills  issued  hereunder  are  sold 
is  not  considered  to  accrue  until  such  bills  are  sold,  redeemed,  or  otherwise  dis- 
posed of,  and  such  bills  are  excluded  from  consideration  as  capital  assets.  Accord- 
ingly, the  owner  of  Treasury  bills  (other  than  life  insurance  companies)  issued 
hereunder  need  include  in  his  income  tax  return  only  the  difference  between  the 
price  paid  for  such  bills,  whether  on  original  issue  or  on  subsequent  purchase, 
and  the  amount  actually  received  either  upon  sale  or  redemption  at  maturity 
during  the  taxable  year  for  which  the  return  is  made,  as  ordinary  gain  or  loss. 
Treasury  Department  Circular  No.  418  (current  revision)  and  this  notice, 
prescribe  the  terms  of  the  Treasury  bills  and  govern  the  conditions  of  their 
issue.  Copies  of  the  circular  may  be  obtained  from  any  Federal  Reserve  Bank 
or  branch. 


PRESS  RELEASE  OF  APRIL  11,  1962 

The    Treasury    Department    announced    last    evening  that    the    tenders    for 
$2,000,000,000,  or  thereabouts,  of  365-day  Treasury  bills  to  be  dated  April  15, 
1962,  and  to  mature  April  15,  1963,  which  were  offered  on  April  3,  were  opened  at 
the  Federal  Reserve  Banks  on  April  10. 
The  details  of  this  issue  are  as  follows: 

Total  applied    for $3,453,408,000 

Total  accepted  (includes  $1 59, 1 76,000  entered  on  a  noncompetitive 

basis  and  accepted  in  full  at  the  average  price  shown  below)  _    2,000,446,000 
Range  of  accepted  competitive  bids: 

High,  equivalent  rate  of  discount  approximately  2.918%  per 

annum 97.041 

Low,  equivalent  rate  of  discount  approximately  2.957%  per 

annum 97.002 

Average,  equivalent  rate  of  discount  approximately  2.943%  per 

annum  ' 97.017 

(86  percent  of  the  amount  bid  for  at  the  low  price  was  accepted.) 

•  On  a  coupon  issue  of  the  same  length  and  for  the  same  amount  invested,  the  return  on  these  bills  would 
provide  a  yield  of  3.05  percent.  Interest  rates  on  bills  are  quoted  in  terms  of  bank  discount  with  the  return 
related  to  the  face  amount  of  the  bills  payable  at  maturity  rather  than  the  amount  invested  and  their  length 
in  actual  numl)er  of  days  related  to  a  360-day  year.  In  contrast,  yields  on  certificates,  notes,  and  bonds 
are  computed  in  terms  of  interest  on  the  amount  invested,  and  relate  the  number  of  days  remaining  in  an 
interest  payment  period  to  the  actual  number  of  days  in  the  period,  with  semiannual  compounding  if  more 
than  one  coupon  period  is  involved. 


Federal  Reserve  district 

Total  applied 
for 

Total  accepted 

Boston      _                                                  - 

$29,614,000 

2, 4.50,  984,  000 

46, 179, 000 

158, 894, 000 
26, 233, 000 
23, 379, 000 

413,778,000 
22,  597, 000 
30,  460, 000 
39, 386, 000 
30,  914, 000 

180, 990, 000 

$18,614,000 

New  York                    -               _    

1,540,322.000 

Philadelohia                                                                    _  

11,179,000 

Cleveland                                    -  

93, 894, 000 

Richmond                                                                       

17,733,000 

15,379,000 

Chicaeo.  

169,478,000 

St.  Louis 

16, 497, 000 

Minneapol is _-  

20, 460,  000 

Kansas  City    .  .            _           -      . 

23, 186, 000 

Dallas 

14,  714, 000 

San  Francisco                            --  - --  

58,  990, 000 

Total       .              -            --- 

3, 453, 408, 000 

2, 000, 446, 000 

248   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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EXHIBITS 


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640,  522 

1, 097, 164 
650, 092 

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252   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Guaranteed  Obligations  Called 

Exhibit  5. — Calls  for  partial  redemption,  before  maturity,  of  insurance  fund 

debentures 

During  the  fiscal  year  1962,  there  were  fifteen  calls  for  partial  redemption, 
before  maturity,  of  insurance  fund  debentures,  seven  dated  September  20,  1961, 
and  the  others  dated  March  21,  1962.  The  notices  of  call  were  published  in  the 
Federal  Register  of  September  28,  1961,  and  March  29,  1962.  The  notice  covering 
the  twelfth  call  of  the  2>i  2%,  2%,  2%,  3,  3%,  3>i  3%,  3>i  3%,  S%,  and  4}i  percent 
Series  AA  mutual  mortgage  insurance  fund  debentures  is  shown  in  this  exhibit. 
Since  the  other  notices  of  call  are  similar  to  this  exhibit,  they  have  been  omitted 
but  the  essential  details  are  summarized  in  the  table  following  the  notice  of  call. 

NOTICE  OF  CALL.     FEDERAL  REGISTER  OF  MARCH  29,  1962 

To  Holders  of  2Yi;  2%;  2%;  2%;  S;  3%;  S}i;  3%;  Sy,',  3%;  3%;  and  /,%  Percent  Mutual 
Mortgage  Insurance  Fund  Debentures,  Series  A  A: 

NOTICE  OF  CALL  FOR  PARTIAL  REDEMPTION,  BEFORE  MATURITY,  OF  2H,  2%,  2H, 

2%.  3,  3^6,  3H,  3Ji,  3H,  3H,  m,  and  m  PERCENT  MUTUAL  MORTGAGE  INSURANCE 
FUND  DEBENTURES,  SERIES  AA 

Pursuant  to  the  authority  conferred  by  the  National  Housing  Act  (48  Stat.  1246; 
U.S.C.,  title  12,  sec.  1701  et  seq.)  as  amended,  public  notice  is  hereby  given  that 
2K,  2%,  2%,  2%,  3,  3/8,  3K,  3%,  3/2,  3%,  3%,  and  4%  percent  mutual  mortgage  in- 
surance fund  debentures,  Series  AA,  of  the  denominations  and  serial  numbers 
designated  below,  are  hereby  called  for  redemption,  at  par  and  accrued  interest, 
on  July  1,  1962,  on  which  date  interest  on  such  debentures  shall  cease: 

^Vi,  ^%,  ^Yi.  ^Vs,  3,  3%,  3%,  3%,  sy,,  3%,  SYs,  and  J,}i  Percent  Mutual  Mortgage 

Insurance  Fund  Debentures,  Series  A  A 

Serial  numbers 
(all  numbers 
Denomination  inclusive) 

«.n  fll,  794  to  11.  805 

$5U -- <^ii^  g07  to  12,  874 

,„^  135,  275  to  35,324 

100 - ---\35,  339  to  49,510 

f  9,  901  to  9,  910 

500       9,  915  to  13,  329 

|l3  332 

J27;  216  to  27.  254 

1'  """- - \27,  269  to  40,  086 

f  7,  595  to  7,  606 
5,  OUO <^^   7^  g09  to  11,  701 

10,  000 5,  934  to  8,  065 

The  debentures  first  issued  as  determined  by  the  issue  dates  thereof  were  selected 
for  redemption  by  the  Commissioner,  Federal  Housing  Administration,  with  the 
approval  of  the  Secretary  of  the  Treasury. 

No  transfers  or  denominational  exchanges  in  debentures  covered  by  the  fore- 
going call  will  be  made  on  the  books  maintained  by  the  Treasury  Department 
on  or  after  April  1,  1962.  This  does  not  affect  the  right  of  the  holder  of  a  deben- 
ture to  sell  and  assign  the  debenture  on  or  after  April  1,  1962,  and  provision  will 
be  made  for  the  payment  of  final  interest  due  on  July  1,  1962,  with  the  principal 
thereof  to  the  actual  owner,  as  shown  by  the  assignments  thereon. 

The  Commissioner  of  the  Federal  Housing  Administration  hereby  offers  to 
purchase  any  debentures  included  in  this  call  at  any  time  from  April  1,  1962,  to 
June  30,  1962,  inclusive,  at  par  and  accrued  interest,  to  date  of  purchase. 

Instructions  for  the  presentation  and  surrender  of  debentures  for  redemption 
on  or  after  July  1,  1962,  or  for  purchase  prior  to  that  date  will  be  given  by  the 
Secretary  of  the  Treasury. 
APPROVED:  March  22,  1962  Neal  J.  Hardy, 

W.  T.  Heffelfinger,  Commissioner. 

Fiscal  Assistant  Secretary  of  the  Treasury, 


EXHIBITS  253 

Debentures  redeemed  on  or  after  July  1,  1962,  will  have  interest  paid  with 
principal  for  each  $1,000  for  each  percent  as  follows:  $12.50  for  2^%;  $13,125 
for  2%%;  $13.75  for  2^%;  $14,375  for  2%%;  $15.00  for  3%;  $15,625  for  3^8%; 
$16.25  for  3K%;  $16,875  for  3^8%;  $17.50  for  3/2%;  $18.75  for  3%%;  $19,375  for 
3%%;  and  $20,625  for  4/8%. 

Debentures  purchased  between  April  1  and  June  30,  1962,  will  have  interest 
paid  with  principal  from  January  1,  1962,  to  date  of  purchase,  at  the  following  rates 
per  day  for  each  $1,000  for  each  percent:  $0.069061  for  2>^%;  $0.072514  for  2^8%; 
$0.075967  for  2%%;  $0.075967  for  2%%;  $0.082873  for  3%;  $0.086326  for  3/8%; 
$0.089779  for  3%%;  $0.093232  for  3%%;  $0.096685  for  3/2%;  $0.103591  for  3)^%; 
$0.107044  for  3%%;  and  $0.113950  for  4/8%. 


254   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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EXHIBITS  257 

Regulations 

Exhibit  6. — Second  amendment,  November  17,  1961,  to  Department  Circular 
No.  418,  Revised,  regulations  governing  Treasury  bills 

Treasury  Department, 

Washington,  November  17,  1961. 

Department  Circular  No.  418,  Revised,  dated  February  23,  1954  (31  CFR  309), 
as  amended,  is  hereby  further  amended  by  revising  sections  309.3  and  309.8  as 
follows: 

Sec.  309.3  Deno7ninaiions  and  exchange. — Treasury  bills  will  be  issued  in 
denominations  (maturity  value)  of  $1,000,  S5,000,  $10,000,  $50,000,  $100,000, 
$500,000,  and  $1,000,000.  Exchanges  from  higher  to  lower  and  lower  to  higher 
denominations  of  the  same  series  (bearing  the  same  issue  and  maturity  dates)  will 
be  permitted  at  Federal  Reserve  Banks  and  at  the  Office  of  the  Treasurer  of  the 
United  States,  Washington.  Insofar  as  applicable,  the  general  regulations  of  the 
Treasury  Department  governing  transactions  in  bonds  and  notes  will  govern 
transactions  in  Treasury  bills. 

Sec.  309.8  Tenders;  when  cash  deposit  is  required. — Tenders  should  be  sub- 
mitted on  the  printed  forms  and  forwarded  in  the  special  envelopes  which  will  be 
supplied  on  application  to  any  Federal  Reserve  Bank,  or  branch.  If  a  special 
envelope  is  not  available,  the  inscription  "Tender  for  Treasury  bills"  should  be 
placed  on  the  envelope  used.  The  instructions  of  the  Federal  Reserve  Banks  with 
respect  to  the  submission  of  tenders  should  be  observed.  Banking  institutions 
generally  may  submit  tenders  for  account  of  customers  provided  the  names  of  the 
customers  are  set  forth  in  such  tenders.  Others  than  banking  institutions  will 
not  be  permitted  to  submit  tenders  except  for  their  own  account.  Tenders  from 
incorporated  banks  and  trust  companies,  and  from  responsible  and  recognized 
dealers  in  investment  securities  will  be  received  without  deposit.  Tenders  from 
all  others  must  be  accompanied  by  a  payment  of  such  percent  of  the  face  amount  of 
the  Treasury  bills  applied  for  as  the  Secretary  of  the  Treasury  may  from  time  to 
time  prescribe:  Provided,  however,  that  such  deposit  will  not  be  required  if  the 
tender  is  accompanied  by  an  express  guaranty  of  payment  in  full  by  an  incorporated 
bank  or  trust  company.  Forfeiture  of  the  prescribed  payment  may  be  declared 
by  the  Secretary  of  the  Treasury,  if  payment  is  not  completed,  in  the  case  of 
accepted  tenders,  on  the  prescribed  date. 

Robert  V.  Roosa, 
Acting  Secretary  of  the  Treasury. 


ExmBiT  7. — Third  amendment,  August  2,  1961,  to  Department  Circular  No.  530, 
Eighth  Revision,  regulations  governing  United  States  savings  bonds 

Treasury  Department, 
Washington,  August  2,  1961. 

Sections  315.32  and  315.37  of  Department  Circular  No.  530,  Eighth  Revision, 
as  amended,  dated  December  26,  1957  (31  CFR  1959),  are  hereby  amended  to 
read  as  follows: 

Sec.  315.32(b)   Method  of  interest  payments. — *  *  * 

(5)  The  interest  due  at  maturity  in  the  case  of  bonds  for  which  an  optional 
extension  privilege  has  not  been  granted  and  at  the  final  maturity  for  all  bonds 
for  which  an  optional  extension  privilege  has  been  granted  will  be  paid  with  the 
principal  and  in  the  same  manner.  However,  if  the  registered  owner  of  a  bond 
in  beneficiary  form  dies  on  or  after  the  due  date  without  having  presented  and 
surrendered  the  bond  for  payment  or  authorized  reissue,  and  is  survived  by  the 
beneficiary,  the  interest  may  be  paid  to  the  legal  representative  of  or  the  person 
entitled  to  the  registered  owner's  estate.  To  obtain  such  payment,  the  bonds 
with  a  request  therefor  by  the  beneficiary  should  be  submitted  together  with  the 
evidence  required  in  Sec.  315.70. 


661946 — 63 18 


258   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Sec.  315.37.  At  or  after  inaturity. — Pursuant  to  its  terms,  a  savings  bond  of  any 
series  will  be  paid  at  or  after  maturity  at  the  maturity  value  fixed  by  thie  terms 
of  the  Department  Circular  offering  the  particular  series  of  bonds  to  the  public, 
current  at  the  time  of  redemption,  and  in  no  greater  amount.  No  advance 
notice  will  be  required  for  the  redemption  of  matured  savings  bonds  except  that 
any  current  income  bond  for  which  an  optional  extension  period  has  been  provided 
will,  beginning  with  the  first  day  of  the  third  calendar  month  following  the 
calendar  month  in  which  the  bond  originally  matured,  be  regarded  as  unmatured 
until  it  reaches  its  final  maturity  date,  and  the  same  notice  prior  to  redemption 
will  be  required  for  it  as  is  required  for  bonds  of  the  same  series  which  have  not 
reached  original  maturity. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


Exhibit  8. — Fourth  amendment,  November   17,   1961,  to  Department  Circular 
No.  530,  Eighth  Revision,  regulations  governing  United  States  savings  bonds 

Treasury   DEP.iRTMENT, 
Washington,  November  17,  1961. 

In  Sec.  315.10,  paragraph  (b)  is  hereby  amended,  effective  January  1,  1962,  to 
read  as  follows: 

Sec.  315.10.     Amount  which  may  he  held. — 


(b)  Series  H. — $20,000  (maturity  value)  for  each  calendar  year  up  to  and 
including  the  calendar  year  1956;  $10,000  (maturity  value)  for  the  calendar  years 
1957  '  to  1961,  inclusive;  $20,000  (maturity  value)  for  the  calendar  year  1962 
and  each  calendar  year  thereafter. 

Robert  V.  Roosa, 
Acting  Secretary  of  the  Treasury. 


Exhibit  9. — First  amendment,  August  2,  1961,  to  Department  Circular  No.  90.'>, 
Second  Revision,  regulations  governing  Series  H  savings  bonds 

Treasury  Department, 

Washington,  August  2,  1961. 

Sections  332.12  and  332.15  of  Department  Circular  No.  905,  Second  Revision, 
dated  September  23,  1959  (31  CFR  1960  Supp.  332),  are  hereby  amended  to 
read  as  follows: 

Sec.  332.12.  Improvement  of  investment  yield  and  extension  of  term  for  out- 
standing Series  H  bonds. —  (a)  Increased  future  investment  yields  to  maturity  for  all 
outstanding  bonds  with  issue  dates  of  June  1,  1952,  through  May  1,  1959.'^ — The 
investment  yields  on  all  outstanding  Series  H  bonds  with  issue  dates  prior  to 
June  1,  1959,  are  hereby  increased  (for  the  remaining  period  to  maturity)  by 
not  less  than  one-half  of  one  percent,  and  by  lesser  amounts  if  they  are  redeemed 


1  Effocfive  May  1,  1957.  .\ccordiiigly  investors  who  purcliascd  $20,00n  (maturity  value)  of  boniis  of  Series 
E  bearing  issue  dates  of  January  1  tlirough  April  1  were  not  entitled  to  purchase  additional  bonds  of  that 
series  during  lOST.  The  same  limitation  applies  to  bonds  of  Series  FT  bearing  those  issue  dates.  Investors 
who  purchased  less  than  $10,001)  ''matnrity  value)  of  bonds  of  either  series  prior  to  May  1  were  entitled  only 
to  purchase  enough  of  either  series  to  bring  their  total  for  that  series  for  1957  to  $10,000  (maturity  value). 

2  For  bonds  with  issue  dates  of  June  1,  1959,  or  thereafter,  see  section  332.3. 


EXHIBITS  259 

earlier.'  The  resulting  yields  are  in  terms  of  rate  percent  per  annum,  compounded 
semiannually.  See  tables  2  through  16  at  the  end  of  this  cu-cular  for  revised 
schedules  of  interest  checks  and  investment  yields. ^  This  increase  will  be  effective 
beginning  with  the  interest  checks  due  December  1,  1959,  for  bonds  with  the  issue 
month  of  June  or  December  of  any  year  prior  to  1959,  and  for  all  other  bonds 
on  the  next  interest  payment  date  after  December  1,  1959. 

(b)  Optional  extension  privilege  for  owners  of  bonds  with  issue  dates  of  June  1, 
1952,  through  January  1,  1957. — ^Owners  of  bonds  with  the  above  issue  dates  are 
hereby  granted  the  privilege  of  retaining  their  bonds  for  an  additional  period  of 
10  years  with  an  investment  yield  of  approximately  3.75  percent  payable  semi- 
annually. This  privilege  is  generally  referred  to  elsewhere  in  these  regulations 
and  the  regulations  governing  United  States  savings  bonds  as  an  "optional 
extension  privilege."  No  special  action  is  required  of  owners  desiring  to  take 
advantage  of  this  optional  extension  privilege.  Merely  by  holding  their  bonds 
after  maturity  they  will  earn  further  interest  which  will  accrue  and  be  paid 
semiannually  by  check  drawn  to  the  order  of  the  owner  or  coowners  beginning 
six  months  from  the  original  maturity  date.  Interest  payments  will  be  made  in 
the  amounts  shown  in  tables  I  through  X  at  the  end  of  this  circular.  Term 
"owners"  as  used  in  this  section  includes  registered  owners,  coowners,  surviving 
beneficiaries,  next  of  kin,  and  legatees  of  deceased  owners,  and  persons  who  have 
acquired  bonds  pursuant  to  judicial  proceedings  against  the  owners,  except  that 
judgment  creditors,  trustees  in  bankruptcy,  and  receivers  of  insolvents'  estates 
will  have  the  right  only  to  payment  in  accordance  with  the  regulations  governing 
United  States  savings  bonds. 

Sec.  332.15.  Payment  or  redemption. — (a)  Prior  to  maturity. — Prior  to  maturity 
a  bond  of  Series  H  will  be  redeemed  at  par,  in  whole  or  in  part  (in  the  amount  of 
an  authorized  denomination  or  multiple  thereof),  at  the  option  of  the  owner, 
after  six  months  from  the  issue  date  on  the  first  day  of  a  calendar  month  and 
upon  one  month's  notice  in  writing,  by  (1)  a  Federal  Reserve  Bank  or  branch,  (2) 
the  Bureau  of  the  Public  Debt,  Division  of  Loans  and  Currency  Branch,  530 
South  Clark  Street,  Chicago  5,  Illinois,  or  (3)  the  Treasurer  of  the  United  States, 
Washington  25,  D.C.  Such  notice  may  be  given  separately  or  by  presenting  and 
surrendering  the  bond  with  a  duly  executed  request  for  payment.  If  notice  is 
given  separately,  the  bond  must  be  presented  with  a  duly  executed  request  for 
payment  to  the  same  agency  not  less  than  twenty  days  before  the  redemption 
date  fixed  by  the  notice. 

(b)  At  maturity. — Upon  maturity  a  bond  of  Series  H  will  be  redeemed  at  par 
upon  presentation  of  the  bond  with  a  duly  executed  request  for  payment  to  one 
of  the  agencies  designated  in  (a).  In  the  case  of  any  Series  H  bond  for  which  an 
optional  extension  privilege  has  been  provided,  such  bond  will  be  redeemed  at 
par  upon  original  maturity  and  for  two  calendar  months  following  the  month 
in  which  the  bond  originally  matures  without  advance  notice.^ 

(c)  During  optional  extension  period. — Any  bond  of  Series  H  for  which  an  optional 
extension  period  has  been  provided  will,  beginning  with  the  first  day  of  the  third 
calendar  month  following  the  calendar  month  in  which  the  bond  originally  matures, 
be  regarded  as  unmatured  until  it  reaches  its  final  maturity  date,  and  may  be 
redeemed  in  the  same  manner  and  subject  to  the  same  notice  for  redemption  as 
provided  in  (a). 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


1  The  investment  yields  to  maturity  heretofore  prescribed  for  the  bonds  referred  to  in  section  332.12  were 
(according  to  issue  dates)  as  follows: 

Percent  per  annum 
compounded 
semiannually 

June  1,  1952,  throueh  January  1,  1957 -- 3.00 

February  1,  1957,  through  May  1,  1959 3.25 

'  These  tables  were  published  in  the  1960  annual  report,  pages  259-274;  however,  their  substance  is  in- 
cluded as  the  first  part  of  tables  I-X  appended  hereto. 

3  For  example,  if  a  bond  is  dated  June  1,  1952,  the  date  of  original  maturity  is  February  1,  1962.  The  date 
on  which  the  right  to  payment  without  advance  notice  will  be  suspended  is  May  1,  1962. 


260        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Table  I— United  States  Savings  Bonds— Series  H 

TABLE  OF  checks  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARINO  ISSUE  DATES  FROM  JUNE  1  THBOUOH 

NOVEMBER  1,  1952 

Tahle  showing:  (?)  Amounts  of  interest  checks  paid  on  United  States  savinos  bonds  of  Series  IT,  by  denominations, 
on  each  interest  payment  date  folio  wi  no  issue;  {2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date:  and  (S)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  {b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


(Maturity  value 

Face  value]  Redemption  value  '... 
[issue  price 

$500 
500 
500 

$1,000 
1.000 
1,000 

$5. 000 
5, 000 
5,000 

$10, 000 
10. 000 
10,000 

Approximate 
yield  on  fa 

investment 
ce  value  » 

Period  of  time  bond  is  held  after 
issue  date 

(1)  Amounts  of  interest  checks  for  each 
denomination 

(2)    From 

issue   date 

to  each 

interest 

payment 

date 

(3)    From 
each  interest 
payment 
date    (a) 
to  matu- 
rity! 

J4  year    . .    -  

$2.00 
6.25 
6. 25 
6.25 
0.25 
0.25 
0.25 
6.  25 
8.50 
8.50 
8.50 
8. 50 
8.50 
8.50 

$4.00 
12.  50 
12.  .W 
12.50 
12.50 
12.50 
12.50 
12.  50 
17.00 
17.00 
17.00 
17.00 
17.00 
17.00 

$20.00 
02.  50 
62.50 
62.50 
62.  50 
62.50 
62.50 
02.  50 
85.00 
85.00 
85.00 
85.00 
85.  00 
85.00 

WO.  00 
125.  00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 
170.  00 
170. 00 
170.00 
170.00 
170.  00 
170. 00 

Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 
2.40 
2.49 
2.57 
2.63 
2.69 
2.73 

Percent 
3  3.13 

1  year    

3  3.18 

IH  years.. 

3  3.22 

2  years     .      

3  3.27 

2J^  years 

3  3.34 

3  years 

3  3.41 

3J^  years  .  

3  3.49 

4  years 

3  3.58 

4V^  vears            .         .      

3  3.60 

5  years     .  , 

3  3.63 

5H  years 

3  3.66 

6  years 

3  3.69 

6/4  years 

3  3.  74 

7  years 

M.31 

Amounts  of  interest  checljs  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


7H  years 

8  years 

8J%  years 

9  years... 

9H  years 

9  years  and  8  months  (maturity).. 


Period  of  time  bond  is  held  after 
maturity  date 


}/i  year 

1  year 

\\4  years.. 

2  years 

2}4  years... 

3  years 

3H  years 

4  years 

4}^  years 

5  years 

5J4  years 

6  years 

6V2  years 

7  years 

7^2  years 

8  years 

8V^  years 

9  years 

9J-2  years 

10  years  (extended  maturity)  ' 


$8.75 

8. 

75 

10. 

10 

10. 

10 

10. 

10 

10. 

10 

$17.  50 
17.50 
20.20 
20. 20 
20.  20 
20.20 


$87.  50 

87 

50 

101 

00 

101 

00 

101 

00 

101 

00 

$175. 00 
175.  00 
202. 00 
202. 00 
202. 00 
202. 00 


Extended  maturity  period 


$9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

$18.  75 

18.75 

18.75 

18.75 

18.75 

18.75 

18. 75 

18.75 

18.75 

18.76 

18.75 

18.  75 

IS.  75 

18.75 

18.75 

18.75 

18.  75 

18.75 

18.75 

18.75 

$93.  75 

93. 

75 

93. 

75 

93.75  1 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93.75  1 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93 

75 

93 

75 

93.75  1 

93 

75 

93 

75 

93 

75 

93. 

75 

$187.  50 
187.  50 
187.  50 
187.  50 
187. 50 
187. 50 
187.  50 
187. 50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  .50 
187. 50 
197.  50 
187.  50 
187.  50 
187.  50 


2.78 
2.  82 
2.88 
2.94 
2.99 
3.12 


3.15 
3.17 
3.19 
3.21 
3.23 
3.25 
3.26 
3.27 
3.29 
3.30 
3.31 
3.32 
3.33 
3.34 
3.35 
3.36 
3.36 
3.37 
3.38 
3.39 


4.51 
4.83 
5.18 
6.06 
12.37 


(b)  to  extend- 
ed maturity  • 


3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 


•  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 
»  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  ba.sis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 
3  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 

'  19  years — 8  months  from  issue  date. 


I 


EXHIBITS 


261 


Table  II— United  States  Savings  Bonds— Series  H 

TABLE  OF  CHECKS  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  DECEMBER  1, 

1952,  THROUGH  MAY  I,  1953 

Table  showing:  (1)  Amounts  of  interest  checks  paid  on  United  States  savings  bonds  of  Series  H,  by  denominations, 
on  each  interest  payment  date  following  isstte;  (2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date;  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually . 


1  Maturity  value 
Redemption  value '... 
Issue  price 


Period  of  time  bond  is  held  after 
issue  date 


$500 
500 
500 


$1,000 
1,000 
1,000 


$5, 000 
5, 000 
5,000 


$10, 000 
10, 000 
10. 000 


yi  year... 

1  year... . 
VA  years 

2  years.. 
2}4  years, 

3  years... 
33^  years 

4  years... 
4J^  years. 

5  years... 
53^  years. 

6  years. .- 
6ii  years. 


(1)  Amounts  of  interest  checks  for  each 
denomination 


$2.00 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
8.50 
8.50 
8.50 
8.50 
8.50 


$4.00 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
17.00 
17.00 
17.00 
17.00 
17.00 


$20. 00 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
85.00 
85.00 
85.00 
85. 00 
85.00 


$40.  00 
125. 00 
125.  00 
125. 00 
125.  00 
125. 00 
125.  00 
125. 00 
170.  00 
170. 00 
170.00 
170. 00 
170. 00 


Approximate  investment 
yield  on  face  value  2 


(2)    From 
issue  date  to 
each  interest 

payment 
date 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 
2.40 
2.49 
2.57 
2.63 
2.69 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


Percent 
33.13 
33. 18 
3  3. 22 
33.27 
33.34 
33.41 
33.49 
3  3.58 
3  3. 60 
33.63 
•"3.66 
3  3.69 
<4.24 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


7  years.— .— 

7)^  years.. 

8  years 

8}^  years 

9  years 

914  years 

9  years  and  8  months  (maturity).. 


Period  of  time  bond  is  held  after 
maturity  date 


J^year 

1  year 

VA  years 

2  years... 

2H  years 

3  years 

3H  years 

4  years 

4J^  years 

5  years 

53^  years 

6  years 

63^  years 

7  years 

73^  years 

8  years 

83^  years 

9  years 

93^  years 

10  years  (extended  maturity) « 


$8.75 

8.75 

9.85 

9.85 

10.15 

10.15 

10.15 

$17.  50 

17.50 

19.70 

19.70 

20.30 

20.30 

20.30 

$87. 50 

87.50 

98.50 

98.50 

101.  50 

101.  50 

101.  50 


$175. 00 
175. 00 
197. 00 
197. 00 
203. 00 
203.  00 
203. 00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 


$18.  75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.  75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

$93.  75 

93 

75 

93 

75 

93 

75 

93 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93. 

75 

93.75  1 

93. 

75 

93. 

75 

93. 

75 

$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.74 
2.78 
2.85 
2.90 
2.96 
3.01 
3.14 


3.17 
3.19 
3.21 
3.23 
3.25 
3.26 
3.28 
3.29 
3.30 
3.32 
3.33 
3.34 
3.35 
3.36 
3.36 
3.37 
3.38 
3.39 
3.39 
3.40 


4.39 
4.61 
4.82 
5.21 
6.09 
12.43 


(b)  to  extend- 
ed maturity* 


3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 


1  At  aU  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1 ,  1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 
»  Approximate  investment  yield  for  the  fuU  10-year  extension  is  3.75  percent  per  annum. 
« 19  years— 8  mojjthg  ft-onj  Issue  date. 


262        1962    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Table  III— Uxited  States  Savings  Bonds— Series  H 

TABLE  OF  CHECKS  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  JUNE  1  THROUGH 

NOVEMBER   1,   1953 

Table  showing:  (/)  AmourUs  of  intercut  checks  paid  on  United  Slates  samnr/s  bonds  of  Series  TT,  by  denominations, 
on  each  interest  payment  date  folio  wing  issue:  (2)  the  approrimale  inrestment  yield  on  the  face  ralue  from  issue 
date  to  each  interest  payment  date:  and  (3)  the  approximate  inrestment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  {h)  to  extended  maturity.  Yieldi  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


{Maturity  value 
Redemption  value  '... 
Issue  price. 


Period  of  time  bond  is  held  after 
i.ssue  date 


$500 
500 
500 


$1,000 
1,000 
1,000 


$.5,000 
5,000 
5,000 


$10,000 
10, 000 
10,000 


(1)  Amounts  of  interest  checks  for  each 
denomination 


Appro.vimate  investment 
yield  on  face  value  - 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


14  year.. 

1  year... 
IH  years 

2  years.. 
2yi  years 

3  years.. 
3J^  years 

4  years.. 
iVi  years 

5  years.. 
5V^  years 

6  years . . 


$2.00 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
8.50 
8.50 
8.50 
8.50 


$4.00 
12.  .50 
12.50 
12.  50 
12.50 
12.50 
12.  50 
12.50 
17.00 
17.00 
17.00 
17.00 


$20.  00 

62.50 

62.50 

62.  50 

62.  50 

62.  50 

62.50 

62.  50 

85.  00 

85.00 

85.00 

85.00 

$40.00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 
125.  00 
125. 00 
170.  00 
170. 00 
170. 00 
170.00 


Percent 
0.80 


2.49 
2.57 
2.63 


Percent 
»3. 13 
3  3.18 
»3.22 
»3.27 
3  3.34 
3  3.41 
3  3.49 
3  3.58 
3  3.60 
3  3.63 
33.66 
M.  19 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


6H  years 

7  years 

75^  years 

8  years 

81^  years 

9  years 

914  years 

9  years  and  8  months  (maturity) -. 


Period  of  time  bond  is  held  after 
maturity  date 


14  year 

1  year 

\\4  years 

2  years 

2J^  years. 

3  years 

3J4  years 

4  years 

4J^  years 

5  years 

5H  years 

6  years 

6M  years 

7  years 

7H  years 

8  years 

8V^  years 

9  years 

9J^  years 

10  years  (extended  maturity) 


$8.75 

8.75 

9.55 

9.55 

10.20 

10.20 

10.  20 

10.20 


$17.  50 

17.50 

19.10 

19.10 

20. 40 

20.40 

20.40 

20.  40 

$87.  50 

87.50 

95.50 

95.50 

102.  00 

102.00 

102. 00 

102. 00 


$175. 00 
175. 00 
191.00 
191.00 
204. 00 
204. 00 
204.00 
204. 00 


Extended  maturity  period 


$9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

$18.  75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

1 

$93.  75 

93.75 

93.75 

93,75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.50 
187.  50 
187.  50 
187.50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.69 

4.31 

2.75 

4.47 

2.81 

4.62 

2.87 

4.88 

2.93 

5.23 

2.98 

6.12 

3.03 

12.49 

3.17 

(b)  to  extend- 

ed maturity ' 

3.19 

3.75 

3.21 

3.75 

3.23 

3.75 

3.25 

3.75 

3.27 

3.75 

3.28 

3.75 

3.30 

3.75 

3.31 

3.75 

3.32 

3.75 

3.33 

3.75 

3.34 

3.75 

3.35 

3.75 

3.36 

3.75 

3.37 

3.75 

3.38 

3.75 

3.39 

3.75 

3.39 

3.75 

3.40 

3.75 

3.41 

3.75 

3.41 

'  At  all  times,  e.xcept  that  bond  is  not  redeemable  during  first  6  months. 

»  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 

'  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 

«  19  years— 8  months  from  issue  date. 


EXHIBITS 


263 


Table  IV— United  States  Savings  Bonds— Series  II 


TABLE  OF  CHECKS  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  DECEMBER   1, 

1953,  THROUGH  MAY   1,    1954 

Table  showing:  (1)  Amounts  nf  interest  checks  paid  on  United  States  savinos  bonds  of  Series  TI,  by  denominations, 
on  each  interest  payment  date  following  issue;  {2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date:  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (o)  to  maturity,  or  (b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


i  Maturity  value 
Redemption  value  '. 
Issue  price 


Period  of  time  bond  is  held  after 
issue  date 


$.500 
500 
500 


$1,000 
1,000 
1,000 


$5, 000 
5,000 
5,000 


$10, 000 
10, 000 
10, 000 


Approximate  investment 
yield  on  face  value  2 


(1)  Amounts  of  interest  checks  for  each 
denomination 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


}4  year... 

1  year 

VA  years. 

2  years... 
214  years. 

3  years... 
3H  years 

4  years... 
4^2  years 

5  years... 
5H  years 


$2. 00 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 
8.50 
8.50 
8.50 


$4.00 

12.50 

12.50 

12.60 

12.  50 

12.50 

12.60 

12.50 

17.00 

17.00 

17.00 

$20. 00 
62.50 
62.  SO 
62.50 
62.50 
62.50 
62.  60 
62.  60 
85.00 
85.00 
85.00 


$40. 00 
125.00 
125.  00 
125.  00 
125. 00 
125. 00 
125.00 
125.  00 
170. 00 
170. 00 
170. 00 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 
2.40 
2.49 
2.57 


Percent 
33.13 
»3.18 
'3.22 
33.27 
33.34 
33.41 
33.49 
3  3.58 
3  3.60 
3  3.  63 
M.16 


Amoimts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1 ,  1959,  revision 


6  years 

6H  years 

7  years 

7J^  years 

8  years 

8^-2  years 

9  years 

9}^  years 

9  years  and  8  months  (maturity) 


Period  of  time  bond  is  held  after 
maturity  date 


'A  year 

1  year 

VA  years... 

2  years 

24  years 

3  years 

3}/2  years 

4  years 

iA  years 

5  years 

5A  years 

6  years 

63-^  years 

7  years 

7A  years 

8  years 

SA  years 

9  years 

9H  years 

10  years  (extended  maturity)'. 


$8.75 

8.75 

9.35 

9.35 

9.35 

10.45 

10.  45 

10.45 

10.45 


$17.  50 

17.  50 

18.70 

18.70 

18.70 

20.90 

20.90 

20.90 

20  90 

$87.  50 

87.  .50 

93.50 

93.  60 

93.50 

104.  50 

104.  50 

104. 50 

104. 50 


$175. 00 
175. 00 
187. 00 
187. 00 
187. 00 
209  00 
209.  00 
209. 00 
209. 00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 


$18.  75 

18. 

75 

18.75  1 

18. 

75 

18. 

75 

IS. 

75 

18. 

75 

18.75  i 

18. 

75 

18. 

75 

18. 

75 

18. 

75 

18.75  1 

18. 

75 

18 

75 

18.75  1 

18 

75 

18 

75 

18.75 

18.75 

$93.  75 

93.  75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187. 50 
187.  50 
187. 50 
187. 50 


2.64 

4.25 

2.70 

4.38 

2.77 

4.51 

2.83 

4.70 

2.88 

5.00 

2.94 

5.36 

3.00 

6.27 

3.06 

12.80 

3. 19 

(b)  to  extend- 

ed maturity' 

3.22 

3.75 

3.24 

3.75 

3.26 

3.75 

3.27 

3.75 

3.29 

3.75 

3.30 

3.75 

3  32 

3.75 

3.33 

3.75 

3.34 

3.75 

3.35 

3.75 

3.36 

3.75 

3.37 

3.75 

3.38 

3.75 

3.39 

3.75 

3. 39 

3.75 

3.40 

3.75 

3.41 

3.75 

3.42 

3.75 

3.42 

3.75 

3. 43 

'  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision^  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Appro.ximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 
'  Appro.ximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 
« 19  years— 8  months  from  issue  date. 


264   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  V— United  States  Savings  Bonds— Series  H 


TABLE    OF    CHECKS    ISSUED    AND    INVESTMENT    YIELDS   FOR    BONDS    BEARING    ISSUE    DATES    FROM    JUNE    1 

THROUGH    NOVEMBER    1,    1954 

» 

Table  showing:  (7)  Amounts  of  interest  checks  paid  on  United  States  savings  bonds  of  Series  H,  by  denominations 
on  each  interest  payment  date  following  issue:  (2)  the  approximate  inrestment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date:  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  {h)  to  extended  maturity-  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


[Maturity  value 

Face  valuer  Redemption  value  '. 
llssue  price 


Period  of  time  bond  is  held  after 
issue  date 


$500 
500 
500 


$1, 000 
1,000 
1,000 


$5, 000 
5,000 
5,000 


$10, 000 
10, 000 
10, 000 


(1)  Amounts  of  interest  checks  for  each 
denomination 


Approximate  investment 
yield  on  face  value  ' 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


14  year— . 

1  year 

VA  years 

2  years... 
2^4  years, 

3  years... 
3H  years 

4  years... 
4H  years 
6  years... 


$2.  00 
6.25 
6.25 
6.25 
6.25 
6.  25 
6.25 
6.25 
8.50 
8.50 


$4.00 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
17.00 
17.00 


$20. 00 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
85.00 
85.00 


$40.00 
125.  00 
125. 00 
125.00 
125.00 
125. 00 
125.00 
125. 00 
170.  00 
170.  00 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 
2.40 
2.49 


Percent 
3  3.13 
'3.18 
'3.22 
'3.27 
'3.34 
»3.41 
'3.49 
'3.58 
'3.60 
M.13 


Amounts  of  interest  cheeks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


5H  years 

6  years 

6H  years 

7  years 

7H  years .- 

8  years 

8}^  years... 

9  years 

93^  years 

9  years  and  8  months  (maturity).. 


Period  of  time  bond  is  held  after 
maturity  date 


H  year 

1  year 

VA  years .- 

2  years 

2)4  years 

3  years... 

3H  years 

4  years 

4H  years 

5  years 

514  years ..- 

6  years 

614  years 

7  years 

7A  years 

8  years 

SA  years 

9  years 

91-i  years 

10  years  (extended  maturity)  •. 


.$8.75 

8.75 

8.75 

9.75 

9.75 

9.75 

10.45 

10.45 

10.45 

10.45 

$17.  50 

17.50 

17.50 

19.50 

19.50 

19.50 

20.90 

20.90 

20.90 

20.90 

$87.50 

87.50 

87.50 

97.50 

97.50 

97.50 

104.  50 

104.  50 

104.  50 

104.  50 


175.  00 
175. 00 
175. 00 
195. 00 
195.  00 
195.  00 
209. 00 
209. 00 
209.  00 
209. 00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 


$18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 


$93. 75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93. 75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 


$187. 50 
187.  50 
187.  50 
187.  50 
187. 50 
187.  50 
187.  50 
187. 50 
187.  50 
187.  50 
187.  50 
187. 50 
187.  50 
187.  50 
187.  50 
187. 50 
187.  50 
187. 50 
187.  50 
187. 50 


2.58 
2.65 
2.71 
2.78 
2.85 
2.91 
2.97 
3.03 
3.08 
3.22 


3.24 
3.28 
3.28 
3.30 
3.31 
3.32 
3.34 
3.35 
3.36 
3.37 
3.38 
3.39 
3.40 
3.40 
3.41 
3.42 
3.43 
3.43 
3.44 
3.44 


4.21 
4.32 
4.46 
4.57 
4.73 
5.00 
5.  .36 
6.27 
12.80 


(b)  to  extend- 
ed maturity ' 


3.75 
3.75 
3.75 
3.75 
3.75 
3.76 
3.75 
3.75 
3.75 
3.76 
3.75 
3.75 
3.75 
3.76 
3.75 


75 
75 
75 
75 


'  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1,000  bond.  ^     , 

'  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 

checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.    (2)  As  shown  for  any 

period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1, 1959,  revision  to  maturity. 
'  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 

•  19  years— 8  months  from  issue  date. 


EXB3BITS 


265 


Table  VI— United  States  Savings  Bonds— Series    H 

TABLE  OF  CHECKS  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  DECEMBER  1, 

1954,  THROUGH  MAY  1,   1955 

Table  showing:  {I)  Amounts  of  interest  checks  paid  on  United  States  savings  bonds  of  Series  H,  by  denominations, 
on  each  interest  payment  date  following  issue;  (2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  dale;  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rale  percent  per 
annum  compounded  semiannually. 


[Maturity  value 

Face  value<  Redemption  value  '.. 
[issue  price 


Period  of  time  bond  is  held  after 
issue  date 


$500 
500 
500 


$1,000 
1,000 
1,000 


$5, 000 
5, 000 
5,000 


$10, 000 
10, 000 
10, 000 


(1) 


Amounts  of  interest  checks  for  each 
denomination 


Approximate  investment 
yield  on  face  value  2 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


(3)  From 
each  interest 
payment 
date  (a) 
to  matur- 
ity 3 


H  year... 

1  year 

IJ^  years 

2  years... 
2J^  years 

3  years... 
3]^  years 

4  years... 
4J^  years 


$2.00 

6.25 

6.25 

6.25 

6.25 

6.25 

6.25 

6.25 

8.50 

$4.00 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
17.00 


$20. 00 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
62.50 
85.00 


$40.  00 
125.  00 
125.  00 
125.  00 
125. 00 
125. 00 
125. 00 
125.  00 
170. 00 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 
2.40 


Percent 
33.13 
33. 18 
33.22 
33.27 
3  3. 34 
33.41 
33.49 
3  3.58 
<4. 10 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


5  years. 

5^A  years 

6  years 

63^  years 

7  years 

7J^  years 

8  years 

sfi  years 

9  years 

93^  years 

9  years  and  8  months  (maturity) 


Period  of  time  bond  is  held  after 
maturity  date 


}4  year 

1  year 

VA  years 

2  years 

21-^  years 

3  years.. 

SVz  years 

4  years 

4J^  years 

5  years 

5}^  years 

6  years 

6H  years 

7  years 

7'A  years 

8  years. 

8H  years 

9  years 

9J^  years 

10  years  (extended  maturity)  6.. 


$8.75 

8.75 

8.75 

9.65 

9.65 

9.65 

10.35 

10.35 

10.35 

10.35 

10.35 


$17.  50 
17.50 
17.50 
19.30 
19.30 
19.30 
20.70 
20.70 
20.70 
20.70 
20.70 


$87.  50 

87.50 

87.50 

96.50 

96.50 

96.60 

103.  50 

103.  50 

103.  50 

103.  50 

103.  50 

$175.  00 
175.  00 
175.  00 
193.  00 
193.  00 
193.  00 
207. 00 
207.  00 
207.  00 
207.  00 
207  00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.37 
9.38 


$18.  75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.57 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 


$93.  75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 


$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.50 

4.17 

2.59 

4.26 

2.66 

4.37 

2.74 

4.46 

2.81 

4.58 

2.87 

4.75 

2.94 

4.95 

3.01 

5.31 

3.06 

6.21 

3.11 

12.68 

3.24 

(b)  to  extend- 

ed maturity ' 

3.26 

3.75 

3.28 

3.75 

3.30 

3.75 

3.32 

3.75 

3.33 

3.75 

3.34 

3.75 

3.35 

3.75 

3.37 

3.75 

3.38 

3.75 

3.39 

3.75 

3.40 

3.75 

3.40 

3.75 

3.41 

3.75 

3.42 

3.75 

3.43 

3.75 

3.43 

3.75 

3.44 

3.75 

3.44 

3.75 

3.45 

3.75 

3.46 

'  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1 ,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  armum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1, 1959,  revision  to  maturity. 
5  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 

•  19  years — 8  months  from  issue  date. 


266   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  VII— United  States  Savings  Bonds— Series  H 


TABLE    OF    CHECKS    ISSUED    AND    INVESTMENT    YIELDS    FOR    BONDS    BEARING   ISSUE    DATES    FROM    JUNE    1 

THROUGH   NOVEMBER   1,    1955 

Table  showing:  (t)  A  mounts  of  interest  checks  paid  on  United  States  savings  bonds  of  Series  H,  by  denominations, 
on  each  interest  payment  date  following  issue:  (f)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date:  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (6)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


(Maturity  value 

Face  value-^  Redemption  value  '. 
(issue  price 


Period  of  time  bond  is  held  after 
issue  date 


$500 
500 
500 


$1,000 
1,000 
1,000 


$5,000 
5,000 
5,000 


$10, 000 
10,000 
10, 000 


(1)  Amounts  of  interest  checks  for  each 
denomination 


Approximate  investment 
yield  on  face  value  ' 


(2)  From 

issue    date 

to  each 

interest 

payment 

date 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


H  year.. 
1  year 

1  \i  years 

2  years... 
2H  years 

3  years... 
3J^  years 

4  years... 


1 
$2.00 

6.25 

6.25 

6.25 

6.25 

6.25 

6.25 

6.25 

$4.00 

12. 

50 

12.50  1 

12 

50 

12 

50 

12. 

50 

12 

50 

12.50 

$20. 00 

62. 

50 

62. 

50 

62. 

50 

62.50  1 

62. 

50 

62 

50 

62.50 

$40.00 
125. 00 
125.  00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 
2.28 


Percent 
3  3.13 
'3.18 
3  3.22 
3  3.27 
3  3.31 
3  3.41 
33.49 
M.09 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


4H  years 

5  years 

5y2  years 

6  years... 

6V^  years 

7  years 

l\i  years 

8  years 

S^A.  years .- 

9  years 

^\<i  years. _ 

9  years  and  8  months  (maturity') 


Period  of  time  bond  is  held  after 
maturity  date 


H  year 

1  year 

\\^  years 

2  years.. 

2H  years 

3  years... 

3H  years 

4  years 

4H  years 

3  years 

5H  years 

6  years... 

6V^  years 

7  years 

7V^  years 

8  years 

8H  years 

9  years 

9V^  years 

10  years  (extended  maturity)  " 


$8.75 

8.75 

8.75 

9.55 

9.55 

9.55 

9.55 

10.  50 

10.50 

10.50 

10.50 

10.50 


$17.  50 

17.50 

17. 

50 

19 

10 

19 

10 

19 

10 

19 

10 

21 

00 

21 

00 

21 

00 

21 

00 

21 

00 

$87.  50 

87.50 

87.50 

95.50 

95.50 

95.50 

95.50 

105.00 

105. 00 

105.  00 

10.5. 00 

105. 00 

$175. 00 
175. 00 
175. 00 
191.00 
191.00 
191.00 
191.00 
210. 00 
210. 00 
210.  00 
210.00 
210. 00 


Extended  maturity  period 


$9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.37 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

9.38 

$18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18. 75 

18.75 

18.75 

18.75 

18.75 

18.75 

$93.  75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.75 

93.  75 

93.75 

93.75 

93.75 

93.75 

93.75 

$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.41 

4.1.'5 

2.51 

4.23 

2.59 

4.32 

2.69 

4.39 

2.77 

4.49 

2.84 

4.63 

2.89 

4.82 

2.97 

5.02 

3.03 

5.38 

3.08 

6.30 

3.13 

12.87 

3.27 

(b)  to  extend- 

ed maturity  ^ 

3.29 

3.75 

3.31 

3.75 

3.32 

3.75 

3.34 

3.75 

3.35 

3.75 

3.37 

3.75 

3.38 

3.75 

3.39 

3.75 

3.40 

3.75 

3.41 

3.75 

3.41 

3.75 

3.42 

3.75 

3.43 

3.75 

3.44 

3.75 

3.44 

3.75 

3.45 

3.75 

3.46 

3.75 

3.46 

3.75 

3.47 

3.75 

3.47 

'  At  all  times,  except  that  bond  is  not  redeemable  during  first  0  months. 

»  Calculated  on  the  basi.s  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  ([irior  to  .Tune  1, 1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1, 1959,  revision  to  maturity. 

'  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum, 

« 19  years— 8  months  from  issue  date. 


EXHiBWS 


267 


Tapi.e  VIII — United  States  Savinos  Bonds — Series  H 

TABIE  OF  CHECKS  IS  SIED  AND    INVESTMENT    YIEIDS  FOR  KONDS  PEARINO    ISSTE  DATES  tROM    DECEMBER  1, 

1955,  THROIT.H  MAY  1,  1956 

Table  showing:  (1)  A  mounts  of  interest  checks  paid  on  United  States  savings  hands  of  Series  H,  by  denominations' 
on  each  interest  paymeni.  date  following  issue;  (2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  iiUeresl  payment  date;  and  (3)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


i  Maturity  value 
Redemption  value  '._ 
Issue  price 


Period  of  time  bond  is  held  after 
issue  date 


}i  year.. 

1  year 

li4  years 

2  years... 
2}.i  years 

3  years... 
3H  years 


$500 
500 
500 


$1,000 
1,000 
1,000 


$5, 000 
5,000 
5,000 


I 


$10, 000 
10, 000 
10, 000 


(1)  Amounts  of  interest  checks  for  each 
denomination 


$2.00 
6.25 
6.25 
6.25 
6.25 
6.25 
6.25 


$4. 00 

12.50 

12.50 

12.  50 

12.50 

12.50 

12. 50 

$20. 00 

62. 50 

62.50 

62.50 

62.50 

62.50 

62.50 

$40. 00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 
125. 00 


Approximate  investment 
yield  on  face  value  2 


(2)    From 

issue    date 

to  each 

interest 

payment 

date 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 
2.25 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
rity 3 


Percent 
'3.13 
33. 18 
33.22 
33.27 
33.34 
33.41 
<3.99 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


4  years 

4>2  years 

5  years 

5J'2  years 

6  years 

61^  years 

7  years 

7J^  years 

8  years.. 

83-^  years 

9  years 

9H  years 

9  years  and  8  months  (maturity) 


Period  of  time  bond  is  held  after 
maturity  date 


}4  year 

1  year 

VA  years 

2  years 

2J4  years 

3  years 

3H  years 

4  years 

4H  years 

5  years 

5J^  years 

6  years 

63^  years 

7  years 

7H  years 

8  years 

814  years 

9  years 

9H  years 

10  years  (extended  maturity) 


$6.50 

8.75 

8.75 

8.75 

9.80 

9.80 

9.80 

9.80 

10.55 

10.55 

10.  55 

10.55 

10.55 


$13. 00 
17.50 
17.50 
17.50 
19.60 
19.60 
19.60 
19.60 
21.10 
21.10 
21.10 
21.10 
21.10 


$65. 00 

87.50 

87.50 

87.50 

98.00 

98.00 

98.00 

98.00 

105.  50 

105. 50 

105. 50 

105.  50 

105.  50 


$130. 00 
175. 00 
175. 00 
175.00 
196. 00 
196. 00 
196. 00 
196. 00 
211.00 
211.00 
211.00 
211. 00 
211.00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 


$18.  75 
18.75 
18.  75 
18.75 
18.75 
18.76 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 
18.75 


$93. 75 
93.75 
93.75 
93.75 
93.75 
93. 75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 


$187.  50 
187.  50 
187.  50 
187. 50 
187. 50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187. 50 
187. 50 
187.  50 
187. 50 
187. 50 
187. 50 
187.  50 
187. 50 
187.  50 


2.29 

4.13 

2.42 

4.20 

2.52 

4.28 

2.60 

4.38 

2.70 

4.45 

2.79 

4.54 

2.86 

4.66 

2.92 

4.85 

3.00 

5.04 

3.06 

5.41 

3.11 

6.33 

3.16 

12.93 

3.30 

(b)  to  extend- 

ed maturity  ^ 

3.32 

3.75 

3.34 

3.75 

3.35 

3.75 

3.36 

3.75 

3.38 

3.75 

3.39 

3.75 

3.40 

3.75 

3.41 

3.75 

3.42 

3.75 

3.43 

3.75 

3.43 

3.75 

3.44 

3.75 

3.45 

3.75 

3.46 

3.75 

3.46 

3.75 

3.47 

3.75 

3.47 

3.75 

3.48 

3.75 

3.48 

3.75 

3.49 

'  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  Interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 
'  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  aimum. 
« 19  years— 8  months  from  issue  date. 


268       196  2    REPORT   OF   THE    SECRETARY    OF   THE    TREASURY 
Table  IX— United  States  Savings  Bonds— Series  H 

TABLE  OF  checks  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  JUNE  1  THROUGH 

NOVEMBER  1,  1956 

Table  showing:  (1)  Amounts  of  interest  checkspaid  on  United  States  savings  bonds  of  Series  H,  by  denominations, 
on  each  interest  payment  date  following  issue:  (S)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date:  and  (S)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (6)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compowided  semiannually . 


[Maturity  value 

Face  valuer  Redemption  value  '. 
tissue  price 


Period  of  time  bond  is  held  after 
issue  date 


li  year... 

1  year.... 
15^  years 

2  years... 
2J  2  years. 

3  years... 


$500 
500 
500 


$] ,  ono 

1,000 
1,000 


$5, 000 
5,000 
5,000 


$10,000 
10, 000 
10, 000 


(1)  Amounts  of  interest  checks  for  each 
denomination 


$2.00 

6.25 

6.25 

6.25 

6.25 

6.25 

$4.00 
12.50 
12.50 
12.50 
12.50 
12.50 


20 

00 

62. 

50 

62. 

50 

62 

50 

62.50 

62.50 

$40.  00 
125. 00 
125.  00 
125. 00 
125. 00 
125. 00 


Approximate  investment 
yield  on  face  value  « 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 
2.21 


(3)  From 
each  interest 
payment 
date  (a) 
to  matu- 
ritv  3 


Percent 

3  3.13 
3  3.18 
3  3.22 
3  3.27 
3  3.34 
<3.91 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


33^  years 

4  years 

4J^  years 

6  years 

5H  years... 

6  years 

6H  years 

7  years 

7J^  years 

8  years 

8}^  years 

9  years 

9' 2  years 

9  years  and  8  months  (maturity) 


Period  of  time  bond  is  held  after 
maturity  date 


H  year 

1  year 

IVi  years 

2  years 

2}^  years 

3  years 

'■iH  years 

4  years 

4J'^  years. 

5  years 

S^A  years 

6  years 

6)^  years... 

7  years 

7J^  years 

8  years 

8)^  years 

9  years... 

9'i  years 

10  years  (extended  maturity)  « 


$6.50 

6.50 

8.75 

8.75 

9.75 

9.75 

9.75 

9.75 

9.75 

10.60 

10.60 

10.60 

10.60 

10.60 

$13.  00 
13.00 
17.50 
17.50 
19.50 
19.50 
19.50 
19.50 
19.50 
21.20 
21.20 
21.20 
21.20 
21.20 


$65.  00 

65.00 

87.50 

87.50 

97.50 

97.50 

97.60 

97.50 

97.50 

106.  00 

106.  00 

106.  00 

106.  00 

106.  00 

$130.  00 
130. 00 
175. 00 
175. 00 
195.00 
195.  00 
195.  00 
195. 00 
195.  00 
212. 00 
212.  00 
212.  00 
212. 00 
212. 00 


Extended  maturity  period 


9.37 

$18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.37 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

9.38 

18 

75 

$93.  75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.  75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 


$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
1875.  0 
1875.  0 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.26 

4.03 

2.30 

4.17 

2.43 

4.24 

2.53 

4.33 

2.65 

4.38 

2.74 

4.45 

2.82 

4.55 

2.89 

4.68 

2.95 

4.87 

3.02 

5.07 

3.08 

5.44 

3.14 

6.36 

3.19 

12.99 

3.33 

(b)  to  e.xtend- 

ed  maturity ' 

3.34 

3.75 

3.36 

3.75 

3.37 

3.75 

3.39 

3.75 

3.40 

3.75 

3.41 

3.75 

3.42 

3.75 

3.43 

3.75 

3.44 

3.75 

3.44 

3.75 

3.45 

3.75 

3.46 

3.75 

3.47 

3.75 

3.47 

3.75 

3.48 

3.75 

3.48 

3.75 

3.49 

3.75 

3.49 

3.75 

3.50 

3.75 

3.  50 

'  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

'  Calculated  on  the  basis  of  $1,000  bond. 

'  Appro.xiraate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 
checks  is:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1,  1959,  revision  to  maturity. 

»  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  amium. 

« 19  years— 8  months  from  issue  date. 


EXHIBITS 


269 


Table  X— United  States  Savings  Bonds— Series  H 


TABLE  or  CHECKS  ISSUED  AND  INVESTMENT  YIELDS  FOR  BONDS  BEARING  ISSUE  DATES  FROM  DECEMBER  1.  1956, 

THROUGH  JANUARY  1,  1957 

Table  showing:  (1)  Amounts  of  interest  checks  paid  on  United  States  savings  bonds  of  Series  H,  by  denominations, 
on  each  interest  payment  date  following  issue;  (2)  the  approximate  investment  yield  on  the  face  value  from  issue 
date  to  each  interest  payment  date;  and  (?)  the  approximate  investment  yield  on  the  face  value  from  each  interest 
payment  date  (a)  to  maturity,  or  (b)  to  extended  maturity.  Yields  are  expressed  in  terms  of  rate  percent  per 
annum  compounded  semiannually. 


(Maturity  value 

Face  valued  Redemption  value  i... 
[Issue  price 


$500 
SCO 
500 


$1,000 
1,000 
1,000 


$5, 000 
5,000 
5,000 


$10, 000 
10, 000 
10, 000 


Approximate  investment 

yield  on  face  value  2 


Period  of  time  bond  is  held  after 
issue  date 


(1)  Amounts  of  interest  checks  for  each 
denomination 


(2)    From 

issue   date 

to  each 

interest 

payment 

date 


]4  year.. 

1  year. . . 
IJ^  years 

2  years— . 
2>^  years 


$2.00 
6.25 
6.25 
6.25 
6.25 


$4.00 
12.50 
12.50 
12.50 
12.50 


$20.  GO 
62.50 
62.50 
62.50 
62.50 


$40. 00 
125. 00 
125. 00 
125.  00 
125.  00 


Percent 
0.80 
1.65 
1.93 
2.07 
2.15 


(3)    From 
each  interest 
payment 
date    (a) 
to  matu- 
rity 3 


Percent 
33.13 
33. 18 
33.22 
33.27 
4  3.84 


Amounts  of  interest  checks  and  investment  yields  to  maturity  on  basis  of  June  1, 1959,  revision 


3  years 

Zl^  years 

4  years 

4}^  years 

5  years 

5)^  years 

6  years 

6}^  years. 

7  years 

7J^  years 

8  years 

8J^  years 

9  years 

9J^  years 

9  years  and  8  months  (maturity). 


Period  of  time  bond  is  held  after 
maturity  date 


M  year 

1  year 

IM  years 

2  years 

2\i  years 

3  years 

33'^  years 

4  years 

4H  years 

5  years 

5J^  years 

6  years 

634  years 

7  years 

73^  years 

8  years 

83^  years 

9  years 

93-^  years 

10  years  (extended  maturity)  8.. 


$6.50 

6.50 

6.50 

8.75 

8.75 

10.00 

10.00 

10.00 

10.00 

10.00 

10.60 

10.60 

10.60 

10.60 

10.60 

$13.  00 
13.00 
13.00 
17.50 
17.50 
20.00 
20.00 
20.00 
20.00 
20.00 
21.20 
21.20 
21.20 
21.20 
21.20 


$65. 00 

65.00 

65.00 

87.50 

87.50 

100.  00 

100. 00 

100. 00 

100. 00 

100.  00 

106. 00 

106.  00 

106.00 

106.00 

106.  00 


$130.  00 
130. 00 
130.  00 
175. 00 
175. 00 
200. 00 
200.  00 
200. 00 
200.  00 
200.  00 
212.  00 
212.  00 
212.  00 
212. 00 
212.  00 


Extended  maturity  period 


$9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.37 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 
9.38 


$18.  75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

18.75 

$93.  75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 
93.75 


$187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  60 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 
187.  50 


2.22 
2.28 
2.32 
2.44 
2.54 
2.66 
2.77 
2.85 
2.92 
2.99 
3.06 
3.12 
3.17 
3.22 
3.36 


3.37 
3.39 
3.40 
3.41 
3.42 
3.43 
3.44 
3.45 
3.46 
3.47 
3.47 
3.48 
3.49 
3.49 
3.50 
3.50 
3.51 
3.51 
3.52 
3.52 


3.95 
4.07 
4.21 
4.29 
4.38 
4.43 
4.50 
4.58 
4.70 
4.87 
5.07 
5.44 
6.36 
12.99 


(b)  to  extend- 
ed maturity ' 


3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 
3.75 


1  At  all  times,  except  that  bond  is  not  redeemable  during  first  6  months. 

2  Calculated  on  the  basis  of  $1,000  bond. 

3  Approximate  investment  yield  on  the  basis  of  original  (prior  to  June  1, 1959,  revision)  schedule  of  interest 
checks:  (1)  3.00  percent  per  annum  for  entire  period  from  issuance  to  maturity.  (2)  As  shown  for  any 
period  from  each  interest  payment  date  to  maturity. 

*  Approximate  investment  yield  from  effective  date  of  the  June  1, 1959,  revision  to  maturity. 
»  Approximate  investment  yield  for  the  full  10-year  extension  is  3.75  percent  per  annum. 

•  19  years— 8  months  from  issue  date. 


270   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  10. — Second  amendment,  November  17,  1961,  to  Department  Circular 
No.  905,  Second  Revision,  regulations  governing  Series  H   savings   bonds 

Treasury  Department, 
Washington,  November  17,  1961. 

In  Sec.  332.7,  paragraph  (a")  is  hereby  amended,  effective  January  1,  1962,  to 
read  as  follows: 

Sec.  332.7.  Limitation  on  holdings. — The  limits  on  the  amount  of  any  Series  H 
bonds  originally  issued  during  any  one  calendar  year  that  may  be  held  by  any  one 
person  at  any  one  time  (which  will  be  computed  in  accordance  with  the  regulations 
currently  in  force  governing  United  States  savings  bonds)  i  are: 

(a)  General  limitation. — $20,000  (maturity  value)  for  the  calendar  year  1962 
and  each  calendar  year  thereafter. 

Robert  V.  Roosa, 
Acting  Secretary  of  the  Treasury. 


Legislation 

Exhibit  11. — An  act  to  increase  temporarily  the  public  debt  limit  set  forth  in 
section  21  of  the  Second  Liberty  Bond  Act 

[Public  Law  87-414,  87th  Congress,  H.R.  10050,  March  13,  1962] 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in   Congress   assembled,   That,   during 
the  period  beginning  on  the  date  of  the  enactment  of  this  Act 
and  ending  on  June  30,  1962,  the  public  debt  limit  set  forth  in         .  ,,      -pv  j^, 
the  first  sentence  of  section  21  of  the  Second  Liberty  Bond  Act,    Temporary  in- 
as  amended  (31  U.S.C.  757b),  shall  be  temporarily  increased  by    crease. 
$2,000,000,000.     Such  increase  shall  V^e  in  addition  to  the  tem- 
porary increase  provided  bv  the  Act  of  June  30,  1961   (Public 
Law  87-69;  75  Stat.  148). 

Approved  March  13,  1962. 


Exhibit  12. — An  act  to  increase  for  a  one-year  period  the  public  debt  limit  set 
forth  in  section  21  of  the  Second  Liberty  Bond  Act 

[Public  Law  87-512,  87th  Congress,  ILR.  11990,  July  1,  19G2] 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 

United  States  of  America  in  Congress  assembled,  That  the  public 

debt  limit  set  forth  in  the  first  sentence  of  section  21   of  the 

Second  Liberty  Bond  Act,  as  amended  (31    U.S.C.  757b),  shall    Debt  limit,  tem- 
i_     X  •!      •  J  porary     mereasc. 

be  temporarily  increased —  Ante,  p.  23. 

(1)  during  the  period  beginning  on  Julv  1,  1962,  and  ending 
on  March  31,  1963,  to  .$308,000,000,000, 

(2)  during  the  period  beginning  on  April  1,  1963,  and  ending 
on  June  24,  1963,  to  $305,000,000,000,  and 

(3)  during  the  period  beginning  on  June  25,  1963,  and  ending 
on  June  30,  1963,  to  $300,000,000,000. 

Approved  July  1,  1962. 


Financial  Policy 

Exhibit  13. — Statement  by  Secretary  of  the  Treasury  Dillon,  January  30,  1962, 

before  the  Joint  Economic  Committee 

The  past  twelve  months  have  been  an  active,  and  I  think  fruitful,  period  in 
terms  of  our  economic  policy.  In  many  ways,  remarkable  progress  has  been 
evident.  Nevertheless,  urgent  problems  remain.  I  am  grateful  for  this  oppor- 
tunity to  review  with  you  today  both  our  recent  experience  and  our  plans  for 
meeting  the  needs  of  the  future. 

>  Department  Circular  Xo.  530. 


EXHIBITS  271 

Progress  and  problems 

Last  year  began  in  recession,  but  closed  with  output  and  income  at  new  record 
highs.  The  personal  hardship  and  economic  waste  of  unemployment  were 
reduced.  Nearly  a  million  workers  were  added  to  nonfarm  payrolls.  Industry, 
while  working  longer  hours  at  higher  pay,  is  also  earning  greater  profits.  And, 
while  providing  a  higher  standard  of  living  for  our  citizens,  we  have  strengthened 
our  military  defenses  and  contributed  further  to  the  economic  progress  of  other, 
less  fortunate  nations. 

This  progress  was  achieved  within  a  context  of  general  price  stability.  On  that 
solid  base,  exports  reached  a  record  volume,  contributing  to  a  significant  reduction 
in  our  basic  balance-of-payments  deficit.  At  the  same  time,  defenses  against 
potentially  disturbing  short-term  capital  movements  are  being  greatly  reinforced. 
As  a  result,  confidence  in  the  dollar  has  been  strengthened. 

However,  the  economy  is  still  operating  well  below  its  full  potential.  Our 
growth  rate  over  recent  years  has  hardly  been  satisfactory.  Unemployment  is 
still  at  an  unacceptably  "high  level.  The  deficit  in  our  international  accounts, 
while  smaller,  remains  troublesome.  And,  the  very  progress  of  the  past  year, 
not  only  in  this  country  but  in  other  parts  of  the  free  world,  has  brought  with  it 
new  problems  to  which  we  must  find  solutions. 

Financial  policies  in  1961 

There  is  no  single,  easy  explanation  for  our  progress  during  1961.  A  large  part 
of  the  answer  lies  in  the  natural  vitality  of  our  type  of  market  economy  operating 
under  conditions  of  overall  price  stability — the  fundamental  prerequisite  for  all 
our  attempts  to  achieve  faster  growth  at  home  while  simultaneously  working 
toward  a  sustainable  balance  in  our  international  accounts.  That  price  stability, 
in  turn,  can  be  traced  primarily  to  sharp  gains  in  industrial  efficiency  and  worker 
productivity  as  output  expanded  from  its  recession  level,  gains  that  enabled 
industry  to  pay  higher  wages  and  to  increase  profits  without  raising  prices. 

Government  policy  supplied  another  large  part  of  the  answer.  First,  there  was 
the  psychological,  but  nonetheless  real,  reaction  that  flowed  from  President 
Kennedy's  earliest  statements  and  programs.  At  home,  the  President's  clear 
intent  to  deal  with  the  recession  promptly  and  effectively  helped  restore  confidence 
in  the  economic  outlook,  encouraging  expanded  investment  and  spending. 
Similarly,  the  President's  expressed  determination  to  maintain  the  strength  of  the 
dollar  internationally  without  resort  to  protection,  controls,  and  restraints  met 
with  a  prompt  response.  The  speculative  capital  outflow  subsided  and  the  gold 
drain  was  sharply  reduced. 

This  positive  approach  entailed,  under  the  particular  circumstances  then 
prevailing,  acceptance  of  a  sizable  budgetary  deficit,  which  was  further  enlarged 
by  the  higher  levels  of  defense  spending  called  for  by  the  Berlin  crisis.  At  a  time 
when  human  and  industrial  resources  were  readily  available  to  expand  output,  the 
rising  trend  of  Government  outlays  and  the  consequent  deficit  were  important 
factors  in  speeding  the  recovery  without  creating  pressures  on  the  price  structure. 

The  stimulating  effects  of  the  budget  were  reinforced  by  monetary  and  credit 
policies.  Throughout  the  past  year,  the  credit  markets  have  had  ample  funds  to 
meet  the  combined  demands  of  businesses,  individuals,  and  the  various  levels  of 
Government,  thus  facilitating  a  revival  in  capital  outlays,  higher  levels  of  home 
building,  and  steady  progress  toward  meeting  the  accumulated  needs  of  local 
governments.  In  sharp  contrast  to  other  recovery  periods  since  World  War  II, 
lending  rates  have  held  almost  steady,  particularly  in  the  long-term  area.  Both 
corporations  and  State  and  local  governments  can  still  raise  funds  at  virtually 
the  same  cost  as  a  year  ago.  Mortgage  rates,  after  declining  in  the  early  part  of 
1961,  have  been  substantially  unchanged  since  last  spring.  This  stability  was 
particularly  striking  in  a  year  when  the  total  funds  raised  in  the  capital  markets  by 
corporations,  homebuyers,  and  State  and  local  governments,  reached  a  new 
alltime  peak. 

All  this  was  accomplished  without  permitting  rates  for  short-term  money 
market  instruments  to  drop  to  the  extremely  low  levels  characteristic  of  earlier 
periods  of  easy  money  and  recession.  That  was  a  significant  achievement,  for 
short-term  rates,  while  less  important  in  influencing  investment  activity  at  home, 
can  play  a  critical  role  in  directing  the  flow  of  liquid  capital  between  the  financial 
centers  of  the  world.  Here,  Treasury  debt  management  policy,  as  well  as  greater 
flexibility  in  the  day-to-day  conduct  of  open  market  operations,  was  an  important 
factor. 


272   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Working  in  close  cooperation  with  the  Federal  Reserve,  the  Treasury,  in 
financing  the  deficit,  increased  the  outstanding  total  of  securities  maturing  within 
a  year  by  more  than  $10  billion.  At  the  same  time,  there  was  no  shortening  of  the 
average  maturity  of  the  marketable  public  debt,  largely  as  a  result  of  the  continued 
use  of  the  "advance  refunding"  technique.  This  type  of  financing  involves  the 
exchange  of  outstanding  issues  for  longer  maturities,  with  a  minimum  impact  on 
market  conditions  and  flows  of  funds  into  productive  investment. 

This  combination  of  a  budgetary  deficit  with  flexible  monetary  and  debt 
management  policies,  carefully  attuned  to  the  realities  of  the  balance  of  payments 
as  well  as  domestic  needs,  was  appropriate  both  in  terms  of  magnitude  and  timing. 
The  extremes  of  the  1958  recession — when  the  deficit  reached  nearly  $12>^  billion 
and  interest  rates  dropped  sharply,  only  to  surge  abruptly  higher  as  recovery 
started — ^were  successfully  avoided.  Financial  policies  were  stimulating  without 
being  inflationary;  the  threat  of  disturbing  short-term  capital  outflows  was 
ameUorated.  Moreover,  business  expansion  has  proceeded  in  orderly  fashion. 
Today,  signs  of  the  sort  of  excesses  that  breed  instability  and  require  sudden 
changes  in  policy  are  notable  for  their  absence. 

Our  basic  goals 

This  does  not  mean,  of  course,  that  all  the  policies  appropriate  to  the  past 
twelve  months  are  suitable  for  meeting  the  challenges  of  1962.  With  recovery 
largely  completed,  the  domestic  focus  must  now  be  on  maintaining  forward 
momentum  while  guarding  against  inflationary  pressures  as  our  resources  are  more 
fully  utilized.  Confidence  in  the  dollar  has  been  maintained.  To  sustain  that 
confidence,  further  progress  toward  a  longrun  equilibrium  in  our  basic  international 
accounts  is  a  necessity. 

Our  fundamental  objectives,  domestic  growth  and  a  payments  balance,  must 
be  pursued  together,  within  the  framework  of  free  markets.  All  administration 
policy  is  pointed  toward  that  end.  We  reject  policies  that  presume  irreconcilable 
conflict  between  our  objectives;  policies  that  attach  sole  priority  to  growth,  or 
sacrifice  growth  to  external  equihbrium.  These  purported  solutions  are  both 
unacceptable  and  unworkable  in  a  world  in  which  our  capacity  to  grow  is  being 
challenged  and  our  allies  in  freedom  need  the  strength  and  stability  assured  by  a 
solid  dollar. 

Success  in  reaching  our  twin  objectives  will  require  hard  decisions,  not  only  by 
those  who  shape  the  financial  policies  of  Government,  but  also  by  those  who  set 
price  and  wage  policies  for  management  and  labor. 

A  balanced  budget 

The  President's  Budget  Message  is  a  financial  reflection  of  our  national  needs 
and  priorities.  E.xpenditures  will  rise  moderately  in  fiscal  1963,  almost  entirely 
because  of  defense  needs  and  despite  painstaking  elimination  of  nonessential 
spending,  both  miUtary  and  civilian.  These  expenditures  can  and  should  be 
supported  by  a  growing  economy.  In  the  light  of  past  experience  and  current 
trends,  the  projections  of  a  further  rise  in  the  Gross  National  Product  (GNP)  to 
$570  billion  in  1962  that  underlie  the  revenue  estimates  are  entirely  reasonable. 
Without  raising  tax  rates  an  advance  of  this  sort  will  generate  revenues  slightly 
larger  than  expenditures.  Under  the  economic  conditions  we  foresee,  the  achieve- 
ment of  such  a  balance  is  highly  important  in  avoiding  inflationary  pressures  as  the 
economy  moves  closer  to  its  full  potential. 

One  result  of  this  budget  will  be  to  reduce  the  possibility  of  severe  strains  on  the 
monetary  system  as  the  economy  expands,  strains  that  could  bring  sharp  and  sud- 
den increases  in  interest  rates  and  unsettling  market  reactions  that  impede  the  flow 
of  savings  into  productive  investment.  In  1956  and  1957,  and  particularly  in 
1959,  strains  of  this  sort  appeared  to  be  developing  at  a  time  when  too  much  of  the 
burden  of  maintaining  balanced  growth  and  curbing  excesses  was  thrust  upon 
the  monetary  authorities.  Monetary  policj^  is  an  essential  and  powerful  tool  for 
facilitating  appropriate  adjustments  in  the  economy.  But  unless  it  is  supported 
by  appropriate  budgetary  policy,  the  results  can  be  capricious  and  unpredictable, 
contributing  too  little  to  either  stability  or  growth. 

The  debt  ceiling 

The  President's  recent  request  to  raise  the  temporary  debt  limit  to  $308  billion 
is  the  result  of  an  unavoidable  concentration  of  revenues  in  the  final  half  of  fiscal 
1963,  a  concentration  that  stems  largely  from  the  normal  recurring  seasonal 
pattern  of  tax  receipts.  Borrowing  of  about  $9  billion  will  be  necessary  between 
the  end  of  this  fiscal  year  and  the  principal  tax  payment  dates  In  fiscal^l963,  even 


EXHIBITS  273 


>, 


though  the  budget  for  the  fiscal  year  as  a  whole  is  balanced.  Moreover,  while  we 
anticipate  that  the  total  debt  on  June  30  of  this  year  will  be  somewhat  lower  than 
the  current  figure  of  over  $297}^  billion,  prompt  enactment  of  an  increased  ceihng 
is  needed  to  restore  some  margin  for  flexibility  and  unforeseen  contingencies — a 
margin  that  has  been  virtually  exhausted  by  the  higher  defense  expenditures  re- 
quired to  meet  the  Berlin  crisis,  which  developed  after  the  enactment  of  the 
current  limit  of  $298  billion. 
Measures  to  encourage  investment 

A  balanced  budget  in  times  of  relative  prosperity  means  that  the  Federal  Gov- 
ernment on  an  overall  basis  does  not  draw  on  the  national  flow  of  savings  avail- 
able for  investment.  Thus  a  balanced  budget  in  these  circumstances  promotes 
the  flow  of  private  investment. 

Why  is  an  increase  in  such  investment  so  important  to  us  today? 

At  the  heart  of  the  matter  is  the  fact  that  it  makes  possible  greater  productive 
efficiency.  Gains  in  efficiency  are  necessary  for  growth  at  home,  for  price  stability, 
and  for  aggressive  penetration  of  foreign  markets.  Thus,  increased  investment 
is  the  key  to  achieving  our  major  objectives,  growth  and  external  balance,  simul- 
taneously in  the  years  ahead.  And,  this  is  where  the  American  economy  has 
fallen  furthest  behind  in  recent  years. 

Since  the  mid-fifties  investment  in  capital  equipment  in  the  United  States  has 
averaged  less  than  6  percent  of  the  Gross  National  Product  as  compared  to  about 
7  percent  during  the  earlier  postwar  years.  By  contrast,  German  investment  has 
been  averaging  about  12  percent  of  GNP  during  recent  years,  French  between  8 
and  9  percent,  and  the  Common  Market  countries  as  a  group  about  10  percent. 
It  is  not  a  coincidence  that  these  countries  have  been  growing  by  roughly  5  per- 
cent per  year,  while  generally  maintaining  a  strong  external  payments  position. 
Nor  is  it  mere  happenstance  that  some  other  countries,  where  productive  invest- 
ment has  been  a  relatively  small  proportion  of  GNP,  have  had  to  cope  with  rela- 
tively slow  growth  and  recurrent  payments  difficulties. 

Certainly  growth  alone,  or  larger  investment  by  itself,  is  no  guarantee  of  exter- 
nal balance.  But  foreign  experience  strongly  suggests  that  our  twin  objectives 
can  be  not  only  compatible,  but  mutually  reinforcing. 

In  our  economy,  investment  in  plant  and  equipment  is  properly  the  province 
of  private  businesses,  individually  responding  to  the  profit  motive  and  competi- 
tive pressures  by  increasing  production  efficiencies  and  seeking  out  new  markets. 
The  Government  nevertheless  has  an  essential  role  to  play  in  maintaining  an 
economic  climate  that  will  encourage  and  facilitate  the  investment  process. 

I  have  mentioned  the  role  of  budgetary  policy  in  this  regard.  But  a  balanced 
budget  alone  cannot  meet  our  urgent  need  to  increase  our  rate  of  investment  in 
productive  capital  equipment.  It  is  also  vitally  important  that  our  tax  system 
should  recognize  the  need  to  accelerate  the  modernization  of  our  physical  plant 
and  equipment. 

This  is  why  the  administration  has  attached  first  priority,  among  tax  reform 
measures,  to  the  investment  credit  and  the  related  revision  in  depreciation 
schedules.  The  first  steps  toward  depreciation  reform  have  already  been  taken 
with  the  new  depreciation  allowance  guidelines  for  most  of  the  textile  industry. 
Revisions  in  guidelines  for  other  industries  will  be  announced  this  spring. 

Based  on  exhaustive  statistical  and  engineering  studies,  these  administrative 
actions,  consistent  with  the  present  law,  recognize  past  experience  and  practices 
as  well  as  the  impact  of  technological  advances  and  other  factors  on  the  economic 
life  of  plant  and  equipment.  They  will  provide  a  much  more  realistic  basis  for 
taxation,  and  will  stimulate  business  modernization  and  expansion.  They  can 
not  alone,  however,  assure  the  necessary  flow  of  funds  into  new  productive  facili- 
ties, nor  will  they  place  American  firms  on  an  equal  footing  with  their  competitors 
abroad,  where  special  incentive  allowances  are  commonplace.  To  achieve  this, 
revision  of  depreciation  guidelines  must  be  accompanied  by  the  proposed  invest- 
ment credit.     These  coordinated  reforms  go  together  and  should  not  be  separated. 

In  enacting  the  investment  credit,  we  must  also  recognize  the  need  to  avoid  a 
loss  of  revenue  that  could  jeopardize  the  prospects  for  a  vigorous  recovery  with 
stable  prices.  It  is  for  this  reason  that  the  President  is  urging  the  simultaneous 
enactment  of  tax  reforms  that  will  balance  the  cost  of  the  investment  credit  and 
at  the  same  time  eliminate  certain  defects  and  inequities  in  our  tax  structure. 

Meanwhile  the  Treasury  is  continuing  its  intensive  review  of  the  broad  issues 
of  tax  reform,  including  the  structure  of  the  personal  income  tax.  Fundamental 
changes  of  this  sort  inevitably  require  careful  preparation,  and  close  analysis  of  a 
welter  of  detail.     In  the  end,  congressional  hearings  will  provide  the  best  assur- 

661496 — 63 19 


274   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

ance  of  a  full  and  fair  appraisal  of  the  implications  of  any  basic  change  in  the  tax 
laws.  The  President  plans  to  submit  to  the  Congress  later  in  this  session  a 
broad  program  of  tax  reform  so  that  this  process  of  public  scrutiny  can  get  under- 
way promptly,  looking  to  enactment  of  the  reform  in  1963.  Any  comment  now 
on  the  nature  of  these  proposals  would  be  premature,  but  a  thorough-going  reform 
of  this  type  will  almost  certain]}'  entail  some  adjustments  in  the  basic  individual 
tax  rates. 
Toward  payments  equilibrium 

Tax  reform  to  stimulate  modernization  of  our  industrial  equipment  provides  a 
foundation  for  other  efforts  to  improve  our  balance-of-payments  position,  in- 
cluding measures  aimed  directly  at  increasing  exports  to  the  large  and  rapidly 
growing  markets  of  Europe  and  other  developed  countries.  The  administration 
is  pursuing  with  vigor  its  program  to  make  more  American  businesses  aware  of 
the  opportunities  in  foreign  markets,  to  familiarize  those  markets  with  American 
products,  and  to  enlarge  and  speed  the  flow  of  information  between  American 
producers  and  their  potential  markets.  A  new  and  comprehensive  program  of 
export  credit  insurance,  undertaken  by  the  Export-Import  Bank  in  cooperation 
with  private  insurance  companies  and  banks,  is  now  ready  and  will  provide  simpli- 
fied procedures  and  comprehensive  risk  guarantees  fully  equivalent  to  those  long 
available  to  most  of  our  competitors  abroad. 

In  today's  world,  export  markets  are  highly  competitive.  The  rapid  growth 
and  consolidation  of  the  European  Common  Market,  creating  a  free  internal 
market  but  protected  from  outsiders  by  a  wall  of  uniform  tariffs,  poses  a  serious 
problem,  but  it  also  presents  a  great  opportunity.  The  problem  is  that  we  must 
assure  ourselves  of  access  to  the  richest  of  our  foreign  markets,  a  market  to  which 
we  export  almost  9>'^%  billion  per  year,  a  far  larger  amount  than  we  import  from 
the  same  area.  The  opportunity  lies  in  the  mutual  negotiation  of  lower  tariffs 
on  a  reciprocal  basis  for  broad  groups  of  products,  at  one  and  the  same  time 
expanding  our  export  potential  and  forging  a  strong  Atlantic  trading  partnership. 
To  seize  this  opportunity,  President  Kennedy  has  sent  to  Congress  a  new  Trade 
Expansion  Act. 

Increased  exports  are,  over  the  longrun,  the  most  effective  means  of  eliminating 
our  basic  balance-of-payments  deficit  in  a  manner  consistent  with  our  other 
objectives  and  responsibilities.  But  because  of  our  current  position,  other  efforts 
to  reduce  the  drains  directly  related  to  our  overseas  commitments  must  be  con- 
tinued and  reinforced. 

One  of  the  most  important  is  the  negotiation  of  arrangements  with  certain  of 
our  allies  to  offset  the  dollar  outflow  arising  from  maintaining  our  military  forces 
overseas.  In  addition,  a  large  portion  of  our  economic  assistance  is  being  tied 
to  purchases  in  this  country.  And,  the  proposed  legislation  to  equalize  the 
impact  of  the  corporate  income  tax  on  business  operations  at  home  and  in  devel- 
oped countries  abroad  would  eliminate  a  special  stimulus  to  investment  in  indus- 
trialized nations. 

The  balance  of  payments  in  1961 

Although  some  of  these  measures  have  been  in  effect  for  only  a  limited  period 
of  time  and  others  are  yet  to  be  undertaken,  our  balance  of  payments  showed 
substantial  improvement  for  1961  as  a  whole.  While  firm  data  are  still  not 
available,  current  indications  are  that  the  basic  deficit — the  net  of  all  our  recorded 
transactions  except  volatile  short-term  capital  flows — declined  to  roughly  $600 
million,  as  compared  to  almost  $2  billion  during  1960.  A  part  of  this  improve- 
ment, almost  $700  million,  can  be  credited  to  advance  repayments  by  foreigners 
of  long-term  Government  loans.  Nevertheless,  the  improvement  in  the  remainder 
of  the  basic  account  was  substantial.  Preliminary  figures  point  to  an  overall 
deficit,  including  short-term  capital  outflows,  approximating  $2.5  billion,  down 
from  $3.9  billion  in  1960  and  from  an  average  of  $3.7  billion  over  the  tliree  years 
1958-1960. 

Much  remains  to  be  done  before  equilibrium  is  restored.  Some  yearend  figures 
now  becoming  available  and  tentative  data  for  the  fourth  quarter  emphasize  the 
need  for  caution.  The  overall  deficit  appears  to  have  risen  to  well  over  $1  billion 
in  the  final  quarter,  considerably  above  the  average  for  the  first  three  quarters 
of  the  year. 

The  increase  in  the  deficit  from  the  third  to  fourth  quarters  appears  to  have 
been  entirely  a  matter  of  short-term  capital  outflows,  one  of  the  most  elusive 
items  to  pin  down  statistically.  Estimates  now  at  hand  suggest  that  these 
flows,  for  the  year  as  a  whole,  were  almost  as  large  as  in  1960. 

There  were,  however,  clear  and  significant  diff'erences  in  the  character  of  these 


I 


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EXHIBITS  275 

outflows.  In  1960,  roflecting  some  uncertainty  over  the  stability  of  the  dollar, 
the  outflow  had  been  in  considerable  part  of  a  speculative  character,  and  the 
flowa  were  quickly  translated  into  a  drain  of  gold.  This  disruptive  speculation 
ceased  early  in  1961.  There  was,  however,  a  continuing  outflow  of  short-term 
funds  over  the  first  three  quarters  of  1961,  related  largely  to  an  increase  in  the 
financing  of  foreign  trade  by  American  banks. 

In  the  fourth  quarter,  a  further  outflow  from  this  source  was  coupled  with 
large  shifts  of  liquid  funds  to  foreign  markets,  partly  in  response  to  interest  rate 
differentials,  and  partly  related  to  certain  quirks  in  the  impact  of  domestic  and 
foreign  tax  treatment  of  earnings  of  American  companies  with  operations  in 
Canada  resulting  from  changes  made  in  Canadian  tax  laws  during  the  year. 
Some  shifts  recorded  as  an  outflow  were  apparently  promptly  reinvested  in  the 
New  York  market  by  agencies  of  foreign  banks.  This  again  seems  to  be  the  case 
particularly  with  Canadian  banks  and  their  agencies.  We  cannot  as  yet  pinpoint 
the  relative  weight  of  all  these  factors.  There  are  serious  questions  whether  our 
conventional  classifications  of  short-term  capital  flows  accurately  reflect  their  true 
significance  for  the  balance  of  payments.  This  difficult  subject  is  presently  a 
matter  of  intensive  study. 

Certainly,  the  fact  that  the  exchange  markets  have  been  calm  for  months 
belies  any  implication  that  these  recent  outflows  are  a  symptom  of  concern  about 
the  dollar.  So  does  the  fact  that  a  much  smaller  proportion  of  the  dollars  flowing 
abroad  was  converted  into  gold  during  1961.  In  addition  early  and  necessarily 
fragmentary  data  for  January  indicate  that  these  unusual  outflows  have  ceased. 

Strengthening  the  international  monetary  system 

Whatever  their  cause,  the  large  flows  of  short-term  capital  since  the  institution 
of  currency  convertibility  by  major  foreign  countries  provide  evidence  of  the  need 
to  bulwark  the  dollar  and  the  whole  international  payments  mechanism  against 
their  potentially  disturbing  impact.  In  a  world  of  convertible  currencies  and 
free  markets,  sizable  flows  of  liquid  funds  between  markets  can  be  expected  as  a 
natural  response  to  myriad  changes  in  both  our  own  and  foreign  economies.  The 
danger  is  that,  under  certain  circumstances,  they  may  set  off  self-propelling  specu- 
lative movements. 

During  the  past  year,  we  have  used  three  approaches  in  dealing  with  this 
problem: 

For  many  months,  the  Treasury,  operating  within  the  framework  of  the  newly 
created  Organization  of  Economic  Cooperation  and  Development,  has  been 
conducting  fruitful  consultations  with  other  financial  powers  on  a  periodic  basis. 
These  discussions  have  laid  the  foimdation  of  common  understanding  and  coopera- 
tion that  is  a  prerequisite  for  effective  international  action  to  prevent,  limit,  or 
offset  currency  movements  that  could  undermine  a  stable  monetary  system. 
They  have  been  supplemented  by  Federal  Reserve  participation  in  the  regular 
meetings  of  European  central  bankers  at  Basle,  and  by  bilateral  consulations  with 
our  principal  financial  partners. 

The  Treasury  also  has  undertaken  the  purchase  and  sale  of  foreign  currencies 
for  the  first  time  in  a  generation.  These  operations  helped  at  certain  critical 
periods  to  reduce  incentives  to  shift  funds  abroad  on  a  speculative  basis  or  to  take 
advantage  of  temporary  differentials  in  the  exchange  markets.  The  Federal 
Reserve  has  also  recently  decided  to  undertake  operations  in  foreign  currencies, 
a  development  which  we  in  Treasury  regard  as  highly  promising.  Chairman 
Martin  will  be  elaborating  further  on  this  approach  during  his  testimony  this 
afternoon.  I  look  forward  to  our  continued  cooperation  with  the  Federal  Reserve 
in  the  international  field,  just  as  in  the  domestic  area. 

Finally,  and  most  significant  for  the  strengthening  of  the  international  monetary 
system,  is  the  agreement  reached  among  ten  of  the  major  industrialized  countries 
to  buttress  the  resources  and  capabilities  of  the  International  Monetary  Fund  by 
lending  it  specified  amounts  of  their  own  currencies  when  necessary  to  cope  with 
temporary  stresses.  This  $6  billion  of  standby  facilities,  including  almost  $2H 
billion  of  European  Common  Market  currencies,  will  both  reduce  the  likelihood 
of  a  "run"  on  any  member  currency  and  provide  the  means  to  withstand  the 
impact  of  a  speculative  attack  should  one  develop.  The  new  arrangements  will 
powerfully  reinforce  the  effectiveness  of  the  Fund,  and  could  be  of  great  assistance 
to  the  United  States.  Enabling  legislation  will  be  submitted  to  the  Congress 
shortly. 

Economic  security  and  stabilization 

Tbe  President  has  proposed  a  series  of  measures  to  promote  greater  economic 
security  for  all  our  people,  to  permit  more  of  our  citizens  to  share  fairly  in  the 


276   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

growth  of  the  economy,  and  to  reduce  the  hardships  and  waste  of  recurrent  re- 
cessions. Aid  to  depressed  areas  and  worker  retraining  can  help  speed  growth 
and  eliminate  pockets  of  hardship.  Broadened  unemployment  insurance  can 
both  reduce  personal  misfortune  and  strengthen  the  "automatic  stabilizers" 
that  have  helped  prevent  our  postwar  recessions  from  turning  into  full  scale 
depressions.  And,  a  reserve  shelf  of  public  works  will  strengthen  our  defenses 
against  a  possible  future  recession. 

The  President  has  also  set  before  you  a  carefully  devised  plan  for  introducing 
an  element  of  flexibility  into  our  tax  structure.  The  measure  would  facilitate 
a  timely,  but  temporary,  reduction  in  personal  income  tax  rates,  at  his  initiative, 
in  the  event  of  a  serious  business  downturn.  Its  significance  lies  in  the  fact  that 
a  reduction  in  personal  tax  rates  could  speedily  give  a  powerful  boost  to  consumer 
spending  power  at  critical  junctures,  when  delay  might  permit  cumulative  down- 
ward forces  to  take  hold.  Adequate  safeguards  are  provided,  including  strict 
limits  on  the  amount  and  duration  of  any  such  tax  reduction.  This  carefully 
circumscribed  delegation  of  authority  to  the  President,  always  subject  to  con- 
gressional veto,  would  be  a  significant  addition  to  our  arsenal  of  antirecessionary 
weapons. 

The  continuing  challenge 

The  continuing  economic  challenge  before  us  is  clear:  We  must  fashion  the 
most  eff'ective  arrangements  possible  to  assure  that  our  free  economy  will  reach 
its  unrivalled  potential  and  enable  us  to  fulfill  our  responsibilities  for  leadership 
in  the  free  world.  In  meeting  that  challenge,  we  are  acting  in  those  areas  where 
Government  can  appropriately  and  helpfully  initiate  new  programs  and  policies. 
Equally  important,  we  have  tried  to  be  conscious  of  those  things  Government 
cannot  do,  or  that  the  private  sector  of  our  economy  can  do  better. 

The  essential  and  unique  characteristic  of  the  American  economy  is  the  strength 
it  derives  from  individual  freedom  for  all  of  us,  as  workers,  employers,  owners, 
and  consumers.  In  shaping  our  program  for  the  years  ahead,  we  are  working 
toward  the  sort  of  environment  that  will  strengthen  and  preserve  that  precious 
heritage. 

Public  Debt  Management 

Exhibit  14. — Statement  by  Secretary  of  the  Treasury  Dillon,  February  28,  1962, 
before  the  Senate  Finance  Committee  on  the  public  debt  limit 

I  am  here  today  in  support  of  H.R.  10050,  approved  by  the  House  of  Repre- 
sentatives on  February  20,  1962,  which  provides  for  a  temporary  increase  of  $2 
billion  in  the  public  debt  limit  to  a  total  of  $300  billion  for  the  remainder  of  the 
current  fiscal  year.  As  you  know,  the  President  in  his  Budget  Message  requested 
an  increase  to  $308  billion  for  the  fiscal  year  1963.  It  will  be  necessary  to  request 
the  Congress  later  in  this  session  to  approve  the  additional  $8  billion  before 
June  30,  1962. 

The  Treasury  is  confronted  with  a  serious  situation.  Under  present  legislation 
we  are  operating  under  a  debt  ceiling  of  $298  billion.  This  is  made  up  of  the 
permanent  limit  of  $285  billion,  plus  a  temporary  increase  of  $13  billion  enacted 
last  June  which  expires  June  30,  19G2.  In  fixing  the  present  ceiling  at  $298 
billion,  the  Congress  gave  consideration  to  the  Treasury's  estimate  of  a  high 
point  in  this  fiscal  year  of  $295  billion  in  the  amount  of  debt  outstanding  subject 
to  the  limitation,  plus  a  margin  of  $3  billion  to  provide  for  flexibilitj^  in  financing 
and  for  contingencies.  When  the  request  was  made  for  the  $298  billion  ceiling 
last  June  we  were  basing  the  amount  required  on  the  estimated  budget  deficit 
for  fiscal  year  1962,  which  at  that  time  was  $3.7  billion.  Since  then,  mainly 
because  of  increased  defense  expenditures  necessitated  by  the  Berlin  situation, 
the  estimated  budget  deficit  for  this  fiscal  year  has  grown  to  $7.0  billion. 

That  increase  in  the  deficit  has,  in  effect,  used  up  our  margin  of  flexibility. 
The  debt  subject  to  the  limit  is  now  very  close  to  the  ceiling.  This  situation 
imposes  serious  operating  difficulties  on  the  Treasury  for  the  remainder  of  the 
fiscal  year  1962.  There  is  no  leeway  as  far  as  market  financing  operations  are 
concerned,  nor  is  there  a  margin  to  handle  the  necessary  fluctuations  in  trust 
fund  investments  which  are  carried  on  mainly  through  special  issues  of  public 
debt  obligations. 

When  the  debt  ceiling  becomes  too  restrictive,  it  forces  the  Treasury  to  obtain 
some  relief  through  such  unusual  and  costly  measures  as  utilizing  the  borrowing 
power  of  certain  Government  agencies.     This  had  to  be  done  several  times  from 


EXHIBITS 


277 


1953  to  1958  when  the  debt  limit  leeway  became  virtually  exhausted.  There 
have  also  been  other  times,  including  a  quite  recent  occasion,  when  the  Treasury 
because  of  a  very  low  margin  under  the  debt  ceiling,  has  been  forced,  in  its  own 
financing  operations,  to  defer  some  borrowing  when  it  would  have  been  most 
advantageous. 

The  table  I  am  submitting  to  the  committee  shows  our  debt  projections  at 
semimonthly  intervals  for  the  remainder  of  the  fiscal  year  1962.  The  $2  billion 
increase  we  are  requesting  in  the  temporary  limitation  is  the  smallest  increase 
that  would  meet  essential  requirements  for  the  rest  of  this  fiscal  year.  It  will 
be  noted  from  this  table  that  a  $300  billion  ceiling  will  afford  us  a  margin  of  only 
$2.1  billion  in  March,  and  only  $800  million  in  June. 

It  is  important  to  observe  that  for  the  purpose  of  these  projections,  we  have 
assumed  that  the  Treasury's  operating  cash  balance  at  the  Federal  Reserve  Banks 
and  in  Treasury  tax  and  loan  accounts  in  commercial  banks  would  hold  steady 
throughout  the  periods  covered  at  $3.5  billion.  This  is  not  a  large  balance  in 
relation  to  our  Government's  tremendous  cash  requirements.  It  represents  less 
than  half  of  an  average  month's  budget  expenditures.  It  is  equal  to  a  little  more 
than  one-third  of  one  month's  total  cash  payments  to  the  public,  not  counting 
cash  paid  out  to  redeem  public  debt  obligations.  During  the  past  twelve  months, 
the  operating  cash  balance  has  averaged  about  $4.5  billion,  giving  us  a  highly 
desirable  degree  of  flexibility  in  the  conduct  of  day-to-day  Treasury  operations. 

I  believe  that  a  temporary  increase  in  the  debt  limit  to  $300  billion  is  essential 
to  the  orderly  and  economical  management  of  the  Government's  finances  for  the 
remainder  of  this  fiscal  year.  I  earnestly  recommend  its  favorable  consideration 
and  prompt  approval  by  this  committee. 

Actual  and  estimated  public  debt  outstanding  fiscal  year  1962,  with  estimates  based 
on  constant  operating  cash  balance  of  $3,500,000,000  {excluding  free  gold) 

[In  billions.  Estimates  based  on  1963  Budget  document] 


Date 

Operating  balance 
Federal  Reserve 

Banks  and  deposi- 
taries (excluding 
free  gold) 

Public  debt  sub- 
ject to  limitation 

Allowance  to  pro- 
vide flexibility  in 
financing  and  for 
contingencies 

Total  public  debt 
limitation  required 

Actual 

1961 — June  30 

$.5.9 
3.3 

5.8 
4.2 
5.3 
3.1 
8.1 
7.0 
5.4 
4.7 
5.4 
2.8 
5.7 
3.1 
3.9 
3.0 

$288.9 
289.1 
292.2 
292.1 
293.5 
293.2 
293.6 
296.0 
295.5 
296.7 
296.9 
297.0 
296.1 
296.3 
296.4 
296.3 

July  15 

July  31 

Aug.  31 

9,pnt    1  .^i 

Sept  30 

Oct.  15 

Oct  81 

Nov.  15 

Nov  30 

Dec.  15 

Dec  31 

1962— Jan.  15 

Jan. 31 

Feb  15 

Estimated 

Feb.  28  ..  . 

3.5 
3.5 
3.5 
3.5 
3.5 
3.5 
3.5 
3.5 
3.5 

295.3 
297.9 
293.3 
296.8 
296.1 
296.3 
296. 6 
299.2 
294.0 

$3.0 
12.1 
3.0 
3.0 
3.0 
3.0 
3.0 
1.8 
3.0 

$298. 3 

Mar.  15 

300.0 

Mar.  31 

296.3 

Apr.  15 

299.8 

Apr.  30 

299.1 

May  15     . 

299.3 

May  31 -  - 

299.6 

June  15 

300.0 

June  30        ..  . 

297.0 

1  Temporarily  the  full  $3  billion  flexibility  will  not  be  available  on  these  dates. 


278   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  15.- — Statement  by  Secretary  of  the  Treasury  Dilion,  March  14,  1962, 
before  the  Senate  Finance  Committee  on  debt  management  policies 

I  welcome  the  opportunity  to  discuss  witli  this  distinguished  committee  tlie 
Treasury's  debt  management  poHcies  and,  in  particular,  our  use  of  advance 
refunding  as  a  tool  in  achieving  our  debt  management  objectives. 

The  management  of  the  debt  is  one  of  the  major  financial  responsibilities  of  the 
Federal  Government  and  it  is,  in  addition,  an  important  arm  of  economic  policy- 
making. If  the  Federal  debt  were  small,  we  could  afford  to  manage  it  much  as 
the  treasurer  of  a  corporation  manages  his  company's  debt,  without  giving  much 
thought  to  the  impact  of  our  operations  on  the  money  markets  and  the  economy. 
This  is  not,  however,  the  case.  The  magnitude  of  the  Federal  debt  is  such  that 
the  decisions  made  in  managing  the  debt  can  have  profound  effects  on  the  money 
markets,  on  the  structure  of  interest  rates,  and  on  the  magnitude  of  the  flow  of 
funds  into  corporate  and  municipal  bonds  and  mortgages.  Moreover,  debt 
management  decisions  can  have  a  significant  inipact  on  the  liquidity  of  the  econ- 
omy, on  the  effectiveness  of  monetary  policy,  and  on  the  balance  of  payments. 

AH  of  this  means  that  the  management  of  the  debt  is  a  continuous  and  unre- 
lenting task.  Even  in  a  year  in  which  the  Federal  budget  is  in  balance,  debt 
operations  on  a  very  large  scale  must  be  carried  out  both  to  meet  the  seasonal 
financial  needs  of  the  Government  and  to  refund  maturing  obligations. 

The  primary  objective  of  debt  management  is  to  assure  a  satisfactory  placement 
of  the  debt,  and  our  aim  must  always  be  to  minimize  the  burden  on  the  American 
taxpayer  of  the  interest  cost  of  the  debt.  An  important  ol)jective  of  economic 
policy  with  respect  to  debt  management  is  to  help  create  conditions  in  the  money 
and  capital  markets  which  are  most  conducive  to  the  orderly  growth  of  the 
economy  without  inflation.  A  further  objective,  now  of  very  great  importance, 
is  to  conduct  operations,  in  such  a  way  as  to  contribute  toward  the  achievement 
of  equilibrium  in  our  balance  of  payments.  We  must  constantly  blend  these 
objectives  so  as  to  obtain  the  overall  result  that  most  clearly  reflects  the  national 
interest  at  the  moment,  as  well  as  over  the  long  term. 

In  seeking  to  attain  these  debt  management  objectives,  we  are  continually 
striving  to  produce  a  more  balanced  maturity  structure  for  the  debt,  that  is,  a 
broad  distribution  of  the  outstanding  debt  among  holders  interested  in  short-term 
securities,  others  who  want  issues  of  intermediate  term,  and  those  whose  needs 
are  for  long-term  bonds.  This  will  enable  us  to  reach  all  types  of  demand  for 
Government  securities  and  to  avoid  the  problems  produced  by  an  excessive  con- 
centration of  debt  in  a  particular  maturity  area. 

One  of  the  Treasury's  principal  instruments  in  working  toward  the  needed 
restructuring  of  the  debt  over  the  past  few  years  has  been  the  advance  refunding. 
I  would  liKe  to  emphasize,  however,  that  the  achievement  of  a  more  balanced 
debt  structure  is  not  an  end  in  itself.  It  is  a  necessarj^  means  toward  achieving 
all  of  the  other  goals  that  I  have  already  mentioned.  We  do  not  advocate 
lengthening  the  debt  structure  merely  for  its  own  saVe.  If  it  were  possible  to 
accomphsh  all  of  our  objectives  with  a  Federal  debt  entirely  composed  of  short 
maturities,  our  problem,  in  some  respects,  might  be  easier.  In  that  same  light, 
the  shortest  maturity  of  all  would  be  that  of  printing  money.  But  merely  to 
mention  that  extreme  result — the  ultimate  result  of  continually  shortening  the 
maturity  of  the  debt — is  to  give  the  answer.  The  eventual  breakdown  of  the 
entire  payments  mechanism  would  be  the  inevitable  end  of  that  kind  of  course. 

One  fact  of  life  which  bears  heavily  on  any  debt  manager  is  that,  unless  he 
moves  in  a  fairly  regular  fashion  to  put  out  reasonable  amounts  of  intermediate 
and  long-term  debt,  he  will,  within  the  space  of  a  few  years,  find  himself  with  a 
debt  that  is  predominantly  short-term  in  character,  and  getting  shorter  every 
day.  In  this  connection,  I  would  like  to  call  your  attention  to  chart  A.  This 
chart  shows  what  would  happen  to  the  size  of  the  under  one-year  debt  if,  begin- 
ning today,  we  were  to  refund  all  maturing  securities  with  one-year  issues  during 
the  next  five  years.  With  no  change  in  the  total  size  of  the  debt,  the  amount  of 
debt  maturing  within  one  year  would  rise  from  the  present  level  of  $88.5  billion 
to  $132.4  billion  in  two  years  and  to  $153.1  billion  in  five  years.  As  a  percentage 
of  the  present  total  of  outstanding  marketable  debt,  this  would  mean  a  rise  from 
45  percent  to  67  percent  to  77  percent. 


EXHIBITS 
Chart  A 


279 


^POTENTIAL  GROWTH  OF  THE  UNDER  1-YEAR  MARKETABLE., 

PUBLIC  DEBT 


$Bil. 
160 


120 


80 


40- 


Assuming  1-Year  Rollovers  without  Attrition^ 


148 


153 


132% 


135 '/a 


Rolled  over  from 
Preceding  Year 


1 06 1/2 


Maturing  within 
Following  Year 


132'/, 


^!ZZSa 


135'/!. 


148 


1962         '63  '64  '65  '66  '67 

As  of  March  I  Eoch  Yeor 


1  Without  any  future  change  in  the  marketable  debt  or  in  the  volume  of  seasonal  bills.    Partially  tax- 
exempt  bonds  to  earliest  call  date. 


Granted  that  the  printing  press  extreme  is  out  of  the  question,  why,  though, 
should  a  concentration  of  debt  in  the  short-term  area  cause  serious  economic 
problems?  Why  are  we  seeking  a  balanced  maturity  structure  which  includes 
reasonable  amounts  of  intermediate  and  long-term  debt?  These  are  the  questions 
I  would  like  to  discuss  further  before  considering  the  subsequent  question: 
namely,  if  it  should  be  agreed  that  we  ought  to  put  out  some  long-term  debt, 
why  use  the  advance  refunding  technique  rather  than  offering  long-term  issues 
for  cash  or  in  regular  refunding  operations? 

Off  hand,  looking  at  the  smooth  manner  in  which  our  short-term  security  opera- 
tions  have  usually  been  carried  out,  with  relatively  little  disruptive  impact  on 
the  money  markets,  and  at  interest  rates  usually  lower  than  on  longer-term  issues, 
one  might  ask  why  we  do  not  put  the  entire  Federal  debt  in  short-term  securities. 

The  answer  is  that  the  short  debt  only  behaves  this  wav  now  because  we  have 
kept  its  size  down  to  the  present  relative  magnitudes.  While  it  is  true  that  there 
is  a  strong  demand  for  short-term  Government  securities,  the  demand  is  not  with- 
out limits.  If  the  Federal  Government  were  to  try  to  increase  the  supply  of 
short-term  securities  far  beyond  the  needs  of  the  economy  for  this  kind  of  instru- 
ment, yields  would  be  certain  to  rise  sharply.  As  a  consequence,  if  we  were  to 
concentrate  the  entire  Federal  debt  in  maturities  of  five  years  or  less,  the  average 
interest  cost  of  the  debt  would  probably  be  at  least  as  high  as  it  is  with  our  present 
debt  structure. 

A  good  example  of  what  can  happen  when  the  Federal  Goverment  pushes 
more  debt  into  a  particular  maturity  area  than  the  economy  wishes  to  hold  is 
provided  by  the  experience  of  1959.  Because,  under  the  interest  rate  ceiling,  it 
could  not  offer  securities  with  a  maturity  over  five  years  bearing  a  coupon  higher 
than  ^/i  percent,  while  the  market  demanded  a  higher  rate,  the  Treasury  concen- 
trated all  of  its  financing  operations  from  April  1959  through  March  1960  in  the 


280   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


five-year  or  under  area.  During  that  period  you  will  recall  that  the  debt  increased 
by  $9.1  billion.  I  would  like  to  call  your  attention  to  chart  B,  which  shows  the 
effect  on  yields  of  this  concentration  of  relatively  short-term  financing.  Chart  B 
shows  the  pattern  of  yields  on  Government  securities  in  January  1960,  when 
short-term  issues  from  91-day  bills  out  to  five-year  notes  were  selling  at  higher 
yields  than  bonds  maturing  in  twenty-five  to  thirty-five  years.  I  need  not  remind 
you  that  we  have  only  one  outstanding  U.S.  Government  security  bearing  a 
coupon  of  5  percent.  This  was  a  4-year  and  10-month  obligation  sold  on  October 
6,  1959.  Without  reviewing  the  experience  of  1959  and  early  1960  in  detail  or 
the  related  role  of  Federal  Reserve  action  and  other  market  factors  at  that  time, 
the  events  of  that  period  provide  a  vivid  demonstration  that  concentrating  an 
excessive  amount  of  Treasury  securities  in  short  maturities,  a  greater  quantity 
than  the  market  desires  to  absorb,  produces  higher  rather  than  lower  interest 
costs. 

Chakt  B 

MARKET  YIELDS  ON  TREASURY  SECURITIES 


1 — I — I — r 


n — I — I — r 


"I — I — I — r 


T — \ — i — I — I — I — \ — I — r 

Pattern  of  Rates 


1 — I — \ — r 


T — 1 — I — r 


5.0 


4.5 


4.0 


»••••••,, 


'-*-. 


•••• 


•••, 


"^. 


*••.. 


•••.. 


••• 


Jon.  6,1960 


••••.;...! 


^••••........^ 


•^•••••••M*. 


••••••••• 


15  20 

—  Yeors  to  Moturity 


As  time  passes  and  the  economy  grows,  the  demand  for  short-term  Govern- 
ment securities  for  use  as  liquidity  reserves  will  also  grow,  and  it  would  be  quite 
appropriate  for  the  Treasury  to  expand  the  outstanding  volume  of  short-term 
Government  securities  consistent  with  this  growing  demand.  During  1961,  the 
outstanding  amount  of  Government  securities  maturing  within  one-year  was 
increased  by  $10.6  billion.  Thus  far  in  1962,  the  vmder  one-year  debt  has  been 
increased  by  an  additional  $2.6  billion.  We  have  not  been  reluctant  to  increase 
the  outstanding  short-term  debt  in  those  quantities  which  we  felt  the  economy 
could  api)ropriately  absorb,  and  we  will  continue  to  do  so  in  the  future. 

Increasing  the  supply  of  short-term  securities,  of  course,  tends  to  pvit  upward 
pressure  on  short-term  rates.  One  of  the  Treasury's  purposes  in  increasing  the 
volume  of  under  one-year  debt  during  the  past  year  has  been  to  do  just  that — 
to  put  upward  pressure  on  short-term  interest  rates  and,  thereby,  to  keep  our 
short-term  rates  in  reasonable  equilibrium  with  rates  in  other  countries.  The 
objective  was  to  deter  outflows  of  short-term  money  to  foreign  countries  stemming 
from  interest  rate  differentials,  outflows  which  would  weaken  our  balance-of- 
payments  position.  In  substantially  increasing  the  su])ply  of  under  one-year 
debt,  the  Treasury  did  help  to  push  short-term  rates  higher,  as  illustrated  by  the 


EXHIBITS  281 

fact  that  yields  on  3-month  Treasury  bills  have  moved  up  from  around  2.25 
percent  in  January  1961  to  2.80  percent  at  present. 

Even  if  it  were  possible  to  reduce  substantially  the  burden  of  interest  costs  by 
concentrating  on  relatively  short-term  security  offerings,  which  we  do  not  believe 
to  be  true,  there  is  a  vital  economic  reason  for  avoiding  an  excessive  concentration 
of  short-term  debt;  that  is,  the  undesirable  effects  of  such  an  excessive  concentra- 
tion on  the  liquidity  of  the  economy  and  the  effectiveness  of  monetary  policy. 

Short-term  Government  securities  are  close  substitutes  for  money.  They  can 
be  turned  into  cash  quickly,  with  little  marketing  cost  and  relatively  little  risk 
of  loss.  A  banking  system  holding  excessive  quantities  of  short-term  Govern- 
ment securities  will  respond  only  slowly  to  monetary  controls.  This  means 
that  to  achieve  a  given  level  of  monetary  restraint  the  Federal  Reserve  would  be 
required  to  adopt  more  restrictive  measures  than  would  otherwise  be  necessary. 

An  excessive  volume  of  short-term  debt  hampers  an  effective  monetary  policy 
in  still  another  way.  The  shorter  the  maturity  structure  of  the  debt,  the  more 
often  the  Treasury  must  come  to  the  market  in  sizable  refunding  operations. 
Because  of  the  magnitude  of  Treasury  debt  operations,  it  has  always  been  con- 
sidered essential  that  the  Federal  Reserve  maintain  an  "even  keel"  in  the  market 
during  such  operations.  However,  if  the  Treasury  is  almost  continually  in  the 
market,  the  Federal  Reserve  will  find  itself  with  very  little  room  to  operate  in 
carrying  out  its  responsibilities.  A  balanced  debt  structure,  which  reduces  the 
number  of  occasions  during  the  year  that  the  Treasury  must  carry  out  sizable 
refunding  operations,  will  make  for  the  exercise  of  more  effective  monetary 
control  by  the  Federal  Reserve. 

For  all  of  these  reasons,  it  is  essential  that  the  Treasury,  from  time  to  time,  put 
out  some  longer-term  debt.  If  this  must  be  done,  why  is  it  often  more  advanta- 
geous to  put  out  longer-term  debt  through  advance  refunding  rather  than  through 
direct  cash  sales  or  regular  refunding  operations? 

There  are  three  important  and  unique  advantages  to  the  Treasury  in  the 
advance  refunding  approach.  First,  and  most  important,  the  advance  refunding 
technique  does  not  immediately  pull  large  blocks  of  long-term  funds  out  of  the 
capital  markets,  funds  which  otherwise  would  go  into  corporate  and  municipal 
bonds  or  mortgages.  What  this  means  is  that  job-creating  business  investments 
and  the  financing  necessary  to  build  schools,  roads,  other  public  improvements, 
and  homes  will  not  be  curtailed.  Were  the  Treasury  to  sell  any  substantial 
quantity  of  long-term  bonds  for  cash,  it  would  immediately  reduce  the  quantity 
of  long-term  funds  available  for  private  investment  and  investment  by  State  and 
local  governments  and,  thereby,  slow  down  our  economic  expansion.  With  the 
economy  still  operating  well  below  capacity  levels,  we  believe  that  this  would  be 
poor  economic  policy. 

The  advance  refunding,  however,  has  the  least  possible  immediate  impact  on 
the  current  flow  of  new  long-term  savings.  It  merely  changes  the  form  in  which 
old  savings  are  held  by  lengthening  the  maturity  of  the  obligation.  New  cash 
funds  are  not  involved,  except  to  the  relatively  minor  extent  that  some  investors 
buy  the  eligible  securities  in  the  market  in  order  to  make  the  exchange,  and  even 
in  such  cases  an  equivalent  amount  of  funds  is  freed  for  other  uses. 

By  use  of  the  advance  refunding  technique,  the  Treasury  can  assure  the  reten- 
tion of  its  regular  customers  for  genuine  long-term  investments.  This  is  not 
possible  if  long-term  securities  are  only  sold  as  part  of  regular  refundings  since, 
for  a  considerable  period  before  the  maturing  securities  come  due,  they  have 
become  liquid  money  market  instruments;  and  their  ownership  has  largely  been 
shifted  out  of  the  hands  of  long-term  investors  into  the  hands  of  short-term  in- 
vestors who  are  not  likely  to  be  interested  in  long-term  securities. 

A  second  important  advantage  of  advance  refunding  is  that,  through  this 
technique,  a  substantial  quantity  of  long-term  bonds  can  be  added  to  the  Govern- 
ment's debt  structure  with  an  absolute  minimum  of  upward  pressure  on  long- 
term  interest  rates.  This  was  the  experience  in  earlier  advance  refundings,  and 
it  was  certainly  the  experience  in  our  most  recent  operation.  In  last  month's 
advance  refunding,  we  placed  an  additional  $1.4  billion  in  bonds  maturing  in  1990 
and  1998  in  the  hands  of  the  public.  Yet  the  level  of  long-term  Government 
bond  yields  is  somewhat  lower  today  than  it  was  at  the  time  we  announced  the 
advance  refunding  on  February  15.  The  level  of  long-term  interest  rates  in  both 
the  corporate  and  the  municipal  bond  markets  is  lower  now  than  on  February  15. 
If  we  had  attempted  to  sell  $1.4  billion  of  long-term  bonds  in  the  current  market 
as  a  cash  offering  or  regular  refunding,  we  would  certainly  have  put  substantial 
and  immediate  upward  pressures  on  long-term  bond  yields. 


282   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  administration's  policy  on  long-term  interest  rates  has  been  stated  on 
many  occasions  during  the  past  year.  We  have  continually  sought  to  avoid 
putting  upward  pressures  on  long-term  interest  rates,  in  order  to  provide  the  kind 
of  atmosphere  in  the  capital  markets  conducive  to  a  large  flow  of  long-term  funds 
into  private  investment.  Our  debt  management  policies  have  been  and  are  being 
directed  toward  this  end.  We  feel  that  our  e8"orts  in  this  direction  have  been 
successful.  For  1961  saw  the  largest  combined  flow  of  funds  into  corporate 
bonds,  municipal  bonds,  and  mortgages  in  our  history  and,  despite  this  fact, 
long-term  interest  rates,  on  the  whole,  are  no  higher  today  than  they  were  a  year 
ago,  when  we  were  close  to  the  bottom  of  the  recession  (see  chart  C).  While 
yields  on  long-term  U.S.  Government  bonds  are  about  %  of  one  percent  higher 
than  a  year  ago,  j'ields  on  corporate  bonds  are  approximately  unchanged  and  those 
on  municipal  bonds  and  mortgages  are  lower.  In  considering  these  results,  we 
should  realize  that  the  most  important  long-term  rates  from  the  point  of  view  of 
the  economy  are  those  for  new  corporate  borrowing,  for  the  sale  of  new  municipal 
bonds,  and  for  mortgages,  since  they  finance  new  jobs  and  new  schools,  roads,  and 
homes. 

Chart  C 

LONG-TERM  MARKET  YIELDS 

Monthly  Averages  1959-62 


% 


^  New  Aa  Corporate  Bonds  ^ 
Reoffering  Yields 


Municipal  Bonds ' 


"-•  3/a 


I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I    I I    .    I    I    I    I    I    I 

JVMJSNJMMJSNJMMJSNJMM 

1959  I960  1961  1962 


'  Estimate  of  average  yields  on  Moody's  Aa  rateil  new  Corporate  bonds. 
2  Bond  Buyers  average  of  20  bonds  on  first  Tlmrsday  in  eacli  month. 


A  third  important  reason  for  using  the  advance  refimding  approach  is  that  it  is 
usually  the  cheapest  way  for  the  Treasury  to  put  out  long-term  securities.  There 
is  one  simple  reason  for  this.  When  the  Treasury  puts  out  long-term  securities 
for  cash  or  in  a  regular  refunding,  we  must  appeal  to  investors  who  have  complete 
freedom  of  action.  They  are  free  to  choose  among  our  Treasury  offerings,  corpo- 
rate bonds,  corporate  equities,  municipal  bonds,  mortgages,  and  still  other 
alternatives.  The  yields  on  our  long-term  cash  or  refunding  issues  must  be  fully 
competitive  with  these  alternativ'es. 

However,  in  an  advance  refunding  we  are  appealing  to  a  group  of  investors  who 
do  not  have  complete  freedom  of  action.  To  move  out  of  their  present  holdings, 
many  of  these  investors  would  have  to  realize  substantial  capital  losses  on  market 
sales.  Through  the  advance  refunding,  these  investors  may  extend  the  maturity 
of  their  holdings  without  putting  capital  losses  on  their  books  and  with  a  minimum 


EXHIBITS 


283 


of  inconvenience  and  uncertainty.  It  is  because  of  this  special  appeal  of  an 
advance  refunding  to  those  who  otherwise  would  not  wish  to  disturb  their  hold- 
ings that  the  Treasury  can  in  this  way  put  out  larger  quantities  of  long-term 
bonds  at  lower  interest  costs  to  the  taxpayer  than  would  be  possible  by  other 
means. 

I  mentioned  earlier  that  we  placed  in  the  hands  of  private  investors  $1.4  billion 
of  bonds  maturing  in  1990  and  1998  in  last  month's  advance  refunding.  To  have 
attempted  to  sell  such  a  large  quantity  of  long-term  bonds  for  cash  would  have 
required  a  greater  total  interest  cost  to  the  Treasury  than  we  paid  in  our  advance 
refunding  offering. 

I  would  like  to  present  a  numerical  example,  which,  I  believe,  illustrates  this 
last  point.  While  the  situation  is  hypothetical,  it  rather  closely  parallels  the 
form  of  last  month's  advance  refunding.  The  details  of  the  example  are  shown  in 
chart  D,  but  I  will  attempt  to  summarize  the  principal  features. 

Chart  D 

INTEREST  COST  OF  EXTENDING  DEBT  TO  1998  ^_ 


Through  Advance  Refunding  and  through  Direct  Long-Term  Borrowing-.  Per  $100 


3/1/62      2/15/64 


12/15/72 


11/15/98 


Interest  to  be:' 


Cosh 
Borrowing...  $6.95- 


Advance 
Refunding. 


Advonce 
Refunding.. 


127.98- 


Totol JI78.35    $32.86 

Net $145.49 


Cash 
Borrowing.. $156^-  - . 


$  I0.52--Net  additional  interest  on  Direct  Long-Term  Borrowing 


8  10         12 

Yeors  to  Moturity- 


1  Hypothetical  issues  based  on  market  pattern  of  rates  on  Feb.  14,  1962:  3],^%  note  due  Feb.  15,  1964, 
"sold"  at  a  discount  to  yield  3.55%;  4%  bond  due  Dec.  15,  1972,  "exchanged"  for  3%  bond  due  Feb.  15,  1964, 
plus  $0.25  per  $100  payable  by  the  Treasury;  and  4M%  bond  due  Nov.  15,  1998,  "sold"  at  par.  Other  issues 
were  actually  involved  in  the  latest  advance  refunding. 

2  Interest  figures  are  simple  arithmetic  totals.  They  are  not  discounted  to  present  value.  Even  when 
discounted  at  4.25%  (the  rate  for  1998  cash  borrowing  directly)  the  net  discounted  cost  through  advance 
refunding  is  lower. 


In  the  example  we  assume  that  the  Treasury  needs  to  borrow  $1  billion  in  cash 
and  that,  to  improve  the  debt  structure,  it  is  desirable  to  place  this  $1  billion  out 
in  the  1998  maturity  area.  We  can  accomplish  these  objectives  in  one  of  two 
ways.  One  way,  of  course,  is  to  sell  a  $1  billion  1998  bond  directly  for  cash.  An 
alternative  is  to  place  $1  billion  in  bonds  out  in  the  1998  area  through  advance 
refunding  and  to  raise  the  required  cash  through  the  sale  of  a  short-term  issue  in 
the  maturitj-  area  vacated  by  the  advance  refunding. 

We  will  assume  that  the  $1  billion  of  1998  bonds  could  have  been  sold  for  cash 
in  the  present  market  with  a  4%  percent  coupon,  priced  at  par.  In  the  opinion 
of  the  "Treasury,  this  interest  cost  assumption  for  the  sale  of  such  a  large  quantity 
of  new  long-term  bonds  is  most  conservative.  Even  on  the  basis  of  this  conserva- 
tive assumption  the  total  interest  payments  on  these  4^4  percent  bonds  through 
their  maturity  in  1998  would  amount  to  $156.01  per  $100  of  bonds  sold. 


284   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Now  let  us  look  at  an  alternative  way  of  handling  the  situation  which,  as  I 
noted  earlier,  rather  closely  parallels  last  month's  advance  refunding  operation. 
It  is,  in  effect,  a  way  of  putting  an  issue  into  the  long-term  area  while  drawing 
funds  from  the  shorter-term  area.  This  is  done  by  wliat  some  market  observers 
have  called  "leap  frogging".  Not  all  of  the  leaps  may  occur  at  once;  but  to  make 
this  example  clear,  I  will  assume  that  they  do.  What  happens  is  that  a  10-year 
issue,  for  example,  is  converted  into  a  36-year  issue;  then,  following  behind  that, 
a  2-year  issue  is  converted  into  a  10-year  issue.  There  are  two  leaps  involved: 
one  from  10  out  to  36  years;  the  second  from  2  out  to  10  years.  In  effect,  the 
second  move  has  filled  in  the  space  vacated  when  the  first  move  occurred. 

After  that,  the  third  step  is  an  easy  one:  borrow  for  cash  at  a  two-year  maturity. 
In  the  end,  then,  the  Treasury  will  have  its  cash.  It  will  have  borrowed  the  cash 
at  the  two-year  rate  of  interest,  but  it  will  have  no  more  two-year  debt  outstanding 
than  before  the  operation  began.  Nor  will  it  have  any  more  10-year  debt  than 
before.     The  only  increase  will  have  occurred  in  the  36-year  debt. 

Now  let  me  repeat  the  example  more  precisely,  using  issues  and  prices  now  in  the 
market.  What  we  have  here  is  a  combination  "junior"  and  "senior"  advance 
refunding.  The  "senior"  portion  involves  the  advance  refunding  of  $1  billion 
of  2li  percent  bonds  maturing  in  1972  into  SK  percent  bonds  maturing  in  1998. 
To  fill  the  1972  vacancy  in  the  maturity  structure  created  by  this  "senior"  advance 
refunding,  there  is  a  "junior"  advance  refunding  of  3  percent  bonds  maturing  in 
1964  into  4  percent  bonds  maturing  in  1972.  Finally,  to  meet  the  $1  biUion  cash 
requirement,  the  1964  gap  in  the  maturity  structure  created  by  the  "junior" 
advance  refunding  is  filled  byselhng  for  cash  $1  biUionof  3J^  percent  notes  maturing 
in  1964. 

Adding  the  interest  payments  to  maturity  on  the  1964  note  which  we  would  sell 
for  cash,  and  the  interest  payments  on  the  1972  bonds  placed  through  the  "junior" 
advance  refunding  and  the  1998  bonds  placed  through  the  "senior"  advance 
refunding,  we  find  that  the  total  interest  cost  resulting  from  this  three-part  opera- 
tion over  the  entire  period  to  1998  is  $145.49  per  $100  borrowed.  Thus,  we 
would  have  achieved  our  objectives  of  raising  $1  billion  in  cash  and  placing  $1 
billion  in  bonds  out  in  the  1998  area  through  advance  refunding  at  a  total  interest 
cost  during  the  period  of  $10.52  less  per  $100  borrowed  than  if  we  had  issued 
$1  bilhon  of  4}i  percent  1998  bonds  directly  for  cash.  The  total  interest  cost 
savings  on  the  $1  bilhon  of  debt  would  have  amounted  to  $105.2  million. 

Moreover,  the  debt  management  objectives  would  have  been  achieved  without 
draining  new  long-term  funds  out  of  the  capital  markets  or  placing  any  overall 
upward  pressure  on  long-term  interest  rates. 

The  basic  reason  that  the  advance  refunding  approach  resulted  in  a  lower  total 
interest  cost  to  the  Treasury  is  that,  in  the  "senior"  advance  refunding,  holders  of 
the  1972  maturities  were  induced  to  extend  an  additional  26  years  with  a  3% 
percent  coupon,  ^4  of  1  percent  below  the  minimum  coupon  that  would  have  been 
required  for  a  direct  cash  sale  of  1998  bonds.  In  order  to  induce  the  holders  of  the 
1972  bonds  to  extend  to  1998  at  3.H  percent,  the  Treasury  had  to  offer  to  increase 
their  return  from  2}i  percent  to  3^^  percent  during  the  ten  years  from  1962  to 
1972,  but  this  was  an  exchange  that  the  Treasury  could  well  afford  to  make. 
It  represented  a  payment  of  1  percent  in  additional  interest  for  the  next  10  years 
in  return  for  a  saving  of  Yi  of  1  percent  in  interest  over  the  follo^^^ng  26  years — a 
fair  offer  but  no  bonanza. ' 

In  our  last  advance  refunding,  19  percent  of  the  pubhc  holdings  of  the  2]^^ 
percent  bonds  of  1967-72  were  exchanged  for  3/4  percent  bonds  maturing  in  1990 
and  1998.  This  was  a  response  with  which  the  Treasury  was  well  satisfied. 
But  if  this  had  been  a  windfall  offering,  something  which  involved  an  undeserved 
gain  for  the  investor,  one  would  have  to  conclude  that  American  investors  holding 
81  percent  of  the  bonds  did  not  know  a  windfall  when  they  saw  one,  because  81 
percent  of  the  bonds  were  not  exchanged. 

To  sum  up,  the  advance  refunding  offers  a  number  of  unique  advantages  to  the 
Treasury.  Through  this  device,  it  is  possible  to  put  out  substantial  quantities 
of  long-term  Treasury  bonds  with  the  least  possible  drain  of  new  long-term  funds 
out  of  private  investment  channels  and  with  the  minimum  of  upward  pressures 

1  The  calculated  interest  costs  and  interest  savings  in  the  five  advance  refundings  are  summarized  in  the 
tables  attached  to  the  appended  correspondence  with  Senator  Johm  J.  Williams. 


EXHIBITS 


285 


on  long-term  interest  rates.  In  addition,  this  technique  has  enabled  the  Treasury 
to  place  long-term  bonds  in  private  hands  at  lower  interest  costs  than  could  have 
been  possible  through  cash  offerings  or  regular  refunding  offerings  of  any  com- 
parable size.  To  be  sure,  as  market  conditions  shift  about,  there  will  be  times 
when  long-term  cash  issues  or  refunding  exchanges  will  also  be  appropriate. 
But  the  appraisal  will  depend  in  large  part  upon  analysis  of  alternatives  such  as  I 
have  tried  to  outline  here.  Clearly,  in  the  toolkit  of  debt  management,  advance 
refunding  must  be  recognized  as  an  instrument  of  major  importance. 

Advance  refunding  was  first  used  by  my  predecessor,  Secretary  Anderson,  who 
conducted  two  advance  refunding  operations  in  1960.  Last  month's  operation 
was  this  administration's  third  use  of  this  technique,  making  a  total  of  five  advance 
refundings  in  all.  These  advance  refunding  operations  have  accomplished  much 
in  producing  a  more  balanced  maturity  structure  for  the  debt.  The  average 
length  of  the  debt  today  is  4  years  and  II  months,  the  longest  it  has  been  since  the 
fall  of  1958.  If  the  five  advance  refundings  had  not  been  undertaken,  the  average 
length  of  the  debt  would  now  be  only  3  years  and  7  months,  almost  30  percent 
shorter  (see  chart  E).  We  now  have  $15.2  billion  in  outstanding  debt  maturing 
beyond  20  years.  $7.7  bilUon,  or  just  over  half  of  this  total,  was  placed  through 
advance  refunding. 

Chart  E 


^AVERAGE  LENGTH  OF  THE  MARKETABLE  PUBLIC  DEBTl, 


1  Adjusted  to  exclude  21.2%  bonds  exchanged  for  nonraarketable  2%%  bonds.    Partially  tax-exempt  bonds 
to  earliest  call  date;  a.l  other  callable  bonds  to  maturity. 

In  conclusion,  advance  refunding  is  a  technique  that  we  would  hope  to  use 
again  in  the  future,  whenever  circumstances  are  appropriate  for  its  use.  In  seeking 
to  conduct  our  debt  management  operations  in  a  responsible  manner,  we  will 
continue  to  be  mindful  of  the  need  to  minimize  the  interest  burden  of  the  debt, 
and  we  will  also  continue  to  be  mindful  that  our  debt  management  policies, 
through  their  impact  on  the  money  and  capital  markets,  must  contribute  toward 
our  major  economic  objectives  of  sound  economic  growth,  reasonable  price  stabil- 
ity, and  equihbrium  in  our  balance-of-payments  position. 


286   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Washington,  D.C,  March  5,  1962. 
Honorable  Douglas  Dillon, 
Secretary  of  the  Treasury, 
Washington  25,  D.C. 
My  Dear  Mr.  Secretary: 

In  connection  with  the  series  of  advance  refunding  operations  by  tne 
Treasury  Department  I  would  appreciate  the  following  information: 

1.  The  maturity  date  and  the  coupon  rate  of  the  outstanding  bonds  involved  in 

the  refunding  operation  and  the  maturity  date  and  coupon  rate  of  the  new 
bonds  offered  in  transfer. 

2.  The  total  amount  of  these  bonds  of  each  series  which  were  traded  for  the  new 

issue  (if  more  than  one  issue  is  involved  give  the  amount  involved  in  each 
transfer) . 

3.  In  connection  with  each  refunding  operation  please  furnish  the  total  amount 

of  additional  interest  which  will  be  paid  by  the  Government  to  these  new 
bondholders  during  the  period  between  the  date  of  the  refunding  operation 
and  the  original  date  of  maturity  of  the  bonds  traded  in. 

What  I  am  trying  to  establish  is  how  much  additional  interest  the  Federal 
Government  will  be  paying  during  the  next  five  to  ten  years  above  the  amount 
which  would  have  been  paid  had  these  low  coupon  bonds  been  allowed  to  mature 
in  a  normal  maimer. 

Yours  sincerely, 

John  J.  Williams, 
U.S.  Senator  fro7n  Delaware. 


Washington,  D.C.,  March  13,  1962. 
Dear  John: 

In  response  to  your  letter  of  March  5,  I  enclose  two  tables  which  provide  the 
information  you  requested  on  the  five  advance  refundings  which  the  Treasury 
has  undertaken  in  the  past  two  years. 

One  of  the  tables  presents  the  additional  interest  costs  incurred  by  the  Treasury 
in  the  five  advance  refundings.  In  addition,  it  shows  the  interest  savings  to  the 
Treasury  in  these  advance  refundings  on  the  assumption  that  the  original  issues 
are  to  be  refunded  at  maturity  into  the  issues  offered  in  exchange  at  today's  in- 
terest rate  levels.  Looking  at  both  the  additional  interest  costs  to  the  Treasury 
and  the  interest  savings  involved  in  advance  refundings  places  the  interest  cost 
issue  in  its  proper  perspective. 

You  will  note  that  only  the  June  1960  and  March  1961  "junior"  advance 
refundings  resulted  in  a  net  interest  cost  to  the  Treasury  on  these  assumptions 
and  that,  in  taking  the  five  advance  refundings  as  a  whole,  these  calculations  in- 
dicate a  net  interest  savings  to  the  Treasury  of  $541  million  over  the  entire  period 
through  fiscal  year  1999. 

With  best  wishes. 
Sincerely, 

Douglas  Dillon, 
Secretary  of  the  Treasury. 
The  Honorable  John  J.  Williams, 
United  States  Senate, 
Washington  25,  D.C. 


I 


EXHIBITS 


287 


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EXHIBITS 


289 


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-20 


290   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  16. — Statement  by  Secretary  of  the  Treasury  Dillon,  June  26,  1962, 
before  the  Senate  Finance  Committee  on  the  debt  limit  ^ 

Tho  President  in  his  Budget  Message  last  January  requested  a  temporarj' 
debt  limit  of  $308  billion  for  fiscal  1963.  This  request  was  based  on  his  estimate 
that  the  fiscal  1962  deficit  would  amount  to  $7  billion  and  that  there  would  be  a 
$500  million  surplus  in  fiscal  1963.  I  am  here  today  to  renew  the  request  for  a 
$308  billion  temporary  debt  limit  for  fiscal  year  1963. 

The  present  temporary  limit  of  $300  billion  will  expire  at  the  end  of  this  month. 
On  July  1st  the  debt  limit  will  revert  to  its  permanent  level  of  $285  billion  unless 
new  legislation  has  been  enacted  prior  thereto.  Since  the  debt  will  substantially 
exceed  the  permanent  level  of  $285  billion  on  July  1st,  it  is  essential  that  there 
be  new  legislation  prior  to  that  date. 

The  debt  limit  bill  which  passed  the  House  of  Representatives  on  June  14, 
1962  (H.R.  11990)  does  not  provide  the  flat  $308  billion  debt  limit  which  we 
requested  for  fiscal  1963.  Rather,  it  provides  a  graduated  debt  limit  set  at 
$308  biUiou  for  the  period  Julv  1,  1962,  through  March  31,  1963,  $305  billion 
for  the  period  April  1,  1963,  through  June  24,  1963,  and  $300  billion  from  June  25, 
1963,  through  the  end  of  the  fiscal  year.  This  graduated  debt  limit  is  acceptable 
to  the  Treasury,  provided  that  it  is  understood  that  the  debt  ceilings  in  the 
House  bill  were  carefully  tailored  to  meet  the  Treasury's  seasonal  financial 
requirements  under  the  assumption  of  a  balanced  budget.  The  graduated 
reductions  established  in  the  House  bill  would  not  be  adecjuate  if  we  were  to 
run  a  deficit  of  any  substantial  size  in  fiscal  1963.  This  fact  was  specifically 
recognized  and  clearly  set  forth  in  the  report  of  the  House  Waj^s  and  Means 
Committee,  which  reads  as  follows  (page  2) : 

"*  *  *  it  is  the  view  of  your  committee  that  the  increases  provided  by  this 
bill  are  the  minimum  necessary  to  provide  for  the  seasonal  variation  in  the 
collection  of  revenues,  assuming  a  balanced  budget  for  the  fiscal  year  1963. 
The  administration  has  indicated  that  there  may  be  a  balanced  budget  for 
the  fiscal  year  1963.  Your  committee  has  concluded  that  the  series  of  debt 
limitations  provided  under  this  bill  for  the  various  periods  of  the  year  will 
be  adequate  to  provide  for  the  expected  seasonal  variation  in  expenditures 
and  receipts,  but  would  not  give  sufficient  flexibility  should  a  deficit  be 
incurred  in  the  fiscal  year  1963.  In  this  latter  eventuality,  your  committee 
believes  that  it  will  be  appropriate  later  in  the  fiscal  year  1963  to  again 
review  the  statutory  debt  limitation.  Thus  this  'step  approach'  to  the  debt 
limitation,  with  tho  two  reductions  in  the  latter  part  of  the  fiscal  year,  is 
flesigned  to  provide  for  seasonal  needs,  without  providing  so  much  leeway 
that  it  can  subsequently  be  used  to  cover  deficit  financing." 

This  statement  by  the  House  Ways  and  Means  Committee  regarding  the  nature 
of  the  graduated  set  of  debt  limits  passed  by  the  House  is,  I  believe,  wholly 
accurate. 

With  the  fiscal  year  1962  now  nearly  concluded,  I  can  report  to  you  that  we 
still  expect  the  deficit  for  fiscal  1962  to  be  about  $7  liillion.  Past  experience 
has  shown,  however,  that  fiscal  yearend  totals  are  apt  to  vary  several  hundred 
million  dollars  in  either  direction  from  preliminary  estimates.  Therefore,  the 
final  deficit  figure  for  fiscal  1962  may  prove  to  be  somewhat  less  than  $7  billion 
or  it  may  exceed  that  amount  by  a  few  hundred  million  dollars.  In  order  to  be 
on  the  conservative  side,  we  have  used  a  $7}^  billion  figure  in  the  projections  on 
the  attached  table. 

For  fiscal  year  1963,  the  January  Budget  document  showed  a  $500  million 
surplus.  The  President  has  requested  a  few  new  programs  since  Jainiary,  in 
particular  a  capital  improvement  program  for  distressed  areas,  that  would  use 
the  bulk  of  this  estimated  surplus  biit  still  leave  a  balance.  Whether  or  not  this 
balance  is  actually  achieved  depends  largely  on  revenue  receipts  which,  in  turn, 
are  dependent  on  the  state  of  the  national  economy.  The  January  revenue 
estimate  of  $93  billion  assumed  that  the  gross  national  product  would  average 


'  The  Socrotary  also  made  a  statement  on  May  31,  1962,  before  tlic  House  Ways  and  Means  Committee 
on  the  debt  limit. 


EXHIBITS  291 

$570  billion  during  calendar  1962  and  that  the  economy  would  continue  its 
upward  trend  throughout  the  entire  fiscal  year. 

Admittedly,  the  expansion  of  the  economy  so  far  this  year  has  not  measured 
up  to  our  expectations.  While  this  has  substantially  diminished  the  likelihood 
of  achieving  our  goals,  the  economy  continues  to  move  steadily  forward  and  it  is 
still  too  early  for  a  new  and  refined  estimate  of  the  gross  national  product  for 
1962  upon  which  our  revenues  necessarily  depend.  As  to  expenditures,  the  best 
we  can  do  is  to  rely  on  the  January  Budget  document  with  the  realization  that 
Congress  has  not  yet  acted  on  any  1963  appropriation  bill,  nor  has  it  taken  final 
action  on  our  tax  bill,  the  President's  proposals  on  postal  rates  and  farm  price 
supports,  or  on  various  other  legislative  recommendations.  Until  these  matters 
are  decided  by  congressional  action,  there  is  no  firm  basis  for  any  new  estimate 
of  expenditures  and  revenues. 

Accordingl}^,  we  have  made  no  change  in  the  basic  assumption  of  a  balanced 
budget  in  fiscal  1963,  and  our  request  for  a  $308  billion  temporary  debt  ceiling 
is  based  squarely  on  that  assumption. 

It  may  seem  incongruous  to  some  that,  while  projecting  a  balanced  budget  for 
fiscal  1963,  we  are  at  the  same  time  requesting  an  $8  billion  increase  in 
the  temporary  debt  ceiling.  Of  course,  if  the  timing  of  our  receipts  and  expendi- 
tures were  in  balance  throughout  the  year,  there  would  be  no  need  for  this  increase 
in  the  debt  ceiling.  Unfortunately,  this  is  never  the  case.  Even  with  a  balanced 
budget  for  fiscal  1963  as  a  whole,  our  estimates  indicate  that  the  first  half  of  the 
fiscal  year  will  show  a  substantial  seasonal  deficit,  a  deficit  which  will  be  off'set 
by  a  surplus  during  the  remainder  of  the  fiscal  year. 

Specifically,  our  projections  indicate  a  seasonal  cash  deficit  which  reaches  a 
peak  of  $11.2  billion  on  December  15,  just  before  the  receipt  of  the  large  tax 
payments  due  on  that  date.  Succeeding  peaks  of  $11  billion  and  $10.7  billion 
will  be  reached  on  January  15  and  March  15,  before  the  receipt  of  the  substantial 
tax  payments  due  on  those  dates.  Thereafter,  this  seasonal  deficit  will  rapidly 
be  erased  by  a  similarly  large  seasonal  surplus;  and  by  June  30,  1963,  our  pro- 
jections show  the  debt  returning  to  approximately  the  same  level  as  June  30,  1962. 

This  seasonal  imbalance  between  receipts  and  expenditures  is  illustrated  on 
an  attached  chart.  The  imbalance  in  fiscal  1963  is  entirely  attributable  to  the 
marked  seasonal  pattern  of  our  tax  receipts,  since  expenditures  are  projected  at 
a  fairly  constant  level  throughout  the  fiscal  year.  It  is  to  finance  this  seasonal 
deficit  of  $11  billion  in  tax  receipts,  a  deficit  which  will  occur  even  with  a  fully 
balanced  budget,  that  we  need  the  $8  billion  increase  in  the  temporary  debt  limit. 
It  should  be  borne  in  mind  that,  since  the  chart  is  based  on  semiannual  figures 
which  include  the  heavy  December  15  tax  receipts,  it  understates  by  several  billion 
dollars  the  seasonal  swing  which  reaches  its  peak  in  mid- December. 

As  the  attached  table  indicates,  we  are  ending  the  current  fiscal  year  with 
a  debt  projected  at  about  $294  billion.  Adding  the  $3  billion  allowance  for  flexi- 
bility to  this  figure,  gives  a  total  of  about  $297  billion,  $3  billion  under  the  current 
temporary  debt  limit  of  $300  billion.  It  is  because  of  this  extra  leeway  of  $3 
billion  which  we  will  have  on  June  30th  that  we  will  be  able  to  finance  a  seasonal 
deficit  of  $11  billion  with  an  $8  billion  increase  in  the  debt  limit. 

The  seasonal  imbalance  between  Federal  Government  receipts  and  expenditures 
is  a  regular  feature  of  our  financial  mechanism.  It  is  not  just  something  that  will 
occur  in  fiscal  1963.  I  would  like  to  call  your  attention  again  to  the  chart  which 
shows  semiannual  receipts  and  expenditures  from  fiscal  1958  through  fiscal  1963. 
You  will  note  that  a  pronounced  seasonal  pattern  in  revenues  shows  up  in  each 
and  every  year.  It  was  as  much  in  evidence  in  fiscal  1960,  when  we  last  ran  a 
budget  surplus,  as  it  was  in  years  when  we  ran  budget  deficits. 

On  the  assumption  of  a  constant  $4  billion  operating  balance,  we  expect  the 
debt  to  rise  to  about  $305  billion  before  dropping  back  again  to  around  $294 
billion  at  the  end  of  fiscal  1963.  A  $308  billion  debt  ceiling  is  the  minimum 
needed  to  provide  us  with  the  usual  $3  billion  leeway  for  flexibility  in  debt  man- 
agement and  for  unforeseen  contingencies,  a  margin  which  prudent  and  economic 
financial  management  requires. 

The  bill  which  passed  the  House  embodies  a  formal  recognition  of  the  seasonal 
variation  in  Federal  Government  revenues  by  proposing,  for  the  first  time,  sea- 
sonal  debt   limits.     While   we   would   prefer  the  simpler,   overall   annual   debt 


292   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

limit  such  as  wc  have  had  in  the  past,  we  recognize  that  the  House  bill  does  have 
the  characteristic  of  setting  forth  very  clearly  the  seasonal  nature  of  the  Treasury's 
borrowing  requirements  vinder  the  assumption  of  a  balanced  budget  in  fiscal  1963. 

The  Treasury's  operating  cash  balance  consists  essentially  of  funds  on  deposit 
at  the  twelve  Federal  Reserve  Banks  and  in  approximately  11,400  commercial 
banks  throughout  the  country.  For  the  past  few  years  the  Treasury,  in  its 
presentations  at  hearings  on  the  debt  limit,  has  assumed  a  $3.5  billion  constant 
operating  cash  balance.  Experience  has  shown  that  this  is  an  unrealistically  low 
figure.  With  careful  management  to  have  the  necessary  funds  on  hand  in  the 
proper  places  and  at  the  proper  times  to  meet  the  Government's  obligations  as 
they  come  due  and  with  every  effort  to  avoid  excess  cash  balances,  our  average 
operating  cash  balance  (excluding  gold)  for  the  first  eleven  months  of  this  fiscal 
year  was  $4,755  million.  The  average  for  fiscal  year  1961  was  $4,620  million 
and  for  fiscal  year  1960  it  was  $4,638  million.  In  1958,  when  the  $3.5  billion  figure 
was  first  used  for  illustrative  purposes,  Federal  expenditures  amounted  to  $71.4 
billion.  Fiscal  year  1963  expenditures  are  expected  to  be  some  30  percent  larger. 
With  larger  expenditures,  we  require  larger  operating  cash  balances.  For  these 
reasons,  we  have  used  a  $4  billion  figure  in  the  attached  tables  as  a  conservative 
figure  for  a  constant  operating  balance.  That  this  figure  is  truly  conservative 
can  readily  be  seen  by  the  fact  that  a  30  percent  increase,  comparable  to  the  in- 
crease in  budget  expenditures  between  fiscal  1958  and  fiscal  1963,  would  have  indi- 
cated a  figure  of  $4' 4  billion,  a  figure  substantially  closer  to,  but  still  lower  than, 
the  actual  average  of  our  operating  balance  during  each  of  the  past  three  years. 
An  operating  balance  at  least  as  large  as  the  average  of  the  past  three  years  is 
needed  to  permit  the  day-to-day  operations  of  the  Treasury  to  be  conducted  in 
an  efficient  manner. 

Our  estimates  also  provide,  as  in  the  past,  for  a  $3  billion  margin  to  provide 
much  needed  flexibility  in  debt  management  and  to  cover  unforeseen  contin- 
gencies, including  the  inescapable  uncertainties  in  our  month-to-month  projec- 
tions of  revenues  and  expenditures.  Since  the  assumed  cash  balance  of  $4  billion 
is  over  $500  million  less  than  our  actual  needs,  this  margin  of  flexibility  in  practice 
works  out  to  less  than  $25-^  billion.  Such  a  margin  for  flexibility  is  the  minimum 
needed  for  the  efficient  management  of  the  public  debt.  It  is  not  in  the  public 
interest  to  require  the  Treasury  to  operate  with  a  smaller  margin  under  the  debt 
limit.  The  end  result  of  an  excessively  tight  debt  limit  is  likely  to  be  higher 
interest  costs  on  the  debt  and  other  serious  consequences,  not  only  in  our  domestic 
affairs,  but  also  in  our  balance-of-payments  position  and  its  related  effect  on  our 
gold  stock. 

I  would  like  to  give  j^ou  a  few  examples  to  illustrate  why  the  $3  billion  margin 
for  flexibility  is  so  essential  for  efficient  debt  management.  First,  the  Treasury 
should  be  able  to  take  advantage  of  especially  favorable  conditions  in  the  money 
and  capital  markets  whenever  they  arise.  However,  an  excessively  tight  debt 
limit  may  prevent  the  Treasury  from  timing  its  borrowing  operations  most 
advantageously  and  the  opportunity  to  make  important  savings  on  interest 
costs  would,  therefore,  be  lost. 

Second,  in  conducting  our  debt  management  operations  during  the  past  seven- 
teen months  we  have  been  very  conscious  of  the  impact  of  these  operations  on 
our  balance-of-payments  position.  It  is  of  critical  importance  to  our  international 
financial  position  that  our  short-term  interest  rate  structure  be  in  reasonable 
equilibrium  with  short-term  rates  abroad.  If  this  equilibrium  is  not  maintained, 
funds  are  induced  to  flow  abroad  seeking  interest  rate  differentials,  thus  increasing 
the  drain  on  our  gold  stock.  In  order  to  avoid  any  disturbance  of  this  equilibrium, 
the  Treasury  has  arranged  its  recent  cash  borrowing  so  as  to  permit  the  maximmn 
use  of  additional  quantities  of  Treasury  bills.  It  is  vitally  important  that  the 
Treasury  have  enough  room  under  the  debt  limit  to  take  such  actions  whenever 
market  conditions  warrant.  To  deny  the  Treasury  a  sufficient  margin  for  such 
debt  operations  could  result  in  substantial  and  unnecessary  drains  on  our  gold 
stock. 

Third,  it  may  often  be  in  the  best  interest  of  both  the  Government  and  the 
private  capital  markets  if  the  Treasury  consolidates  some  of  its  refunding  opera- 
tions.    For  example,  in  refunding  the  $7.2  biflion  in  securities    maturing    this 


EXHIBITS  293 

coming  November  15,  it  may  be  advantageous  to  make  the  same  refunding  offer 
to  the  holders  of  the  $2.3  billion  of  securities  maturing  December  15.  An  exces- 
sively tight  debt  limit  could  prevent  us  from  using  the  cash  refunding  approach 
in  handling  such  an  operation,  even  though  market  conditions  might  suggest  that 
a  cash  refunding  operation  would  be  most  advantageous  to  the  Treasury. 

Fourth,  if  the  debt  limit  becomes  exceedingly  binding,  the  Treasury  might  have 
to  do  some  of  its  financing  through  the  sale  of  nonguaranteed  issues  of  Federal 
agencies  which  are  not  subject  to  the  debt  limit.  This  was  done  back  in  October 
1957  and  January  1958,  under  the  preceding  administration,  when  the  Treasury 
was  struggling  to  live  with  an  unrealistically  low  debt  limit.  This  is  a  very 
unsound  financial  practice  which  has  been  severely  criticized  by  the  Comptroller 
General.  It  means  that  the  Government  has  to  pay  }i  percent  to  ^1  percent  more 
in  interest  costs  than  it  would  have  to  pay  on  Treasury  obligations.  Secretary 
Anderson  used  this  device  only  with  the  greatest  reluctance.  I  would  hope  that 
we  would  never  again  be  forced  to  use  it. 

For  all  of  these  reasons,  a  sufficient  margin  for  flexibility  in  debt  management 
and  for  contingencies  is  essential  if  we  are  to  have  efficient  and  economical 
management  of  the  Government's  finances. 

The  level  of  the  debt  is  the  resultant  of  all  of  our  past  decisions  on  appropriations, 
expenditures,  and  taxes.  However,  it  is  important  to  recognize  that  these  deci- 
sions are  reflected  in  the  debt  only  after  a  considerable  time  lag.  The  time  lag 
between  decisions  on  appropriations  and  the  impact  of  those  decisions  on  the  debt 
is,  in  fact,  the  reason  why  we  need  a  substantial  increase  in  the  debt  limit  in 
fiscal  1963  even  under  the  assumption  of  a  balanced  budget.  The  increased  debt 
level  during  the  coming  fiscal  year  is  a  product  of  the  deficit  in  fiscal  1962.  If  we 
have  a  balanced  budget  in  fiscal  1963  and,  a  year  from  now,  contemplate  a 
balanced  budget  for  fiscal  1964,  we  could  get  by  in  fiscal  1964  with  the  same  $308 
billion  debt  limit  which  we  are  requesting  now. 

The  level  of  the  debt  is  the  final  link  in  a  sequential  chain  which  has  as  its  first 
link  the  appropriations  process.  Debt  levels  in  the  future  are  the  product  of 
past  decisions  on  appropriations  and  taxes  and  the  debt  ceiling  must  be  consistent 
with  those  past  decisions. 

In  conclusion,  I  wish  to  reemphasize  that  the  increase  in  the  debt  ceiling  to 
$308  billion  is  based  on  the  assumption  of  a  balanced  budget  in  fiscal  1963.  The 
last  attached  table  shows  monthly  estimates  of  budget  receipts  and  expenditures 
in  fiscal  1963,  under  a  balanced  budget  assumption,  and  their  relationship  to  our 
month-end  debt  projections.  The  $8  billion  increase  in  the  temporary  debt 
ceiling  is  required  to  cover  the  seasonal  low  in  receipts,  which  always  occurs 
during  the  first  half  of  the  fiscal  year.  Such  an  increase  is  needed  in  fiscal  1963 
because  of  the  substantial  deficit  which  has  already  been  incurred  in  fiscal  1962. 
In  other  words,  the  increase  is  being  requested  to  meet  the  fiscal  consequences  of 
past  deficits  and  does  not  reflect  the  expectation  of  a  deficit  in  fiscal  1963. 

There  are  those  who  think  our  revenue  estimates  for  fiscal  1963  are  too  opti- 
mistic, and  certainly  they  look  more  optimistic  today  than  they  did  last  January. 
In  April  the  staff  of  the  Joint  Committee  on  Internal  Revenue  Taxation,  on  the 
basis  of  its  independent  revenue  projections,  estimated  that  fiscal  1963  would 
produce  an  administrative  budget  deficit  of  $4.9  billion,  assuming  that  the 
administration's  tax  bill  is  approved  by  the  Congress.  I  will  not  attempt  to  evalu- 
ate this  estimate,  since  I  have  already  given  you  the  reasons  why  we  feel  that  there 
is  no  firm  basis,  as  yet,  for  revising  the  estimates  presented  in  the  President's 
Budget  Message.  I  raise  the  issue  only  to  emphasize  that  if  the  budget  deficit 
forecast  for  fiscal  1963  by  the  staff  of  the  Joint  Committee  on  Internal  Revenue 
Taxation  should  prove  to  be  correct,  the  graduated  set  of  debt  ceilings  approved 
by  the  House  will  not  be  adequate  to  meet  the  Treasury's  needs,  and  we  will  be 
forced  to  return  to  the  Congress  early  in  the  next  session,  as  was  envisioned  by 
the  report  of  the  Ways  and  Means  Committee. 

A  temporary  increase  in  the  debt  limit  to  $308  billion,  as  provided  by  the 
House  in  the  bill  before  you,  is  the  absolute  minimum  needed  if  the  Government's 
finances  are  to  be  managed  in  an  orderly  and  economical  manner  and  if  we  are  to 
be  able  to  finance  our  purely  seasonal  cash  requirements  in  fiscal  1963  within  the 
framework  of  a  balanced  budget.  I  earnestly  recommend  its  approval  by  this 
committee. 


294   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Actual  public  debt  outstanding  fiscal  year  1962,  ivith  June  30,  1962,  estimate  based  on 
operating  cash  balance  of  $4,000,000,000  {excluding  free  gold) 

[In  billions,  based  on  projection  of  June  22,  1962] 


Date 

Operating  balance 
Federal  Reserve 

Banks  and  deposi- 
taries (excluding 
free  gold) 

Public  debt  subject 
to  limitation 

A  llowance  to  pro- 
vide flexibility  in 
financing  and  for 
contingencies 

Total  public  debt 
limitation  required 

Actual 

July  15,  1961 

$3.3 
5.8 
4.2 
5.3 
3.1 
8.1 
7.0 
5.4 
4.7 
5.4 
2.8 
5.6 

3.1 
3.9 
3.0 
4.6 
2.7 
6.0 
2.2 
4.7 
5.6 
7.2 
5.2 

$289. 1 
292.2 
292.1 
293.5 
293.2 
293,6 
296.0 
295.5 
296.7 
296.9 
297.0 
296.1 

296.3 
296.4 
296.3 
296.9 
297.8 
296.1 
295,8 
296.9 
296.7 
299.2 
299.4 

July  31 

Aug.  15  . 

Aug.  31 

Sept.  15 

Sept.  30 

Oct.  15 

Oct.  31 

Nov.  15 

Nov.  30 

Dec.  15 

\ 

Dec.  31 

Jan.  15, 1962 

Jan.  31 

Feb.  15 

Feb.  28    . 

Mar.  15 

Mar.  31 

Apr.  15 

Apr.  30 

May  15 

May  31 

.Tnnp.  '\f\ 

Estimated 

June  30 

4.0 

293.7 

$3.0 

$296.  7 

Note:  For  seasonal  reasons  the  June  30,  1962,  operating  balance  will  be  significantly  above  $4.0  billion,  so 
the  actual  debt  outstanding  will  be  higher  than  shown  lierc. 


EXHIBITS 


295 


SEMIANNUAL  BUDGET  RECEIPTS  AND  EXPENDITURES 

Fiscal  I958-63 


$Bil. 


40 


20 


Expenditures 


Receipts^ 


336 


39.4 


July-  Jan.-  July-  Jan.-  July-  Jon.-  July-  Jan.- 
Dec.  June  Dec.  June  Dec.  June  Dec.  June 
^1958^    ^—'59 —     —'60 —     61  — 


July-      Jan.-      July-      Jan- 
Dec.      June^    Dec.^     June^ 
—  62— -    —•63  — 


1  Net  receipts  after  refunds. 

2  May  1962  estimate. 

3  Estimates  on  basis  of  January  1962  Budget  Message  plus  formal  modifications. 

Forecast  of  public  debt  outstanding  fiscal  year  1963,  based  on  constant  operating  cash 
balance  of  $4,000,000,000  {excluding  free  gold) 


[In  billions,  based  on  1963  Budget  document— plus  formal  modifications] 

Date 

Operating  balance 
Federal  Reserve 

Banks  and  deposi- 
taries (excluding 
free  gold) 

Public  debt  subject 
to  limitation 

Allowance  to  pro- 
vide flexibility  in 
financing  and  for 
contingencies 

Total  public  debt 
limitation  required 

1962 
June  30 

$4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 

4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 
4.0 

$293.  7 
297.0 
297.8 
299.2 
299.0 
301.2 
295.7 
299.  5 
300.5 
302.3 
302.1 
304.9 
301.5 

304.7 
302.1 
302.8 
302.0 
304.4 
297.9 
301.0 
299.4 
299.4 
299.6 
302.0 
294.0 

11 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 

3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 
3.0 

$296. 7 

July  15 

300.0 

July  31.. 

300.8 

Aug.  15 

302.2 

Aug.  31... 

302.0 

Sept.  15 

Sept.  30  . 

304.2 

298.7 

Oct.  15. 

Oct.  31 

Nov.  15 

302.5 
303.5 
305.3 

Nov.  30 

305.1 

Dec.  15 

307.9 

Dec.  31 

304.5 

196S 
Jan. 15 

307.7 

Jan.  31 

305.1 

Feb.  15.. 

305.8 

Feb.  28 

305.0 

Mar.  15  . 

307.4 

Mar.  31 

300.9 

Apr.  15.  . 

304.0 

Apr.  30 

302.4 

May  15.. 

302.4 

May  31 

302.6 

June  15     . 

305.0 

June30  

297.0 

296   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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EXHIBITS  297 

Taxation  Developments 

Exhibit  17. — Statement  by  the  President,  October  16,  1962,  on  signing  H.R. 

10650,  the  Revenue  Act  of  1962 

I  have  today  signed  H.  R.  10650,  the  Revenue  Act  of  1962. 

This  is  an  important  bill — one  possessing  many  desirable  features  which  will 
stimulate  the  economy  and  provide  a  greater  measure  of  fairness  in  our  tax  sytem. 

The  bill  provides  an  investment  tax  credit.  In  combination  with  the  recently 
revised  guidelines  for  depreciation  of  assets,  this  credit  will  provide  added  stimulus 
to  investment  in  machinery  and  equipment,  and  give  American  firms  tax  treat- 
ment which  compares  favorably  with  their  competitors  in  world  markets. 

It  includes  several  provisions  designed  to  reduce  tax  avoidance  on  incomes 
earned  by  American  companies  and  individuals  at  home  and  abroad.  By  limiting 
the  opportunities  to  escape  tax  liability,  it  makes  the  distribution  of  tax  burdens 
fairer  and  increases  our  total  tax  revenues  from  those  sources. 

Congress  did  not  adopt  the  withholding  system  on  interest  and  dividend  income 
which  I  had  recoinmended.  However,  as  automatic  data  processing  is  installed 
by  the  Internal  Revenue  Service,  the  interest  and  dividend  reporting  requirements 
in  the  bill  will  be  helpful  in  improving  compliance  with  the  tax  laws  on  these 
sources  of  income. 

In  summary,  this  bill  makes  a  good  start  on  bringing  our  tax  structure  up  to 
date  and  provides  a  favorable  context  for  the  overall  tax  reform  program  I  intend 
to  propose  to  the  next  Congress. 


Exhibit  18. — Statement  by  Secretary  of  the  Treasury  Dillon,  January  18,  1962, 
before  the  Joint  Committee  on  Internal  Revenue  Taxation  on  depreciation 
reform 

I  am  happy  to  have  this  opportunity  to  appear  before  this  committee  to  dis- 
cuss the  work  the  Treasury  has  been  doing  in  the  area  of  depreciation  reform. 
As  you  know,  the  first  step  of  this  reform  was  completed  last  fall  with  the 
announcement  of  new  depreciation  guidelines  for  a  major  part  of  the  textile  indus- 
try. A  further  step  was  taken  this  week  with  the  announcement  of  new  guide- 
lines for  machinery  and  equipment  used  by  apparel  manufacturers.  This  spring 
we  plan  to  announce  new  guidelines  for  major  types  of  assets  for  all  other 
industries. 

The  changes  being  made  will  assist  American  business  in  its  efforts  to  modern- 
ize and  expand.  The  law  calls  for  a  reasonable  allowance  for  depreciation, 
including  a  recognition  of  obsolescence  as  a  factor.  The  new  guidelines  will  be 
designed  to  meet  this  requirement. 

The  new  guidelines  will  be  based  on  three  major  sources  of  information.  The 
first,  initiated  by  my  predecessor,  is  a  survey  of  business  opinion  and  practice 
regarding  depreciation.  The  second,  also  started  by  Secretary  Anderson,  is  a 
study  based  on  information  drawn  from  corporate  tax  returns.  This  was  designed 
to  supply  additional  data  on  actual  current  experience.  The  third,  begun  late 
last  year,  is  a  group  of  engineering  studies  of  six  major  industries  aimed  at  supple- 
menting the  statistical  data.  In  addition,  we  have  studied  foreign  depreciation 
laws  and  practices. 

Although  our  work  has  not  been  completed,  there  is  sufficient  evidence  to 
indicate  a  real  need  for  revision.  We  also  plan  to  establish  procedures  for  con- 
tinuous review  and  revision  of  the  new  guidelines  to  take  account  of  current 
developments  affecting  depreciation. 

This  admistrative  revision  of  depreciation — if  complemented  by  the  invest- 
ment credit  now  before  the  Congress — will  place  American  industry  on  a  sub- 
stantially equal  footing  with  its  foreign  competitors. 

Introduction 

Depreciation  is  one  of  the  most  difficult  items  of  business  costs  to  deal  with 
under  income  tax  accounting.  As  a  charge  against  income  or  addition  to  business 
costs,  it  is  designed  to  spread  the  cost  to  business  of  vising  depreciable  capital 
asset  over  their  useful  economic  lives.  Its  purpose  is  to  charge  to  each  accounting 
year  a  proportion  of  the  original  cost  of  each  asset  so  that  over  the  life  of  the 


298   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

asset  there  will  be  reflected  its   loss  of  value  due  to  wear  and  tear,  including 
the  destructive  force?  of  the  elements,  and  obsolescence. 

At  best,  the  depreciation  to  be  charged  against  each  year's  income  can  be 
only  an  informed  estimate.  Establishing  the  rate  at  which  any  given  asset  is 
to  be  depreciated  over  its  economically  useful  life  is  made  particularly  difficult 
by  the  fact  that  obsolescence  is  a  function  of  prospective  developments  and 
future  changes  in  technology,  wage  rates  relative  to  the  cost  of  capital,  com- 
petitive conditions,  consumer  tastes,  preferences  and  demand,  and  other  forces 
that  cannot  be  foreseen  with  accuracy.  And  it  is  not  surprising  that  depreciation 
for  income  tax  purposes  has  long  been  a  subject  of  controversy  among  accountants, 
economists,  and  lawyers,  and  between  the  taxpayer  and  those  responsible  for 
administration  of  the  income  tax.  In  consequence  it  is  appropriate  that  the 
general  rule  governing  depreciation,  as  set  forth  in  the  Internal  Revenue  Code 
of  1954,  states  only  that  "There  shall  be  allowed  as  a  depreciation  deduction  a 
reasonable  allowance  for  the  exhaustion,  wear  and  tear  (including  a  reasonable 
allowance  for  obsolescence)  *  *  *"  of  property  used  in  a  trade  or  business  or 
held  for  the  production  of  income. 

Brief  history  of  depreciation  under  the  income  tax 

Because  I  believe  that  the  history  of  administrative  and  legislative  procedures 
in  the  depreciation  area  will  help  to  place  the  present  situation  in  proper  focus, 
I  shall  briefly  describe  that  history. 

For  the  twenty  years  following  the  introduction  of  our  modern  income  tax, 
considerable  freedom  was  allowed  to  the  taxpayer  in  the  determination  of  de- 
preciation. Deductions  taken  by  taxpayers  for  depreciation  were  generally 
not  challenged  by  the  Internal  Revenue  Service  unless  it  could  be  shown  by 
clear  and  convincing  evidence  that  they  were  unreasonable.  Through  most  of 
this  period  tax  rates  were  relatively  low — the  top  rates  of  the  corporate  and 
personal  income  taxes,  for  example,  were  at  12.5  and  25  percent,  respectively^ — • 
and  depreciation  evoked  few  problems. 

However,  in  the  early  thirties  when  tax  rates  were  raised  substantially.  Congress 
became  very  much  concerned  about  the  level  of  depreciation  allowances.  In 
1933  a  subcommittee  of  the  Committee  on  Ways  and  Means  reviewed  deprecia- 
tion policy  in  connection  with  the  major  tax  revision  of  1934.  It  reported  that 
excessive  depreciation  was  being  taken  and  recommended  legislation  to  provide 
a  25  percent  across-the-board  reduction  in  depreciation  allowances  for  the  next 
three  years. 

The  Treasury  objected  to  this  approach  and  suggested  instead  that  it  be  per- 
mitted administrative  discretion  to  tighten  up  depreciation  allowances  in  a 
manner  which  would  be  more  equitable  than  an  arbitrary  and  broadside  per- 
centage reduction.  This  proposal  was  accepted  by  the  congressional  committees 
and  the  Treasury  proceeded  to  issue  its  now  rather  famous  T.  D.  4422.  This 
document  shifted  to  the  taxpayer  the  burden  of  proof  as  to  the  correctness  of 
depreciation  and  paved  the  way  for  redetermining  useful  lives  of  depreciable 
property  for  tax  purposes  along  more  stringent  lines.  Following  the  issuance 
of  T.D.  4422,  the  administration  of  depreciation  was  considerably  tightened, 
although  the  extent  of  readjustment  has  sometimes  been  exaggerated. 

Subsequently,  in  1942,  the  still  used  BuUetin  F  was  issued  as  a  guide  to  tax 
lives.  Conflict  and  controversy  between  taxpayers  and  administrative  officials 
continued,  although  eased  somewhat  by  several  developments. 

The  first  of  these  were  the  provisions  for  accelerated  amortization  for  defense 
and  defense  related  facilities,  adopted  as  emergency  measures  in  1940  and  again 
in  1950.  In  1946  more  general  administrative  approval  was  given  to  the  use 
of  the  150  percent  declining-balance  method  of  computing  depreciation.  A 
major  change  in  administrative  policy  was  introduced  in  1953.  This  new  policy, 
designed  to  reduce  controversies  over  depreciation,  was  contained  in  Revenue 
Rulings  90  and  91.     These  new  rulings  implied  in  large  measure  a  return  to 

§re-1934  arrangements.  They  stated,  in  eff"ect,  that  the  Internal  Revenue 
ervice  would  generally  not  disturb  depreciation  deductions  claimed  and  revenue 
agents  would  propose  adjustments  only  where  there  was  a  clear  and  convincing 
basis  for  a  change.  This  policy  has  since  been  incorporated  into  the  regulations 
under  the  1954  Internal  Revenue  Code. 

The  Revenue  Act  of  1954  marked  an  important  new  direction  in  depreciation 
policy.  New  liberalized  methods — ^the  declining-balance  method  at  twice  the 
corresponding  straight-line  rate  and  the  sum-of-the-years-digits  formula — were 


EXHIBITS  299 

specifically  authorized.  These  new  methods  permit  acceleration  of  the  timing 
of  deductions  for  depreciation  and  concentrate  more  of  the  capital  recovery  for 
tax  purposes  in  the  early  years  of  an  asset's  life.  However,  neither  the  1954 
Code  nor  administrative  policy  provided  changes  with  respect  to  useful  lives 
over  which  assets  might  be  written  off. 

In  the  period  following  the  1954  Code  liberalization  the  Treasury  continued 
to  study  the  question  of  useful  life  determination  and  possible  revision  of  Bulletin 
F.  It  was  recognized  that  Bulletin  F  was  outmoded,  but  the  task  of  carrying 
through  a  realistic  revision  proved  difficult. 

One  major  project  the  object  of  which  was  to  revise  Bulletin  F  was  undertaken 
by  the  Treasury  with  the  cooperation  of  nongovernment  advisers  in  the  years 
1956  to  1958.  This  project  provided  suggested  new  guideline  schedules  for  tax 
lives,  but  the  Treasury  believed  that  these  schedules  did  not  give  adequate  rec- 
ognition to  increasingly  rapid  obsolescence  and,  consequently,  did  not  indicate 
a  sufficient  shortening  of  useful  lives  in  many  cases. 

The  Treasury  depreciation  studies 

In  order  to  obtain  fuller  insight  into  the  problem,  the  Treasury,  in  1960,  ini- 
tiated two  major  studies  designed  to  provide  an  adequate  factual  background  on 
the  operation  of  existing  depreciation  practices  and  tax  lives  actually  being 
used.  We  have,  in  addition,  carefully  studied  depreciation  practices  in  nine  of 
the  other  leading  industrial  nations  of  the  world. 

Both  of  the  Treasury's  major  depreciation  studies  are  elaborate,  detailed, 
statistical  surveys.  One  is  based  on  a  questionnaire  survey  of  corporations. 
The  other  draws  its  data  from  a  tabulation  of  information  contained  in  the  de- 
preciation schedules  submitted  as  part  of  the  corporate  income  tax  returns  for 
1959.  These  studies  were  first  undertaken  on  a  pilot  study  basis  in  1959,  de- 
signed to  test  their  feasibility  and  to  perfect  statistical  procedures. 

The  Treasury  Depreciation  Survey 

In  July  1960  the  Treasury  Department  asked  approximately  2,700  large  cor- 
porations to  supply  information  on  the  amount  of  their  depreciable  assets,  reserves 
for  depreciation,  depreciation  deductions,  and  fully  depreciated  property,  as  well 
as  the  service  lives  being  used  in  the  depreciation  of  various  types  of  property, 
and  the  extent  to  which  the  new  methods  of  depreciation  permitted  under  the 
Internal  Revenue  Code  of  1954  had  been  adopted.  In  addition,  a  questionnaire 
was  distributed  to  these  corporations  requesting  information  on  depreciation 
practices,  experience  under  the  existing  law,  and  opinions  on  various  alternative 
proposals  for  revision  of  the  depreciation  system.  With  the  cooperation  of  the 
Small  Business  Administration,  the  questionnaire  portion  of  the  survey  material 
was  also  mailed  to  approximately  7,600  small  businesses.  Completed  returns 
were  received  from  about  2,000  of  the  large  corporations  and  1,300  of  the  smaller 
firms. 

A  preliminary  report  on  the  questionnaire  portion  of  this  survey,  dealing  chiefly 
with  business  opinions  on  alternative  approaches  to  depreciation  reform,  was 
issued  in  January  1961.  Early  in  1961  the  processing  of  the  statistical  data  was 
accelerated  and  by  the  fall  of  that  year,  thanks  to  the  prodigious  efforts  put  forth 
by  the  Statistics  Division  of  the  Internal  Revenue  Service,  the  compilations  of 
the  data  were  completed. 

These  compilations  provide  a  vast  mass  of  data  which  the  Treasury  is  inten- 
sively engaged  in  analyzing.  This  analysis  is  not  yet  complete,  but  some  indi- 
cations of  the  nature  of  the  findings  may  be  indicated  at  this  point.  The  1,900 
corporations  which  responded  with  usable  data  account  for  close  to  one-half  of  all 
corporate  depreciable  assets  and  approximately  half  of  all  corporate  depreciation 
charges  taken  in  1959. 

The  survey  results  available  at  this  date  indicate  that  in  general  depreciation 
charges  allowed  to  American  corporations  have  by  no  means  been  liberal.  This 
conclusion  is  based  on  two  major  findings.  One  is  that  the  amount  of  fully  de- 
preciated assets  reported  is  surprisingly  small.  The  other  is  that  the  ratio  of 
depreciation  reserves  to  gross  depreciable  assets  is  below  the  level  commonly 
accepted  as  a  measure  of  conservative  depreciation  practices. 

The  Life  of  Depreciable  Assets  Study 

Our  second  study,  designed  to  complement  the  Treasury  Depreciation  Survey, 
was  also  started  on  a  full  scale  in  1960  and  pursued  with  sharply  stepped-up 


300   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

intensity  after  the  beginning  of  1961.  This  study,  known  as  the  Life  of  Depre- 
ciable Assets  Study,  is  based  on  a  tabulation  of  the  detailed  depreciation  infor- 
mation submitted  on  1959  corporation  income  tax  returns.  The  data  are  drawn 
from  the  returns  of  a  large  representative  statistical  sample  of  more  then  50,000 
corporations.  It  is  designed  to  provide  more  detailed  information  by  asset  type, 
year  of  acquisition,  and  depreciation  method  used  than  that  obtained  from  the 
Treasury  Depreciation  Survey.  Moreover,  whereas  the  latter  provides  infor- 
mation primarily  for  corporations  with  assets  in  excess  of  $5  million,  the  LDA 
covers  the  full  range  of  corporations  classified  by  size. 

The  great  mass  of  data  provided  by  the  Life  of  Depreciable  Assets  Study  is 
indicated  by  the  fact  that  when  all  of  the  tabulations  have  been  delivered  to  the 
Treasury-  they  will  be  contained  in  a  pile  of  documents  that  will  stand  seven  feet 
high.  Final  deliveries  are  expected  within  the  next  few  weeks.  I  regard  this 
unprecedentedly  detailed  and  massive  compilation  of  data  as  a  potential  source 
of  information  of  great  value.  It  will  not  only  provide  hitherto  unavailable 
information  on  depreciation  practices,  but  it  will  also  be  extremely  useful  as  a 
source  of  information  that  has  not  been  available  in  the  past  on  many  aspects  of 
the  operation  of  our  corporate  economy. 

With  the  help  of  consultants  the  Treasury  is  proceeding  as  rapidly  as  possible 
with  the  analysis  of  the  data.  Our  findings  thus  far  tend  to  confirm  those  arrived 
at  on  the  basis  of  the  Treasury  Depreciation  Survey  in  that  they  too  tend  to  dem- 
onstrate that  the  existing  depreciation  guidelines  are  outmoded  and  in  need  of 
revision. 

The  engineering  studies 

In  order  to  supplement  the  statistical  data  being  developed  we  have  also 
undertaken  engineering  studies.  While  statistical  data  show  what  practice  has 
been,  engineering  studies  are  designed  to  disclose  the  nature  of  current  and  pro- 
spective technological  developments.  Internal  Revenue  Service  engineers  have 
completed  an  engineering  study  of  the  textile  industry  and  are  currently  engaged 
in  similar  studies  in  the  following  industries:  aircraft,  automobiles,  electrical 
machinery  and  equipment,  machine  tools,  railroads,  and  steel.  The  six  were 
selected  because  they  are  large,  basic  industries  and  because,  among  them,  they 
represent  major  types  of  U.S.  business  activity.  They  also  differ  widely  in  their 
level  of  automation  and  their  recent  experience  with  technological  change.  The 
studies  being  conducted  for  these  industries  are  expected  to  be  completed  by  the 
end  of  this  month. 

Because  of  their  importance  in  our  program  pf  jrevision  and  because  of  the 
widespread  publicity  which  has  been  accorded  to  them,  I  should  like  to  describe 
briefly  for  you  the  nature  of  our  engineering  studies. 

For  the  purpose  of  carrying  out  our  studies  of  the  industries  named,  seven  teams 
of  three  engineers  each  were  formed  and  each  team  was  assigned  to  conduct  a  study 
of  one  of  the  selected  industries.  Each  engineer  assigned  to  a  team  has  the  expe- 
rience and  training  which  qualify  him  to  render  expert  opinion  as  to  the  useful  life 
of  depreciable  assets  used  in  the  industry  under  study.  In  most  cases  the  engi- 
neering team  is  made  up  of  one  engineer  designated  by  the  Washington  office  and 
two  field  engineers. 

After  the  engineering  teams  were  formed,  they  were  assembled  in  the  national 
office  simultaneously  for  briefing  and  general  instructions.  At  that  time  each 
team  arranged  a  tentative  schedule  of  activities,  including  conferences  with  in- 
dustry personnel  and  inspection  trips  to  selected  representative  plants. 

The  selection  of  these  plants  has  been  subject  to  extreme  care,  so  as  to  insure 
access  to  the  greatest  possible  variety  of  operating  conditions  within  each  industrj'. 
Inspection  trips  involve  the  observation  of  actual  plant  operations  and  discussions 
with  management  officials  associated  with  each  plant.  The  discussions  are  de- 
signed to  elicit  management  views  as  to  the  useful  lives  they  believe  should  be 
assigned  to  various  items  of  depreciable  property.  In  order  to  secure  fullest 
cooperation,  all  visits  to  plants  have  been  preceded  by  letters  from  the  Com- 
missioner of  Internal  Revenue  to  the  appropriate  companj^  officials,  briefly 
exi)laining  the  project  and  requesting  cooperation  and  assistance. 

Our  engineers  seek  further  information  through  the  inspection  of  plant  records 


EXHIBITS  301 

of  purchases  and  retirements  of  machinery  and  equipment   and   other    records 
which  may  have  a  bearing  on  the  taxpayer's  operating  practices  and  policies. 

Another  source  of  information  being  used  is  the  major  supphers  of  machinery 
and  equipment  to  each  of  the  industries.  Officials  of  the  firms  producing  the 
various  types  of  capital  goods  are  being  interviewed  with  a  view  to  obtaining 
insights  into  technological  developments  which  may  be  expected  to  have  a  bearing 
on  the  useful  life  of  the  machinery  and  equipment  used  and  expected  to  be  used 
in  each  of  the  industries. 

Conferences  with  major  trade  associations  and  individual  firms  representing 
large  segments  of  these  industries  have  been  arranged.  At  these  conferences  tax- 
payers and  spokesmen  for  groups  of  taxpayers  have  been  encouraged  to  present 
briefs  supporting  each  industry's  position  with  respect  to  depreciation  policy. 
These  conferences  have  thus  far  proved  to  be  an  excellent  forum  for  the  exchange 
of  views  between  industry  representatives,  the  Treasury  and  the  technical  person- 
nel of  the  Internal  Revenue  Service. 

As  a  final  step,  an  engineering  report  is  being  prepared  by  each  of  the  industry 
teams,  setting  out  its  findings  and  recommendations  with  respect  to  the  average 
useful  lives  of  items  of  depreciable  property  used  in  the  industry  studied.  These 
reports  are  expected  to  reflect  the  expert  opinions  of  the  engineers,  after  giving 
full  consideration  to  all  of  the  factors  brought  into  the  picture. 

Depreciation  abroad 

Because  American  industry  does  not  operate  in  a  setting  entirely  of  our  own 
making,  but  is  actively  in  competition  at  home  and  abroad  with  foreign  producers, 
our  practices  with  respect  to  depreciation  policy  need  to  be  examined  in  the  light  of 
foreign  experience.  Thus  the  Treasury  has  gathered  a  substantial  amount  of  in- 
formation on  depreciation  practices  in  leading  foreign  industrial  nations  from  a 
wide  variety  of  published  and  unpublished  sources,  including  our  Embassy  person- 
nel and  officials  of  foreign  governments. 

In  today's  highly  competitive  world  we  find  widespread  use  of  initial  allowances 
and  incentive  allowances  supplementing  depreciation  charges.  Thus  for  the  major 
industrialized  nations  of  the  free  world,  Belgium,  Canada,  France,  West  Germany, 
Italy,  Japan,  the  Netherlands,  Sweden,  and  the  United  Kingdom,  we  have  assem- 
bled reliable  information  with  respect  not  only  to  depreciation  practices,  but  also 
regarding  initial  and  incentive  allowances. 

The  information  presented  in  the  first  column  of  Table  I  shows  that  the  typical 
or  representative  tax  life  permitted  with  respect  to  production  machinery  and 
equipment  in  each  of  these  countries,  except  Japan  and  the  United  Kingdom,  is 
substantially  lower  than  it  is  in  the  United  States.  Moreover,  in  addition  to 
ordinary  depreciation,  Belgium,  the  Netherlands,  the  United  Kingdom,  and  under 
certain  "conditions,  Sweden,  permit  the  deduction  from  income  of  incentive  allow- 
ances. Initial  allowances,  which  add  very  appreciably  to  the  deduction  that  may 
be  taken  in  the  year  of  acquisition  of  a  depreciable  asset,  are  permitted  in  Canada, 
Italy,  Japan,  the  Netherlands,  Sweden,  and  the  United  Kingdom. 

The  impact  of  ordinary  depreciation  plus  initial  and  incentive  allowances  on  the 
amounts  that  may  be  deducted  in  the  year  in  which  a  new  asset  is  acquired  is 
shown  in  the  second  column  of  the  table.  Here  it  may  be  seen  that  the  percentage 
of  the  cost  of  an  asset  that  may  be  deducted  in  the  first  year  ranges  from  20  percent 
in  West  Germany  to  43.4  percent  in  Japan,  compared  with  as  low  as  10.5  percent 
in  the  United  States. 

Columns  3  and  14  of  Table  I  show  the  percentage  of  the  cost  of  the  asset  that 
may  be  deducted  during  the  first  two  and  first  five  years  of  its  life.  Here,  again, 
it  may  be  seen  that  the  deductions  permitted  in  each  of  the  nine  industrialized 
foreign  countries  comprise  a  far  higher  proportion  of  the  cost  of  industrial  machin- 
ery and  equipment  than  is  permitted  under  current  law  and  practices  in  the 
United  States.  For  the  first  five  years  of  the  life  of  the  asset,  the  relevant  propor- 
tion falls  within  the  range  of  60  to  70  percent  for  West  Germany,  Japan,  and  the 
United  Kingdom,  between  70  and  80  percent  for  Canada  and  France,  and  85  to  as 
much  as  100  percent  for  Belgium,  Italy,  the  Netherlands,  and  Sweden.  In  sharp 
contrast,  the  applicable  percentage  in  the  United  States  is  42.7  under  the  present 
average  Bulletin  F  life  and  51.1  percent  for  the  commonly  used  15-year  life. 


302   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  I. — Comparison  of  depreciation  deductions,  initial  and  incentive  allowances^ 
for  industrial  equipment  in  leading  industrial  countries  with  similar  deductions 
and  allowances  in  the  United  States  under  actual  and  various  proposed  plans 


Belgium. 
Canada.. 
France. 


West  Germany. 
Italy 

Japan. 


Netherlands 

Sweden 

United  Kingdom _ 

"United  States: 

Without  investment  credit  and  lives  equal  to  current  Bulletin 

F  weighted  average  of  19  years... 

With  lives  of: 
15  years 

14  years... 

13  years 

12  years 

11  years.. 

10  years.. 

With  investment  credit  and  lives  equal  to  current  Bulletin  F 

weighted    average  of  19  years  2 

With  lives  of: 

15  years 

14  years 

13  years 

12  years 

11  years 

10  years 


Repre- 
sentative 
tax  lives 

(years) 


8 
10 
10 
10 
10 
16 
10 

5 
27 


Depreciation  deductions, 

initial  and  incentive 

allowances 


First 
year 


First  2 
years 


First  5 
years 


Percentage  of  cost  of  asset 


22.5 

45.0 

30.0 

44.0 

25.0 

43.8 

20.0 

36.0 

25.0 

50.0 

43.4 

51.0 

26.2 

49.6 

30.0 

51.0 

39.0 

46.3 

10.5 

19.9 

13.3 

24.9 

14.3 

26.  5 

15.4 

28.4 

16.7 

30.6 

18.2 

33.1 

20.0 

36.0 

26.5 

35.9 

29.3 

40.9 

30.3 

42.5 

31.4 

44.4 

32.7 

46.6 

34.2 

49.1 

36.0 

52.  0 

92.5 
71.4 
76.3 
67.2 

100.0 
68.  2 
85.6 

100.  0 
64.0 


42.7 

51.1 
53.7 
.56.  6 
.59.8 
63.0 
67.2 

58.7 

67.1 
69.7 
72.6 
7.5.8 
79.0 
83.2 


'  The  deductions  and  allowances  for  each  of  the  foreig:n  countries  have  been  computed  on  the  basis  that  the 
investment  qualifies  fully  for  any  special  allowances  or  deductions  permitted.  The  deductions  in  the 
United  States  have  been  determined  under  the  double-declining  balance  depreciation  method,  without 
regard  to  the  limited  first-year  allowances  for  small  business. 

•  For  purposes  of  this  table,  the  proposed  8  percent  investment  credit  has  been  considered  as  equivalent  to 
a  16  percent  investment  allowance.  For  corporations  subject  only  to  the  30  percent  normal  tax  it  is  equiv- 
alent to  an  incentive  allowance  of  27  percent.  The  initial  allowance  of  20  percent  of  each  year's  investment, 
up  to  $10,000,  is  not  taken  into  account  because  of  its  relatively  small  impact. 


This  picture  changes  dramatically,  howev'er,  when  the  proposed  investment 
credit  enters.  In  terms  of  its  effect  on  current  liability,  the  8  percent  investment 
tax  credit  is  equivalent  to  an  incentive  allowance  of  approximately  16  percent  for 
corporations  subject  to  the  52  percent  corporate  income  tax  rate  and  about  27 
percent  for  corporations  subject  only  to  the  normal  tax  rate  of  'M)  p(>rcent.'  The 
bottom  seven  rows  of  Table  I  indicate  the  effect  on  comparable  allowances  for 
new  depreciable  assets  that  would  be  achieved  if  the  8  percent  investment  tax  cred- 
it were  currently  in  force.  Assuming  the  existing  weighted  average  Bulletin  F 
life  of  about  1!)  years,  the  equivalent  first-year  deductions  would  be  2().5  percent. 
In  combination  with  a  somewhat  shorter  life  of  15  years,  we  find  that  the  first 
3'ear's  equivalent  deductions  in  the  United  States  would  be  equal  to  29.:}  percent 
of  the  cost  of  new  depreciable  assets.  This  proportion  is  higher  than  that  which 
obtains  in  Belgium,  France,  West  Germany,  Italy,  and  the  Netherlands.  First- 
year  deductions  or  their  equivalents  would  remain  substantially  higher  than  those 
permitted  in  the  United  States  only  in  Japan  and  the  United  Kingdom.  For  the 
first  five  years  of  the  life  of  the  asset,  pcsrmissible  deductions  would  still  exceed  ap- 
preciably those  allowed  in  the  United  States  in  Belgium,  France,  Italy,  the  Nether- 
lands, and  Sweden.  But  allowances  in  the  United  States  wotild  be  approximately 
the  same  as  those  allowed  in  Canada,  West  Germany,  Japan,  and  the  United  King- 
dom. 


'  Both  the  investment  credit  and  the  incentive  allowance  have  greater  overall  effects  than  a  similar  initial 
allowance  because  they  do  not  reduce  the  amount  of  depreciation  that  may  l)e  taken  over  the  life  of  an  asset. 


EXHIBITS  303 

The  data  presented  in  the  bottom  portion  of  Table  I  demonstrate  clearly  that, 
especially  within  the  first  two  years  of  the  life  of  an  asset,  even  a  revision  to 
provide  realistic  tax  lives  will  not,  by  itself,  place  the  United  States  in  a  position 
comparable  to  that  of  its  most  immediate  foreign  competitors.  The  achievement 
of  this  objective,  rather,  requires  both  the  investment  tax  credit  and  the  faster 
writeoffs  that  would  be  permitted  under  depreciation  policies,  which,  in  broader 
recognition  of  the  increasing  importance  of  obsolescence  in  the  postwar  world, 
would  permit  American  firms  to  assume  shorter  tax  lives  for  depreciable  propert,y. 

Reviewing  this  summary  and  analysis,  three  important  conclusions  emerge: 

(1)  Shorter  tax  lives  alone  will  not  do  the  job  of  bringing  American  industry 
abreast  of  its  foreign  competitors  with  respect  to  tax  allowances  for  investment. 

(2)  The  investment  credit  will  make  a  major  contribution  toward  achieving  that 
goal.  (3)  The  combination  of  the  credit  and  the  forthcoming  revision  of  depreci- 
ation guidelines  will  place  the  United  States  on  substantially  equal  footing  with 
other  major  industrial  nations.  These  conclusions  underscore  the  necessity  for  the 
Treasury's  two-pronged  program  of  revised,  realistic  depreciation  and  the  invest- 
ment credit. 

Objectives  of  depreciation  revision 

It  is  my  firm  intention  to  announce  new  guidelines  for  depreciation  during 
the  course  of  the  spring  of  this  year.  These  guidelines  will  cover  all  major  assets 
for  all  industries.  The  combination  of  engineering  studies  and  statistical  analyses 
will  provide,  on  the  basis  of  information  never  before  gathered  in  such  volume 
and  detail,  the  necessary  guidance  for  this  full  scale  revision.  Our  basic  objective 
is  to  provide  realistic  tax  lives  in  the  light  of  past  actual  practices  and  present 
and  foreseeable  technological  innovations  and  other  factors  affecting  obsolescence. 
Following  the  promulgation  of  the  new  guidelines,  further  revisions  may  be  forth- 
coming with  respect  to  any  particular  industry  on  the  basis  of  subsequent  en- 
gineering studies  that  may  be  requested  and  found  necessary. 

Complementary  to,  but  not  subsidiary  to  this  objective  of  providing  realistic 
lives,  is  our  aim  of  achieving  a  far  more  simple  and  flexible  system  of  depreciation 
under  the  directive  of  the  Internal  Revenue  Code  which,  as  I  indicated  earlier, 
requires  that  "reasonable  allowances"  for  depreciation  be  permitted. 

The  existing  Bulletin  F,  with  its  suggested  useful  lives  for  some  5,000  items  of 
depreciable  property,  is  a  morass  of  detail.  One  of  the  important  goals  of  our 
revision  program  is  to  reduce  this  detail.  I  intend  to  move  toward  guideline 
lives  for  broad  classes  of  assets  used  by  each  of  the  industries  in  our  economy. 
The  Treasury  Depreciation  Survey  has  clearly  demonstrated  that  one  of  the 
major  irritants  now  experienced  by  American  business  stems  from  the  detail 
of  existing  guidelines.  A  large  proportion  of  our  respondents  has  expressed  a 
strong  preference  for  a  system  that  involves  establishment  of  tax  lives  for  broad 
classes  of  assets.  At  the  same  time  our  procedures  must  be  sufficiently  flexible 
to  allow  for  recognition  of  the  varying  circumstances  surrounding  the  economics 
of  the  operation  of  individual  firms  within  industries  as  well  as  varying  practices 
with  respect  to  replacement  policy,  intensity  of  use  of  machinery  and  equipment, 
and  practices  with  respect  to  repairs  and  maintenance. 

Substantial  simplification  and  elimination  of  controversy  between  the  tax 
agent  and  the  taxpayer  will  be  achieved  with  the  enactment  by  Congress  of  that 
feature  of  the  bill  now  before  the  Ways  and  Means  Committee  which  will  permit 
disregarding  the  first  10  percent  of  salvage  value  for  purposes  of  computing  annual 
depreciation  charges.  Flexibility  and  simplification  of  the  system  of  depreci- 
ation will  require  one  important  safeguard.  This  important  safeguard  is  avail- 
able in  the  Treasury's  proposal  to  tax  as  ordinary  income  gains  from  the  sale  of 
depreciable  assets  to  the  extent  of  prior  depreciation  charged  after  December  31, 
1960.  This  amendment  of  section  1231  of  the  Internal  Revenue  Code,  now 
pending  before  the  Ways  and  Means  Committeee,  will  asssist  greatly  in  facil- 
itating the  achievement  of  administrative  depreciation  practices  that  are  fully 
in  keeping  with  the  requirements  of  the  economy  of  1962. 

As  you  know,  we  began  to  move  ahead  with  our  revision  of  depreciation  guide- 
lines in  October,  when  we  announced  new  average  useful  lives  for  machinery  and 
equipment  used  in  the  spinning  and  weaving  of  textile  products.  This  was 
followed,  early  this  week,  by  similar  action  with  respect  to  apparel  manufacturers. 
Revised  tax  lives  for  other  segments  of  the  textile  industry  are  being  developed 
as  rapidly  as  possible. 


304   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  Treasury  accelerated  action  with  respect  to  the  textile  industry  in  response 
to  the  President's  directive  of  May  2.  Our  actions  taken  thus  far  have  provided 
reductions  in  Bulletin  F  guideline  lives  for  depreciation  of  machinery  and  equip- 
ment of  about  40  percent,  specifically  from  25  years  or  more  to  15  years  for  produc- 
tion machinery  and  from  15  to  20  to  12  years  for  finishing  equipment  in  the  textile 
mill  products  industry  and  from  15  to  9  years  for  sewing  equipment.  Because 
many  firms  were  depreciating  their  assets  on  the  basis  of  lives  considerably  shorter 
than  those  suggested  in  Bulletin  F,  the  actual  average  reduction  in  tax  lives 
will  be  equal  to  12  to  15  percent. 

The  new  guidelines  for  the  textile  industry  are  designed  to  take  into  account 
increased  rates  of  obsolescence  due  to  such  factors  as  acceleration  of  techno- 
logical innovation  and  increasingly  intensive  international  competition.  They 
are  far  more  realistic  lives  than  the  old  ones  and  will  bring  a  reduction  in  the 
wide  variance  among  firms  in  depreciation  allowances,  thus  improving  equity. 
In  addition,  the  new  lives  involve  fewer  differences  among  closely  related  assets. 
They  will  recognize  the  growing  importance  of  the  use  of  the  system  approach 
to  factory  organization  (in  contrast  with  an  assemblage  of  more  or  less  unrelated 
machines).  They  will  also  simplify  accounting  for  depreciation,  and  facilitate 
the  use  of  composite  and  group  depreciation. 

Summary  and  conclusion 

I  consider  our  program  of  depreciation  reform,  including  the  investment  credit, 
a  central  part  of  our  economic  policy.  Our  two  most  important  long-range 
economic  problems  today  are  to  stimulate  growth  in  the  domestic  economy  and 
to  eliminate  the  deficit  in  our  balance  of  payments. 

Comparison  with  other  industrialized  countries  shows,  as  would  be  expected, 
that  those  countries  with  higher  levels  of  investment  in  productive  equipment 
have  higher  levels  of  economic  expansion.  As  for  our  balance  of  payments,  the 
most  effective  way  to  eliminate  that  deficit  is  to  increase  our  exports.  Indications 
are  that  other  countries  have  been  modernizing  more  rapidly,  thus  stepping 
3  up  their  productivity,  lowering  costs,  and  offering  stiffer  competition  to  our  own 

producers,  not  only  in  foreign  markets,  but  in  domestic  markets  within  the  United 
States  as  well.  To  meet  that  competition  our  manufacturers  need  the  increased 
stimulus  to  investment  and  modernization  which  can  best  be  brought  about  by 
these  changes  in  tax  policy. 
"^  It  is  no  exaggeration  to  say  that  at  the  present  time,  one  of  the  most  important 
policy  goals  of  the  administration  is  to  increase  productive  private  investment, 
for  both  domestic  and  international  reasons.  We  need  to  make  sure  that  our 
tax  laws  are  fostering  a  strong  flow  of  funds  into  investment  in  new  productive 
facilities. 

It  is  my  conviction  that  depreciation  reform,  including  both  the  administrative 
revision  of  depreciation  guidelines  and  the  investment  credit,  is  not  only  the  best 
way  to  bring  about  a  higher  investment  level,  but  is  absolutely  necessary  if  we 
are  to  grow  at  a  more  rapid  rate  and  maintain  widespread  international  con- 
fidence in  our  currency. 

Exhibit  19. — Address  by  Secretary  of  the  Treasury  Dillon,  March  19,  1962, 
before  the  Tax  Executives  Institute,  Washington,  D.C.,  on  the  role  of  tax 
policy  in  economic  growth 

The  United  States  is  the  richest,  the  strongest,  and  the  most  productive  nation 
on  earth,  but  we  are  still  well  short  of  our  vast  potential.  There  is  no  automatic 
way  of  closing  the  gap  between  what  we  are  and  what  we  could  be.  That  gap 
can  be  narrowed  in  only  one  waj',  by  accelerating  our  rate  of  economic  growth. 

We  must  grow  faster  if  we  are  to  provide  employment  for  our  expanding  labor 
force  and  find  new  jobs  for  workers  displaced  by  technological  progress. 

We  must  grow  faster  to  increase  business  opportunities  and  profits. 

We  must  grow  faster  to  ensure  the  benefits  of  the  world's  highest  standard 
of  living  to  all  of  oiu*  people. 

We  must  grow  faster  if  we  are  to  help  the  peoples  of  the  emerging  nations  to 
improve  their  standards   of  living  within   the  framework   of  free  institutions. 

We  must  grow  faster  to  demonstrate  the  vitality  of  a  free  market  economy 
to  those  in  the  emerging  nations  who  may  be  influenced  by  Communist  boasts 
of  the  superiority  of  a  controlled  economy. 


EXHIBITS  305 

And  we  must  grow  faster  to  ensure  that  the  future  will  find  us  able  to  meet 
our  heavy  defense  commitments  both  at  home  and  around  the  world. 

We  can  ignore  the  need  for  rapid  economic  growth  only  at  our  peril,  for  eco- 
nomic strength  is  essential  to  our  survival  as  a  free  and  prospering  nation. 

Growth  has  become  such  an  imperative  American  goal  that  all  of  our  national 
policies  must  take  it  into  account.  Nowhere  is  this  more  important  than  in 
the  field  of  tax  policy,  because  our  present  tax  system  does  not  contribute  enough 
to  faster  growth. 

To  grow  more  rapidly,  we  must  among  other  things,  raise  our  level  of  produc- 
tive investment.  We  must  use  our  tax  laws  to  make  such  investment  more 
attractive  and  to  foster  a  strong  flow  of  investment  funds.  That  is  the  aim  of 
the  administration's  plan  for  depreciation  reform,  a  twofold  program  which 
includes  the  proposed  tax  credit  for  new  investment  and  the  revision  of  existing 
depreciation  guidelines. 

Depreciation  revision  began  last  October  with  the  announcement  of  new 
guidelines  for  machinery  and  equipment  used  by  spinning  and  weaving  mills 
in  the  textile  industry.  In  January,  we  brought  out  new  guidelines  for  the 
apparel  part  of  the  industry.  Last  month,  revisions  were  published  for  the  ma- 
chinery and  equipment  used  by  hosiery  and  knitwear  producers,  thus  completing 
depreciation  revision  for  textiles,  which  President  Kennedy  had  ordered  expedited 
as  part  of  his  overall  program  to  assist  that  struggling  industry. 

Depreciation  studies  for  all  other  industries  are  now  well  advanced  and  the  new 
guidelines  will  be  in  effect  by  late  spring. 

In  setting  guidelines,  we  are  giving  careful  attention  to  the  pace  of  technological 
change  and  obsolescence  as  a  standard  for  judging  the  useful  "lives"  of  productive 
equipment.  And  in  attempting  to  determine  actual  and  potential  rates  of  obsoles- 
cence, we  will  not  be  bound  by  the  obsolete  notion  that  equipment  is  still  usable 
as  long  as  it  remains  in  good  working  condition.  That  is  the  narrow  concept 
of  "physical"  life.  To  the  greatest  extent  possible,  we  will  consider  the  "economic" 
life  of  machinery  and  equipment.  For  a  25-year-old  machine  may  still  run  well 
enough,  but  its  economically  useful  life  is  over  if  a  newer  machine  produces  at  a 
significantly  lower  overall  cost  per  unit. 

Establishing  new  depreciation  schedules  by  that  standard  of  obsolescence  is  no 
simple  task,  especially  when  we  are  endeavoring  to  take  into  account,  not  only 
recent  technological  change,  but  that  which  is  foreseeable  in  the  near  future. 
However,  we  do  have  a  great  deal  of  information  on  which  to  base  our  decisions, 
including  two  extensive  statistical  studies  of  depreciation  practices  initiated  by 
my  predecessor,  Secretary  Robert  Anderson.  They  have  been  supplemented  by 
recent  engineering  studies  of  six  basic  industries  to  give  us  a  broad  look  at  actual 
industry  experience  with  technological  change  and  obsolescence.  In  addition,  the 
many  conferences  and  meetings  we  have  held  with  industry  and  trade  association 
representatives  and  with  their  tax  advisers  have  been  most  helpful. 

Although  we  have  reached  no  final  decisions  on  new  depreciable  lives  for  any 
industry  other  than  textiles,  the  general  shape  of  the  revision  is  becoming  clear. 
We  shall  move  to  shorter  and  more  realistic  depreciable  lives,  and,  in  addition,  put 
into  effect  a  truly  significant  simplification  of  Bulletin  F.  This  audience  is  well 
aware  that  Bulletin  F,  with  its  suggested  useful  lives  for  some  5,000  items  of  de- 
preciable property,  is  a  morass  of  detail.  We  intend  to  substitute  a  set  of  guide- 
line lives  for  broad  classes  of  assets  in  each  of  our  industries. 

But  administrative  revision  of  depreciation,  important  though  it  is,  is  not 
enough.  If  our  economy  is  to  grow  and  prosper,  it  is  essential  that  our  industry 
meet  the  highest  standards  of  efficiency.  Our  prized  American  standard  of  living 
means  higher  wages  for  our  workers  than  for  workers  elsewhere.  If  they  are  to  be 
more  highly  paid,  they  must  be  more  productive.  And  if  they  are  to  be  more 
productive  they  must  have  the  most  modern  equipment  available  anywhere  in  the 
world. 

Our  tax  laws,  as  they  presently  stand,  do  not  provide  as  great  an  incentive  to 
modernize  as  do  the  laws  of  our  major  competitors.  To  place  American  industry 
on  a  comparable  footing  with  industry  elsewhere  will  require  enactment  of  the 
proposed  investment  credit  which  will  soon  come  before  the  House  of 
Representatives . 

Canada,  Japan,  and  each  of  the  seven  major  industrial  nations  of  Western 
Europe  provide  first-year  depreciation  writeoffs  for  machinery  and  equipment — 
including,  in  most  cases,  special  incentive  allowances — that  are  much  more  gen- 
erous than  ours.  West  Germany  typically  allows  20  percent  and  the  first  year 
total  writeoff  in  the  other  eight  countries  ranges  upward  from  there  to  as  high  as 

661496—63 21 


306   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

43.4  percent  in  Japan.     The  average  first-year  allowance  among  all  nine  of  these 
countries  is  29  percent. 

Compared  with  this,  our  own  industry  now  averages  a  first-year  writeoff  of 
onlv  13.3  percent  less  than  half  that  of  our  competitors.  Under  present  depre- 
ciation practices,  our  industrial  equipment  has  an  average  useful  life  of  about  15 
vears.  Even  if  we  were  to  reduce  this  to  10  years,  and  that  would  be  unrealis- 
tically  low,  our  industry  generally  would  be  able  to  write  oflf  only  20  percent  of  the 
cost  of  its  new  assets  in  "the  first  year:  still  a  third  less  than  our  foreign  competitors. 
The  proposed  investment  credit  would  dramatically  change  those  figures.  For 
with  the  eight  percent  investment  credit,  we  could  keep  the  average  depreciable 
life  of  our  equipment  right  where  it  is  now,  at  15  years,  and  our  industry's  total 
first-vear  cost  recovery  would  amount  to  29.3  percent.  That  would  be  fraction- 
ally better  than  the  average  of  our  major  competitors  and  significantly  higher  than 
the  first-year  writeoffs  presentlv  allowed  in  Belgium,  France,  Italy,  the  Nether- 
lands, and  West  Germany.  We  do  not,  of  course,  expect  average  depreciable 
lives  to  remain  at  15  years.  To  whatever  extent  they  are  reduced  from  that  level, 
our  future  first-year  writeoffs  will  become  relatively  even  more  advantaoieous. 

Enactment  of  the  investment  credit  is  the  only  feasible  means  of  achieving  this 
result.  Alternative  plans  would  provide  much  less  incentive  to  modernization 
with  much  greater  revenue  losses  to  the  Government. 

Our  studies  show,  for  example,  that  the  proposed  eight  percent  investment 
credit  would  improve  the  profitability  of  a  typical  15-year  asset  by  30  percent, 
increasing  the  rate  of  aftertax  return  under  double-dechning  balance  depreciation 
from  5.6  percent  to  7.3  percent.  To  achieve  the  same  increase  in  profitability  by 
use  of  special  depreciation  writeoffs  would  require  a  full  40  percent  first-year 
depreciation  allowance.  Whereas  the  revenue  loss  from  the  proposed  investment 
credit  is  estimated  at  only  $1.8  billion  in  the  first  year,  first-year  depreciation  of 
40  percent  would  reduce  Government  tax  collections  by  $5.3  billion.  Over  a  five- 
year  period,  the  credit  would  cost  $9.9  biUion  in  Federal  revenues,  while  achieve- 
ment of  the  same  result  by  40  percent  first-year  depreciation  would  cost  $24.1 
billion. 

The  recently  advanced  proposal  for  a  20  percent  increase  in  depreciation  al- 
lowances would  likewise  produce  far  less  stimulation  per  tax  dollar  lost.  Its  rev- 
enue cost  in  the  first  full  year  of  operation  would  be  $600  million  and  would  rise 
thereaft(>r  as  new  equipment  was  installed,  reaching  $1.6  billion  in  the  fifth  year, 
and  $3.0  billion  in  the  tenth  year.  Over  a  ten-year  period,  the  total  cost  of  this 
proposal  would  be  $17.9  biUion,  somewhat  less  than  the  $22.1  billion  cost  of  the 
investment  credit.  But  the  credit  would  provide  more  than  four  times  the  stimu- 
lative effect  in  increased  profitability  of  investment. 

The  proposed  20  percent  increase  in  depreciation  writeoffs  has  been  coupled 
by  its  sponsors  with  a  one-shot,  windfall  tax  allowance  for  distributors'  inven- 
tories. This  would  cost  $1>4  billion  in  its  first  year  but  would  have  only  minor 
revenue  impact  thereafter.  This  proposed  tax  treatment  of  inventories  has 
many  serious  flaws,  not  the  least  of  which  is  that  it  would  increase  taxes  on  small 
businesses  at  the  very  worst  time— when  they  are  being  forced  to  reduce  inven- 
tories because  of  unfavorable  business  conditions. 

As  I  have  said,  the  suggested  twenty  percent  increase  in  depreciation  allowances 
docs  not  even  come  close  to  the  eight  percent  investment  credit  as  a  stimulus  to 
business  investment.  Its  effect  would  not  even  equal  that  of  a  two  percent  in- 
vestment credit.  The  relative  merits  of  the  two  proposals  are  most  clearly  seen 
when  you  realize  that  a  full  ninety  percent  increase  in  annual  depreciation  write- 
offs, rather  than  a  mere  twenty  percent,  would  be  required  to  achieve  a  rise  in  the 
profitability  of  investment  equal  to  that  attainable  by  the  eight  percent  investment 
credit.  And  such  a  90  percent  increase  would  involve  a  cost  over  10  years  of  well 
over  three  times  that  of  the  investment  credit. 

It  is  essential  that  we  have  the  full  increase  in  profitability  inherent  in  the  in- 
vestment credit  if  our  industry  is  to  modernize  and  compete  on  even  terms,  both 
against  imports  into  our  home  markets  and  in  world  export  markets.  If  American 
industry  is  prevented  from  becoming  fully  competitive,  it  will  cost  us  literally 
hundreds  of  millions  of  dollars  a  year  in  our  balance  of  payments,  a  loss  we  simply 
cannot  afford.  AH  Americans  now  recognize  that  the  achievement  of  balance-of- 
payments  equilibrium  has  become  essential  to  our  national  security.  Those  who 
oppose  the  investment  credit  and  suggest  mere  poultices  in  its  place  should  be 
fully  aware  that  in  so  doing  they  are  contributing  directly  to  a  serious  aggravation 
of  our  bnlance-of-pnymcnts  difficulties. 


1 


EXHIBITS  307 

Now  pending  before  the  Congress  are  two  other  changes  in  the  tax  treatment  of 
depreciation  which  should  have  special  interest  for  this  audience: 

The  first,  which  has  received  inadequate  public  attention,  would  virtually 
eliminate  one  of  the  most  difficult  and  controversial  questions  in  the  entire  area  of 
depreciation  by  changing  the  manner  in  which  the  prospective  salvage  value  of 
depreciable  assets  is  treated.  We  propose  that  taxpayers  be  permitted  to  ignore 
the  whole  issue  of  salvage  value  to  the  extent  that  such  value  does  not  exceed  ten 
percent  of  the  cost  of  the  asset.  This  change  would  completely  wipe  out  all  prob- 
leins  concerning  salvage  value  on  the  overwhelming  majority  of  industrial  assets. 

The  second  proposed  change  tightens  the  tax  laws  governing  earnings  on  sales 
of  depreciable  property.  The  reason  for  this  goes  far  beyond  our  aim  of  tax 
equity.  Adoption  of  the  proposal  to  treat  earnings  from  such  sales  as  ordinary 
income  is  also  an  essential  prerequisite  to  our  efforts  to  simplify  depreciation. 
Without  this  change,  we  will  be  thwarted  in  one  of  our  major  tax  reform  goals — 
the  elimination,  to  the  greatest  extent  possible,  of  rankling  controversy  between 
business  taxpayers  and  Government  tax  agents  for,  once  this  provision  is  put  into 
effect,  errors  made  in  determining  the  proper  depreciable  lives  of  equipment 
would  no  longer  lead  to  tax  windfalls  on  their  sales.  If  we  are  to  move  forward 
with  our  plan  for  a  broad  category  approach  to  the  establishment  of  useful  lives — 
and  with  the  proposed  liberalized  treatment  of  salvage  value- — this  modification 
is  absolutely  essential. 

The  Congress  is  also  considering  a  number  of  other  major  tax  changes  designed 
to  offset  the  revenue  cost  of  the  investment  credit  and  to  remove  inequities  in  our 
tax  system.  We  are  gratified  by  the  careful  consideration  they  have  received 
during  exhaustive  hearings  and  months  of  study  by  the  House  Ways  and  Means 
Committee.  This  extended  discussion  has  helped  to  clarify  areas  where  even  the 
experts  are  sometimes  less  than  certain.  While  the  present  bill,  as  modified  by 
the  committee,  is  not  as  complete  as  we  would  like,  it  does  represent  a  good  start 
on  our  program  of  overall  tax  reform. 

The  pending  bill  establishes  a  system  of  withholding  on  income  from  interest 
and  dividends,  thereby  assuring  the  collection  of  some  $650  million  annually  in 
taxes  which  are  legally  owed  but  are  not  now  being  paid.  There  is  absolutely  no 
reason  why  those  who  receive  income  from  interest  and  dividends  and  who  year 
in  and  year  out  avoid  the  payment  of  more  than  $800  million  in  taxes  due  their 
Government  should  not  be  subject  to  withholding,  just  as  wage  and  salary  earners 
have  been  for  twenty  years.  The  withholding  system  will  collect  fully  three 
times  as  much  revenue  as  the  proposed  alternative  of  a  vastly  expanded  interest 
reporting  system.  $200  million  is  the  maximum  that  could  he  collected  by  this 
means  and  even  this  would  call  for  literally  thousands  more  revenue  agents  to  run 
down  possible  tax  evaders  identified  by  automatic  data  processing. 

Adequate  safeguards  to  protect  the  current  income  of  people  with  little  or  no 
tax  liability  are  built  into  the  Ways  and  Means  Committee  bill  which  completely 
exempts  from  withholding  those  who  owe  no  tax  on  their  dividends,  their  savings 
accounts,  or  their  savings  bond  interest.  For  those  subject  to  tax,  but  to  less 
than  the  amount  withheld,  prompt  quarterly  refunds  are  planned. 

As  for  payers  of  interest  or  dividends,  they  will  not  be  required  to  make  de- 
tailed reports  to  the  Government  identifying  those  to  whom  the  payments  have 
been  made.  In  addition,  they  will  be  permitted  to  retain  and  to  use  the  with- 
held taxes  for  certain  specified  periods.  This  provision  is  designed  to  help  them 
offset  the  cost  of  the  withholding  system. 

Other  sections  of  the  bill  make  additional  important  steps  toward  tax  fairness: 
The  bill  provides  for  more  equitable  taxation  of  mutual  thrift  institutions 
and  mutual  fire  and  casualty  insurance  companies,  although  they  will  still  bear 
a  relatively  lighter  tax  load  than  their  competitors. 

It  ends  the  existing  possibilities  for  prolonged  postponement  of  tax 
payments  on  the  earnings  of  cooperatives,  by  taxing  currently  either  the  co-op 
itself  or  its  patrons. 

It  makes  a  progessive  move  toward  eliminating  the  widespread  abuse 
of  tax  deductibility  as  a  means  of  paying  for  much  personal  entertainment,  travel, 
and  recreation. 

And,  finally,  it  takes  a  major  step  toward  ending  the  proliferating  use 
of  tax  havens  abroad  as  a  device  for  avoiding  U.S.  corporate  taxes.  The  data 
we  now  have,  which  we  know  is  incomplete,  shows  that  there  are  several  thousand 
American-controlled  subsidiaries  in  the  Bahamas,  Liechtenstein,  Panama,  and 
Switzerland  to  name  just  the  areas  most  often  used,  and  most  of  them  appear 
to  have  tax  avoidance  as  the  main  reason  for  their  existence.     While  the  Ways 


308   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

and  Means  Committee  bill  does  not  go  as  far  as  we  would  like  toward  ending 
the  advantageous  tax  treatment  of  income  earned  from  overseas  operations, 
it  will  certainly  curb  the  most  obvious  abuses.  As  in  the  case  of  the  investment 
credit,  our  balance-of-payments  difRculties  make  it  essential  that  we  move  ahead 
vigorously  in  this  area. 

The  pending  tax  bill,  as  you  know,  represents  only  a  first  step  in  a  compre- 
hensive program  of  tax  reform  which  this  adminstration  is  undertaking.  Our 
fundamental  goal  of  more  rapid  economic  growth  underlies  every  aspect  of  that 
program. 

Growth  is  the  basic  consideration  behind  the  President's  recent  request  for 
authority — subject  to  congressional  concurrence — to  reduce  tax  rates  tempo- 
rarily by  as  much  as  five  percentage  points  in  the  early  stages  of  a  recession. 
For  recessions,  with  their  utter  waste  of  manpower  and  resources,  constitute 
the  greatest  of  all  setbacks  to  economic  growth.  We  hope  to  increase  our  ability 
to  mitigate  these  periodic  slumps  through  the  use  of  a  flexible  tax  policy  which 
will  add  to  consumer  purchasing  power — and  thus  to  overall  economic  activity — 
during  times  when  that  is  most  essential. 

Growth  is  also  a  primary  objective  of  our  overall  tax  reform  bill,  which  will 
be  presented  to  the  Congress  later  this  year. 

Our  present  tax  system  does  not  make  the  maximum  possible  contribution 
to  our  goal  of  economic  vitality.  For  example,  it  makes  investment  in  some 
kinds  of  business  activity,  such  as  speculative  real  estate  transactions,  more 
attractive  than  investment  in  other  forms  of  business  enterprise  that  contribute 
more  to  a  growing  economy. 

Not  the  least  of  the  economically  undesirable  consequences  of  our  present 
tax  law  is  the  fact  that  it  diverts  highly  skilled  talent  from  the  making  of 
fruitful  business  decisions  to  the  pursuit  of  the  legal  avoidance  of  tax  liabilities. 
I  need  not  spell  that  out  for  this  particular  audience. 

Simplifying  our  tax  structure,  and  making  it  more  equitable,  is  essential  if 
our  nation  is  to  achieve  its  economic  potential.  The  job  must  be  done  even 
though  there  is  little  prospect,  for  the  immediate  future,  of  our  being  able  to 
afford  a  truly  significant  reduction  in  the  total  amount  of  our  tax  bill. 

That  amount  is  not,  in  fact,  as  burdensome  as  has  sometimes  been  claimed. 
Our  Federal  taxes  are  much  less,  as  a  proportion  of  total  national  income,  than 
they  have  been  at  various  times  in  the  past.  And  our  combined  Federal,  State, 
and  local  tax  load  is  smaller,  proportionate  to  either  national  income  or  gross 
national  product,  than  the  taxes  borne  by  the  citizens  and  businesses  of  six  of 
our  major  allies,  five  of  which  have  steadily  maintained  a  rate  of  economic  prog- 
ress considerably  in  excess  of  our  own. 

Those  who  reject  our  concept  of  tax  reform  to  be  achieved  largely  through 
a  broadening  of  the  tax  base  and  urge  instead  massive  reductions  in  tax  rates, 
without  any  provision  for  compensating  revenue — are  simply  refusing  to  rec- 
ognize that  such  a  course  would  leave  us  no  alternative  but  withdrawal  from  our 
world  commitments  and  neglect  of  our  pressing  needs  at  home — a  course  that 
would  be  entirely  unacceptable. 

Tax  rates  can  be  cut.  That  is  what  our  overall  tax  reform  program  will  be 
all  about.  Our  aim  is  to  reduce  tax  rates  for  all  by  eliminating  the  special  tax 
privileges  of  some — while  at  the  same  time  maintaining  the  revenues  needed  to 
fulfill  our  national  commitments. 

The  tax  burden  imposed  by  our  urgent  needs  at  home  and  by  our  inescapable 
leadership  of  the  free  world  is  a  heavy  one.     But  it  can  be  borne. 

The  price  of  freedom  may  be  high — but  the  day  our  citizens  think  it  is  too 
high  will  be  the  day  when  freedom  has  no  future. 

I  do  not  think  that  day  will  ever  come. 


EXHIBITS  309 

ExmBiT  20. — Statement  by  Secretary  of  the  Treasury  Dillon,  April  2,  1962, 
before  the  Senate  Committee  on  Finance  on  H.R.  10650,  the  Revenue  Act 
of  1962 

During  my  appearance  before  you  this  morning,  I  hope  that  I  shall  be  able 
to  convey  my  strong  personal  feeling  of  urgency  concerning  the  need  for  favorable 
action  on  the  balanced  tax  revision  bill  so  painstakingly  constructed  by  the  House 
Ways  and  Means  Committee. 

H.R.  10650 — entitled  the  Revenue  Act  of  1962 — was  passed  by  the  House 
of  Representatives  last  Thursday.  This  forward-looking  measure  was  developed 
on  the  basis  of  the  tax  recommendations  contained  in  the  President's  message 
to  the  Congress  of  April  20,  1961. 

The  President  pointed  out  in  his  message  that  although  the  basic  framework 
of  our  tax  system  is  generally  acceptable,  constructive  reforms  are  essential  to 
ensure  that  it  serves  our  changing  domestic  and  international  economic  goals  and 
that  it  continues  to  meet  the  requirements  of  tax  fairness  in  a  changing  economy. 

The  bill  before  you  incorporates  most  of  the  President's  recommendations, 
although  some  of  them  in  modified  form.  The  House  Ways  and  Means  Com- 
mittee merits  high  commendation  for  its  thoughtful  and  truly  prodigious  efforts 
over  the  past  eleven  months.  Those  efforts  have  produced  a  bill  that  moves 
the  tax  structure  a  considerable  distance  in  the  directions  sought  by  the  President 
and  at  the  same  time  provides  a  modest  revenue  gain. 

I  appreciate  being  able  to  discuss  with  you  the  features  of  the  bill  which  I 
consider  satisfactory  as  well  as  our  recommendations  for  improvements.  I 
will  not  follow  the  order  in  which  these  features  are  taken  up  in  the  bill.  The 
sequence  used  in  the  bill  does  not  group  related  subjects  together  but  rather 
takes  up  sections  in  accordance  with  the  order  in  which  they  will  appear  in  the 
Internal  Revenue  Code.  Thus,  I  will  depart  from  this  sequence  in  order  to 
treat  related  items  in  close  conjunction  with  one  another. 

Tax  credit  for  investment  in  certain  depreciable  property  (section  2) 

The  central  element  in  the  bill  is  the  tax  credit  for  investment  in  depreciable 
machinery  and  equipment.  The  bill  provides  in  general  for  the  deduction  from 
taxes  otherwise  due  of  7  percent  of  the  cost  of  new  machinery  and  equipment. 
A  similar  result  could  have  been  achieved  by  a  14  percent  investment  allowance, 
under  which  14  percent  of  the  investment  would  be  deductible  in  computing 
taxable  income.  This  method  of  investment  stimulation  is  presently  in  use  in 
the  United  Kingdom,  Belgium,  and  Canada,  and  is  in  the  process  of  being  enacted 
by  the  Australian  Parliament.  The  Netherlands  makes  use  of  an  investment 
credit  similar  to  that  in  the  House  bill.  Both  of  these  approaches  are  tried  and 
proven.  We  have  preferred  the  7  percent  tax  credit  to  the  14  percent  investment 
allowance  because  it  gives  full  credit  to  small  businesses  subject  to  the  30  percent 
corporate  tax  rate  and  to  those  unincorporated  businesses  whose  tax  rate  is  less 
than  52  percent.  With  an  investment  allowance  a  small  business  would  receive 
only  30  percent  of  the  benefit  compared  to  52  percent  for  larger  companies.  With 
a  tax  credit  the  full  benefit  flows  to  small  businesses.  The  credit  will  apply 
to  investment  in  eligible  assets  acquired  after  December  31,  1961.  It  will  stimu- 
late investment  in  modernization  and  expansion  of  our  industrial  capacity, 
strengthen  our  whole  economy,  contribute  to  economic  growth  and  substantially 
increase  the  competitiveness  of  American  products  in  markets  at  home  and 
abroad. 

American  industry  must  compete  in  a  world  of  diminishing  trade  barriers, 
in  which  the  advantages  of  a  vast  market,  so  long  enjoyed  here  in  the  United 
States,  are  now  being  or  are  about  to  be  realized  by  many  of  our  foreign  com- 


3 10   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

petitors.  Our  balance-of-payments  position,  as  well  as  our  standard  of  living 
in  the  long  run,  can  be  improved  or  even  maintained  only  if  we  can  increase 
our  efficiency  and  productivity  at  a  rate  at  least  equal  to  that  of  other  leading 
industrialized  nations.  These  nations  have  now  largely  achieved  the  conditions 
needed  to  attract  massive  investment  in  productive  facilities,  including  external 
currency  convertibility,  price  stability,  and  political  stability,  and  they  are 
providing  effective  tax  incentives  designed  to  accelerate  investment  and  growth. 
We  cannot,  therefore,  afford  to  stand  by  and  do  nothing,  or  put  off  affirmative 
action  to  a  later  day.  We  need  to  increase  our  investment  in  machinery  and 
equipment  now — delay  can  only  place  greater  strains  on  our  international  pay- 
ments position  and  put  ol  the  achievement  of  the  rate  of  growth  we  must  achieve 
if  we  are  to  meet  our  domestic  and  international  commitments  and  provide  jobs 
for  our  ever-increasing  labor  force. 

Machinery  and  equipment  expenditures — the  type  of  busine.ss  capital  expendi- 
ture which  is  basic  to  the  creation  of  new  products  and  which  also  makes  the 
most  direct  contribution  to  cost-cutting,  productivity,  and  efficiency — constitute 
a  smaller  percentage  of  the  gross  national  product  in  the  United  States  than  in 
any  major  industrial  nation  of  the  world.  In  recent  years  we  have  devoted 
less  than  6  percent  of  our  GNP  (less  than  5  percent  in  1961)  to  this  type  of  vital 
capital  outlay,  only  half  the  proportion  devoted  to  this  purpose  by  West  Germany, 
only  three-fourths  that  of  the  United  Kingdom,  and  about  60  percent  as  much 
as  the  combined  average  of  the  European  members  of  the  Organization  for  Eco- 
nomic Cooperation  and  Development  (OECD).  Even  more  significant  is  the 
fact  that  in  the  United  States  this  percentage  has  recently  been  declining  steadily, 
whereas  it  has  been  increasing  in  these  other  nations. 

Recent  studies  indicate  a  close  correlation  between  the  ratio  of  investment 
in  productive  equipment  to  GNP  and  the  rate  of  economic  growth.  In  view  of 
the  relatively  small  proportion  of  GNP  that  has  been  aUocated  to  investment 
in  machinery  and  equipment  in  the  United  States,  it  is  not  surprising  to  find 
that  the  average  annual  rate  of  growth  (in  constant  prices)  experienced  in  the 
United  States  in  the  decade  of  the  fifties  was  only  3  percent,  compared  with 
more  than  7  percent  for  West  Germany,  and  with  a  range  of  4  to  6  percent  for 
most  other  industrial  countries  of  Western  Europe.  In  order  to  minimize  un- 
employment, to  satisfy  the  desire  of  our  people  for  rising  standards  of  living, 
to  meet  ovir  defense  and  other  domestic  and  international  obligations,  and  to 
demonstrate  the  vitality  of  our  free  economy,  we  must  achieve  a  higher  rate  of 
growth.  This  we  cannot  do  unless  we  achieve  a  more  satisfactory  rate  of  capital 
formation. 

We  cannot  hope  to  achieve  the  increased  rate  of  capital  formation  necessary 
to  more  rapid  economic  growth  and  full  employment  unless  we  bring  our  tax 
treatment  of  capital  investment  into  line  with  the  standards  which  our  European 
competitors  have  used  so  successfully  over  the  past  decade.  To  attain  this  result 
the  administration  is  pursuing  a  two-pronged  course  in  the  area  of  depreciation. 
One  step  involves  administrative  action  to  modernize  depreciation  guidelines  in 
keeping  with  the  statutory  provision  of  a  "reasonable  allowance"  for  depreciation, 
including  obsolescence.  In  addition  to  more  realistic  recognition  of  obsolescence 
and  technological  trends,  the  Treasury  aims  to  achieve  a  simpler,  more  flexible 
system  of  depreciation. 

The  revised  depreciation  guidelines,  to  be  announced  in  late  spring  of  this  year, 
will  constitute  the  first  really  major  change  in  the  administration  of  depreciation 
since  the  early  1930's.  The  establishment  of  a  modern  depreciation  system  which 
takes  account  of  the  current  faster  tempo  of  obsolescence  will  help  to  stimulate 
investment  in  this  country.  But,  I  must  emphasize,  the  shortening  of  depreciable 
lives  to  a  fully  realistic  "basis  will  not  bring  American  industry  abreast  of  its 
foreign  competitors.  For  all  of  the  other  major  industrialized  nations  of  the  free 
world  provide  for  either  the  use  of  unrealistically  short  lives  for  depreciation 
purposes,  a  practice  which  distorts  income  and  cost  statements,  or  for  special 
initial  allowances  or  investment  allowances  which  supplement  regular  depreciation 
charges,  or  for  a  combination  of  two  or  more  of  these  incentives. 

The  impact  of  depreciation  plus  initial  and  investment  allowances  on  the 
amounts  that  may  be  deducted  in  the  year  in  which  a  new  asset  is  acquired  in 


EXHIBITS  311 

Canada,  Japan,  and  the  seven  leading  industrial  nations  of  Western  Europe  is 
shown  in  Table  I.  Here  it  may  be  seen  that  the  percentage  of  the  cost  of  an  asset 
that  may  be  deducted  in  the  first  year  ranges  from  20  percent  in  West  Germany 
to  43.4  percent  in  Japan  compared  with  as  low  as  10.5  percent  in  the  United 
States.  For  the  first  5  years  of  the  life  of  the  asset,  the  relevant  proportion  falls 
within  the  range  of  62-70  percent  for  West  Germany,  Japan,  and  the  United 
Kingdom,  between  70  and  80  percent  for  Canada  and  France,  and  85  to  as  much 
as  100  percent  for  Belgium,  Italy,  the  Netherlands,  and  Sweden.  In  sharp  con- 
trast, the  applicable  percentage  in  the  United  States  is  42.7  under  the  present 
average  Bulletin  F  life  and  51.1  percent  for  the  most  commonly  used  15-year  life. 

The  data  presented  in  the  table  demonstrate  clearly  that  even  a  drastic  down- 
ward revision  of  depreciable  lives  beyond  anything  that  can  be  justified  by  realistic 
asset  lives  would  still  not  bring  capital  allowances  in  the  United  States  to  a  level 
comparable  with  that  permitted  by  our  foreign  competitors.  Should  our  over- 
all administrative  revision  of  depreciation  bring  about  reductions  in  guideline 
lives  as  large  as  those  which  were  found  appropriate  for  the  textile  industry,  not 
more  than  a  quarter  of  the  current  gap  between  depreciation  practices  here  and 
abroad  will  be  closed.  Administrative  modernization  of  depreciation  simply  can- 
not do  the  job.  The  reason  is  simple.  Realistic  depreciation  cannot  be  expected 
to  produce  depreciation  chargeoffs  equal  to  the  special  incentive  provisions  in 
general  use  abroad.  Nor  can  it  provide  the  additional  incentive  which  the  expe- 
rience of  other  industrialized  countries  has  demonstrated  is  needed  to  broaden 
and  deepen  the  flow  of  investment  into  new,  more  efficient  equipment.  The 
combination  of  both  the  forthcoming  modernization  of  depreciation  giiidelines 
and  a  special  incentive  such  as  the  investment  credit  contained  in  the  bill  before 
you  is  required  if  U.S.  business  firms  are  to  be  placed  o\\  substantially  equal 
footing  with  their  foreign  competitors  in  this  respect.  It  is  essential  to  our  com- 
petitive position  in  markets  both  here  at  home  and  abroad  that  American  indus- 
try be  put  on  the  same  basis  as  foreign  industry.  Unless  this  is  done  increased 
imports  and  decreased  exports  will  unnecessarily  add  to  the  burden  of  our  balance- 
of-payments  deficit. 

The  investment  credit  will  stimulate  investment  in  a  number  of  ways.  Because 
it  reduces  the  net  cost  of  acquiring  depreciable  assets  it  increases  the  rate  of 
profitability.  Thus,  for  example,  a  10-year  asset  that  is  expected  to  yield  a  rate 
of  return  after  taxes  of  5.0  percent  under  straight-line  or  5.6  percent  under  double- 
declining  balance  depreciation  will,  with  an  8  percent  investment  credit,  yield 
a  return  of  7.9  percent  per  year.  This  represents  an  increase  in  profitability 
of  more  than  40  percent  (for  a  7  percent  credit  the  7.9  and  40  percent  become  7.6 
and  35  percent).  An  increase  of  this  magnitude  will  provide  a  major  stimulus 
to  business  firms  to  replace  older,  less  efficient  machinery  and  equipment  and, 
in  the  process,  incorporate  the  most  recent  technological  developments  into  pro- 
ductive facilities.  Detailed  explanations  of  the  procedures  involved  in  computing 
profitability  and  the  costs  of  the  various  incentive  measures  that  have  been  sug- 
gested at  one  time  or  another  are  contained  in  Exhibit  I. ' 

Investment  decisions  are  influenced  as  well  by  the  availabilit}'  of  funds.  Since 
the  credit  will  increase  the  flow  of  cash  available  for  investment,  it  will  stimulate 
investment  through  this  effect  as  well  as  through  its  effect  on  profitability.  The 
increased  cash  flow  will  be  particularly  important  for  new  and  smaller  firms, 
which  do  not  have  ready  access  to  the  capital  markets  and  whose  growth  is  often 
restrained  by  a  lack  of  capital  funds. 

Still  another  way  in  which  the  credit  may  be  expected  to  stimulate  investment 
is  through  a  reduction  in  the  pay-off  period  for  investment  in  a  particular  asset, 
which  is  one  measure  of  the  risk  associated  with  any  investment.  This  reduction 
in  risk,  coupled  with  the  higher  rate  of  profitability  and  increased  cash  flow,  will 
shift  the  margin  at  which  positive  decisions  to  invest  are  made  and  will  help  to 
restore  to  past  levels  the  proportion  of  our  annual  output  that  is  devoted,  through 
investment  in  machinery  and  equipment,  to  building  the  strength,  vitality,  and 
competitive  force  of  the  American  economy. 

Another  interesting  comparison  may  be  made,  one  that  should  intrigue  those 
who  favor  a  low  interest  rate  as  a  primary  investment  stimulus. 

'  Omitted  from  this  exhibit;  for  document  reference  see  note  at  end  of  this  statement. 


312   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  I. — Comparison  of  depreciation  deductions,  initial  and  investment  allowances ' 
for  industrial  equipment  in  leading  industrial  countries  with  similar  deductions 
and  allowances  in  the  United  States 


Representa- 
tive tax  lives 
(years) 


Depreciation  deductions,  initial  and 
investment  allowances 


First  year 


First  2  years 


First  5  years 


Belgium 

Canada 

France.- 

West  Germany. 
Italy. 


Japan 

Netherlands 

Sweden 

United  Kingdom 

United  States: 
Without  investment  credit  and  lives  equal  to 
current  Bulletin  F  weighted  average  of 

19  years 

With  lives  of: 
15  years 

14  years 

13  years 

12  years 

11  years 

10  years 

With  investment  credit  and  lives  equal  to 
current  Bulletin  F  weighted  average  of 

19  years  « - 

With  hves  of: 

15  years. 


8 
10 
10 
10 
10 
16 
10 

5 
27 


(Percentage  of  cost  of  asset) 


45.0 
44,0 
43.8 
36.0 
50.0 
51.0 
49.6 
51.0 
46.3 


19.9 

24.9 
26.5 
28.4 
30.6 
33.1 
36.0 


14  years. 
13  years. 
12  years. 
11  years. 
10  years. 


(24.  5) 

(27.  3) 
(28.3) 
(29. 4) 
(30.  7) 
(32.  2) 
(34.  0) 


22.5 

30.0 

25.0 

20.0 

25.0 

43.4 

26.2 

30.0 

39.0 

10.5 

13.3 

14.3 

15.4 

16.7 

18.2 

20.0 

26.5 

29.3 

30.3 

31.4 

32.7 

34.2 

36.0 

(33.9)  35.9 


(38.  9) 
(40.  5) 
(42.  4) 
(44.  6) 
(47. 1) 
(50.  0) 


40.9 
42.5 
44.4 
46.6 
49.1 
52.0 


92.5 
71.4 
76.3 
67.2 

100.0 
68.2 
85.6 

100.0 
64.0 


42.7 

51.1 
53.7 
56.6 
59.8 
63.0 
67.2 


(56.7)  58.7 


(65. 1) 
(67.  7) 
(70.  6) 
(73. 8) 
(77. 0) 


67.1 
69.7 
72.6 
75.8 
•9.0 


(81.2)  83.2 


•  The  deductions  and  allowances  for  each  of  the  foreign  countries  have  been  computed  on  the  assumption 
that  the  investment  qualifies  fully  for  any  special  allowances  or  deductions  permitted.  The  deductions  in 
the  United  States  have  been  determined  under  the  double-declining  balance  depreciation  method,  without 
regard  to  the  limited  first-year  allowances  for  small  business. 

2  For  purposes  of  this  table,  tlie  8  percent  investment  credit  has  been  considered  as  equivalent  to  a  16 
percent  investment  allowance.  For  corporations  subject  only  to  the  30  percent  normal  ta.x  it  is  equivalent 
to  an  investment  allowance  of  27  percent.  The  figures  in  parentheses  indicate  the  effect  of  a  7  percent  credit, 
equivalent  to  an  investment  allowance  of  14  percent  (23  percent  for  corporations  subject  only  to  the  normal 
tax). 


An  8  percent  investment  credit  reduces  the  gross  financing  costs  of  a  10-year 
asset  as  much  as  would  a  reduction  of  the  interest  rate  from  5  percent  to  3^ 
percent;  for  a  15-year  asset  from  5  percent  to  3^^  percent.  But  tlie  credit  does 
not  entail  the  balance  of  payments  and  other  difficulties  that  would  accompany  a 
concerted  effort  to  bring  long-term  interest  rates  down  by  such  a  large  extent. 
Some  critics  of  the  investment  credit  have  suggested  that  we  should  approach 
the  problem  of  increasing  investment  through  tax  changes  by  giving  first  priority 
to  measures  designed  to  add  to  consumer  demand.  An  increase  in  consumer 
demand  will  of  course  induce  additional  investment,  but  this  is  not  the  only  way 
in  which  the  level  of  investment  may  be  raised  and  it  would  be  wrong  to  place  our 
entire  reliance  on  this  approach.  This  is  because  investment  induced  by  consumer 
demand  suggests  primarily  expansion  using  existing  kinds  of  equipment  and  tech- 
niques, rather  than  more  efficient  and  larger  quantities  of  capital  per  worker  and, 
therefore,  greater  productivity.  We  cannot  bo  content  merelj'  with  the  level  of 
capital  formation  that  will  result  from  response  to  increased  consumer  demand. 
We  must  have  both  more  capital  equipment  per  unit  of  output  and  increased 
demand  for  that  output.  Thus  a  higher  rate  of  growth  requires  a  more  rapid 
accumulation  of  productive  facilities  than  would  be  forthcoming  if  investment 
were  induced  solely  by  an  increase  in  final  demand.  The  American  economy  now 
is  much  in  need  of  modernization  of  its  capital  equipment  which,  in  the  techno- 
logical environment  of  the  1960's,  requires  an  increase  in  the  ratio  of  capital  to 
output.     One  of  the  important  means  of  achieving  a  higher  rate  of  economic 


EXHIBITS  313 

growth  lies  precisely  in  increasing  this  ratio,  and  a  direct  approach  to  investment 
incentives  is  needed  to  accomplish  this.  We  must  increase  the  overall  attractive- 
ness of  investment  at  any  given  volume  of  consumer  demand  in  order  that  our 
productivity  and  growth  may  be  maximized. 

With  this  objective  in  mind,  the  credit  should  be  viewed  primarily  as  a  means 
of  encouraging  the  modernization  of  industrial,  mining,  agricultural,  and  other 
equipment,  increasing  the  productivity  of  the  American  economy  by  adding  to 
the  quantity  and  quality  of  capital  available  per  worker,  and  increasing  the  rel- 
ative attractiveness  of  investment  at  home  compared  with  investment  abroad. 

Those  who  are  properly  concerned  about  the  existing  gap  between  current  and 
full  employment  output  urge  that  this  gap  should  be  filled  by  expansion  of  con- 
sumer demand.  But  the  increase  in  overall  demand  required  to  bring  the  econ- 
omy closer  to  full  employment  need  not  consist  solely  of  an  increase  in  consumer 
demand.  Increased  investment  adds  equally  to  aggregate  demand,  and  in  the 
transition  to  full  employment  the  rising  aggregate  demand  due  to  increased 
investment  will,  by  transmitting  itself  through  the  economy,  add  substantially 
to  consumer  demand.  Moreover,  in  this  transition  period  the  total  increase  in 
demand,  generated  by  increased  investment  but  including  additional  outlays  on 
consumer  goods  and  services,  will  far  exceed  any  overall  increase  in  capacity. 
Thus  the  credit  will  contribute  significantly  to  our  objective  of  achieving  a  higher 
level  of  employment.  It  should  be  clearly  noted  that  the  increased  productive 
capacity  resulting  from  a  more  rapid  rate  of  capital  formation  will  also  in  the  long 
run  make  possible  far  higher  levels  of  consumption. 

Another  objection  to  the  investment  credit  stems  from  concern  about  our  ability 
to  maintain  full  utilization  of  the  increased  productive  capacity  after  it  has  been 
acquired.  I  believe  that  this  concern  reflects  a  viewpoint  that  is  far  too  pessimis- 
tic. The  underlying  forces  of  expansion  in  our  economy  are  strong  and  will  be 
strengthened  further  by  the  enactment  of  the  investment  credit.  The  substantial 
anticipated  increase  in  the  labor  force  in  the  years  ahead  pi-ovides  a  challenge  and 
an  opportunity,  if  the  necessary  tools  of  production  are  forthcoming,  for  a  more 
rapid  rate  of  economic  growth  than  we  have  experienced  in  recent  history.  I  am 
confident  that  this  administration  will  take  such  steps  as  are  needed  to  maintain 
the  required  level  of  total  demand.  The  economic  effects  of  the  investment  credit 
will  make  its  task  easier.  It  is  in  the  context  of  this  approach  to  public  policy  that 
the  merits  of  the  investment  credit  must  be  appraised. 

Another  criticism  which  was  heard  frequently  last  year  was  based  on  a  mis- 
understanding. This  was  the  thought  that  the  credit  is  a  temporary  remedy  for 
recession  or  that  it  would  be  somehow  offset  by  more  restrictive  administration  of 
depreciation.  The  arguments  I  have  made  for  the  credit  clearly  reveal  that  such 
legislation  must  be  a  permanent  part  of  our  tax  code  if  we  are  to  meet  foreign 
competition,  and  our  administrative  action  in  the  textile  field  is  a  harbinger  of 
what  is  being  prepared  for  other  fields — more  liberal  rather  than  more  restrictive 
administrative  action. 

Finally  there  has  been  the  criticism  that  holds  that  the  credit  is  a  form  of 
subsidy  which  other  incentive  measures  are  not  and  that  it  will  not  be  sufficiently 
effective  as  a  means  of  increasing  investment.  Those  who  hold  this  view,  in- 
cluding the  National  Association  of  Manufacturers,  usually  favor  the  acceleration 
of  depreciation  beyond  what  is  justified  on  the  basis  of  realistic  accounting.  Care- 
ful study  and  consideration  of  a  wide  variety  of  alternatives  to  the  investment 
credit  show,  however,  that  all  of  these  alternatives,  without  exception,  share  the 
same  characteristic  of  giving  the  investor  in  equipment  a  monetary  reward  beyond 
what  he  would  receive  on  the  basis  of  realistic  accoimting.  The  element  of  sub- 
sidy or  incentive  is  equally  present  in  all  of  them.  We  have  chosen  the  credit 
primarily  because  it  increases  the  profitability  of  investment  far  more  per  dollar 
of  revenue  cost  than  any  of  the  other  alternatives.  For  example,  the  first  5  years' 
revenue  cost  of  a  20  percent  initial  allowance  would  exceed  that  of  an  8  percent 
investment  credit  by  about  $1  billion,  but  the  allowance  would  increase  the  prof- 
itability of  investment  in  a  10-year  asset  by  less  than  10  percent,  compared  with 
more  than  40  percent  for  the  investment  credit.  Even  a  40  percent  initial  allow- 
ance, the  cost  of  which  over  the  next  5  years  would  be  more  than  twice  as  great  as 
the  cost  of  the  credit,  would  have  an  appreciably  smaller  effect  on  profitability 
for  assets  with  expected  useful  lives  of  up  to  20  years. 

Similar  conclusions  emerge  from  our  analysis  of  such  incentives  as  triple-declin- 
ing balance  depreciation  and  across-the-board  percentage  increases  in  depreci- 
ation allowances.     In  addition  all  of  these  alternatives  which  go  beyond  realistic 


314   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

depreciation  suffer  from  a  number  of  important  disadvantages  which  are  not 
associated  with  the  investment  credit.  Unrealistically  high  depreciation  charges 
tend  to  distort  income  accounting  and  produce  higher  costs  for  tax  and,  in  the 
case  of  a  great  number  of  firms,  book  purposes.  Such  higher  costs  may  frequently 
be  reflected  in  higher  prices.  Since  they  also  cost  the  Government  more  and 
provide  a  lesser  stimulus  to  investment,  it  seems  clear  that  the  investment  credit 
is  the  best  way  in  which  to  supply  the  additional  incentive  that  is  so  badly  needed. 

In  general,  the  House  bill  carries  out  the  President's  recommendation  on  the 
investment  credit  in  an  acceptable  manner.  As  you  know,  however,  the  general 
rate  of  the  investment  credit  was  reduced  in  the  final  stage  of  House  consideration 
of  the  bill  from  8  percent  to  7  percent  in  order  to  achieve  an  overall  revenue 
balance  in  the  bill.  At  the  same  time  the  House  reduced  the  limit  on  the  credit 
allowable  against  tax  liability  in  any  taxable  year  from  the  first  $100,000  plus  50 
percent  of  the  excess  to  $25,000  plus  25  percent.  Although  a  7  percent  credit 
would  provide  a  substantial  stimulus  to  investment,  the  8  percent  figure  was 
originally  chosen  because  it  produced  the  maximum  stimulus  consistent  with  our 
revenue  needs.  I  therefore  urge  the  committee  to  restore  the  credit  to  the  orig- 
inal level  as  reported  by  the  Ways  and  Means  Committee.  It  would  also  be 
helpful  if  the  committee  would  restore  the  limitation  over  $25,000  to  the  50 
percent  figure  originally  adopted  by  the  Ways  and  Means  Committee.  These 
two  changes  can  be  accomplished  at  a  gross  cost  of  $375  million,  which  would  be 
more  than  offset  by  other  changes  which  I  shall  suggest.  In  order  to  reduce  the 
revenue  cost  of  the  credit  for  fiscal  year  1963  I  recommend  that  the  25  percent 
limit  be  retained  for  the  current  year.  This  would  hold  the  gross  increase  in  cost 
for  fiscal  year  1963  to  $135  million,  which  would  be  more  than  offset  by  other 
reductions  in  the  cost  of  the  credit  which  I  shall  suggest. 

Under  the  House  bill  the  credit  can  be  taken  on  up  to  $50,000  a  year  in  used 
equipment  which  otherwise  meets  the  tests  of  eligibility.  This  feature  is  intended 
to  aid  small  businesses,  which  frequently  purchase  used  equipment.  It  should 
help  those  smaller  firms  with  limited  capital  resources  which  seek  to  upgrade  their 
equipment  by  replacing  wholly  obsolete  assets  with  used  but  more  recent  models. 
At  the  same  time  adequate  safeguards  are  provided  to  ensure  against  abuses  that 
might  otherwise  arise  as  a  consequence  of  fictitious  trading  in  used  assets. 

H.R.  10650  provides  a  partial  credit  of  3  percent  with  respect  to  otherwise 
qualified  outlays  by  regulated  public  utilities  such  as  electric  power,  gas,  and 
telephone  companies.  The  full  credit  is  allowed  transportation  companies  which 
do  not  enjoy  the  monopoly  privileges  of  the  other  utilities,  and  whose  rates  are 
not  regulated  in  a  manner  designed  to  permit  a  specific  rate  of  return  for  each 
company.     The  full  credit  is  also  allowed  to  gas  pipehnes. 

The  President's  original  proposal  recommended  that  the  credit  not  apply  to 
regulated  public  utility  corporations.  This  recommendation  was  made  with  full 
recognition  of  the  great  contribution  the  utilities  make  to  the  American  economy. 
It  was  based  on  the  fact  that  public  utilities  are  regulated  monopolies  with  sub- 
stantial assurance  of  a  given  rate  of  return  on  investment  after  tax.  Moreover, 
investment  in  public  utility  facilities  is  based  largely  on  demand,  governed  by 
public  requirements. 

After  evaluating  serious  conflicting  considerations,  the  Ways  and  Means  Com- 
mittee and  the  House  adopted  a  compromise  position,  granting  a  3  percent  rather 
than  a  7  percent  credit  to  eligible  investments  of  the  utilities.  While  we  recognize 
that  industrial  power  costs  are  an  important  element  in  manufacturing  costs,  we 
have  not  been  able  to  separate  this  element  of  the  utility  business  from  the  regu- 
lated fields  of  commercial  and  household  consumption.  For  this  reason  and  for 
the  reasons  more  fully  set  out  in  Exhibit  V,  the  Treasury  considers  that  on  balance 
the  issue  would  be  better  resolved  through  the  exclusion  of  the  regulated  utilities 
in  the  electric,  gas,  and  communications  fields.  The  Federal  Power  Commission 
has  informed  us  that  the  gas  pipelines  share  the  basic  characteristics  of  these  regu- 
lated utilities  and  would  be  treated  for  ratemaking  purposes  in  the  same  manner. 
For  this  reason  gas  pipelines  should  be  grouped  with  other  regulated  public  utilities 
and  be  excluded  from  qualification  for  the  credit.  The  revenue  gain  from  ex- 
clusion of  these  utilities  from  the  credit  in  the  House  bill  would  amount  to  more 
than  $250  million.  With  the  changes  I  have  suggested  the  annual  gross  cost  of 
the  investment  credit  when  fully  operable  will  be  $1,350  million,  based  on  level  of 
investment  anticipated  for  1962. 

'  Omitted  from  this  exhibit;  for  document  reference  see  note  at  end  of  this  statement. 


EXHIBITS  315 

I  should  like  to  taake  a  few  concluding  comments  on  the  investment  credit  pro- 
posal before  passing  on  to  other  aspects  of  the  bill.  Throughout  our  economy, 
there  will  be  thousands  of  investment  decisions  involving  billions  of  dollars  during 
the  remainder  of  this  year  and  in  succeeding  years  which  may  hinge  on  the  out- 
come of  this  legislation.  There  is  often  a  thin  line  between  a  yes  and  no  decision 
in  the  investment  area.  With  the  credit  we  will  have  affirmative  actions  where 
there  would  otherwise  be  none. 

This  matter  has  top  priority  in  the  agenda  for  tax  reform.  As  chief  financial 
officer  of  the  Nation,  I  do  not  lightly  regard  tax  abatements  on  the  scale  proposed 
here.  I  urge  this  legislation  because  it  will  make  a  real  addition  to  growth  con- 
sistent with  the  principles  of  a  free  economy;  because  it  will  provide  substantial 
help  in  alleviating  our  balance-of-payments  problem,  both  by  substantially  in- 
creasing the  relative  attractiveness  of  domestic  as  compared  with  foreign  invest- 
ment and  by  helping  to  improve  the  competitive  position  of  American  industry  in 
markets  at  home  and  abroad;  and  because,  far  from  adding  to  the  forces  responsible 
for  alternating  recessions  and  recoveries,  it  will  be  of  major  assistance  in  strength- 
ening our  present  recovery  and  enabling  us  to  attain  a  higher  rate  of  growth  and 
sustained  full  employment.  Early  action  will  resolve  uncertainty  or  hesitancy 
and  begin  at  once  a  strong  and  lasting  incentive  for  modernization  of  the  productive 
facilities  of  our  national  economy. 

The  rest  of  the  bill  and  our  further  recommendations  will  bring  substantial 
improvements  in  tax  equity  and  will  more  than  offset  the  gross  cost  of  an  8  percent 
investment  credit. 

Gains  from  the  disposition  of  depreciable  property  (section  14) 

The  President  recommended  that  capital  gain  treatment  be  withdrawn  from 
gains  on  the  disposition  of  depreciable  property,  both  real  and  personal,  to  the 
extent  of  prior  depreciation  allowances.  Such  gain  reflects  depreciation  al- 
lowances in  excess  of  the  actual  decline  in  value  of  the  asset  and  under  the  Presi- 
dent's proposal  would  be  treated  as  ordinary  income.  Any  gain  in  excess  of  the 
cost  of  the  asset  would  still  be  treated  as  capital  gain.  This  reform  would  elimi- 
nate an  unfair  tax  advantage  which  the  law  today  gives  to  those  who  depreciate 
property  at  a  rate  in  excess  of  the  actual  decline  in  market  value  and  then  proceed 
to  sell  the  property,  thus,  in  effect,  converting  ordinary  income  into  a  capital  gain. 
It  is  particularly  essential  at  this  time  in  view  of  the  impending  administrative 
revision  of  depreciation  guidelines. 

Under  H.  R.  10650  gain  on  the  disposition  of  depreciable  personal  property, 
and  certain  other  property  which  is  eligible  for  the  investment  credit,  will  be 
treated  as  ordinary  income  to  the  extent  of  depreciation  taken  for  taxable  years 
beginning  after  December  31,  1961. 

However,  the  House  failed  to  act  on  the  President's  proposal  as  it  applies  ta 
real  estate,  largely  because  of  difficulties  in  reaching  a  consensus  on  the  appro- 
priate remedy.  There  nevertheless  appears  to  be  recognition  that  excessive  de- 
preciation in  the  real  estate  area  is  a  serious  problem  and  that  some  action  is  required. 

It  is  my  view  that  it  would  be  unwise  to  delay  action.  I  therefore  renew  the 
recommendation  for  legislation  at  this  time.  Specifically  I  recommend  that  de- 
preciation, with  respect  to  all  real  property  hereafter  acquired,  be  limited  to  an 
amount  not  in  excess  of  the  depreciation  allowed  under  the  straight-line  method 
Under  present  rules  depreciation  at  accelerated  rates  applies  not  only  to  the  tax- 
payer's investment,  but  also  to  the  amount  of  mortgage  indebtedness  to  which 
the  property  is  subject.  Since  the  acquisition  of  real  property  is  usually  heavily 
financed  by  mortgage  indebtedness,  accelerated  depreciation  often  provides  de- 
ductions far  in  excess  of  the  income  from  the  property.  In  such  cases  the  investor 
is  able,  because  of  the  depreciation  deduction,  to  amortize  the  principal  of  the 
mortgage,  to  obtain  a  nontaxable  cash  return  of  10  to  12  percent  or  more  on  his 
equity  investment,  and  even  to  wipe  out  tax  on  other  income  at  top  bracket  rates. 
When  the  depreciation  deductions  cease  to  produce  such  spectacular  results,  the 
property  is  frequently  sold.  Thus  the  excess  depreciation,  having  been  charged 
against  income  taxable  at  ordinary  rates,  is  recouped  and  taxed  only  as  capital 
gains.     Concrete  examples  of  this  process  are  contained  in  Exhibit  VI. ^ 

Furthermore,  accelerated  depreciation  applied  to  real  estate  is  not  an  appro- 
priate measure  of  decline  in  value.  Real  estate,  unlike  personal  property,  does 
not  generally  suffer  unusually  heavy  depreciation  in  the  early  years  of  its  life. 

1  Omitted  from  this  exliibit;  for  document  reference  see  note  at  end  of  this  statement. 


316   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

In  addition,  gain  on  the  sale  of  all  real  property  should  be  treated  as  ordinary 
income  to  the  extent  of  depreciation  for  taxable  years  beginning  after  December 
31,  1961.  To  meet  the  assertion  of  real  estate  investors  that  such  ordinary  income 
treatment  would  operate  peculiarly  in  the  real  estate  area  to  lock  them  into  their 
investments  after  a  long  period  of  time,  such  treatment  could  be  subject  to  a  slid- 
ing scale  cutoff  as  follows:  In  the  case  of  real  estate  held  for  6  years  or  less  at  time 
of  disposition,  gain  would  be  ordinary  income  to  the  extent  of  100  percent  of  depre- 
ciation for  taxable  years  beginning  after  December  31,  1961;  in  the  case  of  real 
estate  held  for  more  than  6  years  prior  to  disposition,  the  percentage  of  such  de- 
preciation which  would  be  treated  as  ordinary  income  would  be  reduced  by  one 
percentage  point  for  each  month  the  property  has  been  held  in  addition  to  6  years. 

A  sliding  scale  cutoff,  starting  as  early  as  6  years  after  acquisition,  is  appropriate 
only  if  depreciation  of  real  estate  is  limited  to  the  straight-line  method.  Even  with 
straight-line  depreciation,  taxation  of  gain  on  the  sale  of  depreciable  real  estate  at 
ordinary  income  rates  to  the  extent  of  prior  depreciation  is  necessary  for  at  least 
the  period  provided  in  the  sliding  scale  cutoff.  This  will  relieve  the  pressure  on 
depreciable  lives  that  would  otherwise  obtain  and  will  permit  more  flexibility  to 
the  taxpayer.  It  will  therefore  limit  disputes  in  the  determination  of  tax  lives, 
salvage  values,  and  expenditures  allowable  as  repair  deductions  for  depreciable 
real  estate. 

The  House  bill  also  should  be  amended  to  provide  for  the  treatment  as  ordinary 
income  of  gain  on  the  sale  of  depreciable  property  to  the  extent  of  prior  deductions 
for  amortization  of  interests  in  depreciable  property,  in  order  to  prevent  avoidance 
of  this  section  by  the  use  of  leaseholds  of  depreciable  property. 

The  revenue  gain  to  be  realized  from  the  enactment  of  the  House  bill's  provi- 
sion for  taxation  of  gain  on  the  sale  of  depreciable  property  is  $100  million.  Add- 
ing the  features  I  have  recommended  with  respect  to  real  property  will  add  a 
further  $80  million  to  our  tax  receipts. 

Expense  accounts  (section  4) 

One  of  the  most  publicized  and  troublesome  areas  in  our  tax  system  today  is  the 
deductible  expense  account.  The  problem  is  not  simply  one  of  the  tax  avoidance 
that  arises  through  abuse  of  existing  rules,  such  as  disguising  as  business  expense 
the  entertainment  and  recreational  activities  of  members  of  the  family  or  the  gross 
overestimating  of  expenditures  on  business  entertainment.  The  requirement  in 
the  House  bill  that  entertainment,  traveling,  and  gift  expenses  be  properly  sub- 
stantiated represents  an  effective  step  forward  in  controlling  this  abuse.  But  even 
where  business  associates  are  involved  and  proper  records  are  kept,  present  law 
allows  members  of  a  select  group  to  charge  a  large  portion  of  their  recreational  and 
personal  living  expenses  to  the  Federal  Government. 

Tighter  enforcement  of  present  law  is  not  the  answer  to  the  problem.  Under 
present  law  the  use  of  a  yacht  to  entertain  acquaintances  ostensibly  to  seek 
potential  business,  or  wining  and  dining  acquaintances  in  night  clubs  and  at 
cocktail  parties  for  similar  purposes,  can  be  charged  against  income  otherwise 
taxable.  This  confers  substantial  tax-free  personal  benefits  upon  those  offering  the 
entertainment  and  the  beneficiaries  of  the  entertainment.  Personal  expenses 
disguised  as  business  expenses  present  difficult  enforcement  problems.  Only  clear- 
cut  decisive  legislation  will  remedy  this  ever-worsening  situation,  with  its  unfor- 
tunate effects  on  the  morale  of  the  general  taxpayer  and  on  tax  revenues. 

Originally  in  the  House  and  today  before  this  committee,  we  urge  that  the  cost 
of  business  entertainment,  including  club  dues,  and  the  maintenance  of  entertain- 
ment facilities  (such  as  yachts  and  hunting  lodges)  be  disallowed  in  full  as  a  tax 
deduction.  Restrictions  should  also  be  imposed  on  the  amount  to  be  deducted  as 
business  gifts,  and  on  travel  expenses  for  vacations  that  are  combined  with  business 
travel.  To  permit  the  normal  conduct  of  business  affairs,  a  number  of  important 
exceptions  should  be  provided.  Thus,  deductions  should  not  be  denied  for  the 
cost  of  meals  in  surroundings  conducive  to  business  discussions,  employee  recrea- 
tional programs,  entertainment  extended  to  the  public  in  general,  and  similar 
items,  as  set  forth  in  the  House  bill. 

As  it  relates  to  entertainment  and  facilities,  H.R.  10650  is  designed  to  require  a 
closer  connection  between  the  entertainment  and  the  carrying  on  of  business 
activities.  While  this  will  enable  the  Internal  Revenue  Service  to  disallow  the 
cost  of  entertaining  which  is  not  directly  related  to  the  actual  conduct  of  business, 
the  House  provision  obviously  draws  only  a  vaguely  defined  line.  It  seems  certain 
that  considerable  controversy  and  litigation  will  ensue.  Moreover,  the  House 
approach  does  not  fully  solve  the  basic  problem.     It  still  permits  the  deduction. 


EXHIBITS  317 

for  a  relatively  small  and  select  group,  of  expenditures  which,  unlike  other  business 
expenses,  confer  substantial  personal  benefits  upon  their  recipients. 

As  regards  gifts,  the  House  provision  denying  deductions  for  business  gifts 
having  a  value  of  more  than  $25  would  effectively  curb  present  abuses. 

The  bill  before  you  will  also  effect  an  improvement  in  the  area  of  travel  expenses 
if,  as  we  assume,  the  standard  of  "reasonableness"  inserted  in  the  statutory 
provisions  dealing  with  the  deduction  of  traveling  expenses,  is  intended  to  curtail 
lavish  and  extravagant  expenditures.  However,  the  bill  fails  to  provide  for  any 
allocation  of  traveling  expenses  when  a  trip  is  devoted  partly  to  business  and  partly 
to  vacation;  deduction  of  the  total  expenses  of  such  travel  is  a  serious  abuse 
problem  today  and  a  reasonable  allocation  provision  is  needed. 

In  its  present  form,  the  expense  account  features  of  H.R.  10650  will  add  $125 
million  per  year  to  tax  receipts.  Adoption  of  the  provisions  we  are  now  recom- 
mending will  increase  this  figure  to  $250  million. 

Withholding  of  income  tax  at  source  on  interest  and  dividends  (section  19) 

An  obvious  defect  in  our  tax  system  lies  in  the  failure  of  some  individuals  to 
report  dividend  and  interest  income  on  their  tax  returns.  Most  dividend  and 
interest  recipients  are  responsible  taxpayers  who  faithfully  report  each  year  about 
$15  billion  of  such  income.  There  is,  however,  about  $3  billion  of  interest  and 
dividends  received  by  taxable  individuals  which  is  not  reported.  That  shortage 
results  in  a  revenue  loss  of  more  than  $800  million  annually,  which  must  be  made 
up  by  the  general  taxpayer. 

This  nonreporting  of  dividends  and  interest  is  a  chronic  problem  which  must  be 
dealt  with  effectively.  Billions  of  dollars  in  Government  revenues  have  been  lost 
over  the  years  and  the  substantial,  continuing  avoidance  of  tax  in  this  area  has 
a  demoralizing  effect. 

The  Government  has  not  let  this  problem  go  unchallenged.  Strong  efforts  have 
been  made,  with  the  full  support  and  cooperation  of  the  financial  community,  to 
improve  voluntary  compliance  through  educational  drives.  The  Internal  Reve- 
nue Service  has  enlarged  its  audit  enforcement  and  educational  activities  in  this 
area.     But  the  overall  results  have  been  disappointing. 

It  has  been  suggested  that  in  the  future,  with  automatic  data  processing, 
additional  information  reporting  by  interest  and  dividend  payers,  and  more 
audit  enforcement  effoi't,  the  nonreporting  gap  might  be  closed.  This  approach 
has  been  carefully  studied  by  our  tax  administrators.  But  the  failure  to  report 
dividends  and  interest  is  a  mass  compliance  problem  involving  millions  of  trans- 
actions and  ADP,  although  helpful  in  the  sorting  of  information  documents 
filed  by  payers,  will  not,  in  itself,  collect  any  tax.  To  collect  taxes  by  this  proce- 
dure would  require  an  inordinate  amount  of  time,  manpower,  and  money  in 
audit-foUowup  and  collection  procedures,  as  well  as  the  use  of  at  least  250  million 
information  returns.  Moreover,  at  best,  the  Government  could  be  expected 
to  recover  only  a  small  portion  of  the  unpaid  taxes  which,  though  large  in  total, 
represent  an  aggregation  of  a  large  number  of  rather  small  sums. 

The  Commissioner  of  Internal  Revenue  has  concluded  that  the  ADP-enforce- 
ment  approach  alone,  as  compared  to  withholding,  "would  be  burdensome  and 
expensive  to  business  and  Government  out  of  all  proportion  to  the  effect  it  would 
have  on  the  reporting  gap."  He  estimates  that,  even  with  a  substantially  en- 
larged enforcement  and  collection  effort,  based  upon  greatly  expanded  reporting 
by  payers  of  interest,  this  approach  would  only  reduce  the  nonreporting  gap  by 
about  25  percent  as  compared  to  80  percent  for  withholding.  At  the  same  time, 
withholding  will  cost  the  Service  about  one-third  less,  $19  million,  as  compared 
with  $27  million. 

The  Commissioner  regards  withholding  as  "the  most  workable,  business- 
like approach"  for  closing  the  gap,  by  assuring  the  automatic  collection  of  tax  at 
the  first  tax  bracket  rate.  ADP,  as  a  system  complementary  to  withholding, 
can  be  efficiently  and  effectively  apphed  to  assist  in  achieving  tax  compliance  in 
the  higher  income  brackets. 

The  President's  recommendation  for  tax  withholding  does  not  involve  a  new 
tax  on  dividend  and  interest  income;  it  is  simply  an  administrative  device  to 
assure  collection  of  existing  tax  obligations.  We  have  had  tax  withholding  on 
wages  and  salaries  for  almost  two  decades.  It  is  a  proven  tax  collection  method — 
helpful  not  only  to  the  Government  but  also  to  taxpayers  as  a  gradual  and 
systematic  method  of  tax  payment  and  collection.  Since  most  dividend  and 
interest  recipients  also  are,  or  have  been,  wage  and  salary  earners,  withholding 
on  dividends  and  interest  would  in  large  part  cover  taxpayers  already  familiar 


318        1962    REiPORT    OF    THE    SECRETARY    OF    THE    TREASURY 

with  withholding  operations.  The  House  bill  provides  for  exemptions  froni 
withholding  for  most  interest  and  dividends  receivable  by  all  children  under 
18  and  for  adults  who  do  not  expect  to  owe  any  tax.  It  also  provides  for  prompt 
quarterly  refunds  in  all  cases  involving  overwithholding. 

The  rnechanics  Of  withholding  on  dividends  and  interest  will  be  simple.  Th6 
institution  paying  the  dividends  and  interest  will  merely  total  up  the  amount  of 
dividends  or  interest  due  to  persons  who  have  not  filed  exemption  certificates, 
deduct  20  percent  of  this  total  amount,  and  pay  the  20  percent  over  to  the 
Government  at  the  end  of  the  month  following  the  quarter  in  which  the  div- 
idends or  interest  are  paid.  It  will  pay  each  dividend  or  interest  recipient  who 
has  not  filed  an  exemption  certificate  80  percent  of  the  amount  of  his  dividend 
or  interest.  It  will  not  be  necessary  for  payers  to  furnish  information  statements 
either  to  the  Government  or  to  the  recipient  of  dividends  or  interest.  Persons 
who  have  filed  exemption  certificates  will  be  paid  the  full  amount  of  the  dividend 
or  interest. 

Dividend  and  interest  withholding  is  equally  simple  for  the  recipient.  Since 
withholding  will  always  bo  at  a  flat  20  percent  rate,  the  recipient  can  easily  deter- 
mine how  much  has  been  withheld.  In  fact,  the  recipient  does  not  even  have  to 
know  how  much  has  been  withheld  in  order  to  complete  his  tax  return.  The  return 
will  carefully  lead  him  through  a  simple  gross-up  procedure  whereby  he  can 
determine  the  amount  of  his  dividends  and  interest  to  be  included  in  his  income 
and  the  credit  he  is  allowed  for  the  amount  of  tax  withheld. 

The  mechanics  of  the  Treasury's  original  withholding  proposal,  with  no  pro- 
vision for  exemption  certificates,  were  even  simpler.  The  Ways  and  Means 
Committee  after  full  consideration,  however,  decided  that  a  system  of  exemption 
certificates  for  nontaxable  individuals  is  more  desirable.  Although  this  will 
mean  some  additional  record  keeping  for  payers,  the  House  felt  that  the  benefits 
of  an  exemption  procedure  clearly  outweigh  the  additional  work  involved. 

The  withholding  provisions  of  H.R.  10650,  which  would  be  made  effective 
on  January  1,  1963,  meet  the  President's  objective  in  this  area.  It  is  estimated 
that  the  withholding  system  provided  in  the  bill  will  recoup  $650  million  of  the 
annual  revenue  loss  resulting  from  the  nonreporting  of  dividends  and  interest 

Provisions  involving  tax  equality  among  competing  businesses 

1.  Tax  treatment  of  cooperatives  and  patrons  (section  17) 

Legislation  enacted  by  the  Congress  in  1951  was  intended  to  tax  cooperative 
income  on  a  current  basis  at  the  cooperative  level  if  the  income  was  not  paid 
out  or  allocated  as  patronage  dividends,  or  at  the  patron  level,  if  it  was  paid 
out  or  allocated.  As  the  result  of  court  decisions  which  held  that  certain  non- 
cash patronage  refunds  are  nontaxable  when  received  by  patrons,  even  though 
the  dividends  continued  to  be  deductible  by  the  cooperatives,  this  intent  has 
not  been  carried  out. 

The  President  recommended  that  the  law  be  amended  to  make  the  intent 
of  the  1951  legislation  effective.  Another  recommendation  would  extend  the 
proposed  tax  withholding  on  dividends  and  interest  to  patronage  dividends. 
Withholding  on  patronage  dividends  at  the  20  percent  rate  would  assure  the 
average  patron  of  the  funds  with  which  to  meet  his  tax  on  noncash  dividends. 

The  House  bill  provides  an  adequate  remedy  for  the  unintended  exemption 
of  some  cooperative  income.  Under  the  bill,  cooperatives  would  be  permitted 
a  deduction  for  patronage  dividends  paid  in  cash  and  for  noncash  dividends 
paid  in  the  form  of  written  notices  of  allocation.  These  written  notices  of  al- 
location, in  the  form  of  noncash  or  "scrip"  dividends,  would  be  deductible  by 
the  cooperative  either  if  they  are  payable  in  cash  within  90  days  at  the  option 
of  the  patron  or  if  the  patron  has  consented  in  writing  to  include  them  in  his  in- 
come, or  if  the  cooperative  has  adopted  a  bylaw  requiring  all  patron  members 
to  pay  tax  on  these  written  notices  of  allocation.  As  under  present  law,  patrons 
wovild  not  have  to  pay  tax  on  dividends  received  with  respect  to  purchases  of 
items  for  personal  use. 

Cooperatives  engaged  in  furnishing  electrical  energy  or  providing  telephone 
service  in  rural  areas  would  not  be  subject  to  these  provisions  as  these  cooper- 
atives are  exempt  from  taxation  or  are  in  the  process  of  qualifying  for  exemption. 

The  enactment  of  the  House  bill  will  ensure  that  the  earnings  of  cooperatives 
will  be  taxed  currently,  either  to  tlie  cooperative  or  to  the  patrons.  This  pro- 
vision will  yield  $35  million  per  year  in    additional  revenue. 


EXHIBITS  319 

2.  Taxation  of  mutual  fire  and  casualty  insurance  companies  (section  8) 

The  House  bill,  in  line  with  the  President's  recommendation,  is  designed  to 
achieve  more  equal  treatment  of  stock  and  mutual  fire  and  casualty  insurance 
companies.  Since  1942  the  mutual  companies  have  been  taxed  only  on  their 
investment  income,  subject  to  a  minimum  tax  of  one  percent  on  gross  income 
from  all  sources.  This  formula  disregards  both  underwriting  gains  and  under- 
writing losses.  On  the  other  hand,  the  stock  companies  are  fully  taxed  on  all 
of  their  income,  in  the  same  manner  as  other  corporations. 

Under  H.R.  10650  mutual  fire  and  casualty  companies,  after  generous  pro- 
vision for  reserves  for  losses  in  a  deferred  income  account,  would  be  subject 
to  tax  at  ordinary  corporate  rates  on  net  underwriting  and  investment  income. 
Amounts  equal  to  one  percent  of  claims  paid  plus  one-quarter  of  underwriting 
gain  may  be  deducted  from  currently  taxable  income  and  credited  to  a  deferred 
income  account.  If  the  amount  set  aside  in  this  accoimt  in  any  taxable  year 
is  not  used  to  absorb  losses  in  the  following  5  years  it  will  be  added  to  taxable 
income  in  the  sixth  year,  but  only  to  the  extent  of  the  one  percent  of  claims  paid 
and  one-half  of  the  one-quarter  of  underwriting  gain  that  remains.  Thus  one- 
eighth  of  underwriting  gains  may  be  permanently  deferred  from  taxation  and, 
in  addition,  taxation  of  a  large  portion  of  underwriting  gains  is  deferred  for  5 
years. 

The  5-year  deferral  provision  is  continuous  in  its  effect;  taxation  of  each  succeed- 
ing year's  underwriting  gain  is  deferred  for  5  years.  Thus  it  is  more  than  a  mere 
transition  to  regular  corporate  taxation.  If  the  growth  trend  of  the  mutual 
companies  continues,  each  successive  year's  underwriting  gains  will  exceed  the 
gains  of  the  fifth  preceding  year,  so  that  current  full  taxation  will  never  be 
achieved.  In  addition,  permanent  deferral  of  one-eighth  of  underwriting  gains 
is  a  windfall  for  the  most  profitable  companies;  only  those  companies  with  con- 
sistent underwriting  profits  will  be  able  to  enjoy  this  permanent  deferral  and  the 
larger  their  profits  the  greater  the  value  of  the  benefit. 

The  House  provisions  represent  an  important  step  towards  placing  the  mutual 
fire  and  casualty  insurance  companies  on  a  tax  basis  which  recognizes  under- 
writing as  well  as  investment  sources  of  income  or  loss.  But  the  regular  corpo- 
rate basis  of  taxation,  as  orginally  recommended  by  the  President,  and  as  now 
applied  to  the  stock  companies  would  provide  simpler  and  more  equitable  treat- 
ment. In  effect,  this  recommendation  would  eliminate  both  the  5-year  and 
permanent  deferral  provisions  of  the  House  bill.  Consideration  might  be  given 
to  providing  a  gradual  transition  to  regular  corporate  taxation  over  a  5-year  period. 
This  would  be  preferable  to  the  continuing  and  permanent  deferral  provisions 
of  the  House  bill. 

Full  corporate  taxation  would  yield  about  $50  million  of  additional  revenue 
annually.  The  provisions  in  the  House  bill  will  yield  about  $40  million  after 
the  lapse  of  5  years. 

3.  Mutual  savings  banks  and  savings  and  loan  associations 

Under  present  law,  mutual  savings  banks  and  savings  and  loan  associations 
can  deduct  from  their  income  amounts  added  to  a  reserve  for  bad  debts  until 
reserves,  surplus,  and  undivided  profits  equal  12  percent  of  deposits  or  with- 
drawable accounts.  As  a  result,  during  the  entire  decade,  1952-1961,  all  mutual 
savings  banks  and  savings  and  loan  associations  paid  total  Federal  income  taxes 
of  less  than  $70  million,  while  at  the  same  time  they  retained  $5.5  billion  as  addi- 
tions to  reserves,  surplus,  and  undivided  profits.  From  an  economic  and  account- 
ing point  of  view  a  large  part  of  the  untaxed  additions  to  bad  debt  reserves  con- 
stitutes net  income  which,  were  it  earned  by  competing  financial  institutions, 
would  be  subject  to  corporate  income  tax. 

H.R.  10650  goes  part  of  the  way  toward  implementing  the  President's  rec- 
ommendation that  the  tax  laws  should  assure  nondiscriminatory  treatment  of 
competing  financial  institutions.  It  reflects  the  conclusion  of  the  House  of 
Representatives  that  mutual  thrift  institutions  do  retain  a  considerable  amount 
of  income  which  should  be  subject  to  tax.  The  bill  would  substitute  for  the 
present  reserve  provision  an  annual  deduction  for  reserves  for  bad  debts  of  either 
3  percent  of  the  net  increase  in  all  real  estate  loans  or  60  percent  of  the  retained 
income  of  the  institutions. 

The  proposed  |substitute  reserve  provision  is  still  more  generous  than  is  war- 
ranted by  any  reasonable  concept  of  a  bad  debt  reserve.  The  alternative  de- 
duction of  60  percent  of  the  retained  income  of  these  organizations  is  not  related 


320   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

to  bad  debt  reserve  needs.  In  effect,  it  provides  that  the  mutual  thrift  institutions 
will  pay  tax  on  about  55  percent  of  their  operating  income,  computed  after  de- 
duction of  a  reasonable  reserve  for  bad  debts  and  after  distributions  to  depositors. 
In  contrast  the  estimated  comparable  percentage  for  commercial  banks  is  equal 
to  about  80  percent. 

I  believe  your  committee  will  wish  to  reexamine  this  provision  of  H.R.  10650 
in  the  light  of  the  President's  recommendations  to  assure  nondiscriminatory 
taxation  among  competing  financial  institutions.  The  action  by  the  House 
of  Representatives  will  yield  $200  million  per  year  in  revenue,  contrasted  with 
$365  million  under  a  proposal  that  would  provide  taxation  more  closely  compa- 
rable to  that  applicable  to  commercial  banks.  Such  comparability  could  be 
achieved  by  allowing  these  institutions  to  deduct  from  net  income  after  distri- 
butions to  depositors  an  amount  equal  to  either  3  percent  of  net  additions  to 
real  estate  loans,  as  in  the  House  bill,  or  33)4  percent  of  retained  income  before 
deduction  of  a  reserve  for  bad  debts.  This  alternative  would  permit  tax-free 
additions  to  reserves  of  amounts  well  in  excess  of  bad  debt  reserve  needs  and 
would  allow,  in  effect,  substantial  tax-free  additions  to  capital.  Under  these 
alternatives  the  mutual  thrift  institutions  would  pay  tax  on  about  80  percent 
of  their  net  operating  income,  and  thus  this  approach  would  achieve  substantial 
equality  in  the  taxation  of  competing  financial  institutions. 

Lobbying  expenses  (section  3) 

Section  3  of  the  House  bill  would  permit  taxpayers  engaged  in  business  to 
deduct  certain  lobbying  expenditures.  These  include  the  cost  of  appearing 
before  committees  of  Federal,  State,  or  local  legislative  bodies,  contacting 
individual  legislators,  transmitting  legislative  information  between  a  taxpayer 
and  an  organization  of  which  he  is  a  member,  and  the  portion  of  the  dues  paid 
by  a  member  attributable  to  carrying  on  of  such  activities  by  the  organization. 
The  Treasury  is  opposed  to  this  substantial  change  in  the  law. 

The  taxation  of  foreign  income  and  investment 

The  President's  recommendations  on  the  tax  treatment  of  foreign  income 
and  investment  all  support  the  general  principles  of  equity  and  neutrality  in 
the  taxation  of  U.S.  citizens  at  home  and  abroad,  and  as  such  would  promote 
fairness  and  the  efficient  allocation  of  resources  here  and  abroad.  Moreover,  since 
the  special  tax  preferences  we  seek  to  eliminate  tend  to  favor  foreign  over  home 
investment,  the  President's  recommendations  have  two  important  additional 
advantages  for  us  at  the  present  time.  They  will  promote  domestic  capital 
formation  and  employment,  and  thus  stimulate  economic  growth  in  this  countrJ^ 
They  will  thereby  reinforce  the  stimulating  effect  of  the  investment  credit,  which 
is  limited  to  domestic  investment.  Implementation  of  these  recommendations 
will  also  contribute  to  an  improved  balance-of-payments  position  for  at  least  the 
next  10  to  15  }^ears,  when  we  expect  we  will  most  need  that  improvement.  These 
considerations  lend  urgency  to  the  enactment  of  the  recommendations. 

H.R.  10650  contains  provisions  relating  to  all  of  the  President's  recommenda- 
tions, each  of  which  I  will  take  up  in  turn.  In  addition,  I  will  deal  with  the  growing 
problem  of  artificial  tax  incentives  to  short-term  capital  movements.  The 
bill  includes  several  technical  provisions  which  I  will  only  mention  here,  such  as 
those  dealing  with  gains  from  the  liquidation  of  foreign  corporations,  distributions 
in  kind,  rules  for  allocating  income  on  sales  between  U.S.  parent  corporations 
and  their  foreign  subsidiaries,  and  reporting  requirements  with  respect  to  foreign 
corporations.  Under  the  House  bill,  gain  from  the  sale  or  liquidation  of  a  stock 
interest  in  a  controlled  foreign  corporation  is  taxed  as  ordinary  income  to  the 
extent  of  the  stockholder's  share  of  earnings  accumulated  abroad.  The  com- 
mittee may  want  to  consider  whether  it  wishes  to  retain  the  applicability  of  this 
provision  to  earnings  heretofore  accumulated. 

1.  Exemption  of  earned  income  of  individuals  living  abroad  (section  12) 

Under  existing  law  an  American  citizen  who  qualifies  as  a  foreign  resident  is 
tax  exempt  on  all  of  his  income  earned  outside  the  United  States.  A  citizen 
who  does  not  establish  foreign  residence  but  remains  abroad  for  a  period  of  17 
out  of  18  consecutive  months  is  exempt  on  earned  income  of  up  to  $20,000  a 
year. 

H.R.  10650  would  continue  the  $20,000  annual  exemption  for  those  physi- 
cally present  abroad  for  17  out  of  18  months  but  would  limit  the  exemption  to 
$20,000  a  year  for  our  citizens  who  have  been  resident  abroad  for  three  or  less 


EXHIBITS  321 

years,  and  to  $35,000  a  year  for  those  who  have  been  residents  of  foreign  countries 
for  more  than  three  consecutive  years. 

There  are  about  50,000  U.S.  citizens  Hving  abroad  who  claim  an  aggregate 
exemption  of  more  than  $500  miUion  under  these  two  provisions.  The  President 
recommended  ehmination  of  the  exemption  privilege  for  American  citizens  living 
in  economically  developed  countries  since  neither  living  conditions  in  such  coun- 
tries nor  national  pohcy  requires  special  tax  benefits  in  these  cases.  Because 
it  is  in  our  national  interest,  however,  that  Americans  skilled  in  industry,  edu- 
cation, medicine  and  other  professions  be  encouraged  to  go  to  less-developed 
countries  and  contribute  to  their  economic  growth,  the  President  also  recom- 
mended continuing  exemption  for  our  citizens  who  qualify  as  foreign  residents 
of  these  less-developed  countries  or  who  are  present  there  for  17  out  of  18  con- 
secutive months,  but  only  to  the  extent  of  $20,000  a  year. 

The  limitations  in  the  bill  of  $20,000  and  $35,000  are  generous  in  view  of  the 
allowance  of  the  foreign  tax  credit  and  the  fact  that  income  that  is  exempt  from 
tax  is  income  that  would  otherwise  be  subject  to  higher  statutory  marginal  rates 
than  the  remaining  taxable  income.  An  American  citizen  living  abroad  and 
earning  a  salary  of  $50,000  would  pay  no  U.S.  tax  whatever  on  that  salary  under 
the  $20,000  exclusion  if  the  foreign  tax  rate  is  as  low  as  19  percent,  and  under 
the  $35,000  exclusion  if  the  foreign  tax  rate  is  as  low  as  7  percent.  Equity, 
revenue  needs,  and  balance-of-payments  considerations  all  warrant  modifying 
this  section  of  H.R.  10650  to  accord  with  the  President's  recommendation.  The 
bill's  provisions  on  this  matter  will  yield  only  $5  million  per  year  in  tax  revenue, 
compared  with  $25  million  under  the  President's  proposal. 

2.  Estate  tax  exemption  of  foreign  real  estate  (section  18) 

At  present,  foreign  real  estate  is  exempt  from  the  U.S.  estate  tax.  A  number 
of  persons  have  made  investments  in  such  property  to  take  advantage  of  this 
exemption — in  one  known  case,  for  the  specific  purpose  of  avoiding  estate  tax, 
$13  milhon  was  invested  in  this  way  within  6  months  of  death,  with  an  estimated 
tax  saving  of  $5  million. 

Under  legislation  adopted  in  1951,  a  tax  credit  is  allowed  for  estate  and  inher- 
itance taxes  paid  abroad,  and  there  is  therefore  no  longer  any  possible  justification 
for  continuing  the  special  exemption  for  foreign  real  estate.  The  amendment 
included  in  H.R.  10650  would  correct  this  defect  in  the  law  and  would  involve 
renegotiating  only  one  estate  tax  treaty,  that  with  Greece.  The  effective  date 
of  the  House  amendment  is  July  1,  1964,  but  it  would  seem  appropriate  to  change 
this  to  January  1,  1963.  This  provision  would  add  $10  to  $15  miUion  per  year 
to  our  tax  receipts. 

3.  Shares  in  foreign  investment  companies  (section  15) 

Unlike  regulated  domestic  investment  companies,  foreign  investment  companies 
whose  shares  are  held  by  persons  resident  in  the  United  States  are  not  subject 
to  U.S.  tax  on  income  currently  earned,  unless  that  income  is  from  U.S.  sources. 
Hence,  these  companies  provide  a  means  for  shareholders  in  this  country  to 
accumulate  investment  income  indefinitely  without  paying  American  taxes  at 
either  the  corporate  or  shareholder  level.  Moreover,  when  a  shareholder  re- 
ceives his  pro  rata  share  of  such  accumulated  earnings  by  submitting  shares  to 
the  company  for  redemption  or  by  seUing  the  shares,  he  obtains  capital  gains 
treatment  on  the  income. 

H.R.  10650,  following  the  President's  recommendation  that  this  escape  from 
ordinary  taxation  be  ended,  will  ehminate  the  preferential  treatment  of  income 
from  foreign  investment  companies.  Gain  on  the  sale  of  shares  in  such  companies, 
to  the  extent  of  the  shareholder's  undistributed  portion  of  the  company's  earnings, 
would  be  taxed  as  ordinary  income.  An  exception  is  allowed  if  the  company 
elects  to  distribute  90  percent  of  its  ordinary  income  annually  and  if,  in  addition, 
the  shareholders  report  their  portion  of  the  company's  realized  capital  gains, 
whether  or  not  they  are  distributed. 

It  was  not  possible  to  estimate  the  revenue  gain  from  this  particular  change. 
There  are  currently  13  such  companies,  most  of  them  Canadian,  registered  with 
the  Securities  and  Exchange  Commission,  having  total  assets  of  $422  million. 
In  addition,  there  are  apparently  many  more  companies  not  so  registered. 

4.  Foreign  trusts  (section  9) 

Under  present  law  many  American  citizens  are  accumulating  income  in  foreign 
trusts.     The  accumulated  income  is  subject  to  Uttle  or  no  foreign  tax.     When 


661496 — 63 22i 


322   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  trust  is  finally  terminated  after  a  number  of  years,  the  corpus  and  income 
are  brought  back  home  to  American  beneficiaries  who,  in  turn,  pay  little,  if  any, 
U.S.  tax  on  the  distribution.  The  House  bill  taxes  the  American  beneficiaries 
on  termination  of  the  trust  substantially  as  if  they  had  received  the  trust  income 
as  it  was  earned.  The  bill  therefore  ends  an  unjustifiable  device  through  which 
Americans  are  now  able  to  accumulate  income  abroad  solely  for  the  purpose  of 
escaping  the  U.S.  income  tax.  While  this  provision  of  the  bill  will  undoubtedly 
increase  our  revenues,  it  is  not  possible  to  make  any  valid  estimate. 

5.  "Grossing  up"  distributions  in  computing  foreign   tax  credit  on  dividends  from  foreign  subsidiary 
corporations  (section  11) 

The  income  of  an  American-owned  foreign  subsidiary  corporation  is  now  subject 
to  U.S.  tax  only  when  dividends  are  remitted  to  the  parent  company.  The 
U.S.  tax  is  computed  as  52  percent  of  the  actual  dividend  paid  to  the  parent 
companj'  less  a  tax  credit  approximately  equal  to  the  effective  foreign  tax  on 
this  dividend.  The  foreign  income  tax  is,  in  effect,  deducted  from  taxable  profits 
in  computing  the  U.S.  tax,  but  a  good  share  of  it  is  also  allowed  as  a  credit  against 
the  U.S.  tax  liability.  The  combined  effective  foreign  and  U.S.  tax  rate  under 
this  method  of  computation  can  be  reduced,  depending  on  the  foreign  tax  rate, 
to  about  45  percent,  or  even  40  percent  in  cases  involving  two  levels  of  foreign 
subsidiaries.     The  table  below  illustrates  this  point. 

Table  II. —  The  computation  of  corporate  taxes  on  foreign  income 


Profits  of  subsuliary.. 

Foreign  tax  (assumed  rate:  30  percent)-,. 

Dividend  to  U.S.  parent 

"(jross-up"  of  dividend 

Tentative  U.S.  tax  at  52  percent 

Credit  for  foreign  tax  paid  by  subsidiary. 

Net  U.S.  tax 

Combined  foreign  and  U.S.  tax 


Existing 
law 


Proposed 
law 


(Dollars) 


100. 00 
30. 00 
70.00 


36.  40 
21.00 
IS.  40 
45.40 


ion 

30 
70 
30 
52 
30 
22 
52 


To  eliminate  this  unjustified  tax  advantage,  H.R.  10650  contains  an  amendment 
that  would  require  the  U.S.  taxpayer,  as  a  condition  for  obtaining  the  foreign  tax 
credit,  to  include  in  reported  taxable  income  the  full  profit  before  the  payment  of 
foreign  tax.  This  results  in  a  combined  effective  U.S.  and  foreign  tax  rate  of  52 
percent,  where  the  foreign  rate  is  not  above  the  U.S.  rate.  This  amendment  will 
add  $30  million  per  year  to  tax  receipts. 

The  House  bill  postpones  the  effective  date  of  this  provision  in  two  ways.  It 
will  not  apply  to  pre-1963  earnings  of  foreign  subsidiaries  distributed  as  dividends 
before  1965,  and  it  will  not  apply  to  distributions  of  current  earnings  prior  to  Jan- 
uary 1,  1963.  There  is  no  reason  to  postpone  the  application  of  the  gross-up  pro- 
vision, especially  since  this  change  has  been  under  consideration  by  Congress  since 
1959.  I  therefore  urge  that  this  change  be  made  applicable  to  all  distributions 
after  December  31,1961. 

6.  "Tax  haven"  transactions  (section  13) 

Certain  countries  of  the  w'orld,  among  them  Switzerland,  Panama,  and  various 
Western  Hemisphere  dependencies  such  as  the  Bahamas,  do  not  tax  at  all,  or  tax 
at  very  low  rates,  corporate  earnings  attributable  to  activities  carried  on  outside 
their  borders.  This  situation,  together  with  the  privilege  of  deferring  U.S.  tax  on 
retained  earnings  of  foreign  subsidiaries  of  American  corporations,  has  invited  the 
establishment  of  what  may  be  termed  "tax  haven"  corporations.  Profits  on  over- 
seas operations  may  be  channeled  into  these  tax  havens  as  they  are  earned  and 
taxes  on  these  profits  reduced  to  a  level  far  below  that  applicable  in  the  United 
States.  The  typical  activities  of  such  corporations  include  the  handling,  as  mid- 
dleman, of  many  trade  transactions — transactions  which  often  are  largely  paper 
transactions  so  far  as  the  tax  haven  corporation  is  concerned.  Thej'  also  include 
the  sale  of  management  services,  the  collection  of  licensing  and  other  royalty  pay- 
ments, the  insurance  and  reinsurance  of  U.S.  risks,  and  the  like.     In  addition, 


dividends  and  interest  may  be  paid  to  these  tax  haven  companies  from  foreign 
subsidiaries  in  other  countries,  in  a  way  that  involves  large  savings  in  taxes. 

The  existence  of  these  tax  haven  operations  constitutes  a  most  serious  breach  in 
our  principle  of  tax  neutrality,  one  which  is  growing  in  quantitative  terms  by  leaps 
and  bounds  every  year.  We  are  dealing  here  with  a  tax  differential  on  retained 
income,  not  of  5  or  10  percentage  points,  but  of  40  to  50  percentage  points. 

H.R.  10650  contains  reasonably  strong  provisions  with  respect  to  tax  haven 
corporations,  subjecting  their  trading  earnings  and  income  from  dividends,  in- 
terest, rents,  and  royalties  to  U.S.  tax,  except  where  they  are  reinvested  in  less- 
developed  countries.  Receipts  from  insurance  against  U.S.  risks,  and  from  licens- 
ing of  patents,  copyrights,  and  so  forth,  which  have  been  developed  in  the  United 
States,  are  subject  to  tax  without  any  exception  for  reinvestment.  These  tax 
haven  provisions,  with  technical  refinement  to  clarify  their  application  and  to  in- 
clude certain  tax  haven  service  income,  will  achieve  a  substantial  improvement  in 
equity  and  contribute  as  well  to  the  solution  of  our  balance-of-payments  problem. 
They  will  also  bring  in  an  additional  $75  million  per  year  of  revenue. 

I  would  like  to  suggest  only  one  major  change  in  this  section  of  the  bill.  While 
it  is  desirable  to  promote  investment  in  less-developed  countries,  it  is  not  neces- 
sary to  do  so  by  providing  an  artificial  stimulus  to  investment  in  advanced  indus- 
trial countries.  The  exemption  of  tax  haven  profits  invested  in  less-developed 
countries  should  be  limited  to  earnings  generated  in  the  less-developed  countries 
themselves.  This  change  would  add  $25  million  to  annual  revenues,  increasing 
the  receipts  from  this  provision  to  $100  million. 

7.  General  elimination  of  deferral  in  the  taxation  of  foreign  subsidiaries  (section  13) 

H.R.  10650,  as  passed  by  the  House  of  Representatives,  apart  from  tax  havens, 
deals  only  peripherally  with  tax  deferral  for  foreign  income,  another  important 
tax  preference  now  accorded  foreign,  as  compared  with  domestic,  corporate  income. 
It  responds  to  the  President's  recommendation  in  this  area  only  insofar  as  it  specifies 
that  the  undistributed  foreign  income  of  U.S.  subsidiaries  operating  abroad  will 
be  subject  to  U.S.  tax  as  it  is  earned  unless  it  is  reinvested  in  substantially  the 
same  trade  or  business  already  conducted  by  the  firm  in  question,  or  in  a  less-de- 
veloped country. 

By  not  treating  the  tax  deferral  issue  fully  and  directly,  the  bill  still  retains  a 
substantial  tax  advantage  for  investment  abroad  rather  than  at  home.  The 
privilege  of  deferring  U.S.  taxes  until  income  is  repatriated  as  dividends  should 
simply  be  eliminated  for  our  subsidiaries  in  advanced  industrial  countries,  as  the 
President  has  requested.  The  deferral  privilege  should  be  retained,  for  in- 
come earned  in  less-developed  countries,  in  line  with  our  general  foreign  policy 
objectives. 

To  the  extent  that  the  U.S.  tax  exceeds  the  foreign  tax  liability,  tax  deferral 
provides  at  least  an  interest-free  loan  to  American  corporations  which  operate 
through  a  foreign  subsidiary — a  loan  equal  to  the  U.S.  tax  due  on  earnings 
retained  abroad — and  at  most  permanent  forgiveness  of  a  tax  domestic  corpora- 
tions must  pay.  Tax  deferral  thus  serves  as  a  special  tax  stimulus  for  American 
capital  to  go  abroad  and  to  stay  abroad.  No  useful  purpose  or  American  interest 
is  served  when  this  artificial  diversion  is  to  highly  developed  countries.  The 
efficient  allocation  of  our  own  and  world  resources  is  upset.  A  drain  is  imposed  on 
our  already  adverse  balance  of  payments  and  the  reduced  domestic  investment 
limits  employment  opportunities  and  retards  our  economic  growth. 

Let  me  turn  first  to  the  effect  on  employment.  Artificial  stimulation  of  Ameri- 
can investment  in  developed  countries  makes  it  more  difficult  to  maintain  a  high 
level  of  employment  at  home.  The  evidence  relating  to  foreign  investment  in 
manufacturing  as  a  whole  indicates  that  an  American  dollar  invested  in  Europe 
today  generates  a  continuing  annual  flow  of  about  10  cents  worth  of  U.S.  exports 
of  capital  equipment,  raw  materials,  intermediate  goods,  and  finished  products 
sold  to  and  through  overseas  subsidiaries.  That  same  dollar  also  generates  each 
year,  however,  about  6  cents  of  U.S.  imports  from  foreign  subsidiaries.  Moreover, 
the  "net  export"  factor  of  4  cents  per  dollar  invested  does  not  allow  for  sales  made 
abroad  by  the  foreign  subsidiaries  which  displace  actual  or  potential  sales  that 
would  otherwise  be  made  directly  from  the  United  States.  If  only  a  little  over 
one  percent  of  the  more  than  $9  billion  of  sales  by  American-owned  subsidiaries 
of  the  goods  which  they  produce  in  Europe  serves  to  displace  sales  from  U.S.  mar- 
kets, or  if  8  percent  of  estimated  sales  by  these  subsidiaries  made  outside  the 
country  in  which  they  are  located  displaces  sales  from  U.S.  sources,  the  net  ex- 


324   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

port  impact  on  the  United  States  of  foreign  investment  in  Europe  would  be  effec- 
tively offset. 

Comparison  of  the  precise  immediate  and  long-range  employment  effects  of 
investment  of  American  capital  in  Europe  and  investment  in  the  United  States 
depends  upon  how  much  of  our  capital  goods  exports  to  American  subsidiaries  in 
Europe  is  assumed  to  be  new  equipment  and  how  much  is  assumed  to  be  for  re- 
placement purposes.  The  most  favorable  measure  of  the  immediate  employment 
effect  in  the  United  States  of  a  dollar  invested  in  Europe,  on  the  basis  of  recent 
data,  would  be  that  it  generates  10  cents  worth  of  capital  equipment  exports 
from  the  United  States,  that  is,  that  a  dollar  invested  in  Europe  has  an  immediate 
effect  on  employment  equivalent  to  10  cents  invested  here  at  home.  But  under 
these  assumptions,  this  dollar  invested  in  Europe  then  generates  only  3  cents 
worth  of  continuing  exports  of  raw  materials  and  intermediate  products,  whereas 
the  dollar  invested  at  home  would  generate  40  cents  worth  of  continuing  produc- 
tion, assuming  in  both  cases  that  demand  is  sufficient  to  absorb  the  increased 
output. 

We  find  a  very  different  picture  in  the  relationship  between  U.S.  investment 
and  continuing  export  and  import  balances  with  respect  to  manufacturing  sub- 
sidiaries in  Latin  America  and  other  less-developed  regions.  A  dollar  invested 
in  these  regions  generates  about  40  cents  worth  of  net  U.S.  exports  annually. 
The  nature  of  manufacturing  investment  in  these  regions  is  radically  different 
from  that  in  advanced  industrial  countries.  This  difference  explains  why  data 
for  the  world  as  a  whole  differ  from  those  for  developed  countries  only. 

The  artificial  stimulation  of  U.S.  investment  in  developed  countries  is  harmful 
to  our  balance-of-payments  position.  Returning  to  my  analysis,  we  find  that 
each  dollar  thus  invested  contributes  substantially  to  our  balance-of-payments 
deficit.  It  has  been  argued,  however,  that  this  is  the  case  only  in  the  short  run. 
Sooner  or  later,  it  is  claimed,  this  outflow  will  result  in  compensating  inflows  in 
the  form  of  dividends,  fees,  and  royalties,  in  addition  to  inflows  from  continuing 
net  exports.  But  in  every  year  since  1953  the  new  capital  outflow  to  Canada  and 
Western  Europe  exceeded  the  new  increases  in  inflows  associated  with  the  capital 
outflow  in  these  years.  It  is  clear  that  the  catching-up  period  will  take  at  least  10 
to  15  years,  and  much  longer  if  capital  outflow  keeps  growing.  Obviously  our 
current  and  foreseeable  balance-of-payments  needs  will  not  permit  a  continuing 
drain  on  our  resources  for  so  long  a  period. 

The  various  factors,  data,  and  limitations  involved  in  this  analysis  of  the  bal- 
ance-of-payments impact  of  foreign  investment  are  fully  discussed  in  Exhibit  III.^ 
I  wish  to  emphasize  the  importance  of  this  Exhibit  for  it  clearly  demonstrates  two 
things.  First,  that  the  immediate  balance-of-payments  drain  of  new  investment 
in  the  industrialized  countries  is  not  made  up  for  at  least  10  to  15  years.  Second, 
that  such  investment  stimulates  little  in  the  way  of  net  new  exports  and  so  is  of 
little  help  in  creating  jobs  in  the  United  States. 

Looking  ahead,  we  can  see  that  elimination  of  tax  deferral  in  developed  coun- 
tries would  have  two  types  of  effects  on  our  balance  of  payments.  First,  there 
would  be  smaller  net  outflows,  because  of  a  somewhat  smaller  growth  in  foreign 
investment  each  year,  as  a  consequence  of  the  elimination  of  the  tax  inducement 
to  send  capital  abroad.  The  second  effect  on  the  balance  of  payments  from  the 
elimination  of  deferral  arises  from  the  fact  that  there  would  no  longer  be  a  tax 
inducement  to  leave  earnings  abroad. 

In  the  hearings  before  the  House  Ways  and  Means  Committee  in  the  spring  of 
1961,  the  question  of  the  effect  of  removing  deferral  was  iUustrated  over  and  over 
again  by  reference  to  the  experience  of  individual  companies.  Typically  the  new 
capital  outflow  reported  as  coming  from  the  United  States,  usually  year  by  year 
over  some  period  of  time,  was  compared  with  dividend  income  and  with  receipts 
from  exports  sold  to  or  through  foreign  subsidiaries.  "Inflows"  so  computed  gener- 
ally exceeded  "outflows"  by  a  substantial  amount.  This  left  the  impression 
that  the  stimulus  given  foreign  investment  by  tax  deferral  clearly  contributes 
both  to  our  employment  situation  because  of  the  large  export  sales  generated,  and 
to  our  balance-of-payments  position  because  total  inflows  exceeded  outflows. 
There  are  five  things  wrong  with  this  type  of  evidence. 

First,  the  behavior  of  one  company,  or  even  a  selected  group  of  companies,  may 
not  be  typical;  net  inflows  of  one  may  be  more  than  offset  by  net  outflows  of  others. 
Second,  the  data  on  capital  outflow  as  reported  by  individual  companies  often 
include  only  purchases  of  stock  in  foreign  subsidiaries;  but  a  very  large  amount  of 


»  Omitted  from  this  exhibit;  for  document  reference  see  note  at  end  of  this  statement. 


EXHIBITS  325 

the  new  capital  outflow  to  Europe  and  Canada  as  reported  in  Commerce  Depart- 
ment data  consists  of  net  increases  in  intercompany  accounts,  i.e.,  short-term 
credits  for  working  capital  which  are  not  repaid.  Third,  even  if  all  the  measur- 
able inflows  and  outflows  are  correctly  included  in  such  data  (and  many  company 
studies  ignore  sales  by  subsidiaries  made  directly  to  the  United  States,  an  import 
payment  which  may  be  an  important  offset  to  export  receipts) ,  one  important  flow 
is  inevitably  excluded  because  it  cannot  be  readily  measured,  that  is,  foreign  sub- 
sidiary sales  abroad  which  displace  actual  or  potential  U.  S.  exports.  Fourth,  the 
illustrations  are  almost  invariably  on  a  worldwide  basis,  whereas  the  Treasury 
proposal  affects  only  income  earned  in  developed  countries.  But  as  we  have 
seen,  there  is  a  remarkable  difference  between  the  value  of  exports  generated  by  a 
dollar  of  investment  in  advanced  industrial  countries  and  the  value  of  exports 
generated  by  a  dollar  of  investment  in  less-developed  countries. 

These  four  limitations  to  the  approach  which  has  been  typically  employed 
to  support  tax  deferral  are  serious  enough,  but  it  is  a  fifth  limitation  which  is 
crucial.  The  two  types  of  flows  being  compared — the  outflow  of  new  capital  and 
the  dividend  and  export  receipts  for  a  civen  year  or  period— are  not  related  one 
to  another.  The  dividends,  and  most  of  the  export  receipts,  of  one  year  or  period, 
have  been  generated  by  investment  over  many  years  prior  to  the  current  year 
or  period;  that  portion  of  the  inflows  which  has  been  generated  by  past  investment, 
then,  should  not  be  considered  when  we  are  evaluating  the  employment  and 
balance-of-payments  effects  of  current  outflows. 

To  return  to  our  recommendations,  we  are  concerned  only  with  artificial  tax 
inducements  to  investment  abroad.  We  do  not  wish  to  impede  such  investment 
beyond  removing  these  special  preferences.  Those  who  urge  the  continuation 
of  these  tax  inducements  must  bear  a  high  burden  of  proof  that  investment  so 
induced  contributes  to  employment  at  home,  to  an  improvement  in  our  balance- 
of-payments  position,  or  to  efficiency  in  the  allocation  of  the  world's  resources. 
I  submit  that  in  the  light  of  our  analysis  this  argument  simply  cannot  be  sustained, 
even  if  one  assumes  a  wide  margin  of  error  in  our  data. 

It  has  also  been  argued  that  achieving  tax  neutrality  between  investment 
at  home  and  abroad  will  unfairly  affect  the  competitive  position  of  U.S.  sub- 
sidiaries vis-a-vis  foreign  firms,  especially  in  third-country  markets.  But  let 
me  here  point  out  that  most  European  countries  impose  direct  controls  on  foreign 
investment,  something  we  do  not  wish  to  do  here,  and  that  these  controls  ad- 
versely affect  the  position  of  corporations  competing  with  American  foreign 
subsidiaries.  Insofar  as  taxation  is  concerned,  our  foreign  subsidiaries  at  most 
would  feel  the  effect  of  elimination  of  the  deferral  privilege  only  through  a  re- 
duction in  retained  earnings.  If  this  portion  of  the  retained  earnings  is  needed 
in  the  business,  the  parent  can  pay  the  U.S.  tax  or  supply  the  additional  needed 
capital  in  other  ways.  This  situation  is  still  preferable  to  that  facing,  for  example, 
a  British  company,  which  must  seek  permission  from  the  British  Treasury  to 
invest  more  abroad.  The  extent  of  the  controls  exerted  in  the  United  Kingdom 
is  illustrated  by  the  following  quotations  from  a  statement  delivered  in  Par- 
liament last  July  by  the  Chancellor  of  the  Exchequer: 

"I  now  come  to  private  investment  overseas.  The  volume  of  investment 
in  the  nonsterling  area  which  is  subject  to  control  has  been  rising  steadily. 
It  is  true  that  it  produces  earnings  in  the  long  run.  But  these  earnings 
do  not  always  benefit  the  balance  of  payments  in  the  short-term,  partly 
because  of  the  tendency  to  invest  further  in  the  overseas  enterprise  concerned 
and  partly  because  of  local  restrictions  on  remittances. 

"I  therefore  propose  a  more  severe  test  than  at  present.     The  test  for 
new  investment  in  the  nonsterling  area  will  be  that  it  will  produce  clear 
and  commensurate  benefits  to  U.K.  export  earnings   and  to   the   balance 
of  payments." 
It  is  our  understanding  that  this  test  may  be  considered  satisfied  if  the  invest- 
ment is  covered  by  dividends  and/or  increased  exports  within  two  years,  a  test 
under  which  few  investments  would  appear  to  qualify. 

With  respect  to  the  remittance  of  overseas  profits,  the  Chancellor  stated: 

"The  powers  to  control  investment  in  the  nonsterling  area  apply  equally 
to  investment  made  out  of  profits  earned  overseas  by  British  companies 
and  their  subsidiaries.  I  am  not  satisfied  that  in  all  cases  an  adequate 
proportion  of  profits  earned  overseas  is  being  repatriated  to  this  country. 
I  propose  to  request  U.K.  firms  operating  overseas  to  look  at  their  policies 
in  order  to  ensure  that  a  higher  proportion  of  earnings  is  remitted  home. 
So  far  as  nonsterling  investment  is  concerned,  I  propose  to  reinstitute  on 


326   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

a  selective  basis  the  examination  of  company  accounts  by  the  Exchange 
Control  authorities  to  ensure  that  this  policy  is  followed." 

I  fail  to  see  how  anyone  can  logically  claim  that  our  tax  proposals  are  either 
unfair  or  restrictive,  when  compared  with  this  sort  of  treatment. 

The  question  we  must  ask  ourselves  is  whether  or  not  it  is  in  the  national 
interest  to  provide  a  special  subsidy,  through  tax  preferences,  for  the  growth 
of  foreign  subsidiaries  in  industrialized  countries.  I  feel  that  the  answer  is 
clear:  elimination  of  the  special  privilege  of  tax  deferral  is  an  appropriate  change 
from  the  standpoints  of  letting  the  free  market  allocate  resources  efficiently, 
of  assuring  tax  neutrality  between  operations  here  and  in  other  highly  indus- 
trialized countries,  of  stimulating  growth  and  employment  in  the  United  States, 
and  of  supporting  our  essential  balance-of-payments  needs  in  the  critical  years 
ahead.  Complete  elimination  of  deferral  with  respect  to  corporate  subsidiaries 
in  the  advanced  countries  should  add  a  further  $130  million  to  our  tax  receipts, 
over  and  above  the  $10  million  that  would  result  from  the  House  bill. 

8.  Eliminating  artificial  tax  incentives  to  capital  movements  arising  out  of  foreign  tax  credit  computation 

Last  summer  Canada  revised  its  tax  laws  to  provide  a  STJ-l!  percent  effective 
rate  of  Canadian  tax  applicaVile  to  income  going  to  U.S.  corporations  operating 
in  branch  or  subsidiary  form  in  Canada.  This  Canadian  tax  rate  in  excess  of 
the  U.S.  52  percent  rate  has  highlighted  the  operation  of  the  existing  method 
for  computing  the  foreign  tax  credit  as  an  artificial  inducement  to  the  outflow  of 
short-term  U.S.  capital.  This  is  harmful  to  our  monetary  stability  and  to  our 
balance-of-payments  position. 

Under  existing  rules,  a  U.S.  company  deriving  income  from  business  abroad 
through  a  branch  or  a  sudsidiary  may  have  an  unused  foreign  tax  credit  where 
the  foreign  rate  of  tax  on  the  income  exceeds  the  U.S.  rate.  If,  however,  addi- 
tional foreign-source  investment  income  can  be  generated  which  is  subjected 
to  a  foreign  tax  rate  lower  than  the  U.S.  rate,  the  two  kinds  of  income  can  be 
lumped  together  under  the  existing  foreign  tax  credit  rules.  In  this  way  the 
U.S.  tax  on  the  income  from  such  investment  funds  can  be  completely  eliminated 
by  the  excess  credit  from  the  tax  on  the  business  income  of  the  company. 

For  example,  the  57)-^  percent  effective  rate  of  Canadian  tax  applicable  to 
income  going  to  U.S.  corporations  operating  in  branch  or  subsidiary  form  in 
Canada  leaves  an  excess  credit  of  5]4  percent  over  the  U.S.  52  percent  rate. 
The  Canadian  rate  of  tax  on  interest  income  flowing  to  such  corporations  is 
only  15  percent.  Consequently,  some  of  these  U.S.  corporations  have  trans- 
ferred to  Canada  short-term  funds,  such  as  bank  deposits,  which  ordinarily 
would  be  held  in  the  United  States.  Since  the  excess  credit  from  the  business 
income  will  eliminate  the  U.S.  tax  on  the  interest  income,  the  effect  is  to  leave 
that  income  taxable  at  only  a  15  percent  Canadian  rate,,  as  compared  with  the 
52  percent  U.S.  rate  that  would  apply  if  the  funds  were  held  in  the  United  States. 
Thus  the  existence  of  this  situation  serves  as  an  artificial  inducement  to  the  move- 
ment of  U.S.  capital  abroad. 

In  my  report  to  the  President  on  the  balance  of  payments,  transmitted  to  the 
Congress  on  March  28,  1962  (see  exhibit  35),  I  recommended  that  this  situation  be 
corrected.  I  suggest  that  the  foreign  tax  credit  for  certain  investment  income 
be  computed  apart  from  the  foreign  tax  credit  for  all  other  foreign  income.  In 
this  way  a  foreign  tax  credit  will  be  allowed  against  investment  income  only  for 
the  actual  foreign  taxes  paid  on  such  income.  This  will  result  in  the  same  tax 
rate  being  paid  with  repect  to  short-term  investment  income  of  U.S.  companies 
whether  it  is  earned  at  home  or  abroad.  We  believe  that  this  is  an  effective 
and  fair  way  to  correct  this  tax-induced  disruptive  monetary  situation.  A  more 
detailed  explanation  of  this  recommendation  and  the  proposed  statutory  lan- 
guage is  submitted  as  Exhibit  III  D.' 

9.  Treaties  (section  21) 

The  House  bill  provides  that  section  7852(d)  of  the  Code  shall  not  apply  with 
respect  to  any  amendment  made  by  the  bill.  The  effect  is  that  the  statutory 
amendments  would  supersede  inconsistent  existing  treaty  provisions. 

The  Treasury  believes  that  no  part  of  the  bill  is  contrary  to  any  existing  tax 
treaty,  with  the  single  exception  that  the  elimination  of  the  exclusion  of  foreign 
real  estate  from  the  estate  tax  runs  counter  to  the  1950  estate  tax  convention 
with  Greece.     None  of  our  income  tax  treaties  are  affected  by  any  section  of 


Omitted  from  this  exhibit;  for  document  reference  sec  note  nt  end  of  this  statement. 


EXHIBITS  327 

the  bill.     Prior  to  the  time  when  the  foreign  real  estate  provision  becomes  fully- 
operative,  we  intend  to  renegotiate  the  treaty  with  Greece. 

Some  persons,  however,  have  raised  arguments,  which  we  are  confident  are 
legally  unsound,  that  certain  other  provisions  of  the  bill  conflict  with  some  income 
tax  treaties.  The  Ways  and  Means  Committee  inserted  section  21  to  forestall 
useless  litigation.  We  have  no  doubts  about  the  outcome  of  such  litigation  and 
since  section  21  may  give  the  impression  that  we  are  overriding  our  treaty  obli- 
gations, it  would  be' desirable  to  dispel  that  impression.  In  that  light,  therefore, 
I  recommend  the  elimination  of  section  21  to  make  it  clear  that  we  are  honoring 
our  treaty  obligations. 

Repeal  of  the  dividend  credit  and  exclusion 

In  1961  and  again  this  year  the  President  has  recommended  repeal  of  the 
provisions  enacted  in  1954  which  permit  individuals  to  exclude  from  their  taxable 
income  the  first  $50  of  dividends  and  to  take  a  credit  against  tax  of  4  percent 
of  dividends  in  excess  of  this  amount.  In  1959  and  again  in  1960  the  Senate 
voted  to  repeal  the  4  percent  credit,  but  this  action  was  not  accepted  by  the 
Conference  Committees.  H.R.  10650,  as  passed  by  the  House  of  Representatives, 
contains  no  provision  on  this  important  subject. 

The  dividend  credit  and  exclusion  were  adopted  in  the  Hght  of  current  high 
rates  of  the  individual  income  tax  law  on  the  ground  that  they  would  provide 
a  partial  offset  to  the  "double  taxation"  of  dividends  and  encourage  investment 
in  corporate  equities.  Despite  their  large  cost  in  revenue,  however,  they  have 
failed  to  accomplish  their  objectives. 

To  the  extent  that  double  taxation  of  dividends  exists,  these  provisions  grant 
relief  in  a  discriminatory  fashion.  They  give  the  most  relief  to  dividend  recip- 
ients with  high  incomes  and  relatively  little  or  no  relief  to  dividend  recipients 
with  small  incomes.  The  percentage  reduction  of  the  so-called  double  tax  is 
about  8  percent  for  low  income  taxable  stockholders,  while  it  is  about  40  percent 
for  high  income  stockholders.     This  is  illustrated  in  Exhibit  IV.  ' 

The  present  dividend  provisions  represent  a  dead  end  approach  toward  the 
equitable  taxation  of  dividends.  In  1954  they  were  represented  as  only  a  first 
step  for  the  relief  of  "double  taxation,"  eventually  to  be  made  more  complete 
by  raising  the  credit  to  15  percent  of  dividends.  It  is  not  feasible,  however, 
to  increase  the  credit  to  this  level  without  giving  those  in  the  high  tax  brackets 
reductions  exceeding  the  extra  burdens  they  are  presumed  to  bear  as  a  result  of 
the  corporate  income  tax. 

In  the  8  years  since  the  adoption  of  the  dividend  credit  and  exclusion  the 
proportion  of  total  corporate  public  long-term  financing  accounted  for  by  stock 
issues  has  not  been  significantly  higher  than  it  was  in  the  8  years  prior  to  1955. 
The  evidence  does  not  support  the  contention  that  these  provisions  of  the  tax 
law  have  encouraged  investment  in,  or  the  issue  of,  corporate  equities. 

We  recognize  that  an  argument  can  be  made  in  favor  of  postponing  action 
on  this  item  until  it  can  be  considered  in  connection  with  overall  tax  reform. 
This  in  effect  was  the  position  taken  by  the  Ways  and  Means  Committee.  How- 
ever we  feel  that  the  case  on  the  merits  is  clear  and  do  not  see  why  this  matter 
should  be  postponed.  Therefore  we  recommend  that  the  dividend  credit  and 
exclusion  be  repealed  as  of  July  1,  1962.  The  resulting  annual  revenue  gain 
would  amount  to  $475  million. 

Summation  and  review 

H.R.  10650,  as  you  have  it  before  you,  is  a  good  piece  of  tax  legislation.  It 
will  provide  a  much  needed  stimulus  to  the  growth  of  the  American  economy, 
help  substantially  to  alleviate  our  balance-of-payments  problem,  and  achieve 
important  gains  in  the  area  of  tax  fairness  and  neutrality.  But  as  t  have  pointed 
out,  we  feel  that  there  are  certain  improvements  that  can  and  should  be  made. 

The  following  are  my  principal  recommendations  for  changes  in  the  bill.  The 
investment  credit  should  be  restored  to  an  8  percent  level  and  it  should  not  be 
extended  to  regulated  pubUc  utilities,  including  gas  pipelines.  Depreciation 
with  respect  to  all  real  estate  hereafter  acquired  should  be  Hmited  to  an  amount 
not  in  excess  of  the  depreciation  allowed  under  the  straight-line  method.  Gain 
on  the  sale  of  all  real  estate  should  be  treated  as  ordinary  income  to  the  extent 
of  depreciation  for  taxable  years  beginning  after  December  31,  1961,  subject 
to  a  sliding  scale  cutoff  for  property  held  more  than  6  years.     The  provisions 


1  Omitted  from  this  exhibit;  for  document  reference  see  note  at  end  of  this  statement. 


328   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

dealing  with  entertainment  and  travel  expenses  should  be  strengthened  in  the 
manner  I  have  suggested.  Provisions  for  taxation  of  mutual  banks  and  savings 
and  loan  associations  should  be  strengthened  in  order  to  achieve  substantial 
equality  in  the  taxation  of  competing  financial  institutions.  The  deferral  now 
permitted  under  the  bill  to  mutual  fire  and  casualty  companies  should  be  elimi- 
nated, with  the  result  that  these  companies  would  be  taxed  in  the  same  manner 
as  stock  companies.  Tax  fairness,  revenue  requirements,  and  our  balance-of- 
payments  position  all  demand  that  the  tax  deferral  privilege  now  enjoyed  by 
controlled  foreign  corporations  in  industrialized  countries  be  eliminated.  The 
provision  in  the  bill  which  permits  the  deduction  of  certain  lobbying  expenses 
should  also  be  eliminated.  Finally,  the  dividend  credit  and  exclusion  have 
proved  ineffectual  in  meeting  the  objectives  they  were  designed  to  serve  and 
should  Vje  repealed. 

Table  III,  attached  to  my  statement,  presents  the  revenue  effects  of  the  bill,  for 
a  full  year  when  all  of  the  changes  are  fully  effective,  but  without  taking  into  account 
the  effects  on  the  economy  of  its  various  provisions.  The  revenue  effects  are  pre- 
sented both  with  and  without  the  effects  of  the  changes  proposed  by  the  Treasury. 
You  will  note  that  for  the  full  year  the  bill  is  more  than  balanced.  As  passed  by 
the  House  it  will  yield  a  revenue  surplus  for  the  year  of  $120  million.  With  the 
Treasury's  proposed  changes  this  revenue  surplus  rises  to  $965  million. 

In  examining  the  revenue  effects  of  the  bill  for  the  fiscal  year  1963,  it  is  necessary 
to  follow  the  procedure  employed  in  developing  revenue  estimates  for  the  budget 
and  take  into  account  the  impact  of  the  investment  credit  and  other  features  of 
the  bill  on  investment,  income,  profits,  employment,  and  other  factors  affecting 
tax  bases  and  revenues.  This  approach  is  essential  for  fiscal  1963  because  the 
revenue  consequences  of  the  bill  must  be  coordinated  with  budget  estimates.  On 
this  basis.  Table  IV  indicates  that,  as  passed  by  the  House,  H.R.  10650  will  reduce 
budget  receipts  by  $320  million  for  fiscal  year  1963,  while  incorporating  the 
Treasury's  proposed  changes  will  yield  a  revenue  gain  of  $90  million.  The  figures 
presented  in  the  table,  however,  take  only  partial  account  of  the  stimulative  effects 
of  the  investment  credit.  They  ignore  the  especially  favorable  impact  on  busi- 
nessmen's decision  to  invest  of  the  sudden  major  improvements  in  the  cost  of 
capital  goods,  or  profitability  of  investment,  and  cash  flow  that  will  result  from 
the  enactment  of  the  credit  and  are  based,  instead,  on  relationships  in  past  years 
between  gradual  changes  in  these  factors  and  investment.  With  proper  consid- 
eration given  to  this  fact,  it  is  clear  that  the  bill  as  it  stands  is  approximately  in 
balance  and  that  with  the  Treasury's  proposals  added  we  can  confidently  expect 
a  larger  surplus  than  the  small  net  revenue  gain  shown  in  the  table. 

The  provisions  of  this  bill  should  be  regarded  as  the  first  major  step  in  the  tax 
reform  program  envisaged  by  the  President  when  he  delivered  his  tax  message 
of  1961.  The  second  step  will  be  presented  in  the  tax  reform  message  which  he 
is  planning  to  send  to  the  Congress  later  this  year.  By  the  time  the  second  step 
comes  before  you  for  your  consideration  the  revenue  gain  we  expect  the  present 
bill  to  produce  in  a  full  year  may  provide  some  of  the  leverage  that,  together 
with  the  broadening  of  the  tax  base,  will  be  needed  to  permit  a  substantial  read- 
justment of  income  tax  rates. 

In  view  of  the  importance  of  the  investment  credit  it  is  desirable  that  this  bill 
be  enacted  as  soon  as  possible.  To  accomplish  this  end  I  hope  that  you  will  con- 
centrate your  efforts  on  the  subjects  recommended  by  the  President  without  the 
injection  of  new  issues  at  this  time.  While  there  are  many  changes  in  the  tax 
system  that  warrant  consideration,  they  can  better  be  treated  in  connection  with 
the  next  step  in  the  program. 

Note. — The  exhibits  omitted  from  this  exhibit  are  published  in  Hearings  before 
the  Committee  on  Finance,  U.S.  Senate,  87th  Congress,  2d  session,  on  H.R. 
10650,  the  Revenue  Act  of  1962,  April  2,  1962. 


EXHIBITS 


329 


Table  III. — Estimated  revenue  effect  of  H.R.  10650,  when  changes  are  fully  effective, 
without  any  consideration  of  its  stimulative  effects  on  the  economy  • 

[In  millions  of  dollars] 


As  passed 
by  the 
House 


With 
Treasury 
proposed 
changes 


Investment  tax  credit 

Capital  gains  on  depreciable  property 

Withholding  on  dividends  and  interest 

Expense  accounts ..- 

Mutual  banks  and  savings  and  loan  associations- 
Mutual  fire  and  casualty  companies 

Cooperatives 

Foreign  items: 

Controlled  foreign  corporations 

Gross-up  of  dividends 

All  other  foreign  items 

Kepeal  of  the  dividend  credit  and  exclusion 


-1, 175 
+100 
+650 
+125 
+200 
+40 
+35 

+85 
+30 
+30 


Total. 


+120 


-1,350 

2+180 

+650 

+250 

+365 

+50 

+35 

+230 
+30 
+50 

+475 


+965 


•  At  levels  of  income  and  investment  estimated  for  the  calendar  year  1962,  except  for  mutual  thrift  insti- 
tutions, for  which  the  revenue  gain  is  based  on  income  estimated  for  calendar  year  1963. 
2  Including  effect  of  restricting  depreciation  deductions  for  real  property  to  straight-line  method. 


Table  IV. — Estimated  net  revenue  effect  of  H.R.  10650  for  fiscal  year  1963,  after 
taking  partial  account  of  its  stimulative  effects  on  the  economy 

[In  millions  of  dollars] 


Recommended 
effective  date 


As  passed 
by  the 
House 


With 
Treasury 
proposed 
changes 


Investment  tax  credit 

Capital  gains  on  depreciable  property 

Withholding  on  dividends  and  interest -.. 

Expense  accounts 

Mutual  banks  and  savings  and  loan  associations- 
Mutual  fire  and  casualty  companies 

Cooperatives --- 

Foreign  items: 

Controlled  foreign  corporations 

Gross-up  of  dividends --- 

AU  other  foreign  items 

Repeal  of  the  dividend  credit  and  exclusion 


Jan.  1,  1962-. 

do 

Jan.  1,  1963.. 
July  1,  1962. 
Jan.  1,  1963-. 

do 

do 


-560 


+195 
+40 


-465 

+5 

+195 

+80 


do 

Jan.  1,  1902  '. 

Various 

July  1,  1962- 


+5 


+30 

+5 

+240 


Total  (see  note)- 


-320 


+90 


'  The  effective  date  of  the  bill  is  January  1,  1963. 

Note. — In  estimating  the  net  revenue  cost  of  the  investment  credit,  its  favorable  effects  on  the  level  of 
Investment  were  computed  from  statistical  relationships  in  past  years  between  investment  and  gradual 
changes  in  the  cost  of  capital  goods  (profitability)  and  cash  flow.  This  procedure  thus  does  not  take  into 
account  the  especially  favorable  impact  on  businessmen's  decisions  to  invest  of  the  sudden  major  improve- 
ments in  these  factors  resulting  from  the  enactment  of  the  credit.  Taking  this  into  account  should  produce 
more  favorable  effects  and  a  larger  surplus  than  the  small  net  revenue  gain  shown  in  the  table. 


330   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  21.— Statement  by  Secretary  of  the  Treasury  Dillon,  May  10,  1962, 
before  the  Senate  Committee  on  Finance  on  H.R.  10650,  the  Revenue  Act 
of  1962 

Mr.  Chairman,  I  appreciate  this  additional  opportunity  to  discuss  with  you  the 
proposed  Revenue  Act  of  1962.  I  would  also  like  to  suggest  some  changes  in  the 
bill.  We  have  followed  closely  the  suggestions,  objections,  and  recommendations 
which  have  been  offered  in  the  extensive  testimony  which  has  been  presented  to 
your  committee  since  April  2d.  As  the  hearings  have  proceeded  we  have  held 
numerous  meetings  with  persons  interested  in  the  bill,  including  some  of  the  wit- 
nesses who  appeared  before  the  committee  as  well  as  representatives  of  other 
interested  groups.  We  have  worked  with  them  to  make  technical  improvements 
and  to  evaluate  possible  policy  changes.  Today  I  should  like  to  outline  a  number 
of  changes  which  are  responsive  to  matters  raised  during  the  hearings  and  which 
we  believe  would  improve  the  bill.  These  changes  seem  to  us  to  be  clearly  called 
for.  Undoubtedly  further  discussion  in  executive  session  will  reveal  other  ways 
in  which  the  bill  can  be  improved.  It  is  our  desire  to  work  closely  with  j'ou  and 
the  staff  of  the  Joint  Committee  to  produce  the  most  effective,  the  fairest,  and  the 
most  practicable  bill  that  can  be  developed. 

Investment  credit  (section  2) 

The  language  of  section  2  of  the  House  bill  appears  to  present  no  serious  tech- 
nical problems.  However,  we  would  recommend  that  the  bill  be  amended  to 
provide  for  a  three-year  carryback  of  unused  investment  credits.  Of  course,  such 
unused  credits  should  not  be  carried  back  to  taxable  years  before  those  for  which 
the  credit  is  effective.  Such  a  provision  would  result  in  greater  cash  flow  bene- 
fits during  periods  of  recession  when  earnings  are  low  or  at  other  times  when  it  may 
be  especially  needed  by  particular  businesses. 

We  would  also  recommend  that  livestock  be  excluded  from  the  credit.  The 
House  decided  in  section  14  that  gain  on  the  sale  of  livestock  which  reflects  prior 
depreciation  should  continue  to  be  treated  as  capital  gain  rather  than  ordinary 
income.  We  feel  strongly  that  property  not  subject  to  the  recapture  of  excessive 
depreciation  should  not  be  granted  the  investment  credit. 

A  number  of  witnesses  raised  questions  as  to  whether  specific  items  were  eligible 
for  the  credit  or  would  be  disqualified  as  structural  components  of  a  building. 
Some  of  the  items  mentioned  were  refrigerator  cases  used  in  the  grocery  business 
and  testing  equipment  used  in  the  aerospace  industry.  The  House  Ways  and 
and  Means  Committee  Report  indicates  that  machinery  and  equipment  are  to  be 
considered  eligible  property  even  though  considered  a  part  of  the  building  under 
local  law.  This  means  that  such  items  as  refrigerator  cases  and  testing  equipment 
would  qualify  for  the  credit  even  though  affixed  to  a  building.  Appropriate 
language  in  your  committee's  report  could  provide  further  clarification  in  this  area. 

Gains  from  the  disposition  of  depreciable  property  (section  14) 

Some  witnesses  expressed  concern  that  section  14  may  require  recognition  of 
gain  despite  the  fact  that  the  taxpayer's  method  of  accounting  today  docs  not 
require  such  recognition.  The  example  given  was  the  normal  retirement  of  prop- 
erty depreciated  in  a  multiple  asset  account.  Section  1231  today  docs  not  require 
the  recognition  of  gain  or  loss  at  the  time  of  such  retirement  as  long  as  the  tax- 
payer's method  of  accounting,  in  accordance  with  Treasury  regulations,  clearly 
reflects  income.  If  the  taxpayer's  method  of  composite  accounting  complies  with 
the  Treasury  regulations,  those  regulations  will  similarly  permit  nonrecognition  of 
gain  or  loss  under  section  14.  A  statement  in  your  committee's  report,  illus- 
trating this  point,  should  allay  any  concern  in  this  regard. 

Expense  accounts  (section  4) 

In  order  to  ease  the  accounting  problems  of  concerns  supplying  articles  for  use  in 
novelty  advertising,  we  recommend  a  special  exclusion  from  the  $25  business  gift 
limit  in  the  House  bill.  Such  exclusion  would  permit  the  deduction  of  items  cost- 
ing a  modest  amount,  such  as  up  to  two  or  three  dollars,  regardless  of  the  total  gifts 
to  any  one  customer  over  the  year.  It  would  apply  to  each  gift  item  on  which  the 
name  of  the  advertiser  is  clearly  and  permanently  imprinted  and  which  is  one  of  a 
number  of  identical  items  distributed  generally  by  the  advertiser.  Such  an  ex- 
clusion would  permit  novelty  advertising  to  be  carried  on  free  of  accounting 
difficulties  in  keeping  track  of  a  large  number  of  small  items  without  disturbing 
the  curtailment  of  abuses  which  the  bill  provides. 


EXHIBITS  331 

In  addition,  it  was  nevef  oilr  intention  that  advertising  devices  such  as  display 
racks  and  advertising  signs,  which  are  provided  for  use  in  business  and  which  are 
not  items  of  personal  use,  should  be  included  under  the  gift  provision.  We  would 
recommend  that  the  committee  report  contain  language  clearly  indicating  that 
such  items  are  not  business  gifts  under  section  4  of  the  bill. 

Withholding  on  interest  and  dividends  (section  19) 

We  have  continued  our  efforts  to  work  out  a  withholding  system  that  would  be 
as  efficient  as  possible  and  at  the  same  time  would  minimize  any  possible  hardship 
to  the  recipients  of  dividends  and  interest.  We  would  like  now  to  recommend 
certain  improvements  in  the  provisions  for  exemption  certificates. 

The  exemption  certificate  system  contained  in  the  House  bill  applies  to  savings 
account  interest,  certain  interest  paid  by  insurance  companies,  dividends,  and 
patronage  dividends,  so  that  there  will  be  no  withholding  on  such  amounts  received 
by  individuals  who  owe  no  tax.  We  would  recommend  that  the  exemption  certifi- 
cate procedure  be  extended  to  dividend  income  of  other  nontaxable  recipients.  For 
example,  this  would  include  foreign.  State,  and  local  governments,  and  tax-exempt 
organizations,  such  as  colleges  and  universities,  churches,  and  pension  trusts. 

Regarding  withholding  in  the  insurance  industry,  the  exemption  certificate 
system  should  continue  to  apply  to  interest  on  proceeds  of  life  insurance  left  on 
deposit  with  the  insurance  company  but  should  not  apply  to  interest  on  dividend 
accumulations  on  unmatured  life  insurance  policies.  In  the  case  of  interest 
on  these  dividend  accumulations  there  would  appear  to  be  no  need  for  exemption 
certificates  because  the  interest  is  customarily  left  with  the  insurance  company 
and  not  used  by  the  policyholder  to  meet  current  living  expenses.  In  addition, 
the  insurance  companies,  who  recommended  this  change,  have  testified  that 
the  amounts  involved  are  normally  small  and  an  exemption  certificate  procedure 
would  be  impractical  to  apply  because  of  the  millions  of  accounts. 

Provision  should  also  be  made  for  exemption  certificates  to  remain  valid  until 
revoked  by  the  filer  instead  of  requiring  annual  refiling.  This  would  make  the 
House  exemption  certificate  system  easier  to  administer  by  the  paying  insti- 
tutions and  would  also  reduce  the  number  of  forms  which  nontaxable  persons 
would  be  required  to  file. 

There  has  been  considerable  exaggeration  of  the  amount  of  overwithholding 
that  could  occur  under  the  House  bill.  However,  there  may  be  some  situations 
where  the  quarterly  refund  allowance  is  not  sufficient  to  correct  overwithholding 
on  a  taxpayer  with  large  itemized  deductions.  The  House  bill  takes  into  account 
only  the  standard  deduction  in  computing  the  allowable  amount  of  a  quarterly 
refund  so  that  overwithholding  can  result  if  the  taxpayer's  itemized  deductions 
exceed  the  standard  deduction.  In  order  to  provide  prompt  refund  of  all  sig- 
nificant overwithholding,  we  would  recommend  extension  of  the  refund  allowance 
provision  to  permit  an  individual  to  take  into  account  his  itemized  deductions. 

We  also  recommend  two  changes  to  eliminate  technial  problems  which  have 
been  called  to  our  attention.  The  first  is  to  eliminate  withholding  on  dividends 
in  kind  which  consist  of  distributions  of  stock  of  another  corporation. 

Second,  it  has  been  pointed  out  to  us  that  some  corporations,  for  instance, 
some  railroads  with  little  or  no  tax  liability,  may  not  be  able  to  file  their  final 
tax  returns  until  many  months  after  the  close  of  the  taxable  year.  Such  corpo- 
rations would  be  delayed  in  obtaining  a  refund  of  amounts  withheld  from  their 
interest  and  dividends  since  under  the  House  bill  refund  for  the  fourth  quarter 
of  the  taxable  year  can  only  be  obtained  upon  the  filing  of  the  final  return  for 
such  year.  This  problem  can  be  solved  by  permitting  a  quarterly  refund  for 
the  fourth  quarter  in  the  case  of  a  corporate  taxpayer  if  the  refund  is  expected 
to  exceed  its  total  tax  liability  for  the  year. 

These  changes  will  reduce  inconveniences  both  to  the  payers  and  recipients  of 
interest  and  dividends  and  at  the  same  time  will  maintain  the  effectiveness  of 
the  systems  in  reducing  the  intolerable  gap  between  dividends  and  interest  re- 
ceived and  those  reported  for  tax  purposes. 

Controlled  foreign  corporations  (section  13) 

A  great  deal  of  concern  has  been  expressed  by  witnesses  regarding  the  pro- 
visions of  section  13  of  the  bill.  Substantial  modifications  of  this  section  are 
called  for.  We  remain  convinced  that  our  basic  proposal  for  the  general  elim- 
ination of  deferral  for  operations  in  developed  countries  would  be  the  most 
equitable  and  appropriate  policy.  Adoption  of  this  principle  would  eliminate 
a  great  deal  of  the  complexity  of  section  13.     However,  should  the   committee 


332   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

decide  to  adopt  an  approach  along  the  lines  of  the  House  bill,  there  are  a  nuniber 
of  changes  that  should  be  made.  Our  suggestions  for  such  changes  should  not 
be  taken  as  indicating  any  lessening  of  our  support  for  the  elimination  of  deferral. 
It  merely  seemed  desirable  to  indicate  the  changes  that  would  be  needed  to 
improve  the  working  of  section  13  should  this  type  of  approach  be  preferred 
by  the  committee. 

A.  Suggestions  as  to  income  coyered  in  section  13 

1.  Change  approach  to  income  from  U.S.  patents,  copyrights,  etc.— The  HoUSe  bill    deals   with 

the  problem  of  U.S.-developed  patents,  copyrights,  and  exclusive  formulas 
and  processes,  which  are  exploited  abroad  free  of  U.S.  tax  by  controlled  foreign 
corporations,  by  subjecting  the  current  income  generated  by  such  rights  to  current 
U.S.  taxation.  This  requires  a  determination  of  the  amount  of  income  generated 
by  the  use  of  patents,  etc.,  an  admittedly  difficult  problem.  It  would  be  more 
appropriate  to  handle  this  problem  at  the  time  the  patent  (or  like  property  or 
right)  is  transferred  abroad.  Thus,  it  could  be  provided  that  the  sale  of  such 
a  U.S.-developed  patent  to  a  controlled  foreign  corporation  would  result  in 
ordinary  income,  rather  than  capital  gain,  as  frequently  occurs  under  present 
law.  A  somewhat  longer  statute  of  limitations  could  be  provided  to  ensure 
that  the  valuation  of  the  patent  at  the  time  of  transfer  is  a  fair  one.  If  the  patent 
is  licensed  rather  than  sold,  the  transferee  of  the  patent  is  under  current  law 
obligated  to  pay  a  fair  royalty  annually  in  return  for  the  use  of  such  patent. 
This  approach  should  effectively  eliminate  any  abuse  in  this  area  since  all  U.S. 
patents  would  be  transferred  abroad  in  arm's-length  transactions  producing  a 
full  U.S.  tax  at  the  time  of  transfer  or  on  an  annual  basis.  It  would  make  un- 
necessary the  determination  of  the  amount  of  income  generated  by  the  use  of 
patents,  etc.,  as  under  the  House  bill. 

2.  Refine  coverage  of  foreign  base  company  provisions.— The    coverage    of    the   foreign    baSC 

company  provisions  of  section  13  should  be  modified  to  ensiu-e  that  all 
tax  haven  transactions  are  reached  and  also  to  avoid  unintended  coverage  of 
nontax  haven  situations.  Thus,  the  omission  under  H.R.  10650  of  income 
received  by  tax  haven  companies  from  related  parties  for  rendering  managerial, 
technical,  and  other  services  outside  of  the  country  of  their  incorporation  should 
be  corrected  since  this  is  a  significant  form  of  tax  haven  income.  Also,  the 
coverage  of  tax  haven  sales  income  requires  technical  clarification  to  ensure  its 
application  to  commissions  of  companies  acting  as  sales  agents. 

On  the  other  hand,  the  base  company  provisions  of  section  13  now  treat  certain 
kinds  of  operating  income  as  "passive  income"  and,  therefore,  subject  to  tax- 
ation to  the  U.S.  shareholder.  Thus,  rentals,  royalties,  and  interest  may  con- 
stitute active  income  to  businesses  such  as  shipping,  leasing,  and  financing 
companies.  These  types  of  income  when  they  are  the  income  of  an  operating  com- 
pany should  not  be  treated  as  "passive  income",  and,  accordingly,  an  appropriate 
exception  should  be  made.  However,  this  exception  should  not  extend  to  tax 
haven  situations,  as  for  example,  when  rentals  are  received  from  a  related  party 
for  the  use  of  property  outside  of  the  country  of  incorporation  of  the  recipient. 

We  would  also  suggest  that  there  be  an  overall  exception  to  deal  with  situations 
where  a  controlled  foreign  corporation  covered  by  the  provisions  of  the  bill  has  not 
been  availed  of  to  avoid  taxes.  Such  a  provision  was  contained  in  the  revised 
draft  of  tax  haven  legislation  which  we  submitted  to  the  House  Ways  and  Means 
Committee  and  would  be  desirable  from  the  standpoint  of  adding  flexibility  to 
ensure  a  fair  application  of  the  base  company  income  provisions  in  the  cases 
where  it  is  needed.  For  example,  a  subsidiary  incorporated  in  one  country  but 
conducting  a  sales  operation  in  a  second  country  may  pay  full  taxes  to  the  second 
country  so  that  its  place  of  incorporation  does  not  result  in  the  avoidance  of  taxes. 
Finally,  there  are  certain  shipping  activities  which  present  special  problems  for 
which  exclusions  should  be  developed. 

3.  Limit  antidiversification  rule.— The  House  bill  denies  the  use  of  deferral  to  new 
businesses  in  developed  areas.  Earnings  invested  in  a  trade  or  business  that  was 
not  in  operation  on  December  31,  1962,  or  that  has  not  been  in  operation  for  5 
years  would  not  qualify  for  deferral.  Our  preference  that  deferral  be  eliminated 
for  all  profits  arising  in  developed  areas,  of  course,  would  obviate  the  need  for 
this  provision.  However,  if  deferral  is  not  eliminated,  the  jjrovision  should  be 
modified  to  make  clear  that  it  applies  only  with  respect  to  the  use  of  earnings  from  a 
business  enjoying  deferral  and  that  it  does  not  apply  to  the  earnings  of  a  new 
business  started  with  fresh  capital  ft-om  the  United  States.  Also,  it  may  be 
desirable  to  indicate  with   more  definiteness  when  a  trade  or  business  will  be 


i 


i 


EXHIBITS  333 

considered  to  have  been  conducted  for  a  5-year  period  or  since  December  31, 
1962,  by  substantially  the  same  interests. 

4.  Eliminate  provision  for  reinvestment  of  developed  area  tax  haven  profits. — I  renew  my  prior 

suggestion  to  modify  the  deduction  for  reinvestment  in  less-developed  countries 
to  prevent  a  "pour  over"  from  developed  countries.  Permitting  the  profits  of 
tax  haven  companies  in  developed  areas  to  escape  U.S.  taxation  might  unduly 
encourage  the  use  of  such  tax  haven  companies  and  would  be  inconsistent  with 
the  basic  policy  of  eliminating  deferral  for  such  operations.  Our  view  is  that  the 
soundest  approach  would  be  to  provide  that  there  would  be  no  reinvestment 
deduction  for  any  tax  haven  profits  except  for  dividends  and  interest  derived  from 
related  companies  carrying  on  an  active  trade  or  business  within  a  less-developed 
country.  In  this  connection,  I  would  suggest  liberalizing  the  types  of  property 
which  would  qualify  for  the  deduction  as  well  as  the  conditions  for  reinvestment. 
For  example,  it  may  be  that  substantial  minority  stock  interest  should  qualify 
even  though  the  foreign  corporation  is  not  U.S.  controlled.  Consideration  should 
also  be  given  to  allowing  certain  forms  of  debt  obligations  to  qualify.  The  time 
within  which  investments  must  be  made  is  much  too  restricted  under  section  13 
and  provision  for  a  longer  period  would  be  desirable. 

5.  Liberalized  rules  for  reinvestment  of  earnings  of  operating  companies  in  less-developed  areas. — 

As  a  concomitant  of  my  last  suggestion,  I  would  propose  to  liberalize  the  use  to 
which  earnings  of  operating  companies  in  less-developed  countries  may  be  put.  I 
recommend  that  there  be  complete  freedom  as  to  the  manner  in  which  such  earn- 
ings may  be  employed.  To  ensure  that  this  privilege  is  only  granted  in  appropri- 
ate circumstances,  it  will  be  necessary  to  restrict  the  companies  qualifying  to 
those  having  substantially  all  their  income  from  such  countries.  In  this  connec- 
tion, liberal  rules  as  to  source  of  income  would  be  provided,  so  that  such  companies 
can  market  their  products  or  purchase  materials  outside  less-developed  coun- 
tries and  still  qualify  as  operating  in  less-developed  areas.  It  should  be  pointed 
out  that  operating  companies  not  qualifying  for  the  less-developed  country  rein- 
vestment privilege  would  have  restricted  reinvestment  privileges  regardless  of 
where  their  earnings  were  reinvested. 

6.  Nonapplicabiiity  to  possessions  of  United  States.— All  corporations  not  incorporated  Under 
the  laws  of  the  United  States  are  treated  as  foreign  corporations  for  purposes  of 
the  Internal  Revenue  Code.  As  a  consequence,  corporations  incorporated  under 
the  laws  of  possessions  of  the  United  States  technically  might  be  classified  and 
treated  as  controlled  foreign  corporations  under  the  present  language  of  the  bill. 
I  would  recommend,  however,  that  such  corporations  not  be  treated  as  controlled 
foreign  corporations,  since  the  possessions  of  the  United  States,  principally 
Puerto  Rico  and  the  Virgin  Islands,  are  not  truly  foreign  areas  and  present  special 
problems  under  U.S.  tax  law  which  can  best  be  handled  outside  of  the  context  of 
the  treatment  of  controlled  foreign  corporations. 

B.  Suggestions  with  respect  to  technique 

1.  Modify  definition  of  controlled  foreign  corporation.— We        recommend        modifying        the 

definition  of  control  so  as  to  limit  somewhat  the  coverage  of  foreign  corporations 
classified  as  controlled  foreign  corporations.  Perhaps  the  most  effective  way  of 
doing  this  would  be  to  provide  that  in  determining  whether  more  than  50  percent 
of  a  foreign  corporation  is  owned  by  U.S.  persons,  only  U.S.  shareholders  owning 
at  least  a  10  percent  interest  are  to  be  counted.  This  would  help  eliminate,  for 
example,  the  possibility  of  covering  certain  foreign  corporations  more  than  50 
percent  of  which  may  be  owned  by  U.S.  persons  but  where  such  ownership  is  so 
widely  scattered  that  there  is  no  U.S.  group  in  effective  control.  Also,  some 
modifications  in  the  constructive  ownership  rules  would  seem  desirable  to  achieve 
a  more  limited  coverage.  In  particular,  we  would  recommend  that  U.S.  share- 
holders not  be  treated  as  the  indirect  owners  of  stock  owned  by  a  corporation  in 
which  they  have  an  interest  unless  such  interest  is  at  least  10  percent. 

2.  Recognition  of  losses.— It  would  Seem  desirable  to  provide  for  greater  recognition 
of  losses  of  foreign  subsidiaries  than  is  effected  by  the  House  bill.  Thus,  some 
provision  should  be  made  for  allowing  losses  of  a  foreign  subsidiary  in  one  year 
to  offset  its  profits  for  another  year  which  otherwise  would  be  taxable  under 
section  13.  It  would  also  seem  desirable  to  make  certain  changes  in  the  me- 
chanics for  taxing  constructive  distributions  to  U.S.  shareholders.  Some  of  these 
changes  would  enable  the  losses  of  intervening  foreign  corporations  to  offset  the 
gains  of  subsidiaries  of  such  controlled  foreign  corporations. 

3.  Computation  of  earnings  and  profits.— Some  concern  has  been  expressed  over  the 
problem  of  computing  the  earnings  and  profits  of  a  controlled  foreign  corporation 
that  would  be  taxed  to  U.S.  shareholders.     We  shall  provide  clear  administrative 


334   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

regulations  to  assist  taxpayers  in  computing  the  earnings  and  profits  of  foreign 
corporations  in  accordance  with  the  rules  which  have  been  developed  for  domestic 
corporations.  We  will  permit  the  foreign  corporations  earnings  and  profits  to  be 
computed  with  the  benefit  of  elections  similar  to  those  which  are  available  to 
domestic  corporations. 

4.  Foreign  currency  restrictions  and  blocked  income.— We  are  aware  of  problems  tax- 
payers have  with  foreign  currency  restrictions  and  blocked  income  and  provisions 
should  be  made  to  take  care  of  these  situations.  These  problems  arise  under 
present  law  in  connection  with  branch  operations  and  administrative  guidelines 
have  been  developed  in  the  past  to  deal  with  them.  Problems  under  the  House 
bill  will  be  somewhat  different  than  those  dealt  with  in  the  past  but  it  is  believed 
that  these  matters  can  be  handled  satisfactorily  through  establishment  of  rules 
which  are  similar  in  nature. 

5.  Reorganizing  foreign  co'porate  structures.— Taxpayers  have  indicated  a  desire  to 
reorganize  foreign  corporate  structures  to  accommodate  to  the  legislation.  I 
would  like  to  state  that  it  would  be  the  policy  of  the  Treasury  to  view  sympa- 
thetically applications  of  taxpayers  for  rulings  under  section  367  which  are  required 
in  the  case  of  reorganizations  involving  foreign  corporations.  We  contemplate 
that  such  advance  rulings  could  be  made  available  relatively  freely,  except  in 
situations  where  such  arrangements  involve  U.S.  tax  avoidance. 

Liquidation  provision  (section  16) 

In  my  prior  testimony  I  suggested  reconsideration  of  section  16,  dealing  with 
the  liquidation  of  or  sale  of  stock  in  controlled  foreign  corporations.  The  hearings 
and  discussions  with  private  groups  have  confirmed  our  view  that  this  provision 
should  apply  only  to  earnings  for  taxable  years  beginning  after  December  31,  1962. 
In  addition,  technical  amendments  are  needed  to  coordinate  more  closely  the  treat- 
ment of  sales  of  stock  with  the  treatment  on  liquidation,  including  the  allow- 
ance in  appropriate  circumstances  of  a  foreign  tax  credit  on  sales  of  stock. 

Further,  we  recommend  that  the  impact  of  the  section  on  individuals  be  miti- 
gated. Unlike  a  corporate  shareholder,  whose  tax  will  be  limited  to  52  percent 
less  a  foreign  tax  credit,  the  individual  would  be  taxed  at  rates  up  to  91  percent 
and  no  foreign  tax  credit  would  be  available.  Two  meritorious  suggestions 
have  been  advanced.  The  first  would  add  an  averaging  provision  to  the  bill. 
This  would  be  similar  to  that  involved  in  the  foreign  trust  provision,  which  per- 
mits an  individual  to  reduce  the  amount  of  tax  on  a  distribution  by  treating  it 
as  if  it  had  been  distributed  to  him  over  the  period  of  his  holding.  The  second 
would  give  the  individual  shareholder  the  alternative  of  limiting  his  tax  under 
section  16  to  a  capital  gains  tax  provided  that  at  the  same  time  he  paj^s  a  tax 
equal  to  52  percent  of  the  earnings  of  the  corporation  less  any  foreign  tax  credit. 
The  mechanics  of  this  will  work  out  so  that  the  shareholder  pays  64  percent  over- 
all (52  percent  plus  25  percent  of  48  percent)  and  is  in  exactly  the  same  position 
as  if  he  had  had  a  domestic  corporation  which  had  paid  its  full  52  percent  tax 
and  which  he  had  liquidated  or  sold  at  capital  gain  rates. 

Information  requirements  (section  20) 

Section  20  of  the  House  bill  needs  some  modification.  For  example,  changes 
are  needed  to  prevent  the  provision  from  applying  to  foreign  corporations  where 
there  is  no  substantial  U.S.  share  ownership.  It  should  be  made  clear  that  U.S. 
officers  and  directors  of  foreign  companies  where  there  are  no  substantial  U.S. 
owners  need  not  supply  information  as  to  such  companies.  Likewise,  it  should 
be  provided  that  domestic  subsidiaries  of  foreign  parent  corporations  will  not  be 
required  to  supply  information  about  non-U. S.  subsidiaries  of  such  parent  cor- 
porations. Finally,  it  should  be  made  clear  that  as  to  all  aspects  of  section  20 
information  will  be  required  only  as  set  forth  in  such  regulations  as  are  in  existence 
on  the  first  day  of  a  taxable  year. 

Foreign  investment  companies  (section  15) 

Further  study  of  the  foreign  investment  company  provisions  with  representives 
of  such  companies  indicates  that  a  number  of  minor  technical  amendments  should 
be  added  to  clarify  and  improve  their  application.  For  example,  an  increase 
should  be  made  in  the  time  permitted  for  reporting  undistributed  capital  gains 
to  the  shareholders.  Also,  provision  should  be  made  for  a  pass-through  of  foreign 
tax  credit  to  the  shareholders  for  taxes  paid  by  the  foreign  investment  companj'. 

Finally,  with  respect  to  the  overall  problem  of  foreign  income,  I  believe  that 
the  hearings  have  shown  more  than  ever  the  need  for  and  the  appropriateness 


EXHIBITS  335 

of  legislation  to  establish  equity  in  the  taxation  of  such  income  and  T  hope  that 
the  committee  will  agree  with  this  view  and  act  accordingly. 

Conclusion 

In  conclusion  I  wish  to  express  our  appreciation  for  the  extended  effort  and 
careful  consideration  which  your  committee  and  those  testifying  before  it  have 
already  given  to  this  legislation.  As  your  consideration  of  the  bill  progresses, 
we  are  at  your  disposal  to  work  further  with  you  and  your  staffs  in  any  way 
which  you  feel  may  be  helpful  to  you. 


Exhibit  22. — Statement  by  Secretary  of  the  Treasury  Dillon,  July  11,  1952,  on 
the  issuance  of  the  new  Depreciation  Guidelines  and  Rules 

The  new  guidelines  and  procedures  for  determining  depreciation  on  machinery 
and  equipment  used  by  all  American  business  constitute  a  fundamental  reform 
in  the  tax  treatment  of  depreciation  that  will  provide  a  major  stimulus  to  our 
continued  economic  growth. 

This  reform  culminates  a  year  of  intensive  study  and  work  on  the  part  of  the 
Treasury  with  cooperation  and  assistance  every  step  of  the  way  by  the  Internal 
Revenue  Service,  substantial  help  from  other  Government  agencies,  and  advice 
from  countless  businessmen,  their  lawyers,  engineers,  and  accountants. 

Successful  completion  of  the  job  required  us  to  examine  the  depreciation  prac- 
tices, present  and  prospective  rates  of  economic  obsolescence  and  the  pace  of 
technological  change  in  American  industrj'^  and  in  industry  abroad.  This  enor- 
mous task  has  been  completed  with  the  greatest  possible  speed. 

The  reform  we  have  achieved  fully  meets,  while  in  no  way  exceeding,  the 
requirement  of  existing  law  that  reasonable  allowances  be  given  for  depreciation. 

Depreciation  has  been  a  major  problem  of  U.S.  tax  poHcy  for  decades.     As  a     1 
deduction  used  in  determining  the  taxable  income  of  a  business,  it  directly  affects      * 
the  rate  of  recovery  of  invested  capital.     For  that  reason,  it  plays  a  vital  role  in 
business  investment  decisions,  a  major  factor  in  determining  a  nation's  rate  of 
economic  growth.     Faster  economic  growth  is  essential  if  we  are  to  reduce  unem-    {J_J 
ployment  and  provide  jobs  for  the  millions  of  workers  coming  into  the  labor 
force.     Equally  important,  the  investment  level  is  closely  related  to  productivity, 
hence  plays  an  important  part  in  determining  the  competitive  position  of  U.S. 
producers  in  world  markets.     We  must  be  competitive  if  we  are  to  reduce  our 
balance-of-payments  deficit  and  stem  the  drain  on  our  gold  stocks.     Depreciation 
rates  are,  therefore,  important  not  only  to  the  welfare  of  business,  but  to  the 
welfare  of  every  American  citizen. 

Our  depreciation  practices  have  not  been  realistic  for  a  great  many  years. 
Based  essentially  on  taxpayers'  past  replacement  practices,  they  have  inade- 
quately reflected  the  fast-moving   pace   of  economic  and  technological  change. ^. 

The  new  depreciation  guidelines  correct  this  fundamental  flaw  and  the  new 
rules  for  application  of  the  guidelines  recognize  that  economic  obsolescence  is  a 
continuing  factor  in  business  life  which  our  tax  administration  must  take  fully 
into  account.  The  rate  of  depreciation  permitted  under  the  rules  will  not  be 
tied  to  past  history — it  is  tied  to  concurrent  adoption  of  replacement  practices 
consistent  with  the  lives  which  are  claimed  for  tax  purposes.  --. 

The  guidelines  will  not  be  allowed  to  become  outdated,  as  was  the  case  for  so  ' 
long  with  Bulletin  F,  which  the  new  guidelines  replace.  Our  revision  of  depre- 
ciation guidelines  and  rules  recognizes  that  depreciation  reform  is  not  something 
that,  once  accomplished,  is  valid  for  all  time.  It  reflects  an  administrative 
policy  dedicated  to  a  continuing  review  and  up-dating  of  depreciation  standards 
and  procedures  to  keep  abreast  of  changing  conditions  and  circumstances.  The 
experience  under  the  new  guideline  lives,  industry  and  asset  classifications,  and 
administrative  procedures,  will  be  watched  carefully  with  a  view  to  possible  cor- 
rections and  improvements.  Periodic  reexamination  and  revision  will  be  essential 
to  maintain  tax  depreciation  treatment  which  is  in  keeping  with  modern 
industrial  practices. 

This  depreciation  revision  will  bring  meaningful  and  lasting  benefits  to  all  of 
American  business,  agriculture,  and  mining. 

The  new  guideline  lives  average  thirty-two  percent  shorter  than  those  estab- 
lished in  Bulletin  F.  More  significantly,  they  are — as  our  Treasury  depreciation 
survey  showed — fifteen  percent  shorter  than  the  Jives  in  actual  use  by   1,100 


336   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

large  corporations  which  hold  two-thirds  of  all  the  depreciable  assets  in 
manufacturing. 

In  actual  practice,  we  anticipate  that  these  same  companies  will  be  able  to  take 
faster  depreciation  than  that  provided  in  the  new  guidelines.  As  a  result,  the 
depreciable  lives  they  will  actually  use  are  expected  to  be  twenty-one  percent 
shorter  than  those  in  use  now. 

More  rapid  depreciation  than  presently  taken  will  be  immediately  allowed 
under  the  new  guidelines  on  seventy  to  eighty  percent  of  the  assets  in  use  by 
American  business  today. 

For  all  of  our  12,000,000  corporate  and  noncorporate  businesses,  we  estimate 
that  the  potential  increase  in  annual  depreciation  charges  under  the  new  guide- 
lines will  amount  to  seventeen  percent,  or  a  total  of  $4.7  billion,  in  the  first  year. 
Because  some  businesses  operate  at  a  loss,  and  others  may  not  choose  to  make 
immediate  full  use  of  the  new  guidelines,  we  estimate  that  the  additional  depre- 
ciation claimed  on  taxable  returns  in  the  first  year  will  be  $3.4  billion.  In 
contrast,  the  increased  annual  depreciation  charges  resulting  from  enactment  of 
accelerated  depreciation  in  1954  had,  after  seven  years,  reached  only  $2.5  billion 
by  last  year. 

The  $3.4  billion  potential  increase  in  depreciation  charges  will  mean  a  reduction 
in  business  tax  liabilities,  in  the  first  year,  of  $1.5  billion.  But  this  is  a  gross 
figure.  A  very  substantial  part,  if  not  all,  of  this  sum  will  be  recouped  promptly 
by  the  Government  as  higher  depreciation  charges  increase  the  flow  of  cash  to 
corporations  and  this  money  finds  its  way  directly  into  new  investment,  thus 
creating  jobs  and  taxable  income  for  business  and  individuals. 

The  potential  $4.7  billion  in  increased  depreciation  charges  for  business  is  also 
interesting  when  viewed  in  another  light,  namely,  the  extent  to  which  it  closes 
the  so-called  "depreciation  gap."  This  "gap"  was  caused  by  the  inflation  of 
years  past  which  meant  that  business  had  to  replace  its  machinery  and  equipment 
at  ever-rising  cost,  while  the  cash  it  retained  through  depreciation  was  based  on 
the  cost  of  its  outworn  assets.  The  "gap"  is  obviously  hard  to  measure,  but 
such  important  business  organizations  as  the  Machinery  and  Allied  Products 
Institute  have  placed  it  at  $5  to  $8  billion  a  year. 

Our  new  depreciation  guidelines  are  not  based  on  any  estimate  of  the  effects 
of  inflation  on  replacement  costs,  nor  could  they  be  under  existing  law,  even  if 
we  thought  such  a  policy  desirable.  But  the  fact  is  that  our  depreciation  reform 
standing  alone,  goes  much  of  the  way  toward  closing  the  so-called  "depreciation 
gap."  Coupled  with  the  investment  credit,  now  pending  before  the  Senate 
Finance  Committee,  the  reform  will  close  the  gap  entirely,  because  the  depre- 
ciation equivalent  of  the  credit  is  $2.9  billion. 

This  is  not,  however,  the  only  reason  why  enactment  of  the  credit  is  essential. 
Depreciation  reform,  important  as  it  is,  wiU  not  put  American  business  on  a  com- 
parable footing  with  its  foreign  competitors  so  far  as  tax  treatment  of  invest- 
ment is  concerned. 

The  percentage  of  first- year  cost  recovery  on  investment  in  the  United  States 
is  now  only  a  little  more  than  thirteen  percent.  Because  of  special  tax  incentives 
for  new  investment  granted  by  our  nine  friendly  major  industrial  competitor  nations, 
the  average  first-year  recovery  in  those  countries  is  twenty-nine  percent,  more 
than  twice  our  current  figure.  With  this  new  revision,  our  percentage  will  rise 
to  16.7  percent,  but  still  far  short  of  equality.  If,  however,  we  couple  the  pro- 
posed seven  percent  investment  credit  with  the  depreciation  revision,  this  picture 
will  change  sharply.  Our  average  percentage  first-year  cost  recovery  would 
then  climb  to  30.7  percent,  higher  than  the  average  of  the  nine  other  nations 
and  above  the  actual  cost  recovery  allowed  in  all  but  two,  Japan  and  the  United 
Kingdom. 

That  is  why  we  recommended  the  credit,  because  we  beUeve  it  imperative 
to  give  American  producers  every  legitimate  assistance  in  meeting  foreign  com- 
petition. The  administration  has  done  its  part  with  the  completion  of  this 
depreciation  reform.  Further  action  must  come  from  the  Congress,  and  I  hope 
that  Congress  will  soon  take  favorable  action  on  the  investment  credit. 


EXHIBITS  337 

Exhibit  23. — Letter  from  Secretary  of  the  Treasury  Dillon,  August  27,  1962,  to 
the  Senate  Majority  Leader  concerning  the  administration's  tax  bill 

August  27,  1962 
Dear  Senator  Mansfield: 

The  tax  bill  now  before  the  Senate  has  a  direct  and  important  bearing  upon 
the  future  course  of  our  economy.  It  might  be  helpful,  therefore,  if  I  summarize 
briefly  the  administration's  views  on  this  key  measure. 

Both  the  Congress  and  the  Treasury  have  worked  long  and  painstakingly  on 
this  legislation,  which  has  been  under  consideration  since  April  1961.  The 
problems  it  seeks  to  solve  are  as  difficult  as  they  are  important,  and  they  clearly 
warrant  the  time  devoted  to  dealing  with  them. 

The  President,  in  his  Tax  Message  of  April  1961,  recommended  that  action  be 
taken  in  a  number  of  areas.  In  reviewing  the  bill  in  its  present  form,  I  find 
that,  while  the  administration  program  has  not  been  fully  accepted,  there  has 
nevertheless  been  a  significant  advance  over  present  law  in  all  but  one  of  the 
areas  contained  in  the  President's  recommendations — the  dividend  credit  and  ex- 
clusion. The  bill  includes  one  major  provision  not  requested  by  the  President: 
deduction  of  certain  lobbying  expenses. 

The  central  element  of  the  President's  recommendations  was  the  need  for  an 
incentive  for  investment  in  machinery  and  equipment  that  would  stimulate  a 
higher  rate  of  economic  growth  and  better  enable  our  industry  to  compete  in 
markets  at  home  and  abroad.  The  investment  credit  contained  in  this  bill 
will  operate  as  a  powerful  stimulus  to  investment.  In  combination  with  the 
Treasury's  recent  administrative  reform  of  depreciation,  the  credit  will,  at  long 
last,  give  to  American  business  tax  treatment  on  new  investment  in  machinery  and 
equipment  approaching  that  of  its  chief  competitors  in  Western  Europe,  Canada, 
and  Japan.  Its  adoption  will  constitute  a  major  advance  toward  our  national 
goals  of  greater  economic  growth  and  the  increased  productive  efficiency  and 
competitiveness  necessary  to  a  solution  of  our  balance-of-payments  problem. 

To  offset  the  initial  revenue  loss  involved  in  the  investment  incentive — and 
to  achieve  much  needed  reforms  in  our  tax  laws — the  President  recommended 
a  number  of  important  changes  in  those  laws.  As  I  have  stated,  the  bill  contains 
provisions  which  deal  with  all  but  one  of  the  areas  in  which  changes  were  re- 
quested by  the  President.  For  example,  solutions  have  been  found  for  problems 
that  have  long  plagued  the  Congress  concerning  the  taxation  of  mutual  thrift 
institutions,  cooperatives,  and  mutual  fire  and  casualty  insurance  companies. 
The  bill's  provisions  will  effect  a  far  greater  degree  of  equity  in  the  tax  treatment 
of  these  mutual  institutions  in  relation  to  their  competitors. 

In  the  area  of  depreciable  personal  property,  the  bill  closes  a  broad  avenue  of 
potential  abuse  under  wliich  ordinary  income  could  be  converted  to  capital  gains 
on  the  sale  of  depreciable  property.  The  bill  thereby  permits  the  Treasury's 
recent  and  much  needed  administrative  reform  of  depreciation  to  operate  without 
any  possibility  of  windfall  tax  gains  on  sale  of  assets  subject  to  faster  depreciation. 
In  the  field  of  foreign  income,  the  bill  at  one  stroke  would  sweep  away  abuse 
after  abuse  possible  under  present  laws  that  now  permit  very  significant  escapes 
from  taxation.  The  core  of  these  changes  lies  in  the  "tax  haven"  provisions  of 
the  bill,  which  provide  a  workable  set  of  rules  to  end  the  abuses  we  all  know 
exist  in  this  area.  These  rules  have  been  carefully  constructed  to  avoid  hampering 
the  expansion  of  our  export  trade  or  restricting  business  activities  that  are  not 
artificially  tax-motivated.  When  one  takes  account  of  the  wide  variety  of  our 
foreign  activities  abroad,  the  highly  technical  nature  of  present  law  in  this  area, 
and  the  divergent  opinions  on  the  concept  of  tax  deferral  for  foreign  income, 
the  provisions  of  the  bill  in  this  area  represent  a  major  accomplishment. 

Along  with  ending  tax  haven  abuses,  the  bill  is  designed  to  shut  off  such  avenues 
of  escape  from  our  tax  laws  as  the  establishment  of  foreign  residence  by  individuals 
seeking  to  free  their  earnings  from  tax,  the  creation  of  foreign  trusts  to  enable 
them  to  accumulate  income  tax  free,  the  resort  to  foreign  investment  companies 
to  convert  ordinary  income  into  capital  gain,  the  investment  in  foreign  real  estate 
to  escape  our  estate  tax  laws,  and  as  respects  dividends  earned  in  developed 
countries,  the  undertaxation  that  exists  because  of  the  partial  double  counting 
of  foreign  taxes  under  the  foreign  tax  credit.  The  bill  will  also  greatly  strengthen 
the  administration  of  our  tax  laws  on  foreign  income  through  the  establishment 
of  more  effective  information  and  reporting  requirements. 

As  for  expense  accounts — a   problem  that  has  concerned  the  Congress  for  a 
number  of  years — the  bill  contains  provisions  that  will  strengthen  the  hand  of  the 
661496 — 63 23 


338   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Internal  Revenue  Serv-ice  in  ending  flagrant  and  unconscionable  abuses  that  have 
led  us  to  be  known  as  an  "expense  account  society."  In  addition  to  requiring 
detailed  substantiation  of  entertainment  and  other  expenses,  the  bill  and  accom- 
panying committee  report  propose  standards  of  deductibiUty  with  respect  to 
entertainment,  business  gifts,  and  travel  that  are  substantially  more  restrictive 
than  present  law.  While  the  improvement  over  present  law  is  marked,  it  is  still 
considerably  less  than  that  recommended  by  the  administration  or  that  provided 
in  the  version  passed  by  the  House.  In  addition,  the  Finance  Committee's  re- 
port on  expense  accounts  is  not  as  clear  as  could  be  desired  and  is  likely  to  raise 
difficult  problems  of  interpretation  in  the  future. 

I  regret  that  the  Senate  Finance  Committee  bill  does  not  contain  the  with- 
holding approach  adopted  by  the  House  to  end  the  present  evasion  of  taxation  on 
dividends  and  interest.  But  the  committee  bill  does  recognize  that  persistent 
evasion  in  this  area  is  an  extremely  serious  matter  and  must  be  halted.  The  dual 
requirement  to  report  information  on  dividend  and  interest  payments,  both  to 
the  Government  and  to  the  payee,  is  bound  to  improve  compliance  and  enforce- 
ment in  this  field.  Nevertheless,  this  is  a  matter  on  which  we  must  focus  constant 
attention,  for  it  is  imperative  that  our  tax  laws  be  enforced.  I  therefore  feel,  as 
does  the  President,  that  the  affirmative  advantages  of  withholding  will  inevitably 
be    recognized. 

There  is  one  provision  of  the  bill  that  was  not  in  the  President's  Message — 
a  deduction  for  certain  lobbying  expenses.  This  is  a  provision  which  the  adminis- 
tration has  consistently  opposed  for  reasons  set  forth  in  my  testimony  before  the 
Senate   Finance   Committee. 

Now,  for  the  fiscal  aspects  of  the  bill,  our  estimates  show  that  it  falls  short  of  a 
balance  by  $210  million  on  a  full-year  basis.  However,  this  is  a  gross  estimate 
that  does  not  take  into  account  the  feedback  effects  of  the  investment  credit. 
When  those  effects  are  considered,  it  is  my  judgment  that  the  bill  is  at  least  in 
balance. 

We  would,  of  course,  have  preferred  that  the  bill  be  in  balance  even  on  a  gross 
basis.  The  inclusion  of  the  withholding  requirements  on  dividends  and  interest 
would  have  achieved  that  balance.  In  fact,  withholding  would  have  produced  an 
overall  revenue  gain  under  the  bill  of  about  $300  million. 

Even  without  the  withholding  provisions,  however,  the  bill  as  reported  provides 
more  than  $800  million  of  new  revenue  from  tax  reforms.  This  revenue  offsets 
practically  all  of  the  gross  cost  of  the  growth  incentive  embodied  in  the  investment 
credit.  Indeed,  if  the  dividend  and  interest  information  reporting  requirements 
of  the  Senate  bill  prove  to  be  as  efficacious  as  the  committee  staff  estimates  and 
half  of  the  gain  that  we  would  realize  from  withholding  is  achieved  through  the 
application  of  those  requirements  then,  under  the  Treasury's  estimate  of  the  rev- 
enue presently  lost  through  evasion  in  this  area,  the  revenue-raising  features  of 
this  bill  Avould  be  increased  to  just  under  $1  billion.  This  would  leave  the  bill 
approximately  in  balance  on  a  gross  basis. 

In  closing,  I  would  like  to  say  that  the  bill  now  before  the  Senate  represents 
a  major  advance  toward  our  national  goal  of  a  revised  and  modernized  tax  system. 
In  its  tax  reform  provisions  the  bill  makes  substantial  headway  in  eliminating 
many  long  recognized  abuses.  The  investment  credit  provides  a  significant 
stimulus  both  to  economic  growth  and  to  the  maintenance  of  America's  competi- 
tive position  in  the  world — an  important  consideration  as  we  enter  a  new  era  of 
freer  trade.  The  bill,  in  short,  is  a  significant  first  step  toward  the  reform  of  our 
present  outmoded  tax  laws.  As  such,  I  believe  it  merits  the  support  of  every 
member  of  the  Senate,  and  I  urge  its  favorable  consideration  and  passage. 

With  best  wishes, 
Sincerel}^ 

Douglas  Dillon, 
Secretary  of  the  Treasury. 

Exhibit  24. — Remarks  by  Secretary  of  the  Treasury  Dillon,  November  15,  1962, 
before  the  White  House  Labor-Management  Conference  on  fiscal  and  monetary 
policy 

None  of  us  is  satisfied  with  the  performance  of  our  economy  over  recent 
3'ears.  Fiscal  and  monetary  policies  play  a  critical  role  in  that  performance. 
Therefore  the  need  for  a  fresh  look  at  this  area  is  clear. 

The  President  will  submit  to  the  Congress  in  January  a  major  program  of  tax 
reform  and  reduction.     This  program  will  in\oh-e  a  basic  reworking  of  our  fiscal 


EXHIBITS  339 

structure.  The  results  will  have  a  major  bearing  on  our  success  in  meeting  our 
economic  goals,  not  only  in  1963,  but  for  many  years  ahead.  We  welcome  your 
inquiry  into  the  policy  issues  involved. 

One  of  the  major  responsibihties  of  any  modern  society  is  to  provide  the  sort  of 
economic  environment  in  which  men  and  women,  willing  and  able  to  work,  can 
find  useful  employment.  The  duty  of  the  Federal  Government  to  shape  its  poli- 
cies to  that  end  has  been  embodied  in  law.  But  our  goal  cannot  simply  be  one  of 
providing  enough  jobs  today.  We  also  want  our  economy  to  grow  more  rapidly 
over  the  years  ahead.  That  is  a  must  if  we  are  to  provide  jobs  for  the  new  workers 
who  will  be  entering  the  labor  force  in  increasing  numbers,  if  we  are  to  banish  re- 
maining poverty,  and  if  we  are  to  continue  to  carry  the  heavy  burdens  imposed  by 
our  role  in  the  world. 

For  the  past  five  years,  our  country's  performance  in  meeting  these  goals  has 
clearly  been  inadequate.  True,  production  is  now  running  at  record  levels,  16 
percent  above  the  rate  of  early  1961,  unemployment  has  been  cut  by  30  percent 
over  the  same  period,  and  total  profits  have  been  well  maintained.  But  in  only 
one  month  during  the  past  five  years  has  unemployment  dropped  below  5  percent 
of  the  labor  force,  and  a  4  percent  unemployment  rate — roughly  the  average  of 
the  first  postwar  decade — has  not  been  closely  approached  since  the  spring  of 
1957.  Output  per  manhour  has  increased  more  slowly  since  the  mid-50's  than 
during  the  earlier  postwar  years,  and  less  than  the  average  for  this  century. 

While  we  have  made  progress  toward  ehminating  the  deficit  in  our  balance  of 
payments,  that  deficit  still  persists,  and  its  eventual  elimination  will  require 
continued  effort.  Even  the  price  stability  of  recent  years,  gratifying  as  it  is,  can 
be  traced  in  part  to  the  same  excess  capacity  and  unemployment  that  are  meas- 
ures of  our  deficient  performance  in  other  directions.  Tax  reform  and  reduction 
can  play  a  vital  role  in  improving  our  performance. 

For  a  long  time,  we  have  been  familiar  with  the  use  of  fiscal  and  monetarj' 
policies  to  achieve  full  employment,  an  adequate  growth  rate,  and  price  stability. 
But  in  recent  years  the  balance-of-payments  problem  has  added  a  wholly  new 
dimension  to  our  economic  objectives  and  to  the  problems  of  achieving  a  coor- 
dinated set  of  financial  policies.  It  has  reinforced  the  urgency  of  one  of  our 
basic  domestic  goals,  maintenance  of  relative  price  stability.  But,  it  has  many 
other  implications  for  economic  policy  as  well.  Thus  monetary  policy  must 
now  be  shaped  with  a  view  toward  its  impact  on  international  capital  flows, 
which  are  influenced  particularly  by  the  level  of  short-term  interest  rates.  Very 
simply,  we  no  longer  have  the  freedom  to  follow  the  sort  of  monetary  policies 
that  would  drive  short-term  rates  to  very  low  levels.  Unless  our  short-term 
rates  maintain  a  proper  relationship  to  similar  rates  in  foreign  markets  our  funds 
will  simply  flow  abroad  in  volume,  which  we  cannot  afford. 

But,  that  does  not  mean  that  we  cannot  maintain  an  ample  supply  of  long- 
term  credit  for  productive  investment,  for  better  housing,  and  for  needed  com- 
munity facilities.  That  is  what  we  have  been  trying  to  do,  and  rates  for  corpo- 
rate and  municipal  bonds  and  for  mortgages — which  are  most  significant  for 
investment  and  business  activity — are  actually  lower  today  than  during  the 
recession  months  of  1961. 

At  the  same  time,  we  have  moved  to  improve  the  incentives  for  new  invest- 
ment in  this  country,  as  well  as  the  internal  flow  of  funds  available  to  business. 

Many  of  our  economic  difficulties  can  be  traced  to  an  inadequate  rate  of  pro- 
ductive investment  and  a  lessening  of  the  intense  demands  for  goods  and  services 
accumulated  over  years  of  depression  and  war. 

As  a  result  of  lagging  investment,  we  have  been  permitting  the  average  age 
of  our  productive  equipment  to  increase,  and  its  efficiency  has  failed  to  keep 
pace  with  the  potential  needs  of  a  full  employment  economy. 

The  contrast  with  our  leading  foreign  competitors,  who  have  provided  much 
more  favorable  tax  treatment  for  investment,  is  striking.  Typically  the  in- 
dustrialized countries  of  Continental  Western  Europe  and  Japan  have  been 
investing  between  m  and  2  times  as  much  of  their  total  output  in  new  equip- 
ment as  has  the  United  States.  Their  growth  rates  have — and  this  is  no  coin- 
cidence— also  averaged  1}>^  to  2  times  our  own,  or  even  higher.  Furthermore, 
there  is  evidence  in  a  number  of  industries  that  our  wide  advantage  in  technology 
and  worker  productivity  has  been  reduced,  at  the  expense  of  our  international 
trading  position. 

As  a  consequence,  action  in  this  area  deserved  first  attention.  It  is  important 
for  domestic  growth.  It  is  also  essential  if  we  are  to  maintain  our  competitive 
position  in  markets  at  home  and  abroad. 


340   19G2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

A  major  part  of  our  effort  over  the  past  year  to  stimulate  investment  has  been 
long  overdue  reform  in  our  treatment  of  depreciation  for  tax  purposes.  We 
have  put  into  effect  new  guidelines  and  simplified,  flexible  administrative  arrange- 
ments that  will  permit  business  the  freedom  it  needs  to  depreciate  equipment 
on  the  basis  of  its  actual  experience,  and  with  full  allowance  for  the  impact  of 
new  technology  on  the  useful  life  of  equipment. 

This  administrative  depreciation  reform  has  been  complemented  and  supple- 
mented by  the  new  7  percent  investment  credit — the  principal  provision  of  the 
Revenue  Act  of  19G2.  This  measure  directly  increases  the  profitability  of  new 
investment  and  the  aftertax  income  of  any  firm  purchasing  new  equipment. 
Together,  these  measures  are  reducing  the  current  tax  load  on  business  by  $2 
billion  per  year. 

George  Terborgh  of  the  Machinery  and  Allied  Products  Institute,  one  of  the 
nation's  leading  analysts  of  investment  behavior,  has  calculated  that  these  meas- 
ures increase  the  potential  profitability  of  a  typical  new  piece  of  equipment 
by  20  percent.  That  would  be  equivalent  to  a  10-point  reduction  in  the  corpo- 
rate tax  rate,  applied  to  the  same  new  investment.  I  am  confident  that,  as 
businessmen  fully  appraise  the  potential  value  of  these  measures,  we  will  find 
a  steadily  increasing  response  in  terms  of  expanded  investment. 

We  had  hoped,  a  year  ago,  that  with  this  added  stimulus,  the  economic  re- 
covery would  carry  us  to  full  employment  by  the  end  of  the  current  fiscal  year. 
Unfortunately,  the  economy  has  failed  to  expand  as  rapidly  as  we  had  hoped 
and  expected.  This  failure  underscores  something  that  many  had  already 
suspected,  that  the  natural  expansionary  forces  in  the  economy  are  no  longer 
strong  enough  to  overcome  the  restrictive  impact  of  an  onerous  tax  structure 
which  was  built  in  the  inflationary  circumstances  of  war  and  the  immediate 
postwar  period.  I  think  that  both  labor  and  management  will  agree  that  taxes 
today  are  simply  too  high. 

The  basic  structure  of  individual  income  taxes,  with  rates  running  from  20 
percent  on  the  first  bracket  to  91  percent  at  the  top,  was  set  in  the  Revenue  Act 
of  1950.  Incomes  have  risen  substantially  since  that  time,  partly  reflecting 
real  growth,  but  also  reflecting  the  inflation  that  took  place  during  much  of  the 
1950's.  Meanwhile,  the  tax  structure  has  siphoned  off  an  increasing  proportion 
of  buying  power  into  Federal  taxes. 

What  is  needed,  in  addition  to  the  steps  we  have  already  taken  to  improve 
the  climate  for  investment,  is  a  reduction  in  the  overall  tax  load  that  will  increase 
demand,  and  so  lead  to  better  utilization  of  our  industrial  capacity,  more  em- 
ployment, andfhigher''profits.  But  we  are  not  merely  interested  in  expanding 
purchasing  power.  We  also  must  aim  at  increasing  incentives  to  work  and 
to  take  risks,  to  cut  costs  and  to  produce  efficiently. 

I  see  no  reason  at  this  juncture  for  the  Cuban  crisis  and  the  new  international 
tensions  to  alter  this  analysis  in  any  basic  way.  What  that  crisis  does  emphasize 
is  something  we  already  knew,  that  we  cannot  delay  tax  reform  indefinitely  in 
the  vain  hope  that  tax  reduction  can  be  matched  by  cutbacks  in  spending.  No 
one  is  more  conscious  than  I  am  of  the  need  to  reinforce  our  controls  over  all 
expenditure  programs,  seeking  out  savings  wherever  they  can  be  made,  and  in- 
creasing Government  efficiency.  That  is  our  objective  and  we  shall  pursue  it 
vigorously.  However,  there  is  simply  no  possibility  within  the  foreseeable  future 
that  expenditures  can  be  reduced  below  current  levels.  In  fact,  the  expanding 
demands  imposed  by  the  cold  war  and  by  our  growing  population  will  make  some 
increase  inevitable.  For  example,  defense  and  space  expenditures  will  rise 
substantially  in  fiscal  1964,  merely  to  pay  for  programs  already  underway  in 
accordance  with  past  appropriations. 

It  is  now  clear  that  our  commitments  to  the  defense  and  development  of  the 
free  world,  coupled  with  the  current  state  of  our  economy,  will  mean  a  further 
budget  deficit  in  fiscal  1964.  We  need  not  fear  that  deficit  as  inflationary,  in  view 
of  the  excess  capacity  and  widespread  unemployment  that  exist  today,  and  that 
are  certain  to  remain  with  us  for  some  time  to  come.  It  is  also  important  to  re- 
alize that  tax  reduction  does  not  mean  that  we  will  face  an  endless  succession  of 
budget  deficits.  On  the  contrary,  the  tax  structure  we  propose  will  generate  budg- 
et surpluses  as  the  economy  provides  full  employment  in  the  years  ahead.  The 
essential  point  is,  that  by  increasing  incentives  and  reducing  the  tax  burden,  the 
prospects  for  attaining  sustained  prosperity,  and  thus  budget  surpluses,  will  be 
greater  than  with  the  current  tax  structure. 

We  should  also'be  clear  about  the  implications  of  the  prospective  deficit  for  the 
balance  of  payments.     There  is  not  necessarily  any  direct  connection  between 


EXHIBITS  341 

budget  deficits  and  balance-of-payments  deficits.  If  any  proof  is  required,  one 
need  only  look  at  the  record  of  1930's,  when  gold  literally  poured  into  this  country 
at  a  time  when  we  ran  much  larger  budget  deficits,  relative  to  the  size  of  the  econ- 
omy, than  at  any  time  in  recent  years.  However,  we  must  also  recognize  that  a 
deficit  at  the  wrong  time  can  and  has  been  inflationary,  and  for  that  reason  a  defi- 
cit can  have  a  psychological  influence  on  international  flows  of  funds.  Fortu- 
nately, there  is  no  reason  to  anticipate  any  adverse  psychological  impact  on  our 
balance  of  payments  from  our  current  budget  deficit.  Responsible  financial  opin- 
ion abroad  recognizes  that  a  tax  cut  can  contribute  to  the  strength  and  efficiency 
of  the  American  economy,  and  that  a  budget  deficit  will  not  be  inflationary  in 
current  circumstances.  In  fact,  a  tax  cut  has  been  urged  upon  us  by  many  abroad 
as  a  means  of  encouraging  domestic  growth. 

One  thing  is  clear.  That  is  that  the  goal  of  our  tax  program  will  not  be  merely 
to  give  the  economy  a  quick  shot  in  the  arm.  Our  tax  program  is  not  intended  to 
be  an  antidote  for  a  temporary  cyclical  anemia.  It  is  intended  to  be  a  long-range 
lightening  of  the  drag  of  the  entire  tax  system  on  the  economy,  which  involves 
both  individuals  and  business  firms. 

In  short,  it  will  be  tailored  to  deal  with  the  economic  outlook  existing  at  the 
time  it  is  enacted,  but  it  will  not  be  designed  solely  with  this  in  mind.  Our  con- 
cern is  not  just  for  next  month  or  just  for  next  year,  but  for  the  next  decade  and 
beyond. 

With  that  in  mind,  the  reforms  included  in  the  program  should  be  measured 
primarily  against  the  yardstick  of  what  they  will  contribute  to  accelerating  eco- 
nomic growth.  I  can  assure  you  they  will  be  so  measured.  There  will  be  siz- 
able rate  cuts,  across  the  board.  There  will  be  reforms,  and  not  merely  token 
reforms.  And  the  net  reduction  after  the  reforms  and  rate  cuts  have  been  taken 
into  account  will  be  a  significant  one. 

The  President  will  present  to  the  Congress  next  year  a  tax  program  as  he  has 
described  it — a  balanced  program  to  ensure  more  rapid  economic  expansion,  in 
an  atmosphere  of  greater  tax  equity  and  simplicity. 

With  significant  tax  reduction,  and  significant  reform,  and  with  the  reforms 
already  enacted  in  this  year's  tax  legislation,  we  will  have  come  a  long  way.  The 
investment  credit,  depreciation  reform,  and  the  other  gains  of  our  tax  changes, 
will  pay  benefits,  in  increasing  number,  for  years  to  come. 

Our  major  economic  goal  is  not  merely  to  cope  with  problems  as  they  arise,  but 
to  make  a  lasting  contribution  to  the  growth  potential  of  the  American  economy. 
The  benefits,  in  increased  employment,  greater  prosperity,  and  a  stronger  nation 
both  at  home  and  abroad,  are  not  ones  we  can  afford  to  ignore. 

We  have  no  intention  of  doing  so,  and  the  President's  tax  program  will  clearly 
demonstrate  that  fact. 


Exhibit  25. — Remarks  by  Under  Secretary  of  the  Treasury  Fowler,  October  12, 
1961,  before  the  American  Retail  Federation  on  tax  policy  for  growth  and 
productivity 

Someone  has  said  that  taxes  are  everybody's  business.  That  should  be  so  in 
view  of  the  vital  role  a  strong  and  sound  Federal  tax  system  will  play  in  America's 
future. 

But  it  is  not  necessarily  the  case.  It  is  altogether  possible  for  special  interests 
to  supersede  the  national  interest  in  tax  policy  formulation.  To  achieve  a  tax 
policy  in  the  national  interest,  there  must  be  a  national  interest  in  tax  policy. 
Otherwise,  tax  policy  tends  to  become  the  special  preserve  of  those  enjoying  or 
seeking  privileged  sanctuaries,  no  matter  how  conscientiously  the  executive 
branch  and  the  responsible  committees  of  Congress  seek  to  improve  the  system. 

So  I  want  to  talk  to  you  about  tax  policy — not  as  retailers  representing  a  great 
organization  of  retailers,  not  about  some  particular  interest  you  have  in  tax  policy 
as  retailers — but  as  American  citizens  sharing  a  national  interest  in  the  increasing 
growth  and  productive  efficiency  of  the  U.S.  economy  and  the  role  tax  policy  can 
play  to  that  end. 

It  will  be  incumbent  for  all  Americans  to  consider  tax  policy  and  the  national 
interest  in  the  years  just  ahead.  For  President  Kennedy  and  liis  administration 
will  put  forward,  not  only  the  specific  "first  step"  proposals  submitted  in  the  last 
session  of  Congress  because  they  are  so  urgently  needed,  but  also  a  long-range  and 
thoroughgoing  program  of  tax  revision  and  reform. 

In  accordance  with  the  President's  directive  in  his  Tax  Message  of  April  20,  1961, 
the  Treasury  Department  has  undertaken  a  review  of  the  tax  system  in  prepara- 


342   196  2  REPORT  OP  THE  SECRETARY  OE  THE  TREASURY 

tion  for  a  comprehensive  tax  reform  program.  This  review  will  make  use  of  recent 
tax  studies  of  the  Congress,  particularly  those  of  thelCommittee  on  Ways  and 
Means  and  the  Joint  Economic  Committee.  Also  research  I  projects  are  being 
conducted  on  various  features  of  the  tax  laws,  including  in  the  income  tax  area 
the  exclusions,  deductions,  and  credits,  some  of  which  now  provide  forms  of  spe- 
cial tax  treatment.  These  investigations  will  provide  information  on  the  opera- 
tion and  effects  of  various  present  provisions  and  provide  a  basis  for  legislative 
recommendations  for  improvement. 

The  objectives  of  reform  are  to  provide  a  more  equitable  distribution  of  tax 
burdens,  a  simpler  tax  law  and  a  balanced  structure  which  contributes  more  effec- 
tively to  our  economic  goals  of  stability  at  high  levels  of  employment  and  to  a  more 
rapid  rate  of  growth.  There  is  widespread  recognition,  as  indicated  in  the  earlier 
congressional  studies,  that  these  objectives  would  be  served  by  providing  a 
broader  and  more  uniform  income  tax  base  and  an  adjustment  of  the  rates  of  tax. 
The  general  objectives  can  be  attained  only  by  specific  steps.  The  Treasury's 
studies  are  for  the  purpose  of  determining  whether  and  to  what  extent  it  may  be 
appropriate  to  revise  particular  provisions  of  the  existing  law  at  the  same  time  that 
suitable  and  complementary  adjustments  are  made  in  the  rate  structure.  It  is 
expected  that  these  studies  will  result  in  recommendations  for  broad  and  con- 
structive reform  while  assuring  the  adequacy  of  revenues  for  national  defense  and 
other  essential  needs. 

It  is  contemplated  that  the  recommendations  will  be  presented  to  the  Congress 
sometime  in  the  1962  session  after  there  has  been  a  suitable  period  for  further 
congressional  consideration  of  the  specific  tax  proposals  which  were  the  subject  of 
extensive  hearings  before  the  House  Ways  and  Means  Committee  from  early  in 
last  May  until  late  in  August  of  this  year. 

Hence,  the  schedule  calls  for  an  intensive  national  examination  of  tax  policy  in 
1962  and  1963.  Let  us  hope  that  this  will  result  in  decisions  recognizing  the 
changing  requirements  of  our  economic  and  international  position  and  the  need  for 
constructive  reforms  to  keep  our  tax  system  up-to-date  and  maintain  its  equity. 

Today  1  will  discuss  one  particular  aspect  of  tax  policy- — one  so  important  that 
President  Kennedy  singled  it  out  for  urgent  treatment  on  a  priority  basis  in  his 
first  Tax  Message.  I  refer  to  the  development  of  a  tax  policy  which  will  promote 
economic  growth  and  productivity  by  encouraging  the  modernization  and  ex- 
pansion of  machinery  and  equipment. 

While  the  comprehensive  national  review  and  revision  of  tax  policy  proceeds, 
this  "first  and  urgent  step"  should  be  taken  promptly  in  line  with  the  President's 
schedule  of  priorities. 

Increasing  the  investment  levels  in  productive  machinery  and  equipment 
contributes  significantly  to  three  of  our  vital  national  economic  objectives.  First, 
it  encourages  the  long-term  growth  of  our  economy.  Second,  it  improves  our 
international  balance-of-payments  position  by  increasing  competitive  efficiency. 
And,  third,  it  contributes  to  making  our  present  economic  recovery  a  vigorous  and 
long  lasting  one.  One  of  the  best  ways  to  increase  investment  levels  in  productive 
machinery  and  equipment  is  through  tax  treatment  of  this  investment.  That  is 
why  this  administration  has  undertaken  throughgoing  depreciation  reform. 

In  the  Report  of  the  President's  Commission  on  National  Goals  in  November 
1960  a  group  of  distinguished  Americans  of  varied  political  faiths  appointed  by 
President  Eisenhower  described  as  one  of  our  major  goals  that:  "The  economy 
should  grow  at  the  maximum  rate  consistent  with  primary  dependence  upon  free 
enterprise  and  the  avoidance  of  marked  inflation." 
The  Commission  recognized!that: 

"Such  growth  is  essential  to  move  toward  our  goal  of  full  employment,  to 

provide  jobs  for  the  approximate  13)^  million  net  new  additions  to  the  work 

force  during  the  next  ten  years;  to  improve  the  standard  of  living;  and  to 

assure  the  U.S.  competitive  strength." 

In  its  prescription  for  efficient  economic  growth,  the  Commission  singled  out 

tax  poHcy,  saving: 

"Public  i)olicies,  particularly  an  overhaul  of  the  tax  s}-stcm,  including 
depreciation  allowances,  should  seek  to  improve  the  climate  for  new  invest- 
ment and  the  balancing  of  investment  with  consumption.  We  should  give 
attention  to  policies  favoring  completely  new  ventures  which  involve  a  high 
degree  of  risk  and  growth  potential." 
What  are  some  of  the  underlying  factors  which  bear  upon  the  importance  of 
increasing  investment  levels  in  productive  machinery  and  equipment? 


EXHIBITS  343 

The  growth  of  the  American  economy  has  been  one  of  the  marvels  of  economic 
history. 

In  the  economic  sphere  this  growth  has  been  marked  by  a  continued  advance  in 
technology,  new  inventions,  new  processes,  new  materials,  and  new  machinery. 
And  a  notable  clement  in  the  historical  pattern  has  been  the  ever  increasing  use  of 
machines  to  increase  output  per  man-hour. 

The  great  role  of  this  factor  in  the  panorama  of  growth  is  suggested  by  the  fact 
that  manufacturing  establishments  now  have  available  about  10  horsepower  per 
wage  earner,  as  compared  with  1.25  horsepower  in  1879.  Net  investment  in 
structures,  equipment,  and  inventories  is  now  equal  to  about  nine  thousand  dollars 
for  each  employee  in  manufacturing. 

Even  though  these  past  accomplishments  represent  a  record  of  which  we  can  all 
be  proud,  we  are  today  facing  immense  new  challenges  both  at  home  and  abroad. 
We  have  large  unmet  needs  on  the  domestic  scene.  In  addition,  I  need  not  remind 
you  of  our  continuing  needs  in  the  area  of  national  security — intensified  in  recent 
weeks  by  the  uncertain  situation  in  Berlin  and  at  other  vital  points — needs  that 
require  a  tremendous  quantity  of  our  resources.  We  are  also  heavily  committed 
to  assisting  the  peoples  in  the  less-developed  countries  in  their  efforts  for  economic 
progress.  A  rapid  rate  of  economic  growth  will  permit  our  meeting  all  of  these 
needs  more  easily  while  minimizing  the  strain  imposed  on  the  civilian  private 
sector  of  our  economy. 

Yet,  instead  of  an  increasing  rate  of  economic  growth  to  meet  these  increasing 
challenges,  the  nation  has  been  confronted  by  a  lagging  rate  of  growth.  From  a 
historic  growth  rate  of  three  percent  per  annum  in  gross  national  product  (1909- 
1956  in  constant  prices)  we  have  fallen  to  two  percent  in  the  latter  part  of  the 
1950's.  In  the  last  five  years  Western  Europe  has  grown  at  double  or  triple  our 
recent  rate,  and  Japan  has  grown  even  faster.  C.I. A.  estimates  that  the  annual 
rate  growth  of  the  Soviet  economy  was  seven  percent  during  the  1950's. 

In  his  first  Message  to  the  Congress,  which  was  devoted  to  a  program  to  restore 
momentum  to  the  American  economy,  President  Kennedy  set  out  this  national 
objective: 

".  .  .  realistic  aims  for  1961  are  to  reverse  the  downtrend  in  our  economy, 
to  narrow  the  gap  of  unused  potential,  to  abate  the  waste  and  misery  of 
unemployment,  and  at  the  same  time  to  maintain  reasonable  stability  of 
the  price  level.  For  1962  and  1963  our  programs  must  aim  at  expanding 
American  productive  capacity  at  a  rate  that  shows  the  world  the  vigor  and 
vitality  of  a  free  economy." 

Certain  fundamental  facts  disclose  the  reasons  for  this  emphasis  on  renewed 
vigor  and  vitality  for  the  U.S.  economy.  Fifty  percent  of  our  present  productive 
capacity  was  installed  before  or  during  World  War  II.  More  than  sixty-five 
percent  was  installed  before  the  Korean  War.  Thus,  of  all  business  plant  and 
equipment  less  than  one-third  is  modern  in  the  sense  of  being  new  since  1950. 

Estimates  show  that  there  has  been  a  startling  rise  in  recent  years  in  the  pro- 
portion of  our  national  machinery  and  equipment  which  is  over  ten  years  old. 
It  now  averages  more  than  nine  years,  and  from  1954  to  1959  the  stock  of  equip- 
ment over  ten  years  old  rose  by  fifty  percent.  In  a  dynamic  economy  that  aver- 
age should  be  falling  as  new  equipment  is  put  into  place. 

Meanwhile,  other  countries  have  been  lowering  the  average  age  of  their  fixed 
capital.  The  German  example  is  the  most  spectacular — their  proportion  of 
capital  equipment  and  plant  under  five  years  of  age  grew  from  one-sixth  of  the 
total  in  1948  to  two-fifths  in  1957. 

Another  indication  of  a  slowdown  in  U.S.  capital  formation  is  the  leveling-off 
in  business  expenditures  on  plant  and  equipment.  Recent  estimates  indicated 
businessmen  planned  to  spend  $34.6  billion  in  new  plant  and  equipment  in  1961, 
a  decline  of  three  percent  from  1960  and  of  six  and  one-half  percent  from  1957. 

This  pattern  is  even  more  disturbing  when  measured  against  the  performance 
of  investment  levels  in  productive  machinery  and  equipment  in  other  indus- 
trialized societies,  friendly  and  less  friendly. 

Our  gross  fixed  capital  expenditures  (other  than  housing)  have  declined  from 
12.5  percent  of  GNP  in  1948  to  9.5  percent  in  1960.  By  comparison,  the  invest- 
ment ratio  in  Western  European  countries  rose  from  an  average  of  13.3  percent 
of  GNP  in  1951-55  to  15.1  percent  of  GNP  in  1956-60. 

Even  greater  percentages  of  GNP  are  said  to  be  devoted  to  new  machinery 
and  equipment  in  Japan.  This  means  our  manufacturers  must  compete  against 
their  friendly  rivals  in  the  free  world  to  get  a  larger  share  of  export   markets 


344   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

and  to  keep  imports  from  getting  a  larger  share  of  our  domestic  markets,  with 
our  machinery  and  equipment  being  replaced  at  a  much  slower  rate  than  theirs. 

And  what  about  competitors  who  are  not  so  friendly?  In  his  10-hour  speech 
to  the  21st  Congress  of  the  Communist  Party  in  February  1959,  Khrushchev 
summarized  his  assessment  of  the  situation  in  these  words: 

"The  economic  might  of  the  Soviet  Union  is'based  on  the"priority  growth 
of  heavy  industr}^;  this  should  insure  Soviet  victory  in  peaceful  economic 
competition  with  the  capitalistic  countries;  development  of  the  Soviet  eco- 
nomic might  will  give  communism  a  decisive  edge  in  the  international  balance 
of  power." 

Against  this  factual  background  let  us  consider  how  tax  policy  for  increasing 
investment  levels  in  productive  machinery  and  equipment  affects  the  three  vital 
national  economic  objectives  mentioned  earlier. 

First,  increasing  investment  levels  in  machinery  and  equipment  in  the  years 
ahead  will  help  make  our  present  economic  recovery  a  vigorous  and  long  lasting 
one.  Additional  expenditures  on  machinery  and  equipment  and  the  plants  and 
facilities  necessary  to  house  it  will  create  more  jobs  in  the  capital  goods  industries. 
There  is  a  startling  association  between  vigorous  and  lengthy  upswings  in  the 
economic  cycle  and  a  healthy  increase  in  the  levels  of  capital  goods  expenditures. 
Our  last  three  recoveries  have  lasted  forty-five  months,  thirty-five  months,  and 
twenty-five  months,  respectively,  in  that  order.  Since  World  War  II  approxi- 
mately fourteen  quarterly  periods,  or  twenty-three  percent  of  the  total,  have 
been  periods  of  recession.  Already  some  economic  forecasters  are  warning  that 
the  rising  economy  may  level  off  in  mid-1962  or  early  1963,  and  that  there  is 
a  real  danger  of  another  slump.  The  projection  of  a  healthy  increase  in 
investment  levels  for  machinery  and  equipment,  whether  for  modernization  or 
expansion,  would  be  added  insurance  that  the  current  recovery  would  reverse 
the  trend  to  ever  shorter  upswings  and  give  promise  for  a  healthy  and  more 
enduring  recovery. 

Second,  increasing  investment  levels  in  machinery  and  equipment  would  do 
double  duty  in  increasing  our  rate  of  economic  growth.  The  figures  previously 
cited  suggesting  a  relationship  between  equipment  investment  and  economic 
growth  merely  reflect  the  proposition  that  expanding  the  productive  base,  or 
improving  its  efficiency,  or  both,  should  lead  to  higher  output.  As  investment 
in  plant  modernization  and  expansion  contributes  to  a  larger  export  trade  for 
our  nation,  as  it  puts  people  to  work  in  the  capital  goods  industries,  as  it  preserves 
and  expands  our  domestic  market  through  competitive  efficiency,  it  contributes 
to  the  economy's  long-term  growth. 

Third,  increasing  investment  in  the  modernization  of  machinery  and  equip- 
ment is  vital  to  a  long-term  solution  of  our  newest  economic  problem  bound  up 
in  the  phrase  "balance  of  payments."  If  the  nation  is  to  finance  the  maintenance 
of  our  military  forces  overseas,  as  well  as  finance  our  investment  abroad,  and  that 
minor  portion  of  our  foreign  aid  which  is  in  dollars,  it  must  sell  more  merchan- 
dise abroad  than  it  buj's,  at  least  ?6  billion  more.  This  places  a  high  premuim 
upon  the  competitive  position  of  U.S.  based  production  in  relation  to  foreign 
manufacturing.  The  simple  truth  is  that  the  United  States,  to  a  large  extent, 
is  depending  on  the  aggressive,  competitive  drive  of  American  business  to  meet 
the  underlying  problem  behind  our  balance-of-paymcnts  deficits  without  dimin- 
ishing our  national  security  and  world  position. 

Deficits  in  our  international  balance  of  payments  totaled  about  $11  billion  in 
the  three  years  1958-60. 

Lately,  however,  as  a  result  of  many  actions  taken  by  the  Government,  there 
has  been  some  improvement  in  our  balance-of-paymcnts  situation,  But  the 
heart  of  the  problem  is  our  merchandise  trade  accovmt — that  is  where  we  make 
or  break.  Earlier  this  year  our  merchandise  trade  surplus  was  running  at 
an  annual  rate  of  $6  billion.  That  surplus,  however,  reflects  recession  conditions 
at  home  early  this  year  during  a  time  of  boom  abroad — a  temporarA^  situation 
which  holds  imports  down  and  increases  exports.  As  our  recovery  progresses 
our  imports  will  rise  and  cut  into  that  surplus,  so  we  cannot  expect  continued 
improvement  without  all-out  effort. 

The  administration  has  stepped  up  services  to  exporters  and  we  are  putting 
together  a  comprehensive  export  insurance  program.  But  a  real  effort  is  needed 
on  the  part  of  business  to  continue  to  improve  its  share  of  foreign  markets  with 
the  competitive  spirit  comparable  to  the  drive  that  created  our  vast  domestic 
m  arkets. 


EXHIBITS  345 

If  this  drive  is  to  be  successful  American  production  must  be  competitive,  not 
only  in  quality,  but  in  price  as  well.  We  don't  have  to  be  the  cheapest,  but 
we  can't  afford  to  be  priced  out  of  the  market  at  home  or  abroad. 

That  is  why  every  effort  must  be  made  to  avoid  out  of  line  increases  in  prices 
or  wages;  but  that  in  itself  won't  be  enough.  It  won't  be  enough  because  our 
competitors  in  Western  Europe  and  Japan  have  been  modernizing  their  equipment 
faster  than  American  manufacturers  and  are  cutting  unit  costs  and  improving 
quality  in  the  process  to  add  to  the  advantage  they  have  in  relatively  lower  wage 
scales. 

So,  wholly  apart  from  the  question  of  expansion  of  capacity  to  meet  growth 

needs,  there  is  a  great  stake  in  the  modernization  of  our  manufacturing  equipment. 

Viewed  against  the  background  of  a  declining  or  lagging  rate  of  investment 

in  this  vital  sector  as  compared  to  other  industrialized  societies,  friendly  and 

less  friendly  alike,  we  ask  ourselves:  What  do  they  have  that  we  haven't? 

Now,  perhaps  there  are  many  facets  to  a  full  answer  to  this  question.  But 
tax  experts,  businessmen,  economists,  responsible  public  officials  in  the  executive 
establishment  in  this  administration  and  the  last  one,  as  well  as  experienced 
observers  in  the  responsible  committees  in  Congress,  all  generally  agree  that 
one  of  the  important  contributory  factors  to  America's  lag  in  this  vital  field 
in  recent  years  is  the  difference  in  tax  policy  for  machinery  and  equipment  in 
our  country  and  that  followed  by  other  industrialized  countries. 

The   depreciation  allowances   authorized  for   Federal  income  tax   deductions 
in  this  country  are  probably  among  the  most  limited  in  the  world.     As  one  highly 
qualified  student   (Professor  Dan  Throop  Smith)   puts  it  in  a  recent  analysis: 
"Other  countries,  in  order  to  minimize  tax  barriers  to  economic  growth, 
have  established  depreciation  rates  for  machinery   and  equipment  which 
are  based  on  life  estimates  probably  appreciably  shorter  than  the  average 
lives  in  actual  use,  though  they  are  not  unrealistic  at  a  time  of  great  tech- 
nological change.     In   addition  to   shorter  life   estimates,   many   countries 
allow  one  or  more  of  the  following:  revaluations  and  special  allowances 
to  offset  higher  replacement  costs,  total  depreciation  in  excess  of  one  hundred 
percent  of  cost  regardless  of  price  changes,  initial  allowances  in  the  year 
of  acquisition  which  make  possible  a  very  rapid  recovery  of  an  investment 
in  machinery  though  they  do  not  give  total  allowances  in  excess  of  cost, 
and  special  additional  allowances  above  cost." 
These  other   countries  typically  give  shorter  life  estimates  for  depreciation 
than  those  contained  in  the  Bulletin  F  of  the  Internal  Revenue  Service,  last 
revised  in  1942,  and  many  of  the  countries  also  give  additional  tax  allowances 
or  incentives  in  the  year  of  acquisition.     The  competitive  disadvantage  of  U.S. 
manufacturers  in  both    categories  is  important  to  note.     This   administration 
intends  to  move  to  diminish  this  disadvantage  in  both  facets  to  effect  an  overall 
depreciation  reform.     In  so  doing  it  seeks  a  tax  policy  for  growth  and  produc- 
tivity. 

The  President's  program  of  tax  revision  delivered  to  the  Congress  last  April  20 
contemplated  this  two-pronged  attack.  A  major  aspect  of  that  program  pro- 
vides for  a  new  incentive  to  investment  by  allowing  a  tax  credit  to  those  who 
invest  in  more  modern  machinery  and  equipment.  This  proposal  represents 
a  major  innovation  in   American  tax  law. 

At  the  same  time,  the  President  noted  that  the  proper  determination  of  the 
length  of  an  asset's  life  and  proper  methods  of  depreciation  have  a  normal  and 
important  function  in  determining  taxable  income,  wholly  apart  from  any  con- 
siderations of  incentive.  He  stated  that:  "A  review  of  these  rules  and  methods 
is  under  way  in  the  Treasury  Department  as  a  part  of  its  overall  tax  reform 
study  to  determine  whether  changes  are  appropriate  and,  if  so,  what  form  they 
should  take.  Adoption  of  the  proposed  incentive  credit  would  in  no  way  fore- 
close later  action  on  these  aspects  of  depreciation." 

Here  is  a  brief  status  report  on  both  aspects  of  the  proposed  program. 
Extensive  hearings  have  been  held  in  the  Ways  and  Means  Committee  of  the 
House  of  Representatives  which  has  released  a  tentative  draft  of  legislation 
for  "discussion"  purposes  that  includes  the  tax  credit  investment  incentive 
feature.  Chairman  Mills  has  promised  that  a  tax  revision  measure  including 
this  feature  will  be  the  committee's  first  order  of  business  in  January. 

The  committee's  discussion  draft  does  not  contain  the  incentive  credit  in 
exactly  the  form  the  President  recommended  in  April,  but  the  Treasury  Depart- 
ment believes  the  need  for  an  investment  stimulus  is  so  urgent  that  the  modified 
proposal  should  receive  our  full  support.     The  discussion  draft  provides  for  a 


346   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

credit  against  income  tax  equal  to  eight  percent  of  the  cost  of  new  investment. 
The  credit  would  be  allowed  for  qualified  investments  where  the  property  pur- 
chased has  a  useful  life  of  at  least  six  years.  The  credit  is,  in  general,  limited  to 
tangible  personal  property  used  in  manufacturing,  extraction,  transportation, 
or  cominunications. 

It  is  estimated  that  the  revenue  loss  from  the  investment  credit  proposal  in 
its  present  form  would  be  approximately  $1.1  billion  annually.  It  is  proposed 
l:)y  the  Treasury — and  the  President  insists — that  the  enactment  of  the  invest- 
ment tax  credit  be  accompanied  by  the  correction  of  some  of  the  serious  defects 
in  the  income  tax  structure  which  will  provide  revenue  gains  sufficient  to  offset 
the  cost  of  the  credit  and  keep  the  revenue-producing  potential  of  our  tax  structure 
intact.  The  measures  under  active  consideration  include  a  withholding  on  interest 
and  dividends,  repeal  of  the  dividend  credit  and  exclusion,  a  legislative  tightening 
of  the  provision  on  expense  accounts,  the  withdrawal  of  capital  gains  treatment 
on  the  disposition  of  depreciable  property  to  the  extent  the  depreciation  has 
been  deducted  from  such  property  bj'  the  seller  in  previous  years,  the  equitable 
taxation  of  cooperatives,  mutual  casualty  companies,  mutual  savings  institutions, 
and  the  removal  of  some  special  privileges  allowed  on  foreign  income,  particu- 
larly in  the  abuse  of  so-called  "tax  havens." 

Use  of  a  tax  credit  is  not  the  only  method  available  to  encourage  a  higher 
rate  of  investment.  This  method  was  selected,  however,  as  the  method  which 
gives  the  greatest  inducement  to  investment  per  dollar  of  revenue  loss.  In 
this  respect  the  credit  is  superior  to  a  corresponding  reduction  in  the  rate  of  the 
corporate  income  tax  or  to  a  corresponding  allowance  for  accelerated  depreciation. 
In  view  of  the  nation's  heavy  domestic  and  international  commitments,  tax 
relief  to  stimulate  investment  must  provide  the  maxiinum  effect  per  dollar  of 
revenue  lost. 

The  investment  credit  has  other  advantages.  It  is  a  tax  offset,  not  a  deduction 
from  gross  receipts  made  in  the  computation  of  net  income.  The  credit  will 
not  be  recorded  on  company  books  as  a  cost  of  operation.  The  credit  will  there- 
fore be  less  likely  to  distort  the  costs  of  business  firms  and  thus  influence  business 
decisions  and  stock  market  appraisals.  In  particular,  the  credit  is  not  likely  to 
become  the  basis  for  increased  prices.  This  advantage  of  the  credit  over  acceler- 
ated depreciation  is  of  great  significance  in  our  effort  to  maintain  the  international 
strength  of  the  dollar. 

The  widespread  benefits  of  the  investment  credit  will  be  both  immediate  and 
long-range;  it  will  make  definite  contributions  to  increasing  emplovment,  capital 
formation,  and  the  national  output.  Estimates  of  the  actual  ett'ect  of  the  credit 
in  inducing  additional  investments  are  based  on  calculation  of  investment  response 
to  (1)  higher  aftertax  profitabihty  and,  (2)  increased  cash  flow  available  for 
investment.  Response  will  also  vary  with  economic  conditions,  being  substan- 
tially greater  in  recovery  phases  of  the  economy.  In  addition  to  adding  to  gross 
national  product  through  investment,  the  investment  credit  should  have  a  multi- 
plier effect  due  to  spreading  of  the  incomes  generated  in  the  purchase  and 
construction  of  new  facilities.  This,  in  turn,  should  expand  aggregate  demand 
and  help  reduce  existing  overcapacity,  thereby  making  industry  more  receptive 
to  favorable  decisions  on  expansion  and  modernization  projects. 

It  should  have  beneficial  short-term  and  longer-term  employment  effects, 
providing  jobs  for  the  workers  in  the  process  of  providing  new  machinery  and 
equipment  and  the  additional  investment  to  back  up  many  productive  jobs. 
Obviously,  it  will  increase  the  rate  of  capital  formation. 

Much  of  the  early  opposition  to  the  investment  credit  proposal  came  from 
those  who  felt  that  in  its  original  form  it  was  too  complicated  and  discriminatory, 
because  of  the  high  premivmi  given  to  those  who  expended  a  sum  in  excess  of 
current  depreciation  allowances.  With  the  administration's  willingness  to 
accept  the  preference  of  many  members  of  the  Ways  and  Means  Committee  for  a 
credit  against  income  tax  equal  to  eight  percent  of  the  cost  of  new  investment 
regardless  of  its  relationship  to  current  depreciation  allowances,  it  is  believed 
that  much  of  the  original  opposition  has  evaporated. 

One  other  source  of  concern  and  opjiosition  was  the  fear  of  some  that  the  adop- 
tion of  the  investment  credit  would  foreclose  progress  on  the  redeterminations 
of  the  proper  length  of  life  of  plant  and  equipment.  This  fear  should  now  be 
dissipated  in  the  light  of  new  and  clear  evidence  to  the  contrary.  Those  who 
opposed  the  credit  because  they  viewed  it  as  an  alternative  to  depreciation  reform 
should  be  reassured  by  the  White  House  statement  yesterday  (October  11)  in 
connection  with  the  modification  by  the  Treasury  Department  of  administrative 


EXHIBITS  347 

guidelines   governing   depreciation  allowances  for  tax  purposes  in   the  textile 
industry. 

Pursuant  to  a  review  of  the  increasing  rate  of  obsolescence  in  this  area,  the 
old  administrative  standards  for  estimated  depreciable  lives  of  textile  machinery 
are  being  adjusted.  Specifically,  the  estimated  useful  lives  suggested  by  the 
Internal  Revenue  Service  for  most  textile  machinery  and  equipment  have  been 
reduced  from  twenty-five  years  or  longer  to  fifteen  years,  and  in  some  cases 
twelve  years.  The  resulting  speeding  up  of  depreciation  deductions  to  reflect  cur- 
rent technological  conditions,  will  be  of  significant  help  to  the  industry  in  enabling 
it  to  modernize,  meet  foreign  competition,  and  provide  jobs. 

But  the  significance  of  this  announcement  goes  far  beyond  the  textile  industry, 
important  as  that  may  be. 

As  the  announcement  indicates,  the  Treasury's  study  of  depreciation  allowances 
is  proceeding  with  respect  to  all  industries,  the  study  of  depreciation  schedules 
for  the  textile  industry  having  been  accelerated  because  of  the  Presidential 
priority  given  to  it  on  May  2  of  this  year. 

Whether  or  not  adjustments  downward  in  the  estimated  lives  of  assets  in  other 
industries  is  suggested  will  depend  upon  the  results  of  the  studies  by  the  Treasury 
Department  of  other  industries.  It  is  expected  that  adjustments  will  be  suggested 
wherever  recent  and  prospective  technological  developments  can  be  shown  to 
be  opening  the  gap  between  existing  practices  and  the  requirements  imposed  by 
such  developments.  The  main  objectives  of  the  studies  under  way  are  to  make 
an  appraisal  of  the  realism  of  asset  lives  and  salvage  values  currently  in  use  for 
computing  depreciation.  The  accuracy  of  present  allowances  in  measuring  net 
income  under  present  conditions  bears  directly  upon  the  fundamental  question 
of  what  the  taxpayer  properly  owes. 

Accordingly,  adjustments  in  depreciation  rates  because  of  changes  in  per- 
missible Hves  of  assets  should  not  be  confused  with  the  investment  tax  credit  or 
other  measures  designed  primarily  to  provide  incentives  for  modernization  and 
expansion  of  capital  equipment.  However,  where  they  become  apphcable, 
liberalized  depreciation  allowances  will  incidentally  facilitate  and  encourage 
modernization  and  expansion  of  investment  in  machinery  and  equipment  and 
other  capital  facilities. 

The  nature  of  the  depreciation  studies  being  carried  forward  as  a  part  of  the 
long-range  tax  reform  program  of  the  Treasury  Department  may  be  of  general 
interest  in  view  of  the  recent  action  on  textile  machinery  and  the  prospects  in 
other    areas. 

In  July  1960,  the  Treasury  Department  requested  approximately  2,700  large 
corporations  to  furnish  information  on  the  amount  of  their  depreciable  assets, 
reserves  for  depreciation,  depreciation  deductions,  and  fully  depreciated  property, 
the  service  lives  of  different  types  of  depreciable  property,  and  the  extent  to 
which  the  new  methods  of  depreciation  provided  by  the  Internal  Revenue  Code  of 
1954  had  been  adopted.  In  addition,  a  questionnaire  was  sent  to  these  corpora- 
tions requesting  information  on  depreciation  practices,  experience  under  the 
present  law,  and  opinions  on  various  alternative  proposals  for  revision  of  the  de- 
preciation system.  In  cooperation  with  the  Small  Business  Administration,  the 
questionnaire  portion  of  the  survey  material  was  also  mailed  to  about  7,600  small 
businesses.  Completed  material  was  furnished  by  about  2,000  of  the  large  corpo- 
rations and  1,300  of  the  smaller  firms. 

Another  study  also  begun  in  1960  involves  a  tabulation  of  the  detailed  depre- 
ciation information  submitted  on  1959  corporation  tax  returns.  This  study, 
based  on  a  representative  statistical  sample,  will  provide  more  detailed  infor- 
mation by  asset  type,  year  of  acquisition,  and  depreciation  method  than  that  ob- 
tained from  the  Treasury  Depreciation  Survey.  An  analysis  of  the  data  obtained 
from  these  studies  is  being  made  by  the  Treasury  staff  and  by  consultants. 

Data  provided  by  these  studies  will  enable  a  general  comparison  to  be  made 
t^etween  the  depreciable  Uves  used  by  some  taxpayers  and  the  lives  listed  in 
Bulletin  F.  Information  will  be  available  concerning  the  variation  in  deprecia- 
tion rates  used  on  similar  assets  among  firms  within  the  same  industry  and  among 
various  industries.  For  the  first  time,  detailed  data  on  the  use  of  the  new  depre- 
ciation methods  will  be  provided.  The  questionnaire  portion  of  the  Treasury 
Depreciation  Survey  will  reveal  the  general  opinions  of  taxpayers  as  to  whether 
present  depreciation  allowances  are  reasonably  satisfactory,  the  major  reasons 
for  any  inadequacy  in  depreciation,  as  well  as  opinions  concerning  various  propos- 
als for  changing  the  tax  treatment  of  depreciation. 


348   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  National  Income  Division  of  the  Department  of  Commerce  is  preparing 
a  detailed  breakdown  of  corporation  purchases  of  plant  and  equipment  year  by 
year  from  1914  to  1959.  Comparison  of  this  material  with  the  data  obtained 
from  corporate  tax  returns  is  expected  to  permit  calculation  of  the  average  actual 
lives  of  assets,  which  can  be  compared  with  tax  depreciable  lives.  The  Business 
and  Defense  Services  Administration  in  the  Commerce  Department  is  also  assist- 
ing the  Treasury  in  a  statistical  study  of  the  rate  at  which  machinery  and  equip- 
ment loses  its  economic  usefulness  as  a  basis  for  determining  realistic  patterns  for 
spreading  the  cost  of  an  asset  over  its  estimated  service  life. 

In  connection  with  the  study  of  the  administration  of  the  depreciation  provi- 
sions, information  has  been  obtained  concerning  changes  made  in  salvage  value 
and  life  of  depreciable  assets  upon  examination  of  corporate  returns  by  the  Internal 
Revenue  Service.  This  study  will  permit  an  analysis  of  the  classes  and  length  of 
life  of  assets  for  which  the  estimated  useful  lives  and  salvage  values  have  been 
materially  altered,  as  well  as  the  reasons  for  such  adjustments. 

The  Treasury  Department  has  also  obtained  material  on  the  depreciation 
systems  of  various  foreign  countries  in  order  that  comparisons  can  be  made  with 
the  United  States  with  respect  to  methods  of  depreciation  permitted,  typical 
depreciation  rates,  accelerated  depreciation  provisions,  investment  incentives, 
and  the  treatment  of  gains  or  losses  on  the  disposition  of  depreciable  assets. 

Questions  as  to  the  rate  of  change  of  capital  productivity  and  labor  productivity, 
the  rate  of  technological  obsolescence,  and  the  effect  of  changes  in  the  price  level 
are  being  considered. 

The  results  of  these  studies  and  analyses  will  be  made  available  to  the  appro- 
priate committees  of  Congress  during  the  next  session  either  in  connection  with 
administative  action  of  a  corrective  nature  or  as  a  basis  for  legislative  proposals  in 
this  area  which  would  be  a  part  of  the  President's  comprehensive  program  for  tax 
revision    and    reform. 

To  the  degree  that  this  course  of  action  results  in  a  reduction  in  the  average  tax 
lives  of  capital  goods,  and  hence,  the  increase  in  rates  of  depreciation  now  in  use, 
there  will  be  considerable  economic  significance.  Depreciation  provides  increased 
funds  to  replace  capital  equipment,  particularly  where  rapid  obsolescence  is  a 
major  factor.  The  faster  the  depreciation  deductions  the  greater  the  flow  of  in- 
ternal funds  from  business  operations  and  the  greater  the  prospects  of  securing 
modern  plants.  Thus,  in  a  practical  sense  faster  depreciation  is  likely  to  set  the 
the  stage  for  faster  replacement.  The  fact  that  full  depreciation  can  be  taken  and 
the  investment  recovered  over  a  shorter  period  of  time  is  an  understandable  in- 
ducement to  commit  funds  to  the  investment.  The  shorter  the  term,  the  greater 
the  confidence  in  payout.  Faster  depreciation  also  facilitates  financing  of  new 
capital  outlays  since  funds  arising  through  depreciation  may  be  used  to  repay 
debt  incurred  to  purchase  a  capital  asset.  It  also  increases  the  opportunity  for 
capital  investment  by  shifting  taxes  to  later  years. 

CONCLUSION 

With  this  two-pronged  approach  toward  a  tax  policy  for  increasing  investment 
in  productive  machinery  and  equipment,  the  investment  tax  credit  and  an  adjust- 
ment of  the  lives  of  capital  assets  for  depreciation  purposes  to  conform  to  existing 
conditions  and  technological  obsolescence — there  will  be  a  real  beginning  towards 
attuning  tax  poHcy  to  two  of  our  major  national  objectives — healthy  economic 
growth  and  increasing  competitive  efficiency.  But  as  was  indicated  in  the  be- 
ginning, this  is  but  one  step  in  a  long  program  of  comprehensive  tax  revision. 
True,  it  is  one  which  deserves  a  high  priority  of  treatment,  which  it  is  receiving. 
However,  there  are  many  other  areas  for  constructive  reform  to  keep  our  tax  system 
up-to-date  and  maintain  its  equity.  If  the  nation  is  to  make  progress  in  these 
areas  in  the  years  ahead,  it  will  require  the  increasing  concern  of  the  average 
American  that  tax  policy  conform  to  the  national  interest  rather  than  special 
interest. 


EXHIBITS  349 

Exhibit  26. — Remarks  by  Assistant  Secretary  of  the  Treasury  Surrey,  October  25, 
1962,  before  the  Tax  Institute  Symposium  on  the  U.S.  tax  system  and  inter- 
national tax  relationships 

We  have  an  opportunity  at  these  meetings  to  examine  the  recently  enacted 
Revenue  Act  of  1962,  as  well  as  the  problems  and  progress  of  tax  reform  in  Latin 
America.  In  that  context,  I  would  like  to  begin  by  discussing  some  of  the  broad 
international  aspects  of  U.S.  tax  policy.  In  recent  years  we  have  had  to  reex- 
amine the  international  rules  of  our  tax  system  to  assure  their  continuing  con- 
sistency with  our  foreign  economic  policy. 

To  begin  with,  the  balance-of-payments  implications  of  our  tax  rules  have 
acquired  increasing  importance.  We  have  already  seen  various  innovating 
adjustments  of  monetary,  debt  management,  and  foreign  exchange  policies  to  the 
new  conditions  created  by  our  international  payments  situation.  A  parallel 
adjustment  of  policies  is  being  followed  in  the  tax  area. 

We  do  not,  for  example,  have  any  desire  to  impede  the  flow  of  investment 
capital  between  nations,  and  our  tax  policy  is  designed  with  that  in  mind.  We 
feel  the  same  about  the  importance  of  free  competitive  trade  between  nations, 
and  this  is  also  taken  account  of  in  shaping  tax  policy.  In  that  connection,  I 
believe  we  should  press  for  the  removal  of  artificial  tax  barriers  to  trade  which 
now  exist  in  other  nations,  such  as  discriminatory  transaction  or  turnover  taxes 
on  our  exports. 

The  appearance  of  an  essentially  new  type  of  enterprise,  that  of  the  interna- 
tional corporation  with  its  many  and  varied  foreign  subsidiaries  and  activities, 
has  raised  fresh  problems  in  the  application  of  our  tax  rules.  Tax  rules  should 
not  place  needless  barriers  in  the  way  of  these  international  enterprises  or  require 
their  artificial  structuring.  At  the  same  time,  the  tax  rules  should  not,  because 
of  developing  changes  in  nontax  operational  arrangements,  offer  escapes  from 
taxation  or  lead  to  distortions  in  resource  allocation.  We  are  in  an  era  of 
evolving  changes  in  the  legal  and  accounting  techniques  affecting  our  international 
activities,  and  the  tax  law  must  keep  pace  with  these  changes 

Our  international  tax  rules  should  also  take  account  of  the  existing  and  pro- 
posed Common  Market  arrangements  in  Europe  and  Latin  America,  and  the 
efifect  of  these  arrangements  on  the  tax  systems  of  the  member  countries.  Inev- 
itably these  arrangements  will  move  in  the  direction  of  a  harmonization  of  tax 
systems  and  in  the  development  of  international  tax  adjustments  appropriate 
to  these  markets.  We  must  be  alert  to  any  implications  these  developments 
will  have,  both  for  our  domestic  tax  structure  and  our  international  rules. 

Finally,  it  is  necessary  to  consider  how  the  fiscal  policies  of  the  industrially 
developed  nations  of  the  world  can  be  harmonized  so  that  international  problems 
are  solved  in  an  international  manner.  The  main  forum  today  for  the  discussion 
of  these  issues  is  the  Organization  for  Economic  Cooperation  and  Development, 
whose  membership  includes  the  United  States  and  Canada,  along  with  the  Western 
European  countries. 

Against  this  background  of  guidelines  for  our  international  tax  policy,  we  may 
consider  what  has  been  accomplished  so  far.  The  Revenue  Act  of  1962  represents 
a  major  advance  toward  a  better  adaptation  of  our  tax  system  to  these  new  policy 
requirements  in  the  international  area.  A  large  number  of  its  provisions  directly 
relate  to  international  tax  rules.  Even  the  investment  credit,  which  is  a  central 
feature  of  the  act,  has  important  international  aspects.  It  will  better  enable 
U.S.  industry  to  meet  foreign  competition  by  accelerating  modernization  of 
productive  equipment.  In  combination  with  the  Treasury's  administrative 
reform  of  depreciation,  announced  in  July,  the  credit  provides  our  business — for 
the  first  time — tax  treatment  of  new  investment  comparable  with  that  of  its  chief 
international  competitors. 

The  provisions  of  the  new  revenue  law  relating  to  foreign  income  involve  the 
most  comprehensive  revision  of  our  international  tax  rules  that  has  ever  occurred 
in  a  single  tax  measure. 


350   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  act  removes  the  principal  artificial  tax  inducement  to  investment  in  devel- 
oped countries,  an  inducement  hardly  appropriate  under  present  conditions, 
by  effectively  neutralizing  the  so-called  "tax  haven"  form  of  operation.  Now 
that  the  law  is  changed,  and  the  usefulness  of  this  tax  avoidance  device  ended, 
the  damage  to  our  balance-of-payments  position  as  a  result  of  the  mushrooming 
of  tax  haven  subsidiaries  will  be  stopped. 

The  new  law  ends  tax  deferral  on  the  various  classes  of  tax  haven  income  of 
U.S.-controlled  foreign  corporations.  On  those  types  of  income,  arising  from 
insurance  or  reinsurance  abroad  of  U.S.  risks,  from  passive  investments,  from 
licensing,  and  from  sales,  purchases,  or  service  operations,  the  U.S.  tax  will  be 
applied  currently  to  the  parent  corporation  without  waiting  for  an  actual  dis- 
tribution to  stockholders. 

Tax  deferral  will  not  be  denied,  however,  where  the  dividend  or  interest  income 
is  derived  from  less-developed  countries  and  is  reinvested  in  those  countries,  so 
that  the  holding  company  remains  an  attractive  form  of  organization  for  less- 
developed  country  operations. 

There  are  two  other  major  exceptions,  the  first  of  which  continues  deferral  of 
taxes  on  tax  haven  export-trade  income  utilized  in  ways  that  will  directly  promote 
further  exports.  The  new  rules  will  thus  operate  in  harmony  with  our  need  for 
export  expansion. 

The  second  exception  continues  deferral  where  the  enterprise  is  taxed  at  a 
combined  foreign  and  U.S.  rate  not  substantially  below  the  U.S.  rate.  A  schedule 
of  overall  effective  foreign  tax  rates  and  corresponding  percentages  of  income 
distributions  to  the  United  States — the  lower  the  foreign  rate  the  higher  the 
percentage  of  distribution  required — is  provided  which,  if  complied  with,  justifies 
foregoing  the  U.S.  tax  on  the  undistributed  income  of  the  foreign  corporation. 
In  such  a  case  the  foreign  form  of  organization  has  not  operated  as  a  tax  induce- 
ment to  investment  abroad  since  no  tax  saving  has  been  effected,  either  because 
of  the  level  of  rates  paid  abroad  or  the  amount  of  foreign  earnings  that  were 
actually  repatriated.  In  the  latter  connection,  the  act  sets  a  precedent  for 
looking  at  the  foreign  activities  of  a  U.S.  corporation  on  a  consolidated  basis, 
as  if  together  they  comprised  a  single  entity.  In  this  respect  the  tax  law  is  begin- 
ning to  recognize  the  "international  corporation"  and  to  grapple  with  the  technical 
tax  problems  which  it  involves. 

Finally,  in  the  area  of  tax  deferral,  the  act  places  hmits  on  the  tax  maneuvering 
under  prior  law  that  permitted  the  tax  deferred  profits  to  be  brought  back  at 
capital  gain  rates. 

Undoubtedly  these  rules  have  their  share  of  complexities.  But  the  lawyers, 
who  are  guiding  our  international  corporations  through  the  intricacies  of  foreign 
corporate  and  business  laws,  and  the  accountants,  who  are  developing  principles 
that  will  properly  reflect  the  progress  of  foreign  operations,  are  well  aware  that 
complexities  in  this  area  are  unavoidable.  I  am  sure  they  recognize  no  one  can 
expect  the  tax  rules  to  be  a  httle  valley  of  simpUcity  surrounded  by  these  other 
peaks  of  complexity. 

The  new  law  removes  other  gross  abuses  that  have  grown  up  over  the  years 
and  have  made  our  tax  rules  nonneutral  in  the  international  area.  By  requiring 
a  gross-up  of  dividends  received  from  subsidiaries  in  developed  countries,  the 
law  ends  what  is  in  effect  a  partial  double  counting  for  taxes  paid  to  these  countries 
and  a  consequent  lower  combined  effective  tax  rate  on  those  dividends.  The 
transfer  abroad  of  patents  involving  values  representing  what  is  really  U.S. 
source  income  may  no  longer  be  effected  at  capital  gain  rates.  In  addition,  it 
will  no  longer  be  possible  for  individuals  to  escape  U.S.  taxation  on  unlimited 
amounts  of  earned  income  abroad  by  establishing  foreign  residence,  or  to  accu- 
mulate tax-free  income  by  creating  foreign  trusts,  or  to  resort  to  foreign  invest- 
ment companies  to  convert  ordinary  income  into  capital  gains.  Also,  investment 
in  foreign  real  estate  will  no  longer  escape  our  estate  tax  laws. 

Another  provision  of  the  new  law  removes  an  artifical  inducement  to  the  out- 
flow of  short-term  U.S.  capital,  an  inducement  which  was  harmful  to  our  balance- 
of-payments  position  in  1961.  The  law  now  requires  separate  computation 
of  the  foreign  tax  credit  for  certain  interest  income  in  order  to  avoid  the  use 


EXHIBITS  351 

of  any  excess  foreign  tax  credit  on  business  income  to  reduce  or  eliminate  the 
tax  on  the  interest  income.  This  change  illustrates  the  new  requirement  that 
we  scrutinize  our  technical  tax  rules  in  the  light  of  our  international  balance- 
of-payments  position. 

Finally,  the  new  law  provides  expanded  information  and  reporting  requirements, 
covering  both  parent  corporations  and  U.S.  citizens  or  residents  who  are  officers, 
directors,  or  5-percent  shareholders  of  a  foreign  corporation.  These  requirements 
will  permit  more  complete  enforcement  of  our  tax  laws  on  foreign  income,  and 
they  will  enable  us  to  keep  abreast  of  developments  in  these  fields. 

The  new  act  thus  embodies  many  significant  steps  toward  accommodating  our 
tax  system  to  the  changes  that  have  occurred  in  our  international  position.  With 
this  accomplished,  we  must  consider  what  further  moves  appear  desirable.  Clearly 
one  important  matter  is  the  development  of  appropriate  regulations  to  implement 
the  new  act,  regulations  that  will  provide  as  much  guidance  as  possible  and  ensure 
the  workability  of  the  new  legislation.  The  Treasury  Department  plans  to  publish 
the  proposed  regulations  as  promptly  as  possible  and  we  know  that  we  can  count 
on  the  assistance  of  the  tax  fraternity  in  identifying  and  resolving  the  problems 
that  may  arise. 

The  increasing  volume  of  tax  problems  in  the  international  field  also  requires 
careful  exploration  of  the  possibilities  of  greater  flexibility  in  the  administrative 
use  of  existing  statutory  tools.  Section  482,  relating  to  adjustments  between 
related  organizations,  is  one  example.  While  the  Congress  in  the  new  act  de- 
cided not  to  adopt  statutory  formulas  for  allocating  income  and  deductions  under 
section  482,  the  Conference  Report,  referring  to  the  broad  authority  already 
given  to  the  Secretary  of  the  Treasury  under  that  section,  suggested  instead  that 
the  Treasury  explore  the  possibility  of  issuing  regulations  providing  additional 
allocation  guidelines  and  formulas.  Greater  uniformity  as  well  as  more  appro- 
priate solutions  might  thus  be  achieved  in  the  resolution  of  cases  involving  inter- 
company pricing  or  similar  arrangements.  For  example,  a  technical  information 
release  deaUng  with  allocation  problems  of  firms  operating  in  Puerto  Rico  will 
be  issued  shortly. 

In  our  overall  endeavor  to  improve  the  use  of  present  administrative  tools, 
we  seek  the  informed  and  imaginative  assistance  of  the  tax  bar. 

Our  policies  with  respect  to  tax  treaties  also  require  continued  reexamination. 
With  the  expected  approval  of  the  pending  double  taxation  agreement  with 
Luxembourg,  all  the  European  Common  Market  countries  will  be  covered  by 
tax  treaties,  although  negotiations  are  already  in  process  on  treaty  revisions 
as  well  as  on  new  treaties.  With  expanding  international  trade  and  activity, 
the  transactions  affected  by  tax  treaties  increase,  as  does  the  importance  of  the 
techniques  embodied  in  the  treaties  and  their  technical  operation.  We  hope  that 
continued  scrutiny  of  the  treaties  will  enable  us  both  to  improve  their  usefulness 
and  prevent  their  leading  to  artificial  arrangements  and  distortions.  The  recent 
reexamination  of  the  Netherlands  Antilles  treaty  is  an  example. 

The  growth  of  international  corporations  may  also  have  its  effect  on  treaty 
techniques.  Thus,  the  possible  development  of  a  worldwide  distribution  of  stock 
ownership  in  such  corporations  suggests  that  our  tax  systems,  as  modified  by  our 
treaty  rules,  must  be  kept  under  careful  scrutiny  to  ensure  that  they  do  not  place 
unjustifiable  obstacles  to  foreign  investment  in  U.S.  corporations  or  to  U.S.  in- 
vestment in  foreign  corporations.  In  addition  the  basic  treaty  rules  and  any 
suggested  revisions  must  be  examined  against  the  economic  requirements  of  our 
current  position.  Thus,  in  framing  a  definition  of  permanent  establishment  for 
tax  treaty  purposes  we  must  keep  in  mind  our  balance-of-payments  position  and 
our  need  to  increase  exports.  Balance-of-payments  effects  must  likewise  be 
weighed  in  negotiating  revisions  in  the  treaty  rates  on  dividend  and  interest 
payments. 

We  hope  that  even  broader  international  tax  accommodations  may  be  made 
through  the  OECD.  The  OECD  members  have  agreed  to  work  together  to  pro- 
mote closer  coordination  of  national  economic  policies  and 'accelerated  economic 
expansion  in  the  member  countries  and  in  the  less-developed  countries  as  well. 
Two  high-level  "working  parties"  of  the  OECD  have  been  meeting  regularly  since 


352   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

the  spring  of  1961,  to  study  problems  of  economic  growth  and  to  examine  fiscal 
and  monetary  policies  as  they  relate  to  international  payments  imbalances.  In 
addition,  the  United  States  now  is  officially  represented  on  the  OECD  Fiscal 
Committee,  as  it  was  not  on  the  predecessor  committee  of  the  OEEC.  This 
Committee,  whose  main  objective  is  removal  of  tax  obstacles  to  international 
trade  and  payments,  plans  to  propose  specific  principles  to  be  applied  by  member 
countries  in  their  double  taxation  agreements.  The  Committee  has  already  made 
a  number  of  recommendations  for  standardizing  tax  conventions.  Moreover,  it 
is  exploring,  largely  at  the  urging  of  the  United  States,  the  problems  growing  out 
of  differences  in  jurisdictional  concepts  of  taxation  and  the  issues  involved  in 
the  tax  relationships  between  developed  countries  and  less-developed  countries. 
We  hope  that  this  truly  international  exploration  of  international  tax  problems 
will  prove  to  be  an  important  avenue  to  progress. 

I  have  attempted  to  sketch  the  broad  international  aspects  of  U.S.  tax  policy. 
Against  this  background  we  may  now  consider  those  aspects  affecting  the  less-de- 
veloped countries.  Here  the  paramount  factor  is  the  firm  commitment  of  the 
United  States  to  encourage  increased  private  investment  in  those  areas.  Although 
we  are  not  alone  among  the  advanced  countries  in  this  effort,  we  are  far  ahead  of 
them  in  accomplishment,  and  we  are  conducting  a  continued  search  for  waj's  to  do 
more.  I  might  mention  our  new  investment  guaranty  program,  the  various  fi- 
nancing arrangements  that  are  offered  to  investors,  and  Department  of  Commerce 
and  AID  activities  to  interest  and  encourage  U.S.  firms  to  invest  in  less-developed 
countries.  Care  was  also  taken  in  the  1962  Revenue  Act  provisions,  affecting  tax 
haven  activities  and  the  liquidation  or  sale  of  foreign  corporations  having  tax-de- 
ferred profits,  to  avoid  adverse  effects  on  investment  in  less-developed  countries. 
The  safeguards  so  established,  thus,  in  effect,  become  tax  inducements  to  such 
investment. 

In  considering  possible  tax  incentives  to  increased  private  investment  in  less- 
developed  countries  it  is  necessary  to  realize  that  tax  incentives  do  not  possess  a 
magic  that  will  permit  investment  to  occur  under  any  conditions  or  climate.  If 
tax  incentives  are  not  to  be  sheer  waste  and  windfall,  they  have  to  be  joined  with 
other  forces  to  create  more  promising  investment  opportunities.  Further,  since 
a  tax  incentive  generally  operates  on  a  broader  scale  and  with  less  continuing 
scrutiny  as  to  its  effects  and  utility  than  is  the  case  with  other  inducement  pro- 
grams, it  is  important  that  the  incentive  be  carefully  planned.  On  the  whole,  it 
is  probably  a  wise  use  of  resources  that  tax  incentives  generally  be  viewed  as  the 
last  item  to  be  added  to  complete  the  picture  that  other  measures  produce  rather 
than  be  the  focus  around  which  these  other  measures  develop.  And  the  question 
must  always  be  asked  whether  the  picture  would  really  be  improved  by  the  addi- 
tion of  this  last  item,  considering  the  costs  involved. 

But  passing  these  observations  applicable  generally  to  tax  incentives,  we  may 
inquire  what  are  the  particular  purposes  which  a  possible  tax  incentive  should 
serve  in  the  area  of  private  investment  in  less-developed  countries. 

Three  purposes  come  immediately  to  mind.  First,  it  should  induce  a  larger 
gross  outflow  of  new  capital  for  investment  in  productive  facilities  in  those 
countries;  second,  it  should  encourage  more  reinvestment  in  those  countries  of 
earnings  from  existing  and  new  investment;  and  third,  it  should  avoid  any  en- 
couragement to  capital  repatriation  or  undue  repatriation  of  current  earnings. 
In  brief,  it  should  encourage  funds  to  move  to  these  countries  and  then  stay  at 
work  there  as  long  as  possible. 

Tax  sparing  has  been  urged  at  times  as  a  possible  incentive,  but  it  has  serious 
weaknesses  when  tested  against  the  above  standards.  Its  primary  focus  is  on  a 
quick  repatriation  of  profits.  Also,  since  its  tax  reduction  effect  on  repatriated 
profits  depends  on  the  relationship  between  the  foreign  tax  rate  and  the  U.S.  rate, 
it  both  operates  erratically  and  forces  the  United  States  to  yield  control  over  the 
effect  and  direction  of  its  tax  system.  Moreover,  the  adoption  of  tax  sparing, 
with  its  dependence  on  the  nature  and  extent  of  tax  inducements  in  the  foreign 
country  and  its  encouragement  to  competition  among  countries  in  offering  in- 
ducements, may  not  alwaj^s  be  regarded  as  in  the  longrun  fiscal  and  economic 
interests  of  the  less-developed  countries.     The  history  of  special  tax  inducements 


EXHIBITS  353 

to  attract  investment,  especially  when  they  draw  attention  away  from  needed 
revisions  in  the  basic  tax  systems  of  these  countries,  is  not  at  all  convincing  in 
terms  of  lasting  advantages.  Finally,  in  the  past  too  intensive  a  focus  on  tax 
sparing  may  have  kept  us  from  looking  for  fresh  insights  to  our  problems. 

A  similar  limiting  of  consideration  of  the  possible  ways  to  increase  investment 
may  have  resulted  from  suggestions  for  direct  tax  reductions  on  foreign  income 
when  it  becomes  taxable  by  the  United  States.  Again,  like  tax  sparing,  this 
places  the  stress  on  repatriation  of  profits,  and  indeed  could  have  the  effect  in  a 
few  years  of  causing  the  return  flow  to  offset  the  outflow  of  new  funds. 

These  and  like  suggestions  have  unfortunately  drawn  attention  away  from  our 
main  purpose,  that  of  inducing  new  money  to  flow  to  these  countries  and  keeping 
it  at  work  there.  Incentives  tied  to  the  act  of  new  investment  would  seem  to 
offer  more  fruitful  possibilities.  Thus,  it  would  appear  more  rewarding  to  con- 
sider approaches  similar  to  the  investment  credit  recently  enacted  to  stimulate 
U.S.  domestic  investment.  Such  approaches  might  prove  equally  suitable  in 
raising  the  level  of  U.S.  private  investment  in  less-developed  countries. 

This  discussion  on  tax  incentives  of  course  deals  with  only  a  few  of  the  many 
and  difficult  issues  involved.  For  example,  aside  from  the  form  of  the  investment 
incentive,  it  might  be  appropriate  to  consider  whether  we  want  to  encourage  all 
kinds  of  private  investment  in  less-developed  countries,  or  perhaps  be  more  se- 
lective in  identifying  the  investments,  or  even  the  countries,  which  would  qualify. 
Also,  should  there  be  special  encouragement  to  joint  ventures,  in  which  residents 
or  governments  of  the  less-developed  countries  would  have  an  equity  and  manage- 
ment interest?  These  and  other  questions  are  obviously  present  in  any  consider- 
ation of  tax  incentives  in  this  area. 

Finally,  it  is  possible  that  our  tax  treaty  activities  will  assume  more  importance 
for  the  less-developed  countries  in  the  years  ahead.  As  investment  and  trade 
increase,  it  will  be  important  to  smooth  out  the  rough  spots  in  the  resulting  inter- 
national tax  relationships.  This  smoothing-out  process  is  presently  the  primary 
function  of  tax  treaties  generally.  Perhaps  further  thinking  may  suggest  new 
treaty  functions  helpful  to  the  less-developed  countries.  Thus,  could  the  trea- 
ties, through  an  appropriate  exchange  of  information  or  the  adoption  of  new  col- 
lection procedures,  benefit  countries  seeking  to  protect  their  foreign  exchange 
holdings  against  capital  flight  by  their  own  residents? 

In  the  shaping  of  all  our  international  policies,  the  success  of  the  Alliance  for 
Progress  in  Latin  America  is  of  paramount  concern.  But  no  steps  which  the 
United  States  might  take  in  the  tax  field  or  elsewhere  can  reach  the  core  of  the 
problem  of  expanding  the  flow  of  private  investment  to  Latin  America.  The  pri- 
mary consideration  is  that  private  investment  will  flourish  only  in  a  setting  of 
relative  pohtical  and  economic  stability. 

Reform  of  Latin  American  tax  systems  is  of  central  importance  in  fostering  a 
healthy  investment  climate.  Such  reform  would  help  provide  the  needed  revenue 
for  public  investment  in  education,  transportation,  land  development,  and  other 
"social  overhead"  activities.  Tax  reform,  in  addition,  could  also  contribute  to 
pohtical  and  financial  stabihty  and  to  building  an  attractive  environment  for  pri- 
vate investment  to  further  economic  growth. 

While  basic  tax  reform  must  come  from  within  each  particular  country  and 
cannot  be  imposed  from  without,  there  are  ways  in  which  the  United  States 
might  facilitate  the  process.  Progress  in  improving  tax  administration,  for  ex- 
ample, could  be  accelerated  by  combining  the  serious  concern  over  improvement 
that  exists  in  many  Latin  American  countries  with  a  high  and  sustained  level  of 
technical  assistance  from  the  United  States.  Both  quahties,  a  high  level  of  abihty 
in  the  personnel  involved  and  a  sustained  continuing  cooperation  in  the  assistance, 
are  essential,  since  anything  less  is  hkely  to  be  frittered  away  in  only  minor  im- 
provements. The  United  States,  through  the  Internal  Revenue  Service  of  the 
Treasury  Department,  is  prepared  to  give  the  needed  aid  on  an  expanded  scale. 
The  Organization  of  American  States  and  the  Agency  for  International  Develop- 
ment can  help  in  assisting  the  Latin  American  requests  for  aid  and  overseeing  the 
progress  of  technical  assistance  missions.  After  all,  when  taxes  evaded  approach 
or  even  exceed  taxes  paid,  there  is  ample  scope  for  improvement.  The  recent 
661496—63 24 


354   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

accomplishments  of  Argentina  in  tax  administration  show  that  successes  can 
be  achieved. 

As  to  substantive  tax  reform,  more  intensive  and  persistent  efforts  are  needed 
in  each  country  to  search  for  the  tax  structure  that  wlh  best  facihtate  economic 
growth  and  foster  tax  equity.  Appropriate  revenue  targets,  the  weight  to  be 
placed  on  income  taxes  relative  to  other  levies,  and  the  design  of  effective  incentive 
tax  provisions  are  problems  on  which  these  analytical  efforts  should  be  focused. 
The  Shoup  report  on  Venezuela  is  an  example  of  the  type  of  critical  examination 
and  hard  thinking  about  tax  policies  that  is  requisite  to  basic  tax  reform. 

At  the  same  time,  research  on  comparative  fiscal  systems,  together  with 
multinational  conferences,  may  develop  generalizations  regarding  Latin  American 
tax  structures  that  can  usefully  guide  the  policymaking  officials  and  technical  as- 
sistance missions  in  particular  countries.  International  conferences  could  also 
develop  thinking  on  ways  to  harmonize  the  tax  systems  of  Latin  American  coun- 
tries in  the  interest  of  greater  freedom  of  investment  and  trade.  With  progress  in 
these  directions,  the  Latin  American  countries  will  be  able  to  make  better  use  of 
technical  aid  from  the  United  States  and  other  countries  in  planning  their  tax 
reforms,  formulating  the  needed  structural  changes,  drafting  the  needed  legis- 
lation and  regulations,  and  establishing  an  up-to-date  tax  collection  organization. 
Here  also  any  such  technical  assistance  should  be  of  a  high  caUber  and  on  a  con- 
tinuing basis. 

The  Latin  American  countries  are  desperately  short  of  qualified  economists, 
statisticians,  administrators,  legal  experts,  and  other  technicians  for  work  in  the 
tax  area.  Indeed,  hardly  any  of  the  finance  ministries  maintain  professional  tax 
staffs  on  a  continuing  basis  for  compiling  data,  exploring  policy  issues,  and  eval- 
uating the  performance  of  the  tax  system.  With  only  a  few  exceptions,  the  uni- 
versities in  Latin  America  do  not  systematically  contribute  to  tax  research.  For- 
eign technicians  may  partly  fill  this  institutional  gap,  although  probably  not 
satisfactorily  or  for  very  long.  The  task  of  continually  evaluating  and  revising 
their  tax  systems  must  be  undertaken  as  soon  as  possible  by  the  countries  them- 
selves. Any  effort  that  the  United  States  can  expand  in  helping  the  countries 
prepare  themselves  for  these  particular  tasks  would  certainly  be  a  worthwhile 
investment.  This  calls  for  a  major  emphasis  on  training  and  on  filling  the  insti- 
tutional research  vacuum  in  the  Latin  American  tax  scene.  Our  Government 
and  our  universities  and  foundations  can  be  of  significant  help  in  this  area. 

From  experience  in  this  country  we  know  that  the  taxing  process  and  tax  policy 
decisions  are  greatly  enriched  by  informed  discussion  and  participation  by 
private  citizens.  My  impression  is  that  there  is  very  little  responsible,  active, 
and  continuing  discussion  of  tax  issues  by  the  business,  legal,  and  accounting 
communities  in  Latin  America.  Conferences  and  symposia  such  as  this  one  are 
rare.  Professional  tax  journals  are  found  in  very  few  countries  and  little  attention 
is  being  given  to  the  improvement  of  professional  standards  of  tax  accounting  and 
tax  law  practice.     In  short,  a  crucial  dimension  of  the  taxing  process  is  missing. 

There  thus  exist  opportunities  for  valuable  contributions  by  many  of  you  in 
this  audience.  At  this  end  of  the  AUiunce,  in  3'our  practices,  through  your  clients, 
and  through  your  organizational  and  academic  affiliations,  you  can  and  should 
lend  your  energies  to  assisting  and  stimulating  the  lawyers,  accountants,  busi- 
nessmen, and  professors  in  Latin  America  to  participate  constructively  and 
effectively  in  the  taxing  process  in  their  own  countries.  Conferences,  bihngual 
publications,  and  the  international  extension  of  national  tax  organizations  are 
some  of  the  organized  means  at  your  disposal.  The  opportunities  for  meaningful 
and  lasting  contributions  are  real.  Government  and  private  citizens  ahke  can 
thus  join  in  the  challenging  and  vital  task  of  helping  Latin  America  to  make  the 
Alliance  for  Progress  a  success. 


EXHIBITS 


355 


Exhibit  27. — Individual   income    tax   liabilities  and   effective  rates   under    the 

revenue  acts  of  1913-54 

Table  I. — Individual  income  tax  liabilities — Single  person  with  no  dependents 


Revenue 

Income 
year 

Selected  amount  of  net  income 

act 

$525 

$600 

$800 

$900 

$1,000 

$2,000 

$3,000 

$5,000 

$6,000 

$8,000 

$10,000 

1913 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928,  1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940' 

1941 

1942  2 

1943  2  3 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 

$20 

40 

120 

240 

160 

160 

160 

120 

60 

40 

40 

13 

169 

140 

140 

172 

483 

920 

1,105 

1,105 

922 

811 

843 

964 

1,052 

944 

$30 

60 

170 

370 

250 

250 

240 

180 

90 

56 

56 

22 

240 

216 

216 

255 

649 

1,174 

1,491 

1,395 

1,169 

1,040 

1,080 

1,234 

1,342 

1,204 

$50 

100 

275 

650 

450 

450 

420 

315 

150 

101 

101 

52 

420 

378 

378 

449 

1,031 

1,742 

2,052 

2,035 

1,720 

1,546 

1,634 

1,816 

1, 992 

1,780 

$70 

1916 

140 

1917 

$20 

60 

40 

40 

40 

30 

15 

6 

6 

2 

40 

32 

32 

44 

117 

273 

333 

345 

285 

232 

244 

286 

311 

28D 

$40 

120 

80 

80 

80 

60 

30 

17 

17 

6 

80 

68 

68 

84 

221 

472 

574 

585 

485 

499 

428 

498 

542 

488 

395 

1918 

950 

670 

1921 

670 

600 

450 

1924 

225 

1926 

154 

1928 

154 

90 

1932 

600 

1934 

560 

1936, 1938 

560 

1940 

(*) 

$11 

71 

85 

76 
50 
52 
61 
67 
60 

$4 
21 
89 
107 
115 
95 
66 
70 
82 
89 
80 

686 

1941 

$3 
52 
62 
69 
57 
33 
35 
41 
44 
40 

1,493 

1942. 

1944<.... 

1945 

1948 

""$6" 
5 

$15 
17 
23 
19 

2,390 
2,783 
2,755 
2,347 
2,124 

1950 

2,  201 

1951 

2,486 

2,728 

1954 

2,436 

Selected  amount  of  net  income 

Revenue 

Income 
year 

act 

$15,000 

$20,000 

$25,CO0 

$50,000 

$75,000 

$100,000 

$500,000 

$1,000,000 

$5,000,000 

1913. 

3/1/13-12/31/15 

$120 

$170 

$270 

$770 

$1,  520 

$2, 520 

$25,020 

$69,020 

$340,020 

1916 

1916 

240 

340 

490 

1.340 

2,490 

3,940 

42,940 

102, 940 

687,940 

1917 - 

1917 

770 

1,220 

1,820 

5,229 

9,970 

16,  229 

192. 720 

475,  220 

3,140,220 

1918 

1918 

1,790 

2,759 

3,840 

11,150 

21,  590 

35, 150 

323, 159 

703, 150 

3, 783, 150 

1919-20 

1,310 

2,070 

2,960 

9,270 

18,710 

31,270 

393, 270 

663, 270 

3, 583, 270 

1921 

1921 

1,310 

2,070 

2,960 

9,270 

18.710 

31,270 

393, 270 

663, 270 

3, 583, 270 

1922 

1,140 

1,800 

2,640 

8,720 

17,910 

30, 221 

269, 720 

550, 720 

2, 870,  720 

1923 

855 

1,350 

1,989 

6,540 

13, 433 

22, 665 

195,  540 

413,040 

2,153,040 

1924 

1924 

585 

1,045 

1,635 

6,165 

13,215 

22, 645 

199,645 

429, 645 

2,269,645 

1926 

1925-27 

386 

694 

1,234 

4,954 

10, 184 

16, 134 

116,134 

241, 134 

1,241,134 

1928 

1928, 1930-31 

386 

694 

1,099 

4.664 

9,894 

15, 844 

115,844 

240, 844 

1,240,844 

1929 

285 

555 

922 

4,259 

9, 230 

14, 930 

119,930 

233,930 

1,199,930 

1932. 

1932-33 

1,140 

1,800 

2,640 

8,729 

17,910 

33,229 

263, 729 

571, 220 

3,091,229 

1934 

1934-35 

1,104 

1,834 

2,814 

9,334 

18, 884 

31,404 

264, 844 

572, 324 

3,C92,314 

1936, 1938. 

1936-39 

1,104 

1,834 

2,894 

9.334 

19, 484 

33,354 

3  5,224 

683, 184 

3,799,164 

1940 

1940' 

1,476 

2,666 

4, 253 

14, 709 

28, 481 

44, 268 

331,933 

718, 404 

3.917,390 

1941 

1941 

2,994 

4,929 

7, 224 

20, 882 

36,487 

53,214 

345.654 

733, 139 

3, 923, 124 

1942. 

1942  2 

4,366 

6,816 

9,  626 

25,811 

44, 366 

61,641 

414,616 

854, 616 

4, 374, 616 

1943  2  3 

4,S68 

7,626 

10, 644 

28,058 

48,001 

69, 665 

441,863 

5  899,5)0 

5  4, 499,  590 

1944  * 

1944-45 

4,930 

7,580 

10,  591) 

27, 945 

48, 000 

69,  870 

444, 359 

5930,000 

5  4,590,000 

1945 

1946-47 

4,270 

6,645 

9,362 

25, 137 

43, 477 

63, 541 

497, 897 

840, 147 

54,275,000 

1948 

1948-49 

3,894 

6,  C89 

8,690 

23, 2:11 

49, 182 

58, 762 

5  385,000 

5770,000 

5  3,859,000 

1950. 

1950 

4,032 

6,301 

8,898 

23, 997 

41,556 

60, 770 

386, 221 

5  890,000 

54,000,000 

1951 

1951 

4,528 

7,072 

9,976 

26, 758 

46, 1"4 

67, 274 

429.  750 

5  872,000 

5  4,369,000 

1952-53 

4,968 

7,762 

10,940 

28, 466 

48, 268 

61, 688 

436, 164 

5  880,000 

5  4,490,000 

1954 

1954- 

4,448 

6,942 

9,796 

26, 388 

45, 684 

66, 798 

429,  274 

5  869,478 

5  4,349,478 

Footnotes  at  end  of  table  VI. 


356   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  II. — Individual  income  tax  liabilities — Married  person  with  no  dependents 


Revenue 

Income  year 

Selected  amount  of  net  income 

act 

$600 

$800 

$1,000 

$2,000 

$2,500 

$3,000 

$5,000 

$6,000 

$8,000 

$10,000 

1913 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

192.5-27 

1928,  1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940  1 

1941 

1942' 

1943  2  a 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 

$10 

20 

80 

180 

120 

100 

100 

75 

38 

17 

17 

6 

100 

80 

80 

110 

375 

746 

894 

975 

798 

631 

661 

775 

844 

760 

$20 

40 

130 

2.50 

170 

170 

160 

120 

53 

28 

28 

10 

140 

116 

116 

150 

521 

992 

1,173 

1,  265 

1.045 

819 

856 

995 

1,085 

976 

$40 

80 

235 

530 

370 

370 

340 

255 

105 

56 

56 

22 

300 

248 

248 

317 

873 

1,  532 

1,780 

1,885 

1,577 

1,206 

1,257 

1.443 

1,577 

1,416 

$60 

1916 

120 

1917 

$10 
30 
20 

$20 
60 
40 
20 
20 
15 
8 

355 

1918 -- 

830 

590 

1921 

590 

520 

390 

1924 

165 

1926 

101 

1928 

101 

52 

1932 

20 
8 
8 

31 
138 
324 
405 
475 
380 
299 
313 
367 
400 
360 

480 

1934 

415 

1935,  1938 

415 

1940 

11 
90 
232 
297 
360 
285 
216 
226 
265 
289 
260 

528 

1941 

$42 
140 
188 
245 
190 
133 
139 
163 
178 
160 

1,305 

1942...     . 

2, 152 

1944  < 

1945 

$1 
3 

$8 
9 

$15 
15 

2,467 
2,585 
2,185 

1948 

1,621 

1950 

1,686 

1951 ...     . 

1,  928 

2,104 

1954 

1,888 

Selected  amount  of  net  income 

Revenue 

Income  year 

act 

$15,000 

$20,000 

$25,000 

$50,000 

$75,000 

$100,000 

$500,000 

$1,000,000 

$5,000,000 

1913 

3/1/13-12/31/15 

$110 

$160 

$260 

$760 

$1,  510 

$2,  510 

$25,010 

$60, 010 

$340, 010 

1916 

1916 

220 

320 

470 

1,320 

2,470 

3,920 

42, 920 

102, 920 

687,  920 

1917 

1917 

730 

1,180 

1,780 

5,180 

9,930 

16,180 

192,  680 

475, 180 

3, 140, 180 

1918 

1918 

1,670 

2,  630 

3,  720 

11.030 

21,470 

35, 030 

323,030 

703,0.30 

3,783,030 

1919-20 

1, 230 

1,  990 

2,880 

9,190 

18,  630 

31,190 

303. 190 

663, 190 

3,  583, 190 

1921 

1921 

1,230 

1,990 

2,880 

9,190 

18,630 

31,190 

303, 190 

663, 190 

3,  583, 190 

1922 

1,060 

1,720 

2,560 

8,640 

17,830 

30, 140 

260, 640 

550,  640 

2, 870, 640 

1923 

795 

1,290 

1,920 

6.480 

13, 373 

22, 605 

195, 480 

412, 980 

2, 152, 980 

1924 

1924 

515 

975 

1.  .565 

6,095 

13, 145 

22,  575 

199,  575 

429,  575 

2, 269,  575 

1926 

1925-27 

311 

619 

1,159 

4.879 

10, 109 

16, 059 

116,059 

241, 0,59 

1,241,059 

1928. 

1928,  1930-31 

311 

619 

1,024 

4,589 

9,819 

15,769 

115,769 

240,  769 

1, 240, 769 

1929 

225 

495 

862 

4,190 

9.170 

14, 870 

110,870 

230,  870 

1,190,870 

1932 

1932-33 

1,020 

1,680 

2,  520 

8,600 

17, 790 

30, 100 

263,  600 

571, 100 

3,091,100 

1934 

1934-35 

924 

1.589 

2,489 

8.869 

18, 239 

30,  594 

263, 944 

571, 394 

3, 091, 369 

1936, 1938 

1936-39 

924 

1,589 

2, 489 

8,869 

18,  779 

32, 469 

304, 144 

679. 044 

3,  788, 994 

1940 

1940  1 

1,258 

2,336 

3,843 

14, 128 

27,768 

43. 476 

330, 156 

717,  584 

3,916,548 

1941 

1941 

2,739 

4,614 

6,864 

20, 439 

35, 999 

52, 704 

345, 084 

732.  554 

3, 922,  524 

1942 

1942  2 

4,  052 

6,  452 

9,  220 

25, 328 

43, 820 

64,060 

414,000 

854, 000 

4, 374, 000 

1943  2  3 

4,  533 

7.  100 

10, 035 

27, 075 

46,  9.55 

68,  584 

440, 747 

5  899, 000 

5  4.499,000 

1944 < 

1944-45 

4.  695 

7,315 

10,  295 

27,  585 

47,  595 

09, 435 

443, 895 

5  900,000 

5  4,500,000 

1945 

1946-47 

4,047 

6,394 

9. 082 

24,  795 

43, 092 

63, 128 

407,  465 

839,715 

5  4,275,000 

1948 

1948-49 

2,  829 

4.247 

5,  877 

17,201 

31,015 

46. 403 

359, 662 

5  770,000 

5  3,850,000 

1950 

1950 

2, 935 

4,  402 

6,087 

17,797 

32, 0S2 

47, 994 

370,  657 

792, 442 

5  4,000,000 

1951 

1951 

3,332 

4.972 

6,874 

19, 952 

35,  900 

53,516 

404,  500 

859,  .500 

5  4,360.000 

1952-53 

3,  644 

5.456 

7,508 

21,  880 

38, 696 

56, 932 

412.328 

872,  328 

5  4,400,000 

19.S4 

1954- 

3,260 

4,872 

6,724 

19,  592 

35,290 

52, 776 

403,  548 

858, 548 

5  4,348,956 

Footnotes  at  end  of  table  VI. 


EXHIBITS 


357 


Table  III. — Individual  income  tax  liabilities — 

-Married  person  with  two  dependents 

Revenue 

Income  year 

Selected  amount  of  net  income 

act 

$600 

$800 

$1,000 

$2,000 

$2,500 

$3,000 

$5,000 

$6,000 

$8,000 

$10,000 

1913 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

19401 

1941 

1942  3 
1943  2  3 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 

$10 

20 

64 

156 

104 

68 

68 

51 

26 

8 

8 

3 

68 

48 

48 

75 

271 

592 

730 

755 

589 

432 

452 

530 

577 

520 

$20 

40 

114 

226 

154 

138 

128 

96 

41 

19 

19 

6 

108 

84 

84 

114 

397 

810 

979 

1,005 

798 

598 

626 

734 

799 

720 

$40 

80 

219 

482 

338 

306 

276 

207 

81 

42 

42 

14 

236 

184 

184 

246 

717 

1,322 

1,553 

1,585 

1,292 

974 

1,016 

1.174 

1,282 

1,152 

$60 

1916 

120 

1917 

$2 
6 
4 

$12 
36 
24 

^SQ 

1918 

782 

558 

1921 

526 

456 

342 

1924 

141 

1926       

..  .. 

83 

1928 



83 

40 

1932 

416 

1934          

343 

1936,  1938 

343 

1940-.- 

440 

1941   .       

12 
99 
159 
160 
95 
17 
17 
20 
22 
20 

58 
191 
267 
275 
190 
100 
104 
122 
133 
120 

1,117 

1942 

$13 
58 
45 

1  914 

1944  < 

1945 

$1 
3 

$7 
9 

$14 
15 

2,208 
2,245 
1  862 

1948          

1  361 

1950 

1  417 

1951 

1  622 

1,774 

1954 

1  592 

Revenue 
act 


Income  year 


Selected  amount  of  net  income 


$15, 000 


$20, 000 


$25, 000 


$50, 000 


$75, 000  $100, 000 


$500, 000 


$1,000,000 


$5, 000, 000 


1913- 

1916 

1917 

1918- 

1921 

1924 

1926 

1928 

1932 

1934- 

1936,  1938 

1940 

1941 

1942 

1944  « 

1945 

1948 

1950 

1951 

1954 


3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940  1 

1941 

1942  3 

1943  3 « 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 


$110 

220 

714 

1,622 

1,198 

1,166 

996 

747 

475 

281 

281 

201 

956 

831 

831 

1,118 

2,475 

3,758 

4,207 

4,265 

3,639 

2,512 

2,607 

2,972 

3,  236 

2,900 


$160 
320 
1,164 
2,582 
1,958 
1,886 
1,656 
1,242 
935 
589 
589 
471 
1,616 
1,469 
1,469 
2,143 
4,287 
6,088 
6,693 
6,785 
5,890 
3, 888 
4,030 
4,552 
5,000 
4,464 


$260 
470 
1,764 
3,672 
2,848 
2,816 
2,496 
1,872 
1,525 
1,129 
994 
838 
2,456 
2,327 
2,327 
3,571 
6,480 
8,814 
9,574 
9,705 
8, 522 
5,476 
5,672 
6,406 
7,004 
6,268 


$760 

1,320 

5,164 

10, 982 

9,158 

9,126 

8,576 

6,432 

6,055 

4.849 

4,559 

4,166 

8,536 

8, 621 

8,621 

13,  741 

19, 967 

24, 845 

26, 392 

26, 865 

24,111 

16,  578 

17, 152 

19, 232 

21,088 

18, 884 


$1,510 
2,470 
9,914 
21, 422 
18, 598 
18,  566 
17,  766 
13, 325 
13, 105 
10, 079 
9,789 
9,146 
17,  726 
17,895 
18, 403 
27, 293 
35, 479 
43, 274 
46,  209 
46, 785 
42, 323 
30, 329 
31, 372 
35, 108 
37, 880 
34, 510 


$2, 510 
3,920 
16, 164 
34, 982 
31, 158 
31,126 
30, 076 
22,  557 
22,535 
16, 029 
15,  739 
14, 846 
30, 036 
30, 162 
31,997 
42, 948 
52, 160 
63. 479 
67, 803 
68,  565 
62, 301 
45,  643 
47, 208 
52,640 
56, 032 
51,912 


$25,010 
42, 920 
192,  664 
322, 982 
303, 158 
303, 126 
260,  576 
195. 432 

199. 535 
116,029 
115,739 
110,846 

263. 536 
263, 464 
303. 568 
329,  637 
344, 476 
413, 384 
439, 931 
442, 985 
406,  600 
358,  677 
369, 645 
403, 408 
411, 224 
402, 456 


$60, 
102, 
475, 
702, 
663, 
663, 
550, 
412, 
429, 
241, 
240, 
230, 
571, 
570, 
678, 
717, 
731, 
853. 
«898, 
«900. 
838, 
769, 
791, 
858, 
871, 
857. 


010 
920 
164 
982 
158 
126 
576 
932 
535 
029 
739 
846 
036 
898 
436 
036 
930 
384 
800 
000 
850 
314 
430 
408 
224 
456 


$340, 010 

687, 920 

3, 140, 164 

3, 782, 982 

3, 583, 158 

3,  583, 126 

2, 870,  576 

2,152,932 

2, 269, 535 

1,241,029 

1, 240, 739 

1,190,846 

3,091,036 

3, 090, 865 

3, 788, 370 

3,915,986 

3,921,884 

4, 373, 384 

•4,498,800 

5  4,500,000 

5  4,275,000 

» 3, 850, 000 

5  4,000,000 

5  4,360,000 

5  4,400,000 

5  4,347,912 


Footnotes  at  end  of  table  VI. 


358   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  IV. — Effective    rates    of   individual    income    tax — Single    person    with    no 

dependents 

[In  percent] 


Revenue 

Income  year 

Selected  amount  of  net  Income 

act 

$525 

$600 

$800 

$900 

$1, 000 

$2, 000 

$3, 000 

$5,000 

$6, 000 

$8, 000 

$10,000 

1913 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940  1 

1941 

1942  2 

1943  2  3 
1944-45 
1946-47 
1948-49 

1950 

1951 

1952-53 

1954- 

0.4 

.8 

2.4 

4.8 

3.2 

3.2 

3.2 

2.4 

1.2 

.8 

.8 

.3 

3.2 

2.8 

2.8 

3.4 

9.7 

18.4 

22.1 

22.1 

18.4 

16.2 

16.9 

19.3 

21.0 

18.9 

0.5 

1.0 

2.8 

6.2 

4.2 

4.2 

4.0 

3.0 

1.5 

.9 

.9 

.4 

4.0 

3.6 

3.6 

4.3 

10.8 

19.6 

23.4 

23.3 

19.5 

17.3 

18.0 

20.6 

22.4 

20.1 

0.6 

1.3 

3.4 

8.1 

6.6 

5.6 

5.3 

3.9 

1.9 

1.3 

1.3 

.7 

5.3 

4.7 

4.7 

5.6 

12.9 

21.8 

25.7 

25.4 

21.5 

19.3 

20.0 

22.7 

24.9 

22.3 

0  7 

1916.- 

1  4 

1917 

1,0 

3.0 

2.0 

2.0 

2.0 

1.5 

.8 

.3 

.3 

.1 

2.0 

1.6 

1.6 

2.2 

5.9 

13.7 

16.7 

17.3 

14.3 

11.6 

12.2 

14.3 

15.6 

14.0 

1.3 

4.0 

2.7 

2.7 

2.7 

2.0 

1.0 

.6 

.6 

.2 

2.7 

2.3 

2.3 

2.8 

7.4 

15.7 

19.1 

19.5 

16.2 

13.6 

14.3 

16.6 

18.1 

16.3 

4.0 

1918 

9.5 

6.7 

1921 

6.7 

6.0 

4  5 

1924 

2.3 

1926 

1.5 

1928 

1  5 



.9 

1932 

6.0 

1934 

5  6 

1936.1938.. 

5.6 

1940    . 

0.04 
1.2 
7.9 
9.4 

10.2 
8.4 
5.5 
5.8 
6.8 
7.4 
6.7 

0.4 
2.1 

8.9 
10.7 
11.5 
9.5 
6.6 
7.0 
8.2 
8.9 
8.0 

6  9 

1941 

0.4 
6.5 
7.8 
8.6 
7.1 
4.2 
4.4 
5.1 
5.5 
5.0 

14.9 

1942 

1944* 

1945 

1948 

.9 

2.5 
2.8 
3.8 
3.2 

23.9 
27.8 
27.6 
23.5 
21  2 

1950 

22.0 

1951 

24  9 

1954 

27.3 
24.4 

Revenue 
act 


1913 

1916 

1917 

1918 , 

1921 

1924 

1926 

1928 

1932 

1934 

1936, 1938 

1940 

1941 

1942 

1944  < 

1945 

1948 

1950 

1951 

1954 


Income  year 


3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940  " 

1941 

1942  2 

1943  2 ' 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 


Selected  amount  of  net  income 


$15. 000 


0.8 

1.6 

5.1 

11.9 

8.7 

8.7 

7.6 

5.7 

3.9 

2.6 

2.6 

1.9 

7.6 

7.4 

7.4 

9.8 

20.0 

29.1 

33.1 

32.9 

28.5 

26.0 

26.9 

30.2 

33.1 

29.7 


$20, 000 


0.9 

1.7 

6.1 

13.8 

10.4 

10.4 

9.0 

6.8 

6.2 

3.5 

3.5 

2.8 

9.0 

9.2 

9.2 

13.3 

24.6 

34.1 


38 

3 

33 

30 

31 

35 

38.8 

34.7 


$25, 000 


1.1 

2.0 

7.3 

15.4 

11.8 

11.8 

10.6 

7.9 

6.5 

4.9 

4.4 

3.7 

10.6 

11.2 

11.2 

17.0 

28.9 

38.5 

42.6 

42.4 

37.5 

34.4 

35.6 

39.9 

43.8 

39.2 


$50, 000 


1.5 

2.7 

10.4 

22.3 

18.5 

18.5 

17.4 

13.1 

12.3 

9.9 

9.3 

8.5 

17.4 


18, 

18. 

29. 

41 

51 

56. 

55 

50.3 

46.4 

48.0 

53.5 

56.9 

52.8 


$75, 000 


2.0 
3.3 
13.3 
28.8 
24.9 
24.9 
23.9 
17.9 
17,6 
13.6 
13.2 
12.3 
23,9 
25.2 
26.0 
38.0 
48.6 
59.2 
64.0 
64.0 
58.0 
53.6 
55.4 
61.5 
64,4 
60,9 


$100, 000 


2.5 
3.9 
16.2 
35,2 
31,3 
31,3 
30,2 
22.7 
22.7 
16.1 
15,8 
14.9 
30.2 
31.4 
33.4 
44.3 
53.2 
64.6 
69.7 
69.9 
63.5 
58.8 
60.8 
67.3 
69.7 
66.8 


$500, 000 


5.0 
8.6 
38.5 
64.6 
60.7 
60.7 
52.1 
39.1 
39.9 
23.2 
23.2 
22.2 
52,7 
53,0 
61,0 
66.2 
69.1 
82.9 
88.4 
88.9 
81.6 
1  77.0 
79.2 
86.0 
87.2 
85,9 


$1,000,000 


6,0 

10.0 

47.5 

70,3 

66.3 

66.3 

55,1 

41,3 

43,0 

24,1 

24,1 

23,1 

57.1 

57.2 

68.0 

71,8 

73,3 

85.5 

5  90.0 

J  90.0 

84,0 

«77,0 

»80.0 

"87,2 

«88.0 

'86,9 


$5, 000, 000 


6.8 
13,8 

62,8 
75,7 
71. 
71. 
57. 
43. 
45. 
24.8 
24.8 
23.8 
61.8 
61.9 
75.8 
78,3 
78.5 
87.5 
«90,0 
'90.0 
'85.5 
'77.0 
'80,0 
'87,2 
'88.0 
'87.0 


Footnotes  at  end  of  table  VI. 


EXHIBITS 


359 


Table  V. — Effective  rates  of  individual  income  tax — Married  person  with  no 

dependents 

[In  percent] 


Revenue 

Income  year 

Selected  amount  of  net 

income 

act 

$600 

$800 

$1,000 

$2, 000 

$2,500 

$3,000 

$5,000 

$6,000 

$8, 000 

$10,000 

1913 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940' 

1941 

1942  2 

1943  2  3 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-52 
1954- 

0.2 

.4 

1.6 

3.6 

2.4 

2.0 

2.0 

1.5 

.8 

.3 

.3 

.1 

2.0 

1.6 

1.6 

2.2 

7.5 

14.9 

17.9 

19.5 

16.0 

12.6 

13.2 

1.5.5 

16.9 

15.2 

0.3 

.7 

2.2 

4.2 

2.8 

2.8 

2.7 

2.0 

.9 

.5 

.5 

.2 

2.3 

1.9 

1.9 

2.5 

8.7 

16.5 

19.6 

21.1 

17.4 

13.6 

14.3 

16.6 

18.1 

16.2 

0.5 

1.0 

2.9 

6.6 

4.6 

4.6 

4.3 

3.2 

1.3 

.7 

.7 

.3 

3.8 

3.1 

3.1 

4.0 

10.9 

19.2 

22.3 

23.6 

19.7 

15.1 

15.7 

18.0 

19.7 

17.7 

0  6 

1916 

1  2 

1917 

0.4 
1.2 

.8 

0.7 
2.0 
1.3 
.  7 
.7 
.5 
.3 

3  6 

1918 

8  3 

5  9 

1921 

5  9 

5  2 

3  9 

1924 

1  7 

1926. 

1  0 

1928 

1  0 

.5 

1932 

.7 

.3 

.3 

1.0 

4.6 

10.8 

13.5 

15.8 

12.7 

10.0 

10.4 

12.2 

13.3 

12.0 

4  8 

1934 

4  2 

1936.  1938 

4  2 

1940            .  . 

.4 

3.6 

9.3 

11.9 

14.4 

11.4 

8.6 

9.0 

10.6 

11.6 

10.4 

5.3 

1941 

2.1 
7.0 
9.4 
12.3 
9.5 
6.6 
7.0 
8.2 
8.9 
8.0 

13  1 

1942     . 

21.5 

1944* 

1945 

0.2 
.5 

1.0 
1.1 

1.5 
1.5 

24.7 
25.9 
21  9 

1948 

16  2 

1950 

16  9 

1951 

19  3 

21.0 

1954  . 

18.9 

Revenue 

Income  year 

Selected  amount  of  net 

LQCome 

act 

$15,000 

$20,000 

$25,000 

$50,000 

$75,000 

$100,000 

$500,000 

$1,000,000 

$5,000,000 

1913  . 

3/1/13-12/31/15 

1916 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1936-39 

1940  1 

1941 

1942  2 

1943  2  3 
1944-45 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 

0.7 

1.5 

4.9 

11.1 

8.2 

8.2 

7.1 

5.3 

3.4 

2.1 

2.1 

1.5 

6.8 

6.2 

6.2 

8.4 

18.3 

27.0 

30.2 

31.3 

27.0 

18.9 

19.6 

22.  2 

24.3 

21.7 

0.8 

1.6 

5.9 

13.2 

10.0 

10.0 

8.6 

6.5 

4.9 

3.1 

3.1 

2.6 

8.4 

7.9 

7.9 

11.7 

23.1 

32.3 

35.5 

36.6 

32.0 

21.2 

22.0 

24.9 

27.3 

24.4 

1.0 

1.9 

7.1 

14.9 

11.5 

11.5 

10.2 

7.7 

6.3 

4.6 

4.1 

3.5 

10.1 

10.0 

10.0 

15.4 

27.5 

36.9 

40.1 

41.2 

36.3 

23.5 

24.3 

27.5 

30.0 

26.9 

1.5 
2.6 
10.4 
22.1 
18.4 
18.4 
17.3 
13.0 
12.2 
9.8 
9.2 
8.4 
17.2 
17.7 
17.7 
28.3 
40.9 
50.7 
54.2 
55.2 
49.6 
34.4 
35.6 
39.9 
43.8 
39.2 

2.0 
3.3 
13.2 
28.6 
24.8 
24.8 
23.8 
17.8 
17.5 
13.5 
13.1 
12.2 
23.7 
24.3 
25.0 
37.0 
48.0 
58.4 
62.6 
63.5 
57.5 
41.4 
42.8 
47.9 
51.6 
47.1 

2.5 
3.9 
16.2 
35.0 
31.2 
31.2 
30.1 
22.6 
22.6 
16.1 
15.8 
14.9 
30.1 
30.6 
32.5 
43.5 
52.7 
64.1 
68.6 
69.4 
63.1 
46.4 
48.0 
53.5 
56.9 
52.8 

.■-..0 
8.6 
38.5 
64.6 
60.6 
00.6 
52.1 
39.1 
39.9 
23.2 
23.2 
22.  2 
52!  7 
52.8 
60.8 
66.0 
69.0 
82.8 
88.1 
88.8 
81.5 
71.9 
74.1 
80.9 
82.5 
80.7 

6.0 
10.3 
47.5 
70.3 
66.3 
66.3 
55.1 
41.3 
43.0 
24.1 
24.1 
23.1 
57.1 
57.1 
67.9 
71.8 
73.3 
85.4 
5  89.9 
590.0 
84.0 
577.0 
79.2 
86.0 
87.2 
85.9 

6.8 

1916 

13.8 

1917 

62.8 

1918- .- 

75.7 

1921 

71.7 
71.7 

1924 

57.4 
43.1 
45.4 

1926 

24.8 

1928 

24.8 

1932. 

23.8 
61.8 

1934 

61.8 

1936,  1938-... 
1940 

75.8 
78.3 

1941 

78.5 

1942 

87.5 

1944* 

1945 

590.0 
590.0 
5  85.5 

1948 

577.0 

1950 

5  80.0 

1951 

5  87.2 

1954 

5  88.0 
5  87.0 

Footnotes  at  end  of  table  VI. 


360   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  VI. — Effective  rates  of  individual  income  tax — Married  person  with  two 

dependents 

[In  percent] 


RevcnuB 

Income  year 

Selected 

amoun 

t  of  net 

income 

act 

$600 

$800 

$1,000 

$2,000 

$2,500 

$3,000 

$5,000 

$6,000 

$8,000 

$10,  000 

1913 

3/1/13-12/31/15 

1910 

1917 

1918 
1919-1920 

1921 

1922 

1923 

1924 

1925-27 

1928, 1930-31 

1929 
1932-33 
1934-35 
1930-39 

1940' 

1941 

1942  s 

1943  2 « 
1944-45 
1940-47 
1948-49 

1950 

1951 
1952-53 
1954- 

0.2 

.4 

1.3 

3.1 

2.1 

1.4 

1.4 

1.0 

.5 

.2 

.2 

.1 

1.4 

1.0 

1.0 

1.5 

5.4 

11.8 

14.6 

15.1 

11.8 

8.0 

9.0 

10.0 

11.5 

10.4 

0.3 

.7 

1.9 

3.8 

2.6 

2.3 

2.1 

1.6 

.7 

.3 

.3 

.1 

1.8 

1.4 

1.4 

1.9 

6.6 

13.5 

16.3 

16.8 

13.3 

10.0 

10.4 

12.2 

13.3 

12.0 

0.5 

1.0 

2.7 

6.0 

4.2 

3.8 

3.5 

2.6 

1.0 

.5 

.6 

.2 

3.0 

2.3 

2.3 

3.1 

9.0 

16.6 

19.4 

19.8 

16.2 

12.2 

12.7 

14.7 

16.0 

14.4 

0.6 

1910 

1.2 

1917 

0.1 

.2 
.2 

0.4 

1.2 

.8 

3.4 

1918 

7.8 

5.6 

1921           

5.3 

4.6 

3  4 

1924     

1.4 

1920 

.8 

1928 

.8 

.4 

1932 

4.2 

1934 

3.4 

1930.1938... 

3.4 

1940 

4.4 

1941 

.5 

4.0 

0.4 

0.4 

3.8 

.7 

.7 

.8 

.9 

.8 

1.9 
6.4 
8.9 
9.2 
6.3 
3.3 
3.5 
4.1 
4.4 
4.0 

11.2 

1942       

0.7 
2.9 
2.3 

19.1 

1944* 

1945     

0.2 
.5 

0.9 
1.1 

1.4 
1.6 

22.1 
22.6 
18.6 

1948 

13.6 

I960 

14.2 

1951 

16.2 

17.7 

1954 

16.9 

Revenue 

Income  year 

. 

Selected  amount  of  net  income 

act 

$15,000 

$20,000 

$25,000 

$50,000 

$75, 000 

$100, 000 

$500,000 

$1,000,000 

$5,000,000 

1913 

3/1/13-12/31/15 

1910 

1917 

1918 
1919-20 

1921 

1922 

1923 

1924 

1925-27 

1928. 1930-31 

1929 
1932-33 
1934-35 
1930-39 

1940  ' 

1941 

1942  2 

1943  2 » 
1944-15 
1946-47 
1948-49 

1950 

1951 
1952-53 
1954- 

0.7 

1.5 

4.8 

10.8 

8.0 

7.8 

6.6 

5.0 

3.2 

1.9 

1.9 

1.3 

0.4 

5.5 

5.5 

7.6 

16.5 

25.1 

28.0 

28.4 

24.3 

16.7 

17.4 

19.8 

21.6 

19.3 

0.8 

1.6 

6.8 

12.9 

9.8 

9.6 

8.3 

6.2 

4.7 

2.9 

2.9 

2.4 

8.1 

7.3 

7.3 

10.7 

21.4 

30.4 

33.5 

33.9 

29.5 

19.4 

20.2 

22.8 

25.0 

22.3 

1.0 

1.9 

7.1 

14.7 

11.4 

11.3 

10.0 

7.5 

6.1 

4.5 

4.0 

3.4 

9.8 

9.3 

9.3 

14.3 

25.9 

35.3 

38.3 

38.8 

34.1 

21.9 

22.7 

25.6 

28.0 

25.1 

1.6 

2.6 
10.3 
22.0 
18.3 
18.3 
17.2 
12.9 
12.1 
9.7 
9.1 
8.3 
17.1 
17.2 
17.2 
27.5 
39.9 
49.7 
52.8 
53.7 
48.2 
33.2 
34.3 
38.6 
42.2 
37.8 

2.0 
3.3 
13.2 
28.6 
24.8 
24.8 
23.7 
17.8 
17.5 
13.4 
13.1 
12.2 
23.6 
23.9 
24.5 
30.4 
47.3 
67.7 
61.6 
62.4 
56.4 
40.4 
41.8 
40.8 
50.6 
46.0 

2.5 
3.9 
16.2 
35.0 
31.2 
31.1 
30.1 
22.0 
22.5 
10.0 
15.7 
14.8 
30.0 
30.2 
32.0 
42.9 
52.2 
63.5 
67.8 
68.6 
62.3 
45.6 
47.2 
52.6 
56.0 
51.9 

6.0 
8.6 
38.5 
64.6 
60.6 
00.0 
52.1 
39.1 
39.9 
23.1 
23.1 
22.2 
62.7 
52.7 
00.7 
05.9 
68.9 
82.7 
88.0 
88.6 
81.3 
71.7 
73.9 
80.7 
82.2 
80.5 

6.0 
10.3 
47.6 
70.3 
66.3 
66.3 
55.1 
41.3 
43.0 
24.1 
24.1 
23.1 
67.1 
67.1 
67.8 
71.7 
73.2 
85.3 
»89.9 
•90.0 
83.9 
76.9 
79.1 
85.8 
87.1 
85.7 

6.8 

1916 

13.8 

1917 

62.8 

1918 

75.7 

1921 

71.7 
71.7 

1924 

67.4 
43.1 
46.4 

1926 -- 

24.8 

1928 

24.8 

1932 .- 

23.8 
61.8 

1934 

61.8 

1930,1938 

1940 -- 

76.8 
78.3 

1941  --- 

78.4 

1942 

87.5 

1944  < 

1945 

'90.0 
•90.0 
«85.6 

1948 

»77.0 

1950 

•80.0 

1951 

»87.2 

1954 

»88.0 
•87.0 

Note.— Maximum  earned  net  Income  assumed.  In  the  case  of  married  persons  it  is  also  assumed  that 
only  one  spouse  lias  income. 

•Less  than  50  cents. 

'  Includes  defense  tax. 

2  Tax  liabilities  for  the  years  1942  and  1943  are  unadjusted  for  transition  to  current  payment  basis. 

'  Includes  net  Victory  tax.  Computed  by  assuming  that  deductions  are  10  percent  of  Victory  tax  net 
income;  i.e.,  that  Victory  tax  net  income  is  ten-ninths  of  selected  net  income. 

« Individual  Income  Tax  Act  of  1944. 

»  Taking  into  account  the  following  maximum  effective  rate  limitations:  For  1943-45,  90  percent;  1946-47, 
85.5  percent;  1948-49,  77  percent;  1950,  80  percent;  1951,  87.2  percent;  1952-63,  88  percent  of  net  income;  1954-, 
87  percent  of  taxable  income. 


EXHIBITS 


361 


Table  VII. — Personal   exemption    and   credit   for   dependents    allowed  under   the 

revenue  acts  of  1913-54 


Income  year 

Personal  exemption  and  credit  for  dependents 

Revenue 
Act 

Single 
person 

Married 
person 

or  head 
of  fam- 
ily 1 

Credit 
for  each 
depend- 
ent 

Exemp- 
tion for 
taxpayer 
who  is 
blind 

Exemp- 
tion for 
blind 
spouse 

Exemp- 
tion for 
taxpayer 
65  or  over 

Exemp- 
tion for 
spouse 
65  or  over 

1913 

3/1/13—12/31/15 

1910 

1917 
1918—20 
1921—23 

1924 
1925—27 
1928—31 
1932—33 
1934—35 
1930—37 
1938—39 

1940 

1941 
1942—43 
1944—45 
1940—47 
1948—49 

1950 

1951 

1952—53 

1954- 

$3,000 

3, 000 

1,000 

1,000 

1,000 

1,000 

1,500 

1,500 

1,000 

1,000 

1,000 

1,000 

800 

750 

500 

4  5(10 

500 

000 

000 

000 

000 

600 

$4,000 
4,000 
2,000 
2,000 

2  2,  500 

2,  500 

3,  500 
3,  500 
2, 500 
2, 500 
2, 500 
2, 500 
2, 000 
1,500 
1,200 

*  1,000 
1,000 
1,200 
1,200 
1,200 
1,200 
1,200 

1916       

1917 

$200 
200 
400 
400 
400 
400 
400 
400 
400 
400 
4()0 
400 
350 

*  500 
500 
GOO 
600 
600 
600 
600 

1918 

1921     

1924 

1926  .     .  . 

1928 

1932 

1934       

1936 

1938 

1940 

1941 

1942     

1944  3 

1945 

1948 

$600 
600 
600 
600 
600 

$000 
000 
000 
600 
600 

$000 
(M)0 
000 
000 
000 

$600 

1950 

600 

1951 

600 

1954 

600 
600 

1  Subsequent  to  the  Revenue  Act  of  1913,  and  before  the  individual  Income  Tax  Act  of  1944,  the  personal 
exemption  allovi^ed  to  married  persons  was  also  allowed  to  heads  of  families. 

»  For  net  incomes  In  excess  of  $5,000,  personal  exemption  was  $2,000. 

»  Individual  Income  Tax  Act  of  1944. 

*  Surtax  exemptions.  For  surtax,  each  taxpayer  was  allowed  an  exemption  of  $500,  plus  $500  for  his  spouse, 
and  $500  for  each  dependent.  The  normal  tax  exemption  was  $500.  1  lowever,  if  husband  and  wife  combined 
their  income  in  a  joint  return,  the  normal  tax  exemption  was  $500  plus  the  amount  of  the  smaller  of  the  two 
incomes,  but  not  more  than  $1,000  for  both. 


362        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Table  VIII. — Normal  tax  rates  under  the  revenue  acts  of  1913-64 


Revenue  Act 


Income  year 


Net  income  subject  to  tax 


Rate 


1913 -. 

1916 

1917 

1918 

1921- 

1924 

1926,1928.. 

1932 

1934—1941 

1942 

1944 

1945 

1948 

1950 

1951 

1954 


3/1/13—12/31/15 
1916 
1917 

1918 
1919, 1920 
1921—23 

1924 

1925-31 


1932, 1933 

1934—41 
1942, 1943 
1944, 1945 
1946. 1947 
1948.  1949 

1950 

1951—53 

1954- 


All - — . 

All 

First  $2,000 

Balance  over  $2,000 

First  $4,000 

Halancc  over  $1,000 

First  $4,000. 

IJalance  over  $4,000 

Fir.=t  $4,000 

Balance  over  $4,000 

First  $4.000 

Second  $1,000 

Balance  over  $8,000, 

First  $4,000 

Second  $1,000 

Balance  over  $8,000 

First  $4,000 

Balance  over  $4,000 

All... 

All 

All 

All... 

All 

Al!.. 

All 

None. - 


Percent 
1 
2 

2 
4 
6 

12 
4 
8 

'4 

18 
2 
4 
6 

'U« 

23 

«5 

4 

8 

M 

<6 

3 

S3 

«3 

"3 

3 


1  Tax  for  1923,  computed  at  these  rates,  was  reduced  25  percent  by  credit  or  refund  under  Section  1200  (a). 
Revenue  Act  of  1924. 

2  Rates  for  1929  reduced  to  H  percent,  2  percent,  and  4  percent,  respectively,  by  Joint  Resolution  of 
Congress,  No.  133,  approved  by  the  President  Dec.  16,  1929. 

3  For  1940  the  sum  of  the  normal  tax  and  surtax  was  increased  by  the  defense  tax  of  10  percent  of  the  amount 
of  the  tax,  limited,  however,  to  10  percent  of  the  excess  of  the  net  income  over  the  sum  of  the  normal  tax 
and  surtax. 

*  For  1943  individuals  were  also  subject  to  the  Victory  tax.    For  Victory  tax,  every  individual  taxpayer 
was  allowed  an  exemption  of  $624,  regardless  of  marital  status.    However,  in  the  case  of  a  husband  and 
wife  filin!!:  a  joint  return,  if  the  Victory  tax  net  income  of  one  spouse  was  less  than  $624,  the  total  exemption 
was  limited  to  $024  plus  the  Victory  tax  net  income  of  such  spouse.    The  tax  was  5  percent  of  Victory  tax 
net  income,  loss  a  credit  of  25  percent  of  the  tax  if  single,  or  40  percent  if  married,  plus  in  either  ease  2  percent 
for  each  dependent.    The  amomit  of  the  credit  was  limited,  however,  to  $50(1  if  single,  or  $1,0(I()  if  married, 
plus  in  either  case  $100  for  each  dci)enclcnt.    As  a  means  of  effecting  an  annual  limitation  of  90  percent  on 
the  combmed  individual  income  tax  and  Victory  tax,  the  gross  Victory  tax  (before  deduction  of  credits 
against  the  tax)  was  limited  to  the  amoimt  by  wliich  90  percent  of  net  income  exceeded  the  regular  income 
tax  liability. 
5  Tentative  tax  rate;  the  tentative  tax  is  reduced  by  50  percent  to  determine  the  final  tax. 
«  Tentative  tax  rate;  the  tentative  tax  is  reduced  by  the  following  to  determine  the  final  tax: 
If  the  tentative  tax  is:  The  reduction  in  tax  is: 

Not  over  $400 17  percent 

Over  $100,  not  over  $100,000 68  percent  plus  12  percent  of  excess  over  $400 

Over  $100,000 $12,020  plus  9.75  percent  of  excess  over  $100,000 

'  Tentative  tax  rate;  the  tentative  tax  is  reduced  by  the  following  to  determine  the  final  tax: 
If  the  tentative  tax  is:  'J'lie  reduction  in  tax  is: 

Not  over  $400 13  percent 

Over  $400,  not  over  $100,000 .52  percent  plus  9  percent  of  excess  over  $400 

Over  $100,000 $9,016  plus  7.3  percent  of  excess  over  $100,000 


EXHIBITS 


363 


Table  IX. — Individual  surtax  rates  and  total  surtax   under   the   revenue   acts    of 

1913-54 


Revenue  Act  of 

Net  inco 

me  sub- 
urtax  ' 

Act  of  Oct.  3, 

ject  to  s 

1913  (Income  tax) 

1916 

1917 

1918 

1921 

Income  years 
Mar.  1,  1913, 

through  Dec.  31, 

Income  years 

Exceed- 

Equal- 

1915 

Income  year 

Income  year 

1918-L 

0— Act  of 

Income  years 

ing 

ing 

1916 

1917 

1921- 

-Income 

1922,  1923  2 

year  1921 

Thousa 

nds  of 

Rate 

Total 

Rate 

Total 

Rate' 

Total 

Rate 

Total 

Rate 

Total 

doll 

xrs 

surtax 

surtax 

surtax 

surtax 

surtax 

Per- 

Per- 

Per- 

Per- 

Per- 

n 

2 

2 

4 

cent 

cent 

cent 

cent 

cent 

4 

5 

5 

6 

7.5 

8 
10 
12 
12.5 
13 
14 
15 
16 
18 
20 
22 



""l 

1 
2 

2 
3 
3 
4 
4 
4 
5 
5 
5 
8 

.$i6' 

25 
35 
75 
135 
150 
170 
210 
250 
300 
400 
500 
660 

2 
2 
3 

4 
5 
5 
5 
6 
6 
7 
8 
9 

' $i6" 

40 
50 
110 
190 
215 
240 
290 
350 
410 
550 
710 
890 

_...._ 

6 

1 
1 
2 
3 
3 
3 
4 
4 
5 
6 
8 

$15 

7.5 

20 

8 

40 

10 

80 

12 

95 

12.5 

110 

13 

140 

14 

180 

15 

220 

16 

320 

18 

440 

20 

"$20" 

$20" 

600 

22 

24 

40 

40 

8 

820 

10 

1,090 

9 

780 

24 

26 

60 

60 

8 

980 

11 

1 

310 

10 

980 

26 

28 

80 

SO 

8 

1,140 

12 

1 

550 

11 

1,200 

28 

30 

100 

100 

8 

1,300 

13 

1 

810 

12 

1 

440 

30 

32 

120 

120 

8 

1,460 

14 

2 

090 

13 

1 

700 

32 

34 

140 

140 

8 

1,620 

15 

2 

390 

15 

2 

000 

34 

36 

160 

160 

8 

1,780 

16 

2 

710 

15 

2 

300 

36 

38 

180 

180 

8 

1,940 

17 

3 

050 

16 

2 

620 

38 

40 

200 

200 

8 

2,100 

18 

3 

410 

17 

2 

960 

40 

42 

220 

2 

240 

12 

2,340 

19 

3 

790 

18 

3 

320 

42 

44 

240 

2 

280 

12 

2,  580 

20 

4 

190 

19 

3 

700 

44 

46 

260 

2 

320 

12 

2,820 

21 

4 

610 

20 

4 

100 

46 

48 

280 

2 

300 

12 

3,060 

22 

5 

050 

21 

4 

520 

48 

50 

300 

2 

400 

12 

3,300 

23 

5 

510 

22 

4 

960 

50 

52 

2 

340 

2 

440 

12 

3.540 

24 

5 

990 

23 

5 

420 

52 

54 

2 

380 

2 

480 

12 

3,780 

25 

6 

490 

24 

5 

900 

54 

56 

2 

420 

2 

520 

12 

4,  020 

26 

7 

010 

25 

6 

400 

56 

58 

2 

460 

2 

560 

12 

4,  260 

27 

7 

550 

26 

6 

920 

58 

60 

2 

500 

2 

600 

12 

4,500 

28 

8 

110 

27 

7 

460 

60 

62 

2 

540 

3 

660 

17 

4,840 

29 

8 

690 

28 

8 

020 

62 

64 

2 

580 

3 

720 

17 

5,180 

30 

9 

290 

29 

8 

600 

64 

66 

2 

620 

3 

780 

17 

5,520 

31 

9 

910 

30 

9 

200 

66 

68 

2 

660 

3 

840 

17 

5,  800 

32 

10 

550 

31 

9 

820 

68 

70 

2 

700 

3 

900 

17 

6,  200 

33 

U 

210 

32 

10 

460 

70 

72 

2 

740 

3 

960 

17 

6,540 

34 

11 

890 

33 

11 

120 

72 

74 

2 

780 

3 

1,020 

17 

0,  880 

35 

12 

590 

34 

11 

800 

74 

75 

2 

800 

3 

1,050 

17 

7,050 

36 

12 

950 

35 

12 

1.50 

75 

76 

3 

830 

3 

1,080 

17 

7,220 

36 

13 

310 

35 

12 

500 

76 

78 

3 

890 

3 

1,140 

17 

7,560 

37 

14 

050 

36 

13 

220 

78 

80 

3 

950 

3 

1,200 

17 

7,900 

38 

14 

810 

37 

13 

960 

80 

82 

3 

1,010 

4 

1,280 

22 

8,340 

39 

15 

590 

38 

14 

720 

82 

84 

3 

1,070 

4 

1,360 

22 

8, 780 

40 

16 

390 

39 

15 

500 

84 

86 

3 

1,130 

4 

1,440 

22 

9,220 

41 

17 

210 

40 

16 

300 

86 

88 

3 

1,190 

4 

1,  520 

22 

9,660 

42 

18 

050 

41 

17 

120 

X8 

90 

3 

1,250 

4 

1,  600 

22 

10, 100 

43 

18 

910 

42 

17 

960 

90 

92 

3 

1,310 

4 

1,  680 

22 

10,  540 

44 

19 

790 

43 

18 

820 

92 

94 

3 

1,370 

4 

1,760 

22 

10,  980 

45 

20 

690 

44 

19 

700 

94 

96 

3 

1,  430 

4 

1,840 

22 

11,420 

46 

21 

610 

45 

20 

600 

96 

98 

3 

1,490 

4 

1,920 

22 

11,860 

47 

22 

550 

46 

21 

520 

98 

100 

3 

1,550 

4 

2,000 

22 

12, 300 

48 

23 

510 

47 

22 

460 

100 

150 

4 

3,550 

5 

4,500 

27 

25,800 

52 

49 

510 

48 

46 

460 

150 

200 

4 

5,550 

6 

7,  500 

31 

41, 300 

56 

77 

510 

49 

70 

960 

200 

250 

4 

7,550 

7 

11,000 

37 

59,  800 

60 

107 

510 

50 

95 

960 

250 

300 

5 

10,  050 

8 

15,000 

42 

80,  800 

60 

137 

610 

50 

120 

960 

300 

400 

5 

15,050 

9 

24,  000 

46 

126,  800 

63 

200 

510 

50 

170 

960 

400 

500 

5 

20,  050 

9 

33,  000 

46 

172,  800 

63 

263 

510 

50 

220 

960 

600 

750 

6 

35, 050 

10 

58,000 

50 

297, 800 

64 

423 

510 

50 

345 

960 

750 

1.000 

6 

50, 050 

10 

83, 000 

55 

435, 300 

64 

583 

510 

50 

470 

960 

1,000 

1,500 

6 

80, 050 

11 

138, 000 

61 

740, 300 

65 

908 

510 

50 

720 

960 

1,500 

2,000 

6 

110,050 

12 

198, 000 

62 

1,050,300 

65 

1,233 

510 

50 

970 

960 

2,000 

5,000 

6 

290, 050 

13 

588, 000 

63 

2,  940, 300 

65 

3,183 

510 

50 

2,470 

960 

5,000 

6 

13 

63 

65 

50 

Footnotes  at  end  of  table. 


364   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  IX. — Individual  surtax  rates  and  total  surtax   under   the  revenue  ads    of 

1913-54— Continued 


Net  income  sub- 
ject to  surtax  ' 


Revenue  Act  of— 


Equal- 
ing 

1924 

1926 

1932 

1934 

1936  and  1938 

Exceed- 
ing 

Income  years 

Income  years 

Income  year  1924  | 

1925-27— Act  of 

Income  years 

Income  years 

1936-38  and  Int. 

1928- 

-Income 

1932,  1933 

1934,  1935 

Rev. 

Code  In- 

years  1928-31 

come  year  1939 

Thouss 

nds  of 

Rate 

Total 

Rate 

Total 

Rate 

Total 

Rate 

Total 

Rate 

Total 

doll 

ars 

surtax 

surtax 

surtax 

surtax 

surtax 

Per- 

Per- 

Per- 

Per- 

Per- 

0 

2 
4 
5 

cent 

cent 

cent 

cent 

cent 

2 

4 

4 

"$40 

-- 

$40 
80 

5 

6 
7.5 

4 
5 

80 
155 

4 
5 

6 

.. 

$15' 

155 

7.5 

8 
10 
12 

1 
1 
2 

20 
40 
80 

5 
6 

7 

180 
300 
440 

5 
6 

7 

180 

8 

300 

10 

i' 

$26" 

-- 

"$20' 

440 

12 

12.5 

1 

25 

1 

25 

3 

95 

8 

480 

8 

480 

12.5 

13 

1 

30 

1 

30 

3 

110 

8 

520 

8 

520 

13 

14 

1 

40 

1 

40 

3 

140 

8 

600 

8 

600 

14 

15 

2 

60 

2 

60 

4 

180 

9 

690 

9 

690 

15 

16 

2 

80 

2 

80 

4 

220 

9 

780 

9 

780 

16 

18 

3 

140 

3 

140 

5 

320 

11 

1,000 

11 

1,000 

18 

20 

4 

220 

4 

220 

6 

440 

13 

1,260 

13 

1,260 

20 

22 

5 

320 

5 

320 

8 

600 

15 

1,560 

15 

1,560 

22 

24 

6 

440 

6 

440 

9 

780 

17 

1,900 

17 

1,900 

24 

26 

7 

580 

7 

580 

10 

980 

17 

2,  240 

17 

2,240 

26 

28 

8 

740 

7 

720 

11 

1.200 

19 

2, 620 

19 

2, 620 

28 

30 

9 

920 

8 

880 

12 

1,440 

19 

3, 000 

19 

3,000 

30 

32 

10 

1,120 

8 

1,040 

13 

1,700 

19 

3,380 

19 

3,380 

32 

34 

10 

1,320 

9 

1,220 

15 

2,000 

21 

3,800 

21 

3,800 

34 

36 

11 

1,540 

9 

1,400 

15 

2,300 

21 

4,220 

21 

4,220 

36 

38 

12 

1,780 

10 

1,600 

16 

2,620 

21 

4,6-10 

21 

4,640 

38 

40 

13 

2,040 

10 

1,800 

17 

2,960 

24 

5,120 

24 

5,120 

40 

42 

13 

2,300 

11 

2,  020 

18 

3, 320 

24 

5, 600 

24 

5, 600 

42 

44 

14 

2,580 

11 

2,  240 

19 

3,700 

24 

6,080 

24 

6,080 

44 

46 

15 

2,880 

12 

2,480 

20 

4,100 

27 

6.620 

27 

6,620 

46 

48 

16 

3, 200 

12 

2,  720 

21 

4,520 

27 

7,160 

27 

7, 160 

48 

50 

17 

3,540 

13 

2,980 

22 

4,960 

27 

7,700 

27 

7,  700 

50 

52 

18 

3,900 

13 

3,240 

23 

5, 420 

30 

8, 300 

31 

8,  320 

52 

54 

19 

4,280 

14 

3,520 

24 

.5,900 

30 

8,900 

31 

8,940 

54 

56 

19 

4,660 

14 

3,800 

25 

6.  400 

30 

9,  .500 

31 

9,  560 

56 

58 

20 

5, 060 

15 

4,100 

26 

6,920 

33 

10, 160 

35 

10,  260 

58 

60 

21 

5,480 

15 

4,400 

27 

7,460 

33 

10, 820 

35 

10,  960 

60 

62 

21 

5. 900 

16 

4, 720 

28 

8,020 

33 

11,480 

35 

11,660 

62 

64 

22 

6,340 

16 

5,040 

29 

8,600 

36 

12,200 

39 

12,  410 

64 

66 

23 

6,800 

17 

5,380 

30 

9,200 

36 

12,920 

39 

13,  220 

66 

68 

24 

7,280 

17 

5, 720 

31 

9.820 

36 

13, 640 

39 

14, 000 

68 

70 

25 

7,780 

17 

6, 060 

32 

10, 460 

39 

14,  420 

43 

14,860 

70 

72 

26 

8,300 

18 

6, 420 

33 

11,120 

39 

15,  200 

43 

15, 720 

72 

74 

26 

8,820 

18 

6,780 

34 

11,800 

39 

15.980 

43 

16,580 

74 

75 

27 

9,090 

18 

6,960 

35 

12, 150 

42 

16,400 

47 

17,050 

75 

76 

27 

9,360 

18 

7,140 

35 

12, 500 

42 

16,820 

47 

17,  .520 

76 

78 

28 

9, 920 

18 

7,  500 

36 

13, 220 

42 

17,660 

47 

18,460 

78 

80 

28 

10,  480 

IS 

7,860 

37 

13, 960 

42 

18,  500 

47 

19,400 

80 

82 

29 

11,060 

19 

8.240 

38 

14,720 

45 

19, 400 

51 

20,420 

82 

84 

30 

11,660 

19 

8.  620 

39 

15.500 

45 

20, 300 

51 

21 . 440 

84 

86 

31 

12,  280 

19 

9,000 

40 

16. 300 

45 

21,200 

51 

22. 460 

86 

88 

31 

12, 900 

19 

9,  380 

41 

17,120 

45 

22,100 

51 

23.  480 

88 

90 

32 

13, 540 

19 

9,  700 

42 

17,960 

45 

23.000 

51 

24.  .500 

90 

92 

33 

14, 200 

19 

10,140 

43 

18,820 

,50 

24, 000 

55 

25,  600 

92 

94 

34 

14.880 

19 

10,  520 

44 

19,  700 

,50 

25, 000 

55 

26,  700 

94 

96 

35 

1.5,  ,580 

19 

10,900 

45 

20, 600 

50 

26, 000 

55 

27. 800 

96 

98 

36 

16,300 

19 

11,280 

46 

21,520 

50 

27,000 

55 

28.  900 

98 

ino 

36 

17,020 

19 

11,660 

47 

22.460 

50 

28, 000 

55 

30,000 

100 

1.50 

37 

35.  520 

20 

21,660 

48 

46, 460 

52 

.54.000 

58 

59, 000 

150 

200 

37 

54,020 

20 

31.660 

49 

70,960 

53 

80,  ,500 

60 

89, 000 

200 

250 

38 

73,020 

20 

41,660 

50 

95, 960 

54 

107,  .500 

62 

120,000 

250 

300 

38 

92, 020 

20 

51,660 

50 

120,960 

54 

134, 500 

64 

1,52,000 

300 

400 

39 

131,020 

20 

71,660 

51 

171,960 

55 

189,  ,500 

66 

218.000 

400 

500 

39 

170,020 

20 

91,660 

52 

223, 960 

56 

245, 500 

68 

286, 000 

500 

750 

40 

270,020 

20 

141,660 

53 

356, 400 

57 

388, 000 

70 

461.000 

750 

1,000 

40 

370, 020 

20 

191, 660 

54 

491,460 

58 

5.33, 000 

72 

641,000 

1,000 

1,500 

40 

570, 020 

20 

291,660 

55 

706, 460 

59 

828, 000 

73 

1,006,000 

1,500 

2,000 

40 

770,020 

20 

391,660 

55 

1,041,460 

59 

1,12.3,000 

73 

1,, 37 1,000 

2,000 

5,000 

40 

1,970,020 

20 

991,660 

55 

2,691.460 

69 

2,893,000 

74 

3,591,000 

5.000 

40 

20 

55 

59 

75 

Footnotes  at  end  of  table. 


EXHIBITS 


365 


Table  IX. — Individual  surtax  rates  and  total  surtax   under  the  revenue  acts    of 

1913-54— Continued 


Net  income  sub- 
ject to  surtax  • 

Revenue  Act  of— 

1940* 

1941 

1942 

1944  » 

1945 

Exceed- 

Equal- 
ing 

ing 

Income 

year  1940 

Income 

,  year  1941 

Income  years 
1942, 1943 

Income  years 
1944, 1945 

Income  years 
1946, 1947 

Thous 

an  (Is 

Total 

Total 

Total 

Total 

Total 

of  do] 

lars 

Rate 

surtax 

Rate 

surtax 

Rate 

surtax 

Rate  6 

surtax 

Rate' 

tentative 
surtax ' 

Per- 

Per- 

Per- 

Per- 

Per- 

cent 

cent 

cent 

cent 

cent 

0 

2 

6 

$120 

13 

$260 

20 

$400 

17 

$340 
720 

2 

4 

9 

300 

16 

580 

22 

840 

19 

4 

5 

— ... 

$40' 

13 

430 

20 

780 

26 

1,100 

23 

950 

5 

6 

4 

80 

13 

560 

20 

980 

26 

1,360 

23 

1,180 

6 

7.5 

6 

170 

17 

815 

24 

1,340 

30 

1,810 

27 

1,685 

7.5 

8 

6 

200 

17 

900 

24 

1.460 

30 

1.960 

27 

1,720 

8 

10 

8 

360 

21 

1,320 

28 

2,020 

34 

2,640 

31 

2,340 

10 

12 

10 

560 

25 

1.820 

32 

2,660 

38 

3,400 

36 

3,040 

12 

12.5 

12 

620 

29 

1, 965 

36 

2,840 

43 

3,615 

40 

3,240 

12.5 

13 

12 

680 

29 

2,110 

36 

3,020 

43 

3,830 

40 

3,440 

13 

14 

12 

800 

29 

2,400 

36 

3,380 

43 

4,260 

40 

3,840 

14 

15 

15 

950 

32 

2,720 

40 

3,780 

47 

4.730 

44 

4,280 

15 

16 

15 

1,100 

32 

3.040 

40 

4,180 

47 

5,200 

44 

4,720 

16 

18 

18 

1,460 

35 

3,740 

43 

5.040 

50 

6.200 

47 

5.660 

18 

20 

21 

1,880 

38 

4,500 

46 

5,960 

53 

7,260 

60 

6,660 

20 

22 

24 

2,360 

41 

5,  320 

49 

6,940 

56 

8,380 

53 

7,720 

22 

24 

27 

2,900 

44 

6,200 

52 

7,980 

59 

9,560 

56 

8,840 

24 

26 

27 

3,440 

44 

7,080 

52 

9,020 

59 

10,  740 

56 

9,960 

26 

28 

30 

4,040 

47 

8,020 

55 

10,  120 

62 

11, 980 

59 

11, 140 

28 

30 

30 

4,640 

47 

8,960 

55 

11,220 

62 

13,220 

69 

12,320 

30 

32 

30 

5.240 

47 

9,900 

55 

12, 320 

62 

14, 460 

59 

13,500 

32 

34 

33 

5,900 

50 

10,  900 

58 

13, 480 

65 

15, 760 

62 

14,  740 

34 

36 

33 

6,560 

50 

11,900 

58 

14, 640 

65 

17, 060 

62 

15.980 

36 

38 

33 

7,220 

50 

12, 900 

58 

15,  800 

65 

18, 360 

62 

17,  220 

38 

40 

36 

7,940 

53 

13. 960 

61 

17, 020 

69 

19, 740 

66 

18.  540 

40 

42 

36 

8,660 

53 

15, 020 

61 

18,  240 

69 

21,120 

66 

19. 860 

42 

44 

36 

9,380 

53 

16,  080 

61 

19,  460 

69 

22,  500 

66 

21, 180 

44 

46 

40 

10, 180 

55 

17, 180 

63 

20,  720 

72 

23, 940 

69 

22,  560 

46 

48 

40 

10,980 

55 

18.280 

63 

21,980 

72 

25,  380 

69 

23,940 

48 

50 

40 

11,  780 

55 

19, 380 

63 

23.240 

72 

26, 820 

69 

25.320 

50 

52 

44 

12,  660 

57 

20,  520 

66 

24,560 

75 

28, 320 

72 

26.  760 

52 

54 

44 

13, 540 

57 

21,  660 

66 

25, 880 

75 

29,  820 

72 

28,  200 

54 

56 

44 

14.  420 

57 

22, 800 

66 

27,200 

76 

31,320 

72 

29, 640 

56 

58 

44 

15, 300 

57 

23, 940 

66 

28,  520 

76 

32, 820 

72 

31,080 

58 

60 

44 

16, 180 

57 

25,  080 

66 

29, 840 

76 

34. 320 

72 

32, 520 

60 

62 

47 

17,120 

59 

26,  260 

69 

31, 220 

78 

35,  880 

76 

34, 020 

62 

64 

47 

18,  060 

59 

27, 440 

69 

32,600 

78 

37,  440 

75 

35,  520 

64 

66 

47 

19,  000 

59 

28, 620 

69 

33, 980 

78 

39,  000 

76 

37, 020 

66 

68 

47 

19, 940 

59 

29,800 

69 

36,  360 

78 

40,  660 

76 

38,  520 

68 

70 

47 

20, 880 

59 

30, 980 

69 

36,740 

78 

42, 120 

76 

40,  020 

70 

72 

50 

21, 880 

61 

32,  200 

72 

38, 180 

81 

43, 740 

78 

41,  580 

72 

74 

50 

22,  880 

61 

33, 420 

72 

39,620 

81 

45, 360 

78 

43. 140 

74 

75 

50 

23. 380 

61 

34,  030 

72 

40. 340 

81 

46, 170 

78 

43,920 

75 

76 

50 

23,880 

61 

34, 640 

72 

41, 060 

81 

46,980 

78 

44, 700 

76 

78 

50 

24,880 

61 

35, 860 

72 

42.  500 

81 

48.  600 

78 

46, 260 

78 

80 

60 

25, 880 

61 

37,080 

72 

43. 940 

81 

50, 220 

78 

47,820 

80 

82 

53 

26, 940 

63 

38, 340 

76 

45, 440 

84 

51,900 

81 

49, 440 

82 

84 

53 

28, 000 

63 

39,600 

75 

46.940 

84 

63,  580 

81 

51.  060 

84 

86 

53 

29,060 

63 

40,  860 

76 

48,440 

84 

56, 260 

81 

62, 680 

86 

88 

53 

30, 120 

63 

42, 120 

75 

49, 940 

84 

56, 940 

81 

64, 300 

88 

90 

53 

31, 180 

63 

43,380 

75 

51, 440 

84 

68,  620 

81 

66, 920 

90 

92 

56 

32,  300 

64 

44. 660 

77 

52,980 

87 

60,  360 

84 

57,600 

92 

94 

56 

33, 420 

64 

45,940 

77 

54,520 

87 

62, 100 

84 

69,  280 

94 

96 

56 

34, 540 

64 

47,  220 

77 

56, 060 

87 

63, 840 

84 

60,960 

96 

98 

56 

35, 660 

64 

48, 500 

77 

67,600 

87 

65, 580 

84 

62, 640 

98 

100 

56 

36,  780 

64 

49, 780 

77 

59, 140 

87 

67, 320 

84 

64, 320 

100 

150 

58 

65, 780 

65 

82, 280 

79 

98, 640 

89 

111,820 

86 

107,320 

150 

200 

60 

95,  780 

66 

115, 280 

81 

139, 140 

90 

156, 820 

87 

150, 820 

200 

250 

62 

126,780 

67 

148, 780 

82 

180, 140 

91 

202, 320 

88 

194,820 

250 

300 

64 

158, 780 

69 

183,  280 

82 

221, 140 

91 

247, 820 

88 

238.820 

300 

400 

66 

224,  780 

71 

254, 280 

82 

303, 140 

91 

338,820 

88 

326,820 

400 

500 

68 

292,  780 

72 

326, 280 

82 

386, 140 

91 

429,820 

88 

414,820 

500 

750 

70 

467, 780 

73 

508, 780 

82 

590, 140 

91 

657, 320 

88 

634,820 

750 

1,000 

72 

647, 780 

74 

693, 780 

82 

795, 140 

91 

884, 820 

88 

864, 820 

1,000 

1,500 

73 

1, 012, 780 

75 

1, 068, 780 

82 

1, 205, 140 

91 

1,339,820 

88 

1, 294, 820 

1,500 

2,000 

73 

1,377,780 

75 

1, 443, 780 

82 

1, 615, 140 

91 

1, 794. 820 

88 

1,734,820 

2,000 

5,000 

74 

3,597,780 

76 

3,723,780 

82 

4.075,140 

91 

4, 624, 820 

88 

4,374,820 

5,000 

' 

75 

77 

82 

-.»=- 

91 

8S. 

Footnotes  at  end  of  table. 


366   196  2  KEPOKT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  IX. — Individual  surtax  rates  and  total   surtax   under   the   revenue   acts    of 

1913-54 — Continued 


Net  income  sub- 

Revenue 

Act  of— 

ject  to  surtax  ' 

1948 

1950 

1951 

Exceed- 

Equal- 
ing 

ing 

Income 

years  1948, 
1949 

Income  year  1950 

Income  year  1951 

Separate  returns 

Joint 

Thousands  of 

returns 

dollars 

Rate' 

Total 
tentative 

Rate' 

Total 
tentative 

tax* 

tax" 

Rates 

Total  tax 

Rate" 

Total  tax 

Percent 

Percent 

Percent 

Percent 

0 

2 

20 

.$400 

20 

$400 

20.4 

$408 

20.4 

$408 

2 

4 

22 

840 

22 

840 

22.4 

856 

20.4 

816 

4 

5 

26 

1,100 

26 

1,100 

27 

1,126 

22.4 

1,040 

5 

6 

26 

1,.360 

26 

1,360 

27 

1,396 

22.4 

1,264 

6 

7.5 

30 

1,810 

30 

1,810 

30 

1,846 

22.4 

1,600 

7.5 

8 

30 

1,960 

30 

1,960 

30 

1,996 

22.4 

1,712 

8 

10 

34 

2,640 

34 

2,640 

35 

2,696 

27 

2,252 

10 

12 

38 

3,400 

38 

3,400 

39 

3,476 

27 

2,792 

12 

12.5 

43 

3,615 

43 

3,615 

43 

3,691 

30 

2,942 

12.5 

13 

43 

3,830 

43 

3,830 

43 

3,906 

30 

3,092 

13 

14 

43 

4,260 

43 

4,260 

43 

4, 336 

30 

3,392 

14 

15 

47 

4.730 

47 

4,  730 

48 

4,816 

30 

3,692 

15 

16 

47 

5,200 

47 

5,200 

48 

5,296 

30 

3,992 

16 

18 

50 

6,200 

50 

6.200 

51 

6,316 

35 

4,692 

18 

20 

53 

7,260 

53 

7.260 

54 

7,396 

35 

5,392 

20 

22 

56 

8,380 

56 

8.380 

57 

8,536 

39 

6,172 

22 

24 

59 

9,560 

59 

9,560 

60 

9,736 

39 

6,952 

24 

26 

59 

10.  740 

59 

10,  740 

60 

10,  936 

43 

7,812 

26 

28 

62 

11,980 

62 

11,980 

63 

12,  196 

43 

8,  672 

28 

30 

62 

13. 220 

62 

13, 220 

63 

13, 456 

48 

9,  632 

30 

32 

62 

14, 460 

62 

14,  460 

63 

14,716 

48 

10, 592 

32 

34 

65 

15,760 

65 

15,  760 

66 

16,  036 

51 

11,612 

34 

36 

65 

17. 060 

65 

17,  060 

06 

17, 356 

51 

12,  632 

36 

38 

65 

18,360 

65 

18,  360 

66 

18.  276 

54 

13,712 

38 

40 

69 

19,  740 

69 

19,  740 

69 

20, 056 

,54 

14,  792 

40 

42 

69 

21, 120 

69 

21. 120 

69 

21,436 

57 

15.  932 

42 

44 

69 

22,  500 

69 

22.  500 

69 

22,816 

57 

17, 072 

44 

46 

72 

23. 940 

72 

23. 940 

73 

24,  276 

60 

18,  272 

46 

48 

72 

25.  380 

72 

25, 380 

73 

25, 736 

60 

19.  472 

48 

50 

72 

26.  820 

72 

26, 820 

73 

27, 196 

60 

20, 672 

50 

52 

75 

28,  320 

75 

28, 320 

75 

28,  696 

60 

21,872 

52 

54 

75 

29, 820 

75 

29,  820 

75 

30, 196 

63 

23, 132 

54 

56 

75 

31,320 

75 

31,320 

75 

31, 696 

63 

24, 392 

56 

58 

75 

32, 820 

75 

32, 820 

75 

33, 196 

63 

25,  652 

58 

60 

75 

34, 320 

75 

34,  320 

75 

34, 696 

63 

26,  912 

60 

62 

78 

35,  S80 

78 

35, 880 

78 

36.  256 

63 

28, 172 

62 

64 

78 

37,  440 

78 

37,  440 

78 

37,816 

63 

29,  432 

64 

66 

78 

39,000 

78 

39,  000 

78 

39, 376 

66 

30.  7.52 

66 

68 

78 

40. 500 

78 

40,  560 

78 

40, 936 

66 

32, 072 

68 

70 

78 

42, 120 

78 

42, 120 

78 

42, 496 

66 

33, 392 

70 

72 

81 

43,  740 

81 

43. 740 

82 

44. 136 

66 

34,712 

72 

74 

81 

45,  360 

81 

45,  360 

82 

4.5, 776 

66 

36,032 

74 

75 

81 

46,170 

81 

46,  170 

82 

46, 596 

66 

36,  692 

75 

76 

81 

46, 980 

81 

46, 980 

82 

47,416 

66 

37,  352 

76 

78 

81 

48, 600 

81 

48,  600 

82 

49,  056 

69 

38,  732 

78 

80 

81 

50,  220 

81 

50,  220 

82 

50,  696 

69 

40, 112 

80 

82 

84 

51,900 

84 

51, 900 

84 

52, 376 

69 

41,  492 

82 

84 

84 

53.  .WO 

84 

53, 580 

84 

54,  056 

69 

42, 872 

84 

86 

84 

55. 260 

84 

55.  260 

84 

55, 736 

69 

44,252 

86 

88 

84 

56, 940 

84 

56.  9 10 

84 

,57,416 

69 

45,  632 

88 

90 

84 

58, 620 

84 

5K,  620 

84 

59,  096 

73 

47,092 

90 

92 

87 

60.  360 

87 

60,  360 

87 

60.  830 

73 

48,  552 

92 

94 

87 

62, 100 

87 

62,  100 

87 

62,  576 

73 

50,012 

94 

96 

87 

63, 840 

87 

63,  840 

87 

64,  316 

73 

51.472 

96 

98 

87 

65.  580 

87 

65,  580 

87 

66, 056 

73 

52, 932 

93 

100 

87 

67, 320 

87 

67,  320 

87 

07,  796 

73 

54, 392 

100 

l.'iO 

89 

111.820 

89 

111,820 

89 

112,296 

■      81.2 

135,  592 

150 

200 

90 

1,56.  820 

90 

156.  820 

90 

1,57,296 

200 

2.'i0 

91 

202.  320 

91 

202,  320 

91 

202,  796 

■      89 

224,  592 

2-)0 

300 

91 

247, 820 

91 

247,  820 

91 

248,  296 

330 

400 

91 

338, 820 

91 

338,  820 

91 

339,  296 

90 

314,592 

400 

500 

91 

429,820 

91 

429. 820 

91 

430, 296 

91 

405,  592 

500 

750 

91 

657, 320 

91 

657,320 

91 

657,  796 

91 

633, 092 

750 

1.000 

91 

884. 820 

91 

884, 820 

91 

885,  296 

91 

860.  592 

1,000 

1,500 

91 

1,  339,  820 

91 

1, 339, 820 

91 

1, 340, 296 

91 

1,31.5,592 

1,500 

2,000 

91 

1,  794, 820 

91 

1,794,820 

91 

1, 79.5,  296 

91 

1,  770,  592 

2.000 

5,000 

91 

4, 524, 820 

91 

4, 524, 820 

91 

4, 525, 296 

91 

4,  500,  592 

6,000 

91 

91 

91 

91 



Footnotes  at  end  of  table. 


I 


EXHIBITS 


367 


Table  IX. — Individual  surtax  rates  and  total   stirtax   under   the   revenue   acts   of 

1913-54 — Continued 


Net  income  subject  to 

Revenue  Act  of— 

surtax  ' 

1951 

Exceeding 

Equaling 

Income  years  1952,  1953 

Thousands  of  dollars 

Separate  returns 

Joint  returns 

Head  of  household 

Rate' 

Total  tax 

Rates 

Total  tax 

Rate« 

Total  tax 

Percent 

Percent 

Percent 

n 

2 

22.2 

$444 

22.2 

$444 

22  2 

$444 

2 

4 

24.6 

936 

22.2 

888 

23^4 

912 

4 

5 

29 

1,226 

24.6 

1,1.34 

27 

1,182 

5 

6 

29 

1,516 

24.6 

1,380 

27 

1,  4.52 

6 

7.5 

34 

2,026 

24.6 

1,749 

29 

1,887 

7.5 

8 

34 

2.196 

24.6 

1.872 

29 

2,032 

8 

10 

38 

2,  956 

29 

2,  4.52 

34 

2,  712 

10 

12 

42 

3,796 

29 

3,032 

35 

3,412 

12 

12.5 

48 

4,036 

34 

3,  202 

41 

3,617 

12.5 

13 

48 

4,276 

34 

3, 372 

41 

3,822 

13 

14 

48 

4,756 

34 

3,712 

41 

4,232 

14 

15 

53 

5,286 

34 

4,052 

44 

4,672 

15 

16 

53 

5,  816 

34 

4.392 

44 

5,112 

16 

18 

56 

6,  930 

38 

5, 1.52 

47 

6, 052 

18 

20 

59 

8,116 

38 

5,912 

48 

7, 012 

20 

22 

62 

9, 356 

42 

6,752 

52 

8, 052 

22 

24 

66 

10, 676 

42 

7,  592 

54 

9, 132 

24 

26 

66 

11,  996 

48 

8,  5.52 

57 

10,272 

26 

28 

67 

13,336 

48 

9,  512 

57 

11,412 

28 

30 

67 

14, 676 

53 

10.  572 

60 

12,612 

30 

32 

67 

10,016 

53 

11,632 

60 

13,812 

32 

34 

68 

17, 376 

56 

12,  752 

63 

15,072 

34 

36 

68 

18,  736 

56 

13,87'i 

63 

16, 332 

36 

38 

68 

20, 096 

59 

15, 052 

63 

17,  592 

38 

40 

72 

21,  536 

59 

16, 232 

66 

18,912 

40 

42 

72 

22,  976 

62 

17.472 

66 

20, 232 

42 

44 

72 

24,  416 

62 

18,  712 

66 

21,  552 

44 

46 

75 

25,916 

66 

20, 032 

71 

22,  972 

46 

48 

75 

27,416 

66 

21,3.52 

71 

24, 392 

48 

50 

75 

28,916 

66 

22, 672 

71 

25, 812 

50 

52 

77 

.30,  456 

66 

23, 992 

72 

27, 252 

52 

54 

77 

31,  996 

67 

25, 332 

72 

28, 692 

54 

56 

77 

33,  536 

67 

26, 672 

72 

30, 132 

56 

58 

77 

35, 076 

67 

28, 012 

72 

31,  572 

58 

60 

77 

36,  616 

67 

29,  3.52 

72 

33,012 

60 

62 

80 

38, 216 

67 

30,  692 

73 

34, 472 

62 

64 

80 

39, 816 

67 

32, 032 

73 

35,  932 

64 

66 

80 

41,416 

68 

33,  392 

73 

37,  392 

66 

68 

80 

43,016 

68 

34,  7f  2 

73 

38, 852 

68 

70 

80 

44, 616 

68 

36, 112 

73 

40, 312 

70 

72 

83 

46, 276 

68 

37,  472 

77 

41,  852 

72 

74 

83 

47,  936 

68 

38,  832 

77 

43, 392 

74 

75 

83 

48,  766 

68 

39,  512 

77 

44, 162 

75 

76 

83 

49,  596 

68 

40,192 

77 

44,  932 

76 

78 

83 

51, 2,'^6 

72 

41,632 

77 

46,  472 

78 

80 

83 

52,916 

72 

43,  072 

77 

48, 012 

80 

82 

85 

54,  616 

72 

44,  512 

79 

49,  592 

82 

84 

85 

56, 316 

72 

45,  952 

79 

51,172 

84 

86 

85 

58, 016 

72 

47, 392 

79 

,52,  752 

86 

88 

85 

59,  716 

72 

48,  832 

79 

54, 332 

88 

90 

85 

61,416 

75 

50, 332 

79 

5.5, 912 

90 

92 

88 

63, 176 

75 

51.  832 

81 

57,  .532 

92 

94 

88 

64,  936 

75 

53, 332 

81 

59, 1.52 

94 

96 

88 

66,  696 

75 

54, 832 

81 

60,  772 

96 

98 

88 

68,  456 

75 

56, 332 

81 

62,  392 

98 

100 

88 

70, 216 

75 

67,  832 

81 

64, 012 

100 
150 

150 
200 

90 
91 

115,216 
160, 716 

}           82. 6 

140,432 

85 

88 

106, 512 
150,  512 

200 

250 

92 

206,  716 

}            90 

230, 432 

91 

196, 012 

250 

300 

92 

252. 716 

91 

241,512 

300 

400 

92 

344,716 

91 

321,432 

92 

333, 512 

400 

.500 

92 

436.  716 

92 

41.3,  432 

92 

425,  512 

500 

750 

92 

666, 716 

92 

643,  432 

92 

655,  512 

750 

1,000 

92 

896,  716 

92 

873,  432 

92 

885, 512 

1,000 

1,500 

92 

1,356,716 

92 

1, 333,  432 

92 

1,34,5,512 

1,500 

2,000 

92 

1,816,716 

92 

1,793,432 

92 

1,805,512 

2,000 

5,000 

92 

4, 576,  716 

92 

4,  553,  432 

92 

4,  565, 512 

5,000 

92 

92 

92 

Footnotes  at  end  of  table. 


368   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  IX. — Individual  surtax  rates  and  total   surtax   under   the  revenue  acts   of 

1913-54 — Continued 


Net  income  subject  to 

Revenue  Act  of— 

sur 

tax' 

1954 

Exceeding 

Equaling 

Income  j'ears  1954—62 

s  of  dollars 

Thousanc 

Separate  returns 

Joint  returns 

Head  of  household 

Rate« 

Total  tax 

Rates 

Total  tax 

Rate« 

Total  tax 

Percent 

Percent 

Percent 

0 

2 

20 

$400 

20 

$400 

20 

$400 

2 

4 

22 

840 

20 

800 

21 

820 

4 

5 

26 

1, 100 

22 

1,020 

24 

1,060 

5 

6 

26 

1,360 

22 

1,240 

24 

1,300 

f) 

7.5 

30 

1,810 

22 

1,570 

26 

1,690 

7.5 

8 

30 

1,960 

22 

1,680 

26 

1,820 

8 

10 

34 

2,640 

26 

2,200 

30 

2,  420 

10 

12 

38 

3,400 

26 

2,  720 

32 

3,060 

12 

12.5 

43 

3,615 

30 

2,870 

36 

3,240 

12.5 

13 

43 

3,830 

30 

3,020 

36 

3,420 

13 

14 

43 

4,260 

30 

3,320 

36 

3,780 

14 

15 

47 

4,730 

30 

3,620 

39 

4,170 

15 

16 

47 

5,200 

30 

3,920 

39 

4,560 

16 

18 

50 

6,200 

34 

4,000 

42 

5,400 

18 

20 

53 

7,260 

34 

5,280 

43 

6, 260 

20 

22 

56 

8,380 

38 

6,040 

47 

7,200 

22 

24 

59 

9,560 

38 

6,800 

49 

8,180 

24 

26 

59 

10,  740 

43 

7,660 

52 

9,220 

26 

28 

62 

11,980 

43 

8,  520 

52 

10,260 

28 

30 

62 

13, 220 

47 

9,460 

54 

11,340 

30 

32 

62 

14,  460 

47 

10,400 

54 

12, 420 

32 

34 

65 

15,760 

50 

11,400 

58 

13,  580 

34 

36 

65 

17,  060 

.50 

12,  400 

58 

14,  740 

36 

38 

65 

18, 360 

53 

13, 460 

58 

15,900 

38 

40 

69 

19,  740 

53 

14,  520 

62 

17,140 

40 

42 

69 

21, 120 

56 

15,640 

62 

18, 380 

42 

44 

69 

22,  500 

56 

16,  760 

62 

19,  620 

44 

46 

72 

23, 940 

59 

17, 940 

66 

20,  940 

46 

48 

72 

25,  380 

59 

19, 120 

66 

22,  260 

48 

50 

72 

26, 820 

59 

20,300 

66 

23,  580 

50 

52 

75 

28,  320 

59 

21,  480 

68 

24,  910 

52 

54 

75 

29, 820 

62 

22,  720 

68 

26,  300 

54 

56 

75 

31, 320 

62 

23,  960 

68 

27, 661) 

56 

58 

75 

32,  820 

62 

25,  200 

68 

29, 020 

58 

60 

75 

34, 320 

62 

26,  440 

68 

30, 380 

60 

62 

78 

35,  880 

62 

27,  680 

71 

31,800 

62 

64 

78 

37. 440 

62 

28,  920 

71 

33, 220 

64 

66 

78 

39, 000 

65 

30,  220 

71 

34,  640 

66 

68 

78 

40,  560 

65 

31,  520 

71 

36,  060 

68 

70 

78 

42, 120 

65 

32, 820 

71 

37,  480 

70 

72 

81 

43,  740 

65 

34, 120 

74 

38,  960 

72 

74 

81 

45, 360 

65 

35,420 

74 

40.440 

74 

75 

81 

46, 170 

65 

36, 070 

74 

41, 180 

75 

76 

81 

46, 980 

65 

36,  720 

74 

41, 920 

76 

78 

81 

48,600 

69 

38, 100 

74 

43,400 

78 

80 

81 

50,  220 

69 

39,  480 

74 

44, 880 

80 

82 

84 

51,900 

69 

40, 860 

76 

46, 400 

82 

84 

84 

53, 580 

69 

42, 240 

76 

47,  920 

84 

86 

84 

55, 260 

69 

43.  620 

76 

49, 440 

86 

88 

84 

56,940 

69 

45,  000 

76 

50,960 

88 

90 

84 

58, 620 

72 

46, 440 

76 

52, 480 

90 

92 

87 

60, 360 

72 

47,  880 

80 

54, 080 

92 

94 

87 

62, 100 

72 

49, 320 

80 

55,680 

94 

96 

87 

63,  840 

72 

50,  760 

80 

57,280 

96 

98 

87 

65,  580 

72 

52,200 

80 

58,880 

98 

100 

87 

67, 320 

72 

53, 640 

80 

60,480 

100 

150 

89 

111,820 

(        «' 

134, 040 

83 

101, 980 

150 

200 

90 

156,  820 

87 

145, 480 

200 

250 

91 

202, 320 

}               89 

223,  640 

90 

190, 480 

250 

300 

91 

247,  820 

90 

235,  480 

300 

4C0 

91 

338,  820 

90 

313, 640 

91 

326, 480 

400 

500 

91 

429, 820 

91 

404, 640 

91 

417,  480 

500 

750 

91 

657,  320 

91 

632, 140 

91 

644,  980 

750 

1,000 

91 

884.  820 

91 

859, 640 

91 

872,  480 

1,000 

1,500 

91 

1,339,820 

91 

1,314,640 

91 

1,327,480 

1,500 

2, 000 

91 

1,794,820 

91 

1,769,640 

01 

1.782,480 

2,000 

5,000 

91 

4,  524, 820 

91 

4,  499, 640 

91 

4,512,480 

5,000 

91 

91 

91 

Footnote  on  next  pace. 


EXHIBITS 


369 


Footnotes  for  table  IX. 

*  For  1913  through  1917,  the  surtax  was  called  "additional  tax."  Before  1934,  the  entire  net  income  was 
subject  to  surtax;  for  1934  and  thereafter,  there  is  allowed  as  a  credit  in  arriving  at  net  income  subject  to 
surtax,  the  sum  of  the  personal  exemption  and  credit  for  dependents. 

2  Tax  for  1923,  computed  at  these  rates,  was  reduced  25  percent  by  credit  or  refund  under  section  1200(a), 
Revenue  Act  of  1924. 

3  These  rates  are  a  combination  of  the  additional  tax  rates  provided  by  the  Revenue  Acts  of  1916  and  1917. 
<  For  1940  there  is  superimposed  upon  the  total  tax,  the  defense  tax,  which  is  10  percent  of  the  total  tax. 

The  defense  tax  is  computed  on  the  total  tax  before  applying  any  credits,  and  is  limited  to  an  amount  not 
more  than  10  percent  of  the  net  income  in  excess  of  the  total  tax  computed  without  regard  to  the  defense  tax. 
» Individual  Income  Tax  Act  of  1944. 

« The  combined  normal  tax  and  surtax  (before  deduction  of  credits  for  foreign  taxes,  taxes  withheld  at 
source,  and  taxes  withheld  on  wages)  was  limited  to  90  percent  of  net  income  for  the  taxable  years  1944  and 
1945;  85.5  percent  for  the  taxable  years  1946  and  1947;  77  percent  for  the  taxable  years  1948  and  1949;  80  percent 
for  the  taxable  year  1950;  87.2  percent  for  the  taxable  year  1951;  88  percent  for  the  taxable  years  1952  and  1953; 
and  87  percent  of  taxable  income  for  the  taxable  years  1954  through  1962. 
'  The  total  tentative  surtax  is  reduced  by  5  percent  to  determine  the  surtax, 
8  The  tentative  tax  is  reduced  by  the  following  to  determine  the  final  tax: 
If  the  tentative  tax  is:  The  reduction  in  tax  is: 

Not  over  $400 17  percent. 

Over  $400,  not  over  $100,000 68  percent  plus  12  percent  of  excess  over  $400. 

Over  $100,000 $12,020  plus  9.75  percent  of  excess  over  $100,000. 

'  The  tentative  tax  is  reduced  by  the  following  to  determine  the  final  tax: 
If  the  tentative  tax  is:  The  reduction  in  tax  is: 

Not  over  $400 13  percent. 

Over  $400,  not  over  $100,000 52  percent  plus  9  percent  of  excess  over  $400. 

O  ver  $100,000 $9,016  plus  7.3  percent  of  excess  over  $100,000. 

Table  X. — Earned  income  credit  under  the  revenue  acts  of  1913-54- 


Revenue  Act 

Income  year 

Kind  of  credit 

Earned  net  income  > 

Lunit  of  credit 

1913-21 

1913-23 

1924 

None 

1924 

Against  tax 

Against  tax 

Against  tax... 

None 

All  net  mcome  up  to  $5,000, 
whether  earned  or  not, 
and    up    to    $10,000,    if 
earned. 

All  net  income  up  to  $5,000, 
whether  earned  or  not, 
and    up    to    $20,000,    if 
earned. 

All  net  income  up  to  $5,000, 
whether  earned  or  not, 
and    up    to    $30,000,    if 
earned. 

25%  of  normal  tax  on  earned 

1926 

1925-27 

1928-31 

1932-33 

1934-43 

1944- 

net  income.  (Cannot  ex- 
ceed 25%  of  normal  tax  on 
entire  net  income.) 

25%  of  total  tax  on  earned 
net  income.  (Cannot  ex- 
ceed the  Slim  of  25%  of 
normal  tax  on  entire  net 
income  and  25%  of  surtax 
on  earned  net  income.) 

25%  of  total  tax  on  earned 

1928 

1932 

net  income.  (Cannot  ex- 
ceed the  sum  of  25%  of 
normal  tax  on  entire  net 
income  and  25%  of  surtax 
on  earned  net  income.) 

1934-42 

1943-54 

Against  net 
income. 

None 

All  net  income  up  to  $3,000, 
whether  earned  or  not, 
and    up    to    $14,000,    if 
earned. 

10%  of  the  earned  net  in- 
come, but  not  In  excess  of 
10%  of  the  entire  net  in- 
come. 

1  "Earned  income"  means  wages,  salaries,  professional  fees,  and  other  amounts  received  as  compensation 
for  personal  services  actually  rendered;  and  in  the  case  of  a  taxpayer  engaged  in  trade  or  business,  a  reason- 
able allowance  as  compensation,  not  in  excess  of  20  percent  of  his  share  of  the  net  profits. 


661496 — 63- 


-25 


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EXHIBITS  403 

International  Financial  and  Monetary  Developments 

Exhibit  29. — Statement  by  Secretary  of  the  Treasury  Dillon,  August  7,  1961,  at 
the  Special  Meeting  of  the  Inter-American  Economic  and  Social  Council,  Punta 
del  Este,  Uruguay 

It  was  a  great  American — Jose  Marti — who  reminded  us  that  "We  Americans 
are  one  in  origin,  in  hope,  and  in  danger." 

We  meet  today  in  fulfillment  of  that  concept,  brought  together  by  our  common 
origin,  fired  by  our  common  hopes,  determined  to  conquer  our  common  dangers. 

We  assemble  here  at  Punta  del  Este  to  chart  the  future  course  of  our  hemisphere. 
Upon  our  deliberations  and  decisions  rest  the  hopes  of  Americans  yet  to  come. 
What  we  are  able  to  accomplish  here  may  well  determine  whether  the  most 
cherished  values  of  our  civilization,  the  freedom  and  the  dignity  of  man,  are  to  be 
strengthened  and  expanded. 

This  is  a  revolutionary  task.  But  we  are  no  strangers  to  revolution.  From 
the  shores  of  the  Americas  almost  200  years  ago,  went  forth  the  call  to  freedom  and 
national  independence  which  today  guides  men's  actions  in  all  the  turbulent  con- 
tinents of  the  world. 

It  was  our  hemisphere  which  first  proved  that  men  could  rule  themselves,  that 
colonial  shackles  could  be  cast  off,  and  that  governments  could  be  the  instruments 
of  man's  liberty. 

This  was  the  spirit  of  our  revolution  and  of  the  revolutions  it  has  inspired.  It 
is  the  spirit  which  has  shaped  our  hemisphere.  It  is  the  spirit  of  our  continuing 
struggle  against  the  despotism  which  is  as  ancient  as  the  Pharaohs — no  matter 
what  new  form  it  may  assume  and  it  is  that  spirit — the  legacy  of  Artigas  and  San 
Martin,  of  Bolivar  and  Washington,  of  O'Higgina  and  Jose  Bonifacto,  which  guides 
our  actions  here  today. 

But  the  fruits  of  the  American  Revolution  have  not  yet  been  extended  to  all  our 
people.  Throughout  the  hemisphere  millions  still  live  with  hunger,  poverty,  and 
despair.  They  have  been  denied  access  to  the  benefits  of  modern  knowledge  and 
technology.  And  they  now  demand  those  benefits  for  themselves  and  for  their 
children. 

We  cannot  rest  content  until  these  just  demands  are  met.  And  it  is  our  pro- 
found conviction  that  they  can  be  met  only  by  free  men  working  within  a  frame- 
work of  free  institutions. 

That  is  what  the  Alliance  for  Progress  is  about.  It  is  a  bold  and  massive  effort 
to  bring  meaning  and  dignity  into  the  lives  of  all  our  people  to  demonstrate  to  the 
world  that  freedom  and  progress  walk  hand  in  hand. 

To  accomplish  this,  we  must  dedicate  ourselves  to  the  proposition  that  the 
decade  of  the  sixties  will  be  a  decade  of  democratic  progress — a  period  which  will 
witness  great  forward  strides  in  the  development  of  Latin  America — a  period  in 
which  all  our  nations  will  greatly  advance  the  standard  of  living  of  their  peoples. 

Underlying  the  effort  we  must  make  are  certain  basic  principles: 

First,  no  developing  nation  can  progress  unless  it  makes  heroic  efforts  to  summon 
its  people  to  the  task  of  development,  unless  it  dedicates  a  larger  proportion  of 
domestic  resources  to  the  common  effort,  and  unless  it  calls  upon  all  groups  in  the 
society  to  make  fresh  and  larger  contributions  to  the  cause  of  national  progress. 

Second,  developing  countries  need  national  programs  of  economic  and  social 
development,  programs  which  set  forth  goals  and  priorities  and  ensure  that 
available  resources  are  used  in  the  most  effective  manner.  Long-term  develop- 
ment plans  can  greatly  speed  the  process  of  growth. 

Third,  national  development  programs  must  recognize  the  right  of  all  the 
people  to  share  fully  in  the  fruits  of  progress.  For  there  is  no  place  in  our  demo- 
cratic life  for  institutions  which  benefit  the  few  while  denying  the  needs  of  the 
many. 

We  welcome  the  revolution  of  rising  expectations  among  our  peoples,  and  we 
intend  to  transform  it  into  a  revolution  of  rising  satisfactions. 

To  carry  out  these  principles  will  often  require  difficult  and  far-reaching  changes. 
It  will  require  a  strengthening  of  tax  systems  so  that  would-be  evaders  will  know 
they  face  strict  penalties,  and  so  that  taxes  are  assessed  in  accordance  with  ability 
to  pay.  It  will  require  land  reform  so  that  under-utilized  soil  is  put  to  full  use  and 
so  that  farmers  can  own  their  own  land.  It  will  require  lower  interest  rates  on 
loans  to  small  farmers  and  small  business.     It  will  require  greatly  increased 


404   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

programs  of  education,  housing,  and  health.  And  for  the  United  States  it  will 
require  a  clear  acceptance  of  further  responsibilities  to  aid  our  sister  republics. 

We  can  press  forward  with  industrialization  to  help  modernize  our  economies 
and  provide  employment  for  our  rapidly  growing  urban  populations. 

We  can  establish  a  society  in  which  no  man  wants  for  food,  and  all  have  access 
to  education. 

We  can  clear  away  city  slums  and  wipe  out  disease  by  making  full  use  of  the 
wonders  of  modern  medicine. 

We  can  eliminate  the  poverty  which  burdens  our  farmers,  and  make  it  possible 
for  every  man  to  own  the  land  he  works. 

We  can  do  away  with  the  social  and  economic  injustice  which  undermines  free 
political  institutions. 

All  this  and  more  is  within  our  power  if  we  dedicate  the  creative  energies  of  free 
men  to  the  cause  of  progress. 

This  is  what  President  Kennedy  meant  by  his  call  for  an  Alliance  for  Progress. 

Mr.  Chairman:  Here  at  Punta  del  Este  there  lies  before  us  the  opportunity  to 
create  a  solid  framework  of  inter-American  cooperation  to  carry  forward  the 
Alliance  for  Progress.  To  build  that  framework  we  must,  here  and  now,  chart 
the  course  we  are  determined  to  follow  in  the  decade  of  the  sixties. 

Let  us  establish  the  economic  and  social  goals  we  shall  pursue  in  the  next  ten 
years. 

Let  us  determine  to  prepare,  as  rapidly  as  possible,  comprehensive,  long-term 
national  development  programs,  meanwhile  going  ahead  at  full  speed  with  urgent 
development  projects  and  measures  that  are  ready  for  consideration. 

Let  us  greatly  strengthen  our  inter-American  machinery  for  economic  and  social 
progress,  harnessing  our  best  talents  in  the  service  of  developments. 

Let  us  concert  our  policies  to  expand  world  markets  for  our  exports  and  to  bring 
greater  stability  to  our  foreign  exchange  earnings. 

Let  us  move  ahead  with  economic  integration  in  Latin  America,  releasing  the 
powerful  stimulus  which  this  movement  can  give  to  the  development  process. 

Let  us  also  build  a  great  common  market  of  intellectual,  cultural,  and  scientific 
interchange.  For  this  will  forge  indissoluble  ties  among  our  peoples  to  their 
mutual  enrichment. 

My  delegation  is  prepared  to  discuss  in  detail  these  essentials  of  the  Alliance  for 
Progress.  Meanwhile,  I  wish  to  make  certain  observations  on  some  of  the  more 
important  of  them : 

It  has  been  suggested  by  the  group  of  experts  that  a  major  goal  of  national 
development  programming  should  be  the  achievement  of  a  substantial  and 
sustained  increase  in  per  capital  growth  rates,  the  target  for  any  Latin  American 
country  to  be  set  at  not  less  than  2}^  percent  per  year,  which  means  an  average 
overall  growth  rate  of  better  than  5  percent. 

My  Government  is  in  agreement  with  this  concept.  Moreover,  we  believe  that 
this  goal  is  attainable.  Growth  rates  have  not  been  adequate  in  the  past;  we  can 
and  must  do  better. 

But  this  requires  the  will  to  devote  adequate  internal  resources  to  development 
and  to  do  so  wisely  in  accordance  with  well  conceived  plans  and  programs.  If 
this  is  done  the  vital  supplement  of  external  resources  will  be  available. 

In  his  message  to  this  Conference  on  Saturday,  President  Kennedy  pledged  the 
full  support  of  the  United  States  and  pointed  out  that  public  assistance  from 
United  States  to  Latin  America  has  already  been  increased  to  an  annual  rate  of 
more  than  one  billion  dollars — three  times  last  year's  amount. 

This  is  a  measure  of  our  continuing  devotion  to  the  concepts  of  the  Alliance  for 
Progress.  Furthermore,  it  is  our  intention  that  future  development  loans  made 
by  our  new  aid  agency  will  be  on  a  long-term  basis  running  where  appropriate  up 
to  fifty  years.  We  also  intend  to  make  the  bulk  of  these  loans  at  very  low  or  zero 
rates  of  interests. 

Looking  to  the  years  ahead,  and  to  all  sources  of  external  financing — from 
international  institutions,  from  Europe  and  Japan  as  well  as  from  North  America, 
from  new  private  investment  as  well  as  from  public  funds — Latin  America,  if  it 
takes  the  necessary  internal  measures,  can  reasonably  expect  its  own  efforts  to 
be  matched  by  an  inflow  of  capital  during  the  next  decade  amounting  to  at  least 
twenty  billion  dollars.  And  most  of  this  will  come  from  public  sources.  The 
problem,  I  am  convinced,  will  no  longer  lie  in  shortages  of  external  capital,  but 
in  organizing  effective  development  programs  so  that  both  domestic  and  foreign 
capital  can  be  put  to  work  rapidly,  wisely,  and  well. 


EXHIBITS  405 

In  these  programs  education  must  receive  a  high  priority.  Our  goal  must  be 
to  insure  that  a  decade  from  now  every  Latin  American  youngster  who  reaches 
the  age  of  12  is  able  to  read,  write,  and  do  simple  arithmetic.  These  tools  will 
give  him  access  to  the  great  storehouse  of  human  knowledge  and  will  open  the 
road  to  self-improvement. 

It  therefore  behooves  all  nations  in  the  hemisphere — even,  and  perhaps 
especially,  the  poorest — to  enlarge  the  share  of  national  income  devoted 
to  education. 

Along  with  greater  financial  support,  our  educational  institutions  require 
far-reaching  reforms — and  I  include  those  of  my  own  country.  Curriculums 
must  be  brought  up  to  date,  and  techniques  of  teaching  and  learning  must  likewise 
be  modernized. 

A  task  force  on  education  should  be  created  immediately.  Such  a  task  force 
can  be  the  needed  catalyst  to  rapid  progress  on  the  education  front.  It  can 
clarify  the  educational  needs  of  each  country  including  manpower  requirements. 
It  can  establish  priorities  for  meeting  these  needs. 

In  addition  to  education,  our  agenda  looks  toward  the  formulation  of  detailed 
policies  and  recommendations  in  a  number  of  other  specialized  fields,  including 
investment  programming,  industrialization,  agricultural  improvement,  and 
public  health.  I  hope  that  this  Conference  will  call  upon  the  Secretary-General 
of  the  Organization  of  American  States  (OAS)  to  promptly  establish  task  forces 
to  consider  these  problems. 

I  believe  it  is  especially  urgent  to  set  up  a  task  force  on  land  reform.  Such  a 
task  force  could  recommend  the  measures  required  to  bring  about  the  great  in- 
crease in  agricultural  productivity  which  we  must  have,  while  at  the  same  time 
assuring  that  the  benefits  of  this  productivity  are  available  to  all  who  work  the 
land.  This  may  often  mean  not  only  the  settlement  of  public  lands  but  also  the 
redistribution  of  under-used  latifundia.  It  will  also  mean  a  whole  host  of  new 
techniques,  including  expanded  credit  facilities,  the  promotion  of  cooperatives, 
and  provision  of  effective  extension  services. 

The  United  States  is  prepared  to  finance  inter-American  task  forces  in  these 
various  fields  to  elaborate  the  specific  and  concerted  actions  which  countries  need 
to  consider  in  drawing  up  their  programs. 

In  the  vitally  important  fields  of  tax  administration  and  tax  structure,  two 
conferences  have  already  been  arranged  for  this  fall  and  next  spring  under  the 
auspices  of  the  Organization  of  American  States  (OAS)  and  Economic  Commission  tor 
L,atin  America  (ECLA).  We  believe  that  this  meeting  should  endorse  the  purposes  of 
these  conferences.  Their  results  could  prove  to  be  of  enormous  help  in  mobilizing 
the  resources  required  for  economic  and  social  progress. 

Low  cost  housing  is  another  vital  ingredient  of  the  Alliance  for  Progress. 
We  congratulate  the  Inter-American  Development  Bank  (IDB)  for  its  prompt 
action  in  utilizing  funds  from  the  social  progress  trust  fund  to  finance  housing 
projects  in  Panama  and  Venezuela,  as  well  as  for  the  loan  just  announced  to  help 
small  farmers  in  El  Salvador.  The  United  States  believes  that  an  immediate  and 
large-scale  program,  perhaps  as  much  as  100  million  dollars,  for  aided  self-help 
housing  would  be  a  wise  investment  of  the  funds  provided  to  the  IDB  by  the 
United  States  under  the  Social  Progress  Trust  Agreement. 

Enlarged  expenditures  for  economic  and  social  progress  call  for  the  reduction 
of  needless  or  mxurious  expenditures  for  other  purposes.  It  is  time  we  brought 
these  considerations  to  bear  on  military  expenditures  in  considering  the  competing 
demands  of  development  and  inter-American  defense.  As  ministers  of  finance 
or  economy  we  need  to  encourage  those  responsible  for  our  common  defense 
to  engage  in  the  critical  review  required  to  avoid  imbalances  between  military 
and  other  expenditures.  The  Inter- American  Defense  Board  can  give  invaluable 
assistance  in  identifying  essential  requirements  for  defense  against  both  direct 
and  indirect  aggression. 

One  important  element  in  the  proposed  new  structure  of  inter-American 
cooperation  is  the  Committee  on  Development  Plans.  A  special  committee 
of  highly  qualified  and  experienced  experts  could  review  national  development 
programs  in  close  consultation  with  the  governments  concerned  and  provide 
independent  evaluations  which  would  be  helpful  in  enlisting  the  support  of  other 
governments  and  international  institutions. 

Such  a  committee  would  not  interfere  with  the  responsibility  of  each  national 
government  to  formulate  its  own  targets,  priorities,  and  measures  for  national 
development.     But  it  would  be  an  instrument  of  great  value  in  facilitating  the 


406   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

systematic  and  sustained  provision  of  outside  assistance  for  soundly  conceived 
progress.  The  details  of  its  membership,  staffing,  location,  relations  with  the 
Inter-American  Development  Bank,  and  other  such  matters,  are  all  matters 
for  our  working  committees  to  settle. 

If  a  body  of  highly  qualified  and  impartial  experts  is  established,  my  own 
Government  would  expect  its  recommendations  to  be  of  great  importance  in 
determining  the  allocation  of  our  own  resources  to  Latin  America  for  development 
purposes.  We  would  also  expect  other  friendly  governments  which  are  potential 
suppliers  of  capital,  together  with  the  international  institutions  in  which  we 
participate,  to  accept  these  expert  recommendations  as  a  major  factor  in  their 
decisions  on  aid  for  Latin  America. 

Continued  and  steady  economic  growth  demands  a  solid  basis  in  expanding 
trade.  The  development  of  measures  to  stabihze,  strengthen,  and  enlarge  the 
markets  for  Latin  American  exports  must  therefore  be  an  integral  part  of  the 
Alliance  for  Progress.  The  United  States  is  ready  to  cooperate  in  seeking  work- 
able solutions  for  commodity  problems  and  to  give  its  support  to  the  activities 
of  the  various  international  bodies  in  this  field. 

The  most  urgent  and  important  commodity  problem  confronting  the  coun- 
tries of  Latin  America  is  that  of  coflFee.  A  solution  to  this  problem  must  be 
found.  The  current  coffee  situation  results  in  a  needless  drain  on  resources  and 
is  a  tlu-eat  to  the  economic  well-being  and  stability  of  14  nations  of  the  hemisphere. 

The  weakness  of  the  existing  coffee  agreement  is  twofold: 

Its  membership  has  been  limited  to  exporters  only. 

And  it  has  not  been  possible  to  make  its  export  quotas  fully  effective. 

We  believe  that  an  entirely  new  agreement  is  needed.  For  if  export  earnings 
of  the  coffee  producing  countries  are  to  be  safeguarded,  quotas  must  be  geared 
to  actual  consumption  and  must  be  enforceable.  The  United  States  is  prepared 
to  join  a  workable  coffee  agreement,  to  use  its  good  offices  to  urge  the  participa- 
tion of  other  consuming  countries,  and  to  help  in  the  enforcement  of  export 
quotas  through  the  use  of  import  controls.  We  all  know  that  any  lasting  stabil- 
ization of  prices  will  also  require  courageous  programs  to  deal  effectively  with 
overproduction. 

When  the  coffee  study  group  meets  in  September,  the  United  States  will  propose 
that  a  new  agreement  be  drafted  to  achieve  these  ends. 

Tin  is  another  commodity  of  importance  to  this  hemisphere.  In  order  to 
strengthen  and  support  the  international  tin  agreement  we  plan  to  discuss  with 
the  Tin  Council,  at  an  early  date,  the  terms  of  possible  United  States  accession 
to  the  agreement. 

We  also  believe  that  the  proposal  in  the  report  of  the  group  of  experts  for  an 
export  receipts  stabilization  fund  is  worthy  of  careful  study.  It  offers  promis- 
ing possibilities  even  though  there  are  many  technical  and  policy  issues  regarding 
the  scope,  functions  and  financing  of  the  suggested  fund  which  must  be  carefully 
weighed.  In  the  third  committee  my  delegation  will  propose  the  appointment 
of  a  task  force  to  meet  promptly  after  this  Conference  to  explore  the  plan  in 
detail  and  make  appropriate  recommendations. 

I  turn  now  to  the  economic  integration  of  Latin  America.  Four  countries  of 
Central  America  have  agreed  upon  a  full  customs  union  with  internal  free  trade 
for  substantially  all  their  production.  Their  bold  and  decisive  action  commands 
our  admiration.  We  are  confident  that  it  will  open  the  way  to  their  accelerated 
development. 

The  ratification  of  the  Montevideo  Treaty  establishing  the  Latin  American 
Free  Trade  Association  is  another  significant  milestone  along  the  road  to  a  Latin 
American  common  market.  It  is  our  hope  that  its  members  will  find  it  possible 
to  expand  rapidly  the  lists  of  products  which  are  to  be  traded  freely  so  that  the 
full  benefits  of  integration  can  be  realized. 

The  United  States  is  deeply  conscious  of  the  concern  in  many  Latin  American 
countries  for  the  future  of  their  export  markets  in  the  European  Economic 
Community.  That  Community  has  committed  itself  to  a  liberal  commercial 
policy.  All  of  us  in  the  Western  Hemisphere  have  the  right  to  expect  that  this 
commitment  will  be  honored.  In  addition  to  protecting  our  own  commercial 
interests,  the  United  States  will  continue  to  urge  upon  the  Community  the  impor- 
tance of  fair  treatment  for  exports  of  special  interest  to  Latin  America  and  other 
developing  areas.  I  think  this  conference  should  know  that  in  recent  weeks 
the  United  States  has  proposed  to  the  Community  the  adoption  of  a  program 
to  eliminate  the  tariff  preferences  on  tropical  products  now  accorded  the  Asso- 
ciated Overseas  Territories.     Furthermore,  we  have  informed  the  Community 


EXHIBITS  407 

that  we  are  prepared  to  give  financial  support  to  such  a  program.  We  will 
continue  to  press  this  proposal. 

Mr.  President,  we  are  met  here  at  an  eastern  outpost  of  a  great  and  rich  con- 
tinent. Across  that  continent  live  millions  of  people  struggling  to  break  the 
bonds  which  chain  them  to  lives  of  endless  toil,  of  disease,  and  hunger  and  hope- 
less poverty.  We  are  here  to  help  them  break  those  bonds — to  build  the  founda- 
tions on  which  will  rise  a  new  hemisphere — a  hemisphere  where  human  freedom 
flourishes  in  lands  of  hope  and  progress. 

We  approach  this  task  with  full  knowledge  of  its  vast  dimensions — of  the 
enormity  of  the  struggle  which  lies  ahead.  But  we  also  approach  it  with  sure 
confidence  in  the  unconquerable  powers  of  free  men,  and  with  faith  in  the  God 
who  has  guided  us  so  surely  through  the  dangers  of  the  past. 

Working  together — with  His  help — I  am  confident  we  will  succeed. 


ExmBiT  30. — Statement  by  Secretary  of  the  Treasury  Dillon,  August  23,  1961, 
before  the  Senate  Appropriations  Committee  in  support  of  the  President's 
foreign  aid  program 

It  is  a  privilege  to  appear  before  this  committee  in  behalf  of  the  appropriations 
requested  by  the  President  under  the  foreign  aid  legislation  submitted  by  him 
to  the  Congress.  I  wish  to  report  on  the  recent  Alliance  for  Progress  meeting 
at  Punta  del  Este,  but  first  I  would  like  to  comment  on  the  major  financial  aspects 
of  the  economic  aid  program,  which  are  my  responsibility  as  Secretary  of  the 
Treasury  and  Chairman  of  the  National  Advisory  Covmcil  on  International 
Monetary  and  Financial  Problems.  As  Secretary  of  the  Treasury,  I  have  the 
responsibility  for  financing  approved  Government  programs. 

It  is  precisely  because  of  this  heavy  responsibility  that  I  hope  my  belief  that 
an  adequate  and  soundly  conceived  foreign  economic  assistance  program  merits 
high  priority  as  one  of  our  most  pressing  national  needs  will  carry  some  weight 
with  this  committee.  The  program  which  forms  the  basis  of  the  appropriations 
request  is  soundly  conceived.  It  is  responsive  to  our  national  need  for  an  ade- 
quate foreign  aid  program.  It  is  essential  to  our  own  security  and  well-being 
and  that  of  the  entire  free  world. 

Moreover,  it  is  a  program  the  United  States  can  afford.  The  President  re- 
quested a  total  of  $2,878  million  in  fiscal  1962  for  the  Act  for  International 
Development.  In  addition,  the  military  assistance  request  for  1962  amounted 
to  $1,885  million.  This  made  up  an  overall  program  of  $4,763  million,  excluding 
funds  carried  over  from  previous  years'  appropriations.  The  total  cost  of  the 
program  amounted  to  less  than  one  percent  of  our  gross  national  product,  a 
figure  well  within  the  capacity  of  our  economy. 

The  Senate  has  voted  to  reduce  the  authorization  for  the  Act  for  International 
Development  by  slightly  more  than  $350  million,  and  also  to  curtail  military 
assistance  by  $335  million.  The  total  authorized  by  the  Senate  bill  for  the 
fiscal  year  1962  is  $4,076,500,000,  nearly  $700  million  below  the  amount  requested 
by  the  President.  This  substantially  reduced  amount  is  even  more  clearly 
within  the  capacity  of  our  economy. 

I  am  only  too  well  aware  that  there  are  some  who  single  out  this  program  and 
seek  to  attribute  to  it  alone  the  prospective  excess  of  expenditures  over  receipts 
in  the  overall  budget  for  fiscal  1962.     This,  of  course,  is  not  the  case. 

For  as  this  committee  knows,  only  a  fraction  of  the  new  request  for  funds  will 
result  in  expenditures  during  fiscal  1962.  Estimated  expenditures  under  this 
and  previous  foreign  economic  aid  programs  in  1962  are  $1,950  million.  To- 
gether with  military  aid  expenditures  this  means  a  total  of  $3,650  million,  approxi- 
mately the  same  as  the  estimate  contained  in  the  budget  presented  to  the  Congress 
by  President  Eisenhower.  Expenditures  in  ensuing  years  will,  of  course,  be 
taken  into  account  in  the  presentation  of  the  budgets  for  those  years. 

On  the  revenue  side  of  our  budget,  income  in  the  current  fiscal  year  will  still 
substantially  reflect  the  recession  level  earnings  of  the  first  half  of  calendar  1961. 
Principally  because  of  increased  defense  expenditures  and  reduced  recession 
revenues,  an  excess  of  expenditures  over  receipts  amounting  to  over  $5  billion 
has  been  estimated  for  fiscal  1962.  Parenthetically,  I  might  say  that  this  is  not 
at  all  unusual  in  the  year  immediately  following  a  period  of  recession.  Moreover, 
our  unused  plant  capacity  and  our  excessive  unemployment  will  prevent  the 
budget  deficit  we  face  in  the  current  fiscal  year  from  having  inflationary  results. 


408   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Looking  forward  to  fiscal  1963,  our  revenues  are  expected  to  increase  substantially 
and  we  anticipate  that  a  balanced  budget  can  be  achieved  without  a  tax  increase. 
Now,  you  may  well  ask,  what  is  the  relationship  of  the  foreign  economic  assist- 
ance program  to  our  balance  of  payments?  This  is  a  matter  that  especially 
interests  me  as  Secretary  of  the  Treasury.  The  program  proposed  is  consistent 
with  our  efforts  to  achieve  and  sustain  overall  balance  in  our  international  pay- 
ments. I  wish  to  emphasize  that  it  is  the  form  in  which  aid  is  extended,  rather 
than  the  amount  to  be  provided,  that  is  most  relevant  to  this  question.  Under 
the  new  program,  as  at  present,  we  will  continue  to  place  primary  emphasis  on 
the  purchase  of  United  States  goods  and  services  by  aid  recipients.  The  pre- 
ponderant bulk  of  foreign  aid  expenditures  will  be  made  in  the  United  States. 
Such  expenditures,  which  are  accompanied  by  American  exports,  have  no  adverse 
impact  on  our  balance  of  payments.  The  fact  that  foreign  assistance  has  been 
largely  accompanied  by  an  outflow  of  American  exports  is  not  well  understood 
by  those  who  seek  to  cure  our  balance-of-payments  deficit  by  curtailing  foreign 
economic  assistance. 

For  as  long  as  our  international  payments  situation  requires,  in  administering 
the  Act  for  International  Development,  insofar  as  the  procurement  of  goods  and 
services  is  involved,  our  objective  will  be  to  reserve  between  75  and  80  percent  of 
the  available  funds  for  procurement  of  United  States  goods  and  services.  Because 
of  earlier  commitments,  this  goal  cannot  be  achieved  immediately,  but  our  efforts 
in  this  direction  will  have  an  increasingly  favorable  effect  on  our  balance-of-pay- 
ments position. 

It  is  not  in  every  case  practicable  or  even  desirable  to  require  that  foreign 
assistance  funds  be  limited  exclusively  to  the  procurement  of  United  States  goods 
and  services.  In  some  cases,  particular  commodities  financed  by  aid  dollars  are 
not  available  in  the  United  States,  or  may  not  be  available  here  in  the  time  re- 
quired. Also,  there  are  certain  situations  that  sometimes  require  the  transfer 
of  aid  through  cash  grants,  a  part  of  which  is  ultimately  spent  for  the  goods  of 
other  countries.  Nevertheless,  through  our  procurement  policy  we  will  hold  to  a 
minimum  any  adverse  effect  of  aid  spending  on  our  balance-of-payrnents  situation. 
I  am  satisfied  that  the  present  directives  are  adequate  to  assure  this  result. 

As  you  know,  I  have  just  returned  from  Punta  del  Este,  Uruguay,  where  I  led 
the  delegation  of  the  United  States  to  the  Special  Meeting  at  ministerial  level  of 
the  Inter-American  Economic  and  Social  Council. 

At  this  meeting,  agreement  was  reached  on  the  Charter  of  Punta  del  Este, 
establishing  an  Alliance  for  Progress  among  the  American  Republics. 

The  Charter  of  Punta  del  Este  will  become  a  landmark  in  the  history  of  the 
Western  Hemisphere.  It  provides  in  full  measure  for  those  principles  of  self-help 
which  are  essential  to  economic  and  social  progress  in  Latin  America — for  tax 
reform  and  land  reform,  for  .self-help  measures  in  education,  health  and  housing, 
for  the  mobilization  of  domestic  resources  with  the  full  participation  of  private 
enterprise. 

It  also  provides  for  the  establishment  by  the  Latin  American  countries  of  com- 
prehensive, long-term  programs  for  economic  and  social  development,  with  strong 
inter-American  machinery  to  assist  in  the  formulation  of  these  programs,  evaluate 
their  adequacy  and  follow  their  progress  and  execution.  Such  programs  are 
essential  to  the  intelligent  use  of  economic  resources  in  the  development  process. 

The  charter  also  makes  provision  for  foreign  assistance  to  Latin  America  from 
the  United  States,  from  the  international  financial  institutions,  and  from  other 
friendly  countries. 

Copies  of  the  charter  and  the  related  declaration  have  been  made  available 
to  members  of  the  committee  for  their  examination. 

While  at  Punta  del  Este  I  followed  closely  the  reports  on  the  Conference  which 
appeared  in  the  American  press.  Some  of  these  reports,  having  been  filed  during 
the  uncertainties  and  confusions  which  inevitably  surround  the  progress  of  an 
important  international  Conference,  were  erroneous  with  respect  to  U.S.  commit- 
ments for  foreign  assistance.  I  would  like  therefore  to  clarify  this  matter  for  the 
information  of  the  committee. 

There  are  three  sections  of  the  charter  which  relate  to  the  provision  of  external 
capital  to  Latin  America  to  support  Latin  America's  own  development  efforts. 

The  first  of  these  three  sections  appears  in  title  II,  chapter  I  of  the  charter  set- 
ting forth  the  basic  requirements  for  development.  Paragraph  4  of  this  chapter 
states  that,  in  order  to  achieve  development  goals,  it  will  be  necessary: 

"That  the  Latin  American  countries  obtain  sufficient  external  financial  as- 
sistance, a  substantial  portion  of  which  should  be  extended  on  flexible  conditions 


EXHIBITS  409 

with  respect  to  periods  and  terms  of  repayment  and  forms  of  utilization,  in  order 
to  supplement  domestic  capital  formation  and  reinforce  their  import  capacity; 
and  that,  in  support  of  well-conceived  programs,  including  the  necessary  structural 
reforms  and  measures  for  the  mobilization  of  internal  resources,  a  supply  of  capital 
from  all  external  sources  during  the  coming  ten  years  of  at  least  $20  billion  be 
made  available  to  the  Latin  American  countries,  with  priority  to  the  relatively 
less-developed  countries.     The  greater  part  of  this  sum  should  be  in  public  funds." 

The  estimate  of  $20  billion  in  capital  assistance  to  Latin  America  over  the  next 
10  years  from  all  external  sources,  public  and  private,  including  the  international 
institutions  and  other  industrialized  countries,  as  well  as  the  United  States  is  in 
my  judgment  a  minimum  estimate  from  the  viewpoint  of  Latin  American  needs 
and  a  conservative  estimate  from  the  viewpoint  of  the  ability  of  the  outside  world 
to  supply  it.  Given  adequate  self-help  measures  a  supply  of  outside  capital  of 
about  $2  billion  a  year  would  still  mean  that  80  percent  or  more  of  total  re- 
sources for  development  in  Latin  America  must  be  provided  by  the  Latin 
Americans  themselves.  This  they  fully  realize  and  they  are  prepared  to  un- 
dertake the  necessary  self-help  efforts  that  will  be  involved. 

The  second  provision  of  the  charter  relating  to  external  assistance,  title  II, 
chapter  III,  deals  with  emergency  and  short-term  measures,  including  the  com- 
pletion of  development  projects  already  under  way,  measures  to  assist  distressed 
areas  and  relieve  unemployment  and  the  beginning  steps  which  must  be  taken  now 
to  formulate  long-term  development  programs  within  a  reasonable  time.  Para- 
graphs 1  and  3  of  this  chapter,  dealing  with  United  States  assistance  reads  as 
follows: 

"1.  Recognizing  that  a  number  of  Latin  American  countries,  despite  their 
best  efforts,  may  require  emergency  financial  assistance,  the  United  States  will 
provide  assistance  from  the  funds  which  are  or  may  be  established  for  such  pur- 
poses. The  United  States  stands  ready  to  take  prompt  action  on  applications 
for  such  assistance.  Applications  relating  to  existing  situations  should  be  sub- 
mitted within  the  next  (30  days. 

"3.  The  United  States  will  assist  in  the  realization  of  these  short-term  measures 
with  a  view  to  achieving  concrete  results  from  the  Alliance  for  Progress  at  the 
earliest  possible  moment.  In  connection  with  the  measures  set  forth  above,  and 
in  accordance  with  the  statement  of  President  Kennedy,  the  United  States  will 
provide  assistance  under  the  Alliance,  including  assistance  for  the  financing  of 
short-term  measures,  totaling  more  than  $1  billion  in  the  year  ending  March 
1962." 

The  reference  to  U.S.  public  assistance  of  more  than  $1  billion  during  the  year 
ending  March  1962  was  based  upon  President  Kennedy's  message  to  the  Con- 
ference and  my  opening  speech.  It  includes  U.S.  assistance  in  all  forms  for  the 
12  months  ending  next  March — increased  Export-Import  Bank  loans,  anticipated 
expenditures  from  the  Social  Progress  Fund  already  appropriated  by  the  Congress, 
P.L.  480,  and  both  development  lending  and  contingency  assistance  provided  for 
in  the  foreign  aid  bill  now  before  the  Congress.  This,  again,  is  a  minimum  esti- 
mate of  the  funds  which  should  be  obligated  by  the  United  States  for  Latin 
America  if  the  Alliance  for  Progress  is  to  get  off  to  a  good  start. 

The  third  provision  in  the  charter  relating  to  U.S.  financial  assistance  is  based 
upon  President  Kennedy's  address  of  March  13,  1961.  It  states  in  paragraph 
2  of  chapter  IV,  that: 

"2.  The  United  States  will  assist  those  participating  countries  whose  develop- 
ment programs  establish  self-help  measures,  economic  pohcies  and  programs 
consistent  with  the  goals  and  principles  of  this  Charter.  To  supplement  the 
domestic  efforts  of  such  countries,  the  United  States  is  prepared  to  allocate 
resources  which,  along  with  those  anticipated  from  other  external  sources,  will 
be  of  a  scope  and  magnitude  adequate  to  realize  the  goals  envisaged  in  this 
Chapter.  Such  assistance  will  be  allocated  to  both  social  and  economic  develop- 
ment, and,  where  appropriate,  will  take  the  form  of  grants  or  loans  on  flexible 
terms  and  conditions.  The  participating  countries  will  request  the  assistance  of 
other  capital-exporting  countries  and  international  institutions  so  that  they 
may  provide  assistance  for  the  attainment  of  these  objectives." 

This  provision  is  an  overall  promise  by  the  United  States  that  if  the  Latin 
American  countries  do  their  part,  and  if  our  friends  and  allies  in  other  indus- 
trialized countries  will  also  participate,  we,  the  United  States,  stand  ready  to  do 
our  part  also.  This  mutual  dedication  to  our  common  goals  is  the  heart  of  the 
Alliance  for  Progress. 


410   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

In  closing,  Mr.  Chairman,  I  wish  to  add  a  word  about  the  effect  of  these  com- 
mitments on  our  balance  of  payments.  I  am  satisfied  that  our  payments  situa- 
tion will  be  amply  protected  and  will  not  be  worsened.  The  major  part  of  the 
funds  to  be  provided  by  the  United  States  is  already  being  extended  by  methods 
which  assure  their  expenditure  in  the  United  States,  as  is  the  case  with  Export- 
Import  Bank  loans  and  P.L.  480,  and  with  a  substantial  part  of  the  funds  under 
the  new  aid  legislation.  Due  to  the  nature  of  expenditures  under  the  Social 
Progress  Fund,  a  somewhat  larger  part  of  the  overall  aid  total  may  be  spent  for 
local  costs  in  Latin  America  than  is  the  case  with  other  aid  programs,  but  in  any 
event  these  expenditures  will  enhance  the  ability  of  Latin  America  to  buy  goods 
and  services  from  their  normal  United  States  supphers. 


^1 


Exhibit  31, — Remarks  by  Secretary  of  the  Treasury  Dillon,  November  30,  1961, 
at  the  Inter-American  Economic  and  Social  Council  of  the  Organization  of 
American  States 

It  is  a  great  pleasure  to  be  present  at  this  first  meeting  of  the  Inter- American 
Economic  and  Social  Council  to  take  formal  steps  toward  implementing  the 
Alliance  for  Progress. 

This  is  not  an  occasion  for  vivid  pronouncements.  It  is  a  working-level  meeting. 
In  that  sense,  it  is  truly  representative  of  the  entire  spirit  of  the  Alliance,  for 
success  in  our  efforts  will  depend  upon  our  resolution  and  our  willingness  to  work 
to  achieve  it. 

The  United  States  is  doing  its  part.  We  have  promised  more  than  a  billion 
dollars  of  governmental  assistance  for  the  first  year  of  the  Alliance  which  ends 
March  13,  and  we  have  already  committed  more  than  $800  million  of  that  amount. 
That  $800  million  includes,  in  approximate  amounts:  $390  miUion  in  Export- 
Import  Bank  loans  for  development  and  related  purposes;  $250  million  for 
technical  assistance,  development  loans  and  grants  under  the  Agency  for  Inter- 
national Development;  $78  million  for  housing,  community  development,  rural 
credit  and  other  projects  under  the  Social  Progress  Trust  Fund,  administered 
by  the  Inter-American  Development  Bank,  and  $94  million  in  U.S.  agricultural 
commodities  under  the  food  for  peace  program. 

So  we  are  well  on  the  way  toward  making  good  our  commitment  for  the  year. 
We  know  that  over  the  10-year  span  of  the  Alliance,  Latin  America  will  need  at 
least  $20  billion  in  external  resources  to  foster  growth  and  development.  This 
figure  includes  private,  as  well  as  public  investment,  and  while  we  expect  to 
provide  the  major  part  of  it,  substantial  amounts  will  also  be  expected  from  other 
industrialized  nations  and  from  international  lending  institutions. 

But  dollars  don't  mean  development.  At  the  very  outset,  our  opportunity 
for  success  can  be  wiped  out,  and  the  hope  of  the  hemisphere  can  be  betrayed, 
if  we  assume  that  the  AUiance  for  Progress  is  no  more  than  a  loan  program. 
It  is,  and  will  be,  far  more.  Loans  there  will  certainly  be.  But  we  have  no 
intention,  now  or  later,  of  making  loans  for  other  than  sound  reasons  of  develop- 
ment or  need.  At  Punta  del  Este,  we  agreed  that  this  was  to  be  a  genuine  alliance, 
with  full  cooperation  and  matched  effort,  and  that  the  other  Republics  would 
make  their  own  entry  into  the  decade  of  development.  We  will  be  a  partner  in 
hemispheric  progress,  but  we  do  not  intend,  and  in  fact  we  cannot,  carry  the 
whole  load.  Fully  80  percent  of  the  resources  needed  to  move  the  hemisphere 
into  the  twentieth  century  must  come  from  Latin  America  itself. 

But  that  is  not  all.  The  most  important  part  of  the  entire  effort  is  the  overall 
administrative  progress,  including  both  land  and  tax  reforms,  that  our  fellow 
members  of  the  Alliance  must  make  for  themselves. 

These  improvements  are  needed  to  give  the  great  bulk  of  the  people  of  Latin 
America  the  stake  in  social  and  economic  development  that  is  necessary  if  they 
are  themselves  to  provide  the  needed  effort.  They  are  also  basic  in  our  mutual 
effort  to  provide  a  framework  for  progress  in  which  free,  private  institutions  can 
grow  and  flourish. 

No  one  believes  such  reforms  will  be  easy.  They  go  to  the  very  root  and  tradi- 
tion of  ways  of  life  that  have  evolved  through  centuries.  There  is  no  doubt  that 
making  these  reforms  involves  hard  choices  and  difficult  decisions.  The  course 
of  reform  is  not  a  smooth  one,  and  it  is  seldom  a  popular  one.  But  these  decisions 
must  be  made. 


4 


EXHIBITS  411 

For  it  is  the  agreed  position  of  all  of  us  that  the  loans  would  go  to  the  nations 
which  help  themselves,  and  it  is  fitting  that  this  should  be  the  case.  This  Alliance 
was  not  formed  to  waste  its  resources. 

It  was  formed,  and  its  purpose  was  stated  in  unmistakable  terms,  to  benefit 
those  people  of  the  hemisphere  who  need  help  to  achieve  their  own  potential, 
and  to  realize  their  opportunity  for  growth  in  freedom. 

In  the  words  of  the  preamble  to  the  historic  Charter  of  Punta  del  Este: 

"It  is  our  inescapable  task  to  .  .  .  demonstrate  to  the  poor  and  forsaken  of  our 
countries,  and  of  all  lands,  that  the  creative  powers  of  free  men  hold  the  key  to 
their  progress  and  to  the  progress  of  future  generations." 

The  realization  of  the  aspirations  of  the  people  of  the  hemisphere  depends  on 
the  practical  planning  and  implementation  that  is  necessary  to  transform  our 
goals  into  concrete  and  lasting  achievements.  That  is  why  this  meeting  today 
to  select  the  panel  of  nine  experts  who  will,  with  appropriate  assistance,  review 
development  plans  and  programs,  is  of  particular  importance. 

One  of  the  most  promising  aspects  of  the  Alliance  is  the  emphasis  it  places  on 
countrywide  planning.  Such  planning  should  serve  to  assure  that  individual 
projects  are  well  integrated  into  patterns  of  national  development,  and  that  they 
contribute  to  a  balanced  growth,  both  economically  and  socially. 

The  panel,  and  the  experts  who  serve  with  it,  wiU  provide  an  incentive  to 
plan  so  that  private,  government,  and  external  resources  are  used  in  such  a  man- 
ner as  to  make  a  maximum  contribution  to  advancing  development.  This  is 
particularly  important  since  external  capital  can  only  be  supplementary  to  local 
capital,  and  is  most  effective  when  used  in  combination  with  national  public 
and  private  resources. 

The  panel  will  also  serve  to  increase  the  care  with  which  project  priorities  are 
worked  out  within  a  national  development  plan.  That  is  a  significant  aspect  of 
development  planning.  It  is  sometimes  difficult,  for  instance,  to  decide  between 
schooling  and  irrigation,  and  often  hard  choices  must  be  made.  Priority  planning 
helps  to  insure  that  such  choices  are  faced  up  to,  that  decisions  are  made,  and  in  a 
manner  that  will  bring  the  greatest  benefit  to  the  greatest  number  of  people. 

And,  finally,  the  panel  will  serve  as  a  highly  useful  source  of  information  and 
guidance  to  U.S.  Government  officials  and  others  involved  in  providing  and 
channeling  external  capital.  It  will  produce  greater  confidence  on  the  part  of 
private  investors,  by  assuring  them  of  an  informed  judgment  on  the  project 
itself,  and  will  also  give  them  confidence  that  they  are  investing  in  countries  with 
a  future,  where  growth  and  expansion  can  be  expected.  Public  capital  suppliers 
will  also  have  greater  confidence  that  their  resources  will  be  used  in  combination 
with  other  funds  to  provide  maximum  overall  effect. 

But  we  must  remember  that  all  of  these  things,  public  capital,  private  invest- 
ment, and  sound  planning,  will  have  little  effect  without  the  essential  improve- 
ments in  administration,  tax  systems,  and  land  utilization,  that  are  the  very 
backbone  of  the  Alliance. 

These  changes  are  underway  in  sortie  Latin  American  countries,  and  other  mem- 
bers of  the  Alliance  are  planning  them. 

We  are  all  aware  that  some  hemisphere  leaders  are  already  working  hard  to 
accomplish  these  improvements,  not  only  in  land  and  tax  policy,  but  in  other 
very  important  areas  as  well,  such  as  education  and  public  administration. 

We  in  the  United  States  are  doing  our  part,  and  with  the  approval  of  the  Con- 
gress and  the  American  people,  we  will  continue  to  do  it.  But  our  friends  in  the 
Americas  must  also  act.     We  are  confident  that  they  will. 


Exhibit  32. — Statement  by  Secretary  of  the  Treasury  Dillon,  February  27,  1962, 
before  the  House  Banking  and  Currency  Committee  on  special  borrowing  ar- 
rangements of  the  International  Monetary  Fund 

I  am  glad  to  appear  before  the  committee  this  morning  in  support  of  H.R. 
10162.  This  legislation  will  enable  the  United  States,  in  cooperation  with  nine 
other  industrial  countries  of  the  free  world,  to  take  a  major  step  in  support  of  a 
strong  international  monetary  system.  An  amendment  to  the  Bretton  Woods 
Agreements  Act  authorizing  the  United  States  to  lend  up  to  $2  billion  to  the 
International  Monetary  Fund  is  a  prerequisite  for  U.S.  participation  in  proposed 
arrangements  which  will  make  $6  billion  of  additional  resources  available  to  the 
Fund. 


412   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Five  members  of  the  European  Common  Market  are  participating  in  the  special 
arrangements  with  an  aggregate  lending  commitment  of  $2.45  billion.  Germany's 
commitment  is  $1.0  billion;  France  and  Italy  have  agreed  to  lend  up  to  $550 
million  each;  while  the  Netherlands  is  participating  with  $200  million,  and 
Belgium  with  $150  million.  The  United  Kingdom  is  to  lend  up  to  $1.0  billion. 
Other  participants  are  Japan,  which  is  to  lend  up  to  $250  million,  Canada,  partic- 
ipating with  $200  million,  and  Sweden,  with  $100  million.  In  all,  the  nine 
participating  countries  other  than  the  United  States  will  stand  ready  to  lend  their 
currencies  to  the  Fund  up  to  a  total  of  $4  billion. 

These  additional  resources  have  potentially  great  importance  for  the  United 
States.  The  Fund  has  on  hand  today  only  a  limited  supply  of  currencies  that 
could  be  used  if  the  need  for  a  drawing  by  the  United  States  should  ever  arise. 
The  lending  commitments  of  the  major  countries  other  than  the  United  States 
and  the  United  Kingdom,  which  amount  to  $3  billion,  are  approximately  twice 
as  large  as  the  Fund's  current  holdings  of  their  currencies.  These  supplementary 
resources  would  greatly  enhance  the  Fund's  ability  to  assist  us  should  it  ever 
become  necessary. 

As  you  know,  the  International  Monetary  Fund  was  established  in  1945,  at  the 
same  time  as  the  World  Bank.  United  States  membership  in  the  Fund  was 
authorized  by  the  Bretton  Woods  Agreements  Act.  The  Fund's  purpose  is  to 
promote  exchange  and  monetary  stability  among  its  75  member  nations.  It  does 
so  principally  by  providing  short-term  assistance  to  deal  with  temporary  balance- 
of-payments  difficulties,  pending  the  results  of  longer-range  corrective  measures. 

With  the  growth  of  world  trade  and  the  increase  in  the  size  of  monetary  reserves, 
the  resources  of  the  Fund  have  been  called  ui)on  to  a  greater  and  greater  extent. 
To  keep  pace  with  these  requirements,  the  quotas  of  the  Funds  members,  includ- 
ing the  United  States,  were  increased  in  1959. 

Since  that  time  new  problems  have  arisen,  largely  as  a  result  of  the  recent 
heavy  strains  placed  upon  the  two  principal  world  reserve  currencies — the  dollar 
and  the  pound  sterling.  The  proposed  legislation,  which  would  authorize  U.S. 
participation  in  the  new  Fund  borrowing  arrangements,  is  designed  to  help  deal 
with  these  problems,  which  arose  partly  as  a  result  of  the  restoration  of  currency 
convertibility  among  the  industrialized  countries.  With  the  advent  of  full 
economic  recovery  in  Europe,  these  countries  have  improved  their  trade  and 
payments  positions  and  have  accumulated  large  monetary  reserves.  In  the 
four-year  period  from  the  end  of  1957  through  the  end  of  1961,  the  reserves  in 
gold  and  foreign  exchange  (mostly  dollars)  of  the  major  industrial  countries  other 
than  the  United  States  and  the  United  Kingdom  increased  from  $12.1  billion  to 
about  $20.1  billion. 

As  a  result  of  the  improvements  in  the  payments  positions  of  other  industrial 
countries,  chiefly  in  Western  Europe,  they  were  able  to  make  their  currencies 
freely  convertible,  with  the  consequence  that  movements  of  short-term  capital 
from  country  to  country  were  greatly  increased.  Wider  investment  opportunities, 
the  attraction  of  interest  rate  differentials  and,  to  some  extent,  speculation,  all 
contributed  to  these  movements  of  capital. 

Increases  in  foreign  monetary  reserves  were  largely  the  counterpart  of  overall 
deficits  in  the  balance  of  payments  of  the  United  States.  Our  deficits  totaled 
approximately  $13.5  billion  during  the  four-year  period  1958-1961  and  were 
financed  by  a  gold  outflow  of  $5.5  billion  and  an  increase  in  U.S.  dollar  liabilities  of 
$8  billion. 

The  basic  part  of  our  deficit  has  been  made  up  of  trade  transactions,  long-term 
investment,  and  expenditure  for  military  and  economic  aid  programs.  But  since 
the  middle  of  1960  a  large  part  has  also  resulted  from  movements  of  short-term 
capital.  In  1958,  1959,  1960,  and  1961,  our  basic  deficit  (which  is  the  net  of  all  of 
our  international  transactions  except  short-term  capital  movements  and  unre- 
corded transactions)  was  $3.6,  $4.3,  $1.9  and  $0.6  billion,  respectively,  while  we 
incurred  total  deficits,  including  short-term  capital  movements  and  unrecorded 
transactions,  of  $3.5,  $3.7,  $3  9  and  about  $2.4  billion,  respectively. 

The  stability  of  the  dollar  is  essential  not  only  to  the  economj-  of  the  United 
States  but  to  that  of  the  entire  free  world.  The  dollar  is  the  major  reserve 
currency  of  the  free  world.  Much  of  world  trade  and  other  transactions  is  carried 
.out  in  dollars,  and  settlements  of  payments  surpluses  or  deficits  between  foreign 
countries  to  a  large  extent  are  made  in  dollars.  It  is  for  these  reasons  that  other 
nations  have  a  vital  interest  in  th(>s('  new  Fund  arrangements  which  will  be  so 
imjjortant  as  an  added  resource  to  deal  with  stresses  in  the  international  payments 
system. 


EXHIBITS  413 

In  his  message  of  February  6,  1961,  President  Kennedy  referred  to  the  drawing 
rights  of  the  United  States  on  the  International  Monetary  Fund  as  a  secondary 
line  of  reserves  which  we  could  call  upon  to  maintain  the  strength  of  the  dollar, 
in  addition  to  our  own  holdings  of  gold  and  foreign  currencies. 

The  U.S.  quota  in  the  Fund  is  $4,125  million,  one-quarter  of  which  the  United 
States  has  paid  to  the  Fund  in  gold  and  three-quarters  in  dollars.  A  member 
country  is  normally  entitled  to  draw  currencies  freely  from  the  Fund  up  to  the 
amount  of  its  gold  payment,  plus  an  amount  equal  to  the  outstanding  amounts 
of  the  member's  currency  which  have  been  drawn  by  other  countries.  As  of 
December  31,  1961,  these  virtually  automatic  drawing  rights  of  the  United  States 
amounted  to  $1.7  billion.  In  addition,  the  Fund  treats  liberally  requests  for 
additional  drawings  up  to  25  percent  of  a  member's  cjuota,  if  the  member  itself 
is  making  reasonable  efforts  to  solve  its  balance-of-payments  problems.  In  the 
case  of  the  United  States,  this  would  be  the  equivalent  of  another  $1  billion. 
Larger  drawings  are  permitted  by  the  Fund  if  a  member  is  undertaking  programs 
of  monetary  stabilization  and  measures  for  rectifying  balance-of-payments 
deficits. 

The  total  amount,  therefore,  that  the  United  States  would  have  the  right  to 
draw  from  the  Fund  almost  automatically  would  be  $1.7  billion;  another  $1.0 
billion  could  be  drawn  with  relative  ease;  and  additional  amounts  could  be  drawn 
depending  upon  the  seriousness  of  the  situation  and  the  measures  which  the 
United  States  was  taking  to  cope  with  it. 

However,  the  resources  of  the  Fund  to  meet  a  U.S.  request  for  a  large  drawing 
are  not  at  present  adequate.  On  December  31,  1961,  the  Fund  had  available  to 
it  $2.1  billion  in  gold  and  $11.5  billion  in  member  currencies.  But  a  large  part  of 
these  currencies  consisted  of  currencies  of  the  less-developed  countries  which  for 
the  time  being  are  not  suitable  for  use  by  the  Fund.  The  Fund's  holdings  of  the 
currencies  of  the  major  industrial  countries  amounted  on  that  date  to  the  equiva- 
lent of  about  $6.6  billion;  however,  of  this  amount  $4.9  billion  was  in  dollars  and 
sterling  and  only  $1.6  billion  was  in  currencies  of  the  other  industrial  countries. 
The  currencies  of  the  member  countries  of  the  European  Economic  Community 
accounted  for  only  $890  million  of  this  $1.6  billion.  On  tlie  same  date,  the  Fund's 
outstanding  commitments  under  e.xisting  standby  arrangements  with  the  United 
Kingdom  and  other  members,  amounted  to  the  equivalent  of  $1.4  billion. 

It  is  clear,  therefore,  that  the  Fund  now  lacks  the  resources  in  gold  and  the  cur- 
rencies of  industrial  countries  other  than  dollars  and  sterling  which  would  be 
needed  to  meet  a  large  drawing  such  as  the  United  States  would  be  entitled  to 
request. 

At  their  Vienna  meeting  last  September,  there  was  general  agreement  among 
Fund  Governors  that  ways  should  be  found  to  increase  the  resources  available  to 
the  Fund.  The  arrangements  finally  worked  out  are  embodied  in  the  Fund  Deci- 
sion of  January  5,  1962,  and  in  the  exchange  of  letters  initiated  in  Paris  in  Decem- 
ber 1961  at  the  conclusion  of  discussions  among  the  ten  governments  concerned. 
The  Fund  Decision  and  the  related  Paris  arrangements  are  reproduced  in  the 
Report  of  the  National  Advisory  Council  on  Special  Borrowing  Arrangements 
which  is  now  before  you. 

The  proposed  new  arrangements  can  be  described  very  simply.  The  ten  par- 
ticipating countries  would  lend  stated  amounts  of  their  currencies  to  the  Fund  if 
required  to  permit  drawings  from  the  Fund  by  any  one  of  the  participant  countries 
in  order  to  "forestall  or  cope  with  an  impairment  of  the  international  monetary 
system."  These  commitments  to  lend  would  be  invoked  only  if  and  when  the 
Fund  needs  the  additional  resources. 

The  proposed  arrangement  is  intended  to  remedy  the  shortage  of  the  Fund's 
current  holdings  of  currencies  of  industrial  countries,  especially  those  of  countries 
having  surpluses  in  their  balance  of  payments  and  increasing  reserves.  The  par- 
ticipating European  Common  Market  countries,  Belgium,  France,  Germany, 
Italy,  and  the  Netherlands,  would  commit  an  amount  of  their  currencies  almost 
equal  to  their  present  quotas  in  the  Fund,  while  the  commitments  of  the  United 
States  and  the  United  Kingdom  would  be  only  about  half  of  their  present  quotas. 
The  effect  of  the  new  arrangement  would  be  to  increase  by  about  275  percent  the 
present  availability  to  the  Fund  of  the  currencies  of  the  surplus  countries  of  the 
European  Economic  Community. 

The  proposed  arrangement  is  designed  so  that  countries  which  are  in  a  surplus 
position  and  which  are  gaining  reserves  may  lend  their  own  currencies  to  the  Fund 
which  in  turn  can  supply  them  to  other  participating  countries  which  might  need 


414   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

additional  resources.  Thus,  if  the  United  States  were  to  draw  on  the  Fund,  the 
Fund  would  be  able  to  obtain  the  currencies  which  we  could  use.  On  the  other 
hand,  a  country  which  itself  faces  serious  balance-of-payments  problems  and  whose 
reserves  are  declining  would  not  be  expected  to  lend  to  the  Fund.  This  would 
mean  that  the  United  States,  for  example,  would  not  be  expected  to  lend  dollars 
to  the  Fund  under  present  circumstances.  In  any  event,  since  the  Fund  still  has 
available  in  dollars  almost  $2>4  billion  from  the  regular  U.S.  quota,  it  is  highly 
unlikely  that  a  need  for  borrowing  from  the  United  States  will  arise. 

The  agreement  set  forth  in  the  Paris  letters  estabUshes  the  international  ma- 
chinery necessary  for  the  ten  participating  countries  to  meet  and  act  upon  requests 
for  loans  to  the  Fund. 

If  one  of  the  ten  participating  countries  wishes  to  draw  from  the  Fund,  or  to 
enter  into  a  standby  arrangement  with  it,  in  order  to  forestall  or  cope  with  a  situa- 
tion that  might  lead  to  impairment  of  the  international  monetary  system,  that 
country  would  consult  with  the  Managing  Director  and  with  the  other  participants. 

The  Managing  Director  would  then  propose  to  the  participants  the  total  amount 
which  he  beheves  the  Fund  should  borrow,  and  the  amounts  which  should  be  sup- 
plied by  each  participant  in  its  own  currency.  The  participants  would  try  to 
reach  unanimous  agreement  on  their  response  to  the  Managing  Director's  proposal. 
If  they  could  not  reach  unanimous  agreement,  the  question  of  lending  to  the  Fund 
would  be  decided  by  a  vote  of  the  participants.  The  country  proposing  to  draw 
would  not  vote.  A  decision  would  require  a  two-thirds  majority  of  the  other 
voting  participants  and  a  three-fifths  majority  of  their  weighted  votes. 

Since  the  countries  concerned  are  in  constant  close  communication  regarding 
their  balance-of-payments  positions  not  only  in  the  Fund,  but  also  through  the 
Organization  for  Economic  Cooperation  and  Development  and  bilaterally,  a  de- 
cision can  be  reached  very  rapidly.  The  procedure  established  balances  the  right 
of  each  country  to  safeguard  its  own  interests  with  the  collective  judgment  of  the 
group  as  to  the  needs  of  the  international  monetary  system.  Such  safeguards  are 
appropriate  and  necessary  since  it  is  impossible  to  foresee  what  the  situation  of 
any  particular  country  may  be  at  an  unspecified  date  in  the  future  when  a  bor- 
rowing may  be  needed. 

Loans  to  the  Fund  by  participating  countries  would  carry  a  transfer  charge 
of  Yz  of  1  percent,  plus  annual  interest  of  IJ^  percent.  Loans  to  the  Fund  would 
mature  in  five  years,  but  would  be  repaid  sooner  if  the  drawing  country  repaid 
the  Fund  sooner.  Also,  if  a  lending  country  should  itself  encounter  balance-of- 
payments  difficulties,  it  may  obtain  prompt  repayment  from  the  Fund. 

Drawings  of  the  additional  resources  from  the  Fund  would  conform  to  the 
Fund's  normal  procedures:  that  is  to  say,  the  drawing  member  would  purchase 
from  the  Fund  currencies  of  other  participating  countries  with  its  own  currency, 
and  would  pay  a  service  charge  of  ^/i  of  1  percent  on  the  amount  of  the  drawing, 
plus  interest.  The  rate  of  interest  would  vary  with  the  size  of  the  drawing  and 
the  period  for  which  it  would  be  outstanding.  The  drawing  member  would 
usually  have  to  repay  the  Fund  by  repurchasing  its  currency  within  three  to 
five  years,  but  would  be  expected  to  repay  earlier  if  its  payments  situation 
improved. 

The  whole  arrangement  would  be  effective  for  an  initial  period  of  four  years, 
subject  to  renewal  by  the  Fund,  but  it  could  not  be  modified  within  that  period 
except  with  the  consent  of  all  the  participants. 

I  wish  to  emphasize  the  great  advantage  to  the  United  States  of  these  borrowing 
arrangements.  It  may  be  that  the  Fund  will  never  need  to  borrow.  We  hope 
this  will  be  the  case.  But  the  commitments  will  stand  as  a  reserve  to  be  used 
if  and  when  necessary,  and  they  will  provide  the  Fund  with  the  currencies  which 
would  be  needed  by  the  United  States  if  it  were  ever  to  draw  on  the  Fund.  Thus 
the  very  existence  of  this  large  supplementary  pool  of  usable  resources  should 
act  as  a  strong  deterrent  to  speculation  against  the  dollar  or  other  currencies, 
since  it  will  be  well  known  that  there  are  ample  resources  available  to  counter- 
act serious  disturbances  of  the  international  monetary  system.  The  arrange- 
ments will  benefit  not  only  the  participating  countries,  but  all  countries  of  the 
free  world.  The  stability  of  the  dollar  and  of  the  other  major  currencies  are  of 
vital  importance  to  the  smooth  functioning  of  the  international  trade  and  pay- 
ments system. 

The  legislation  which  is  before  you  would  auKMid  the  Bretton  Woods  Agree- 
ments Act,  which  now  prohibits  any  loan  by  the  United  States  to  the  Fund 
without  the  specific  approval  of  Congress,  and  grant  the  authority  to  lend  up 
to  S2  billion.     The  legislation   would   also    authorize   an    appropriation  of  $2 


EXHIBITS  415 

billion,  to  remain  available  until  expended,  for  the  purpose  of  making  loans  to 
the  International  Monetary  Fund.  As  I  have  pointed  out,  we  will  not  be  called 
upon  to  make  a  loan  to  the  Fund  under  present  conditions  and,  in  any  event, 
the  question  of  a  loan  would  not  arise  until  the  Fund's  resources  in  dollars,  cur- 
rently about  $2}^  billion,  had  been  exhausted.  This  is  to  be  a  standby  commit- 
ment to  the  Fund.  There  will  not  be  an  expenditure  of  the  funds  authorized 
until  such  time  as  we  might  actually  make  a  loan  to  the  Fund.  In  considering 
any  request  to  lend  under  the  commitment,  we  would  of  course  take  into  con- 
sideration our  balance-of-payments  position  at  the  time  and  the  level  of  our 
reserves,  as  well  as  the  special  circumstances  which  led  to  the  request  to  lend. 

I  should  like  to  emphasize  that  the  amount  of  the  appropriation  must  be  in  the 
full  amount  of  $2  billion,  in  order  to  bring  into  effect  our  agreement  with  the  other 
nine  participants.  The  entire  arrangement  is  contingent  upon  the  participating 
countries  having  authority  to  take  action  promptly.  The  amount  of  each  coun- 
try's commitment  is  part  of  the  arrangement,  and  any  change  in  this  amount 
would  requu-e  a  renegotiation.  It  is  thus  necessary  to  have  the  full  authority 
to  provide  the  necessary  financing  if  we  should  be  called  upon,  even  though  in 
practice  we  do  not  expect  to  have  to  use  this  authority  in  the  foreseeable  future. 

A  section  of  the  legislation  before  you  includes  a  technical  amendment  designed 
to  clarify  existing  legislative  authority,  so  as  to  permit  the  use  of  noninterest- 
bearing  notes,  and  thus  save  us  interest  costs,  in  an  amount  of  any  U.S.  drawings 
on  the  Fund.  If  the  United  States  were  to  draw  on  the  Fund,  it  would  have  to 
do  so  by  purchasing  foreign  currencies  from  the  Fund  with  dollars.  The  Fund's 
Articles  of  Agreement,  however,  permit  these  dollars  to  be  paid  to  the  Fund  in 
the  form  of  noninterest-bearing  notes,  without  any  use  of  cash  from  current 
receipts  or  any  debt  operations  which  would  involve  the  United  States  in  an 
interest  cost.  The  Bretton  Woods  Agreements  Act  authorized  the  issuance  of 
such  noninterest-bearing  notes  to  the  Fund  up  to  the  amount  of  our  quota  sub- 
scription, which  is  $4.1  billion.  As  of  December  31,  1961,  notes  outstanding 
under  this  authority  amounted  to  $2.4  billion.  If  the  United  States  were  now 
to  make  a  drawing  from  the  Fund  in  excess  of  the  $1.7  billion  balance  of  this 
authority,  it  is  not  clear,  under  existing  legislation,  that  we  could  issue  noninterest- 
bearing  notes  in  the  amount  of  this  excess.  The  proposed  legislation  would  make 
entirely  clear  the  Treasury's  authority  on  this  matter. 

In  conclusion,  Mr.  Chairman,  I  should  like  to  say  that  the  present  proposal 
before  the  committee  is  one  which  is  in  the  best  interests  of  the  United  States 
and  of  the  free  world  as  a  whole.  It  is  essential  to  us  and  to  other  countries 
that  the  dollar  be  maintained  as  a  sound  and  reliable  currency  at  its  present 
parity.  If  necessary  to  defend  the  dollar,  as  President  Kennedy  said  in  his 
Balance-of-Payments  Message,  we  will  use  our  drawing  rights  in  the  International 
Monetary  Fund  as  a  supplementary  form  of  reserves.  The  bill  before  you  will 
enable  the  United  States  to  participate  in  arrangements  which  will  provide  the 
International  Monetary  Fund  with  an  adequate  supply  of  the  currencies  which 
we  ourselves  might  some  day  need.  It  will  provide  significant  assistance  to  the 
United  States  in  dealing  with  the  balance-of-payments  problem. 

The  arrangement  can  be  used  by  the  Fund  to  assist  any  other  participating 
countries  as  well.  The  other  nine  countries  also  have  a  stake  in  the  maintenance 
of  a  stable  international  monetary  structure  in  the  free  world,  and  this  is  why 
they  are  all  now  cooperating  in  this  new  arrangement.  We  should  join  with 
them  in  strengthening  the  International  Monetary  Fund  by  giving  it  authority 
to  borrow,  if  needed,  the  currencies  which  are  most  essential  to  cope  with  an 
impairment  of  the  monetary  system  of  the  free  world. 


Exhibit  33. — Statement  by  Secretary  of  the  Treasury  Dillon,  March  15,  1962, 
before  the  House  Ways  and  Means  Committee  on  the  Trade  Expansion  Act 
of  1962 

I  am  here  today  to  support  approval  of  the  Trade  Expansion  Act  of  1962. 
The  authority  provided  for  in  H.R.  9900  is  designed  to  enable  the  President  to 
adjust  our  trade  policies  so  that  they  can  give  maximum  support  to  the  political, 
military,  and  economic  aims  of  the  United  States. 

The  bill  would  equip  the  United  States  to  carry  out  tariflf  negotiations  effectively 
during  the  next  five  years.  Such  authority  is  essential  if  we  are  to  keep  our 
place  of  leadership  in  today's  changing  world.  We  must  accomplish  more 
through  trade  negotiations  in  the  next  few  years  than  ever  before. 


416   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Other  witnesses  have  testified  on  the  broad  political,  military,  and  economic 
benefits  of  the  bill  to  the  United  States.  As  Secretary  of  the  Treasury,  I  wish  to 
direct  my  remarks  to  the  contribution  which  it  can  make  to  the  accomplishment 
of  our  national  financial  objectives,  especially  the  solution  of  our  balance-of- 
payments  problem. 

I  will  not  take  up  the  committee's  time  with  a  long  discussion  of  that  problem. 
T  have  reviewed  our  balance-of-payments  position  in  some  detail  before  other 
committees,  most  recently  for  the  Joint  Economic  Committee,  and  I  will  be  glad 
to  furnish  copies  of  that  testimony  for  your  use.  The  essential  problem  is  that, 
although  we  have  a  large  surplus  of  exports  of  goods  and  services  ovei  imports, 
that  surplus  is  not  large  enough  to  meet  our  other  payments.  Our  commercial 
export  surplus  of  goods  and  services,  excluding  those  financed  with  U.S.  aid, 
amounted  to  $5  billion  in  1961,  and  was  $4.6  billion  in  1960.  But  commercial 
surpluses  of  this  magnitude,  large  as  they  are,  have  not  been  large  enough  to 
finance  the  indispensable  foreign  undertakings,  public  and  private,  of  the  United 
States.  The  largest  items  for  which  we  had  to  provide  in  1961  were:  $3  billion  to 
support  our  own  military  forces  abroad,  $2.6  billion  for  private  long-term  foreign 
investment,  and  $1.3  billion  of  economic  aid,  in  the  form  of  dollars.  After  allowing 
for  about  $700  million  of  receipts  from  special  debt  prepayments  to  the  United 
States,  our  basic  deficit,  which  includes  all  our  international  transactions  except 
the  unrecorded  items  and  the  outflow  of  American  short-term  capital,  amounted 
to  about  $600  million  as  compared  to  $1.9  billion  in  1960. 

Unrecorded  transactions,  and  various  types  of  short-term  capital  movements, 
involved  additional  outflows  of  $1.9  billion  in  1961.  This  brought  the  overall 
deficit  in  our  balance  of  payments  to  nearly  $2.5  billion,  compared  with  $3.9 
billion  in  1960. 

Whilf  our  international  payments  do  not  have  to  be  in  exact  balance  every 
year,  we  must  aim  to  bring  them  into  balance  over  a  period  of  years.  If  we  do 
not  we  will  experience  persistent  reductions  of  our  available  gold  and  holdings  of 
convertible  foreign  currencies. 

Expanding  our  export  trade  has  become  an  urgent  national  need.  As  our 
domestic  economy  continues  to  advance,  our  demand  for  imports  will  become 
greater.  Our  outlays  abroad  for  the  national  defense,  aid  and  investment,  are 
large  and  continuing.  If  these  payments  are  to  be  met,  the  United  States  must 
export  more.  But,  in  the  end,  U.S.  exports  can  be  expanded  to  the  necessary 
extent  only  if,  through  negotiations,  we  ensure  that  the  doors  to  major  foreign 
markets — and  especially  the  new  and  expanding  Common  Market  of  Western 
Europe — can  be  opened  wider  for  U.S.  products. 

The  six  countries  which  formed  the  European  Economic  Community  have  now 
established  their  common  external  tariff,  and  are  expected  to  bring  it  into  full 
effect  when  their  "transitional  period"  is  over,  at  the  latest  by  the  end  of  1969. 
A1.S0,  they  are  rapidly  reducing  the  tariffs  which  apply  to  their  trade  with  one 
another  and  are  committed  to  eliminate  them  altogether  by  the  end  of  1969. 
The  United  Kingdom  is  expected  to  join  the  European  Economic  Community 
and  others  may  well  follow.  The  resulting  expanded  Common  Market  will  con- 
stitute a  giant  new  economic  unit  within  the  free  world.  If  our  exports  are  to  be 
expanded  to  the  necessary  extent,  liberal  access  to  the  Common  Market  is 
absolutely  essential. 

We  are  now  cooperating  intensively  on  monetary  matters  with  the  members 
and  prospective  members  of  the  Common  Market.  But  monetary  cooperation 
must,  in  the  end,  rest  on  a  solid  basis  of  international  trade. 

We  must  not  view  our  efforts  to  achieve  balance  in  the  international  payments 
of  the  United  States  as  a  battle  in  which  we  can  win  a  decisive  victory  and  then 
relax.  This  is  a  campaign  which  must  be  waged  successfully  year  after  year. 
To  ensure  that  we  have  favorable  conditions  for  that  continuing  campaign,  we 
must  show,  by  determined  action  now,  the  direction  American  policy  is  going  to 
take.  Then  foreign  governments  will  know  that  we  are  resolved  to  obtain 
liberalized  access  to  foreign  markets  for  our  products  and  that  we  are  prepared 
to  bargain  realistically  for  such  access.  Moreover,  investors  can  then  begin 
without  d(>lay  to  base  their  forward  planning  on  the  premise  that  it  will  be 
economically  feasible  to  supply  European  markets  with  products  from  American 
factories  and  farms. 

I  want  to  make  it  entirely  clear  that  in  my  judgment  trade  negotiating  author- 
ity Hke  that  now  on  the  books  would  be  completely  inadequate  for  the  solution  of 
the  problems  we  face.  There  are  several  reasons  for  this.  First,  if  our  negotiat- 
ing authority  continues  to  be  subject  to  unduly  narrow  and  precise  procedures 


1 


EXHIBITS  417 

for  item-by-item  determination  of  possible  injury,  the  basic  intention  to  create 
authority  for  broad  negotiations  covering  a  wide  range  of  commodities  would  be 
frustrated.  The  Common  Market  countries,  which  have  found  across-the-board 
techniques  the  only  practicable  method  for  their  own  tariff  negotiations,  have  no 
interest  in  further  item-by-item  bargaining  or  narrowly  selective  lists  of  com- 
modities. Second,  if  American  products  are  to  be  competitive  with  European 
products,  all  of  which  are  to  gain  the  right  to  move,  free  of  duty,  across  European 
borders,  we  need  to  think  in  terms  of  substantial  tariff  action.  If  reductions 
cannot  exceed  the  20  percent  authority  we  have  had  on  the  books  in  the  past,  we 
could,  at  best,  achieve  only  marginal  changes  in  our  trading  prospects.  Third, 
tariff  cuts  by  an  across-the-board  percentage  offer  the  best  way  of  assuring 
reciprocity,  of  obtaining  from  the  Common  Market  full  value  in  tariff  cuts  for  the 
reductions  we  make. 

If  broad  and  substantial  mutual  tariff  reductions  by  the  Common  Market  and 
the  United  States  are  effected  and  if  we  put  our  American  producers  on  a  com- 
parable footing  with  their  European  competitors  through  the  enactment  of  the 
investment  credit,  coupled  with  administrative  reform  of  depreciation,  we  can 
then  expect  the  resulting  expansion  of  two-way  trade  to  bring  with  it  a  significant 
increase  in  the  commercial  trade  surplus  of  the  United  States,  with  corresponding 
benefit  to  our  balance-of-payments  position. 

Commercial  merchandise  exports  of  the  United  States  have  been  $17.6  billion, 
and  imports  about  $14.5  biUion,  in  each  of  the  last  two  years,  giving  us  an  annual 
merchandise  trade  surplus  of  about  $3  billion  for  these  years.  Exports  to  the 
Common  Market  were  about  $3.5  biUion  and  imports  $2.2  bilhon,  giving  us  a 
surplus  of  $1.3  billion  in  1961;  the  comparable  surplus  was  $1.2  billion  in  1960. 
Even  for  nonagricultural  goods,  our  exports  to  the  Common  Market  in  1961  were 
valued  at  more  than  $2.3  bilhon,  compared  with  our  imports  of  $2  billion,  giving 
us  a  surplus  of  $300  million,  the  same  as  in  1960.  Thus,  we  have  a  favorable 
basis  for  enlargement  of  our  trade  surplus  through  reciprocal  reduction  of  tariffs. 
This  is  especially  true  of  our  trade  with  European  countries.  The  European 
countries  have  surpluses,  arising  from  transactions  other  than  trade,  which  are 
readily  available  to  finance  deficits  in  their  merchandise  trade  with  us. 

If  tariffs  on  our  exports  and  imports  are  reduced  to  a  comparable  extent,  the 
natural  assumption  would  be  that  exports  and  imports  would  rise  by  the  same 
percentage.     As  a  result,  the  American  trade  surplus  would  become  larger. 

Conditions  now  evident,  and  likely  to  persist  for  a  number  of  years,  make  it 
more  likely,  however,  that  American  exports  to  Western  Europe  would  rise 
by  a  greater  percentage  than  the  exports  of  Western  European  countries  to  the 
United  States.  European  labor  resources  and  productive  capacity  are  being 
strained  to  support  present  rates  of  production.  The  rapid  rise  of  real  incomes  and 
the  high  rate  of  capital  formation  prevailing  in  the  European  economy  may  be 
expected  to  exert  strong  pressure  towards  absorption  of  increases  in  output  in 
domestic  markets.  In  addition,  European  demand  may  be  particularly  strong 
and  persistent  for  products  which  the  United  States  already  has  the  plant 
capacity  and  the  labor  force  to  supply  in  quantity.  This  is  particularly  true  of 
(1)  machinery  associated  with  the  advanced  labor-saving  methods  already  well 
estabhshed  in  the  United  States,  (2)  equipment  resulting  from  our  intensive  re- 
search and  development  programs,  and  (3)  consumer  goods  which  have  not  been 
available  in  Europe,  but  are  coming  into  use  as  incomes  of  ever-larger  groups 
rise  towards  the  American  level. 

The  Trade  Expansion  Bill  is  also  important  in  meeting  our  need  for  more 
rapid  economic  growth.  Our  principal  domestic  economic  problem  is  how  to 
stimulate  increasing  production  and  jobs.  We  must  create  a  million  and  a  half 
new  jobs  every  year  during  the  present  decade  to  provide  for  the  expected  increase 
in  our  labor  force.  In  addition,  more  than  a  million  jobs  are  needed  if  we  are  to 
reduce  unemployment  from  its  present  unacceptable  level  of  more  than  5% 
percent,  to  a  more  tolerable  level  of  4  percent.  Finally,  there  must  be  employ- 
ment opportunities  for  the  millions  of  workers  whose  present  jobs  will  be  affected 
by  advancing  technology  in  the  years  ahead. 

The  proposed  trade  program  is  designed  to  be  a  key  portion  of  our  whole 
effort  to  meet  the  need,  both  for  more  employment,  and  for  better  employment 
of  all  our  resources.  With  new  trade  legislation  we  may  look  forward  to  sub- 
stantial increases  in  a  wide  range  of  American  exports.  These  will  be  in  lines  of 
production  in  which  we  have  now,  or  in  which  we  can  achieve,  our  greatest  com- 
petitive strength.  These  will  be  branches  of  industry  and  of  agriculture  in  which 
our  advanced  technology  and  high  skills  find  their  greatest  role. 

661496—63 ^28 


418   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Increases  of  imports,  as  well  as  of  exports,  will  result  from  the  reciprocal  reduc- 
tion of  tariffs.  Pessimists,  therefore,  will  look  at  once  for  damage  from  those 
increased  imports.  In  a  resilient,  expanding  economy  they  will  have  to  look 
hard.  The  reduction  in  tariffs  and  any  resulting  increase  in  imports  will  be 
gradual.  Given  time,  and  a  favorable  general  economic  climate  in  the  United 
States,  most  of  the  adjustment  to  import  competition  will  take  place  unnoticed, 
as  part  of  the  dynamic  readjustment  of  our  economy  which  goes  on  constantly. 
If  the  American  labor  and  capital  which  may  have  been  gradually  displaced  by 
imports  could  be  identified,  they  would  not  be  found  idle,  but  rather,  busily 
engaged  in  new  enterprises,  using  new  methods,  furnishing  new  services,  or  pro- 
ducing new  products,  many  of  them  for  export  markets. 

The  Treasury  Department  has  particular  responsibility  for  two  phases  of  the 
administration's  general  program  to  stimulate  faster  application  of  technical 
achievements,  and  to  strengthen  our  emphasis  upon  facing  the  challenges,  and 
winning  the  rewards,  of  more  rapid  economic  growth.  While  helping  us  to 
achieve  the  goals  we  have  set  for  our  domestic  economy,  these  measures  will 
strengthen  our  ability  to  meet  international  competition. 

One  measure,  designed  to  encourage  business  generally,  and  to  assist  it  in 
modernization  of  machinery  and  equipment,  is  the  8  percent  investment  credit 
recently  recommended  by  this  committee.  This  will  offer  a  powerful  encourage- 
ment to  American  business  to  invest  in  new  machinery  and  equipment. 

A  second  measure  is  the  Treasury  Department's  review  of  the  guidelines  for 
depreciation  in  all  industries.  Substantial  reductions  in  the  suggested  useful 
lives  of  equipment  have  already  been  announced  for  the  textile  industry.  New 
guidelines  will  be  announced  for  all  other  industries  later  this  spring.  Deprecia- 
tion revision  and  the  investment  credit  will  powerfully  assist  American  manu- 
facturers to  modernize  and  sell  at  competitive  prices  at  home  and  abroad.  These 
tax  reforms  should  be  especially  valuable  to  United  States  producers  who  are,  for 
competitive  reasons,  forced  to  speed  their  replacement  of  existing  equipment  with 
more  efficient  machinery. 

A  third  tax  measure  is  now  proposed.  It  appears  as  section  317  of  the  Trade 
Expansion  Bill.  Firms  found  to  be  eligible  for  adjustment  assistance  as  a  conse- 
quence of  increased  imports  could  be  given  tax  relief  in  the  form  of  a  five-year 
carryback  of  net  operating  losses,  as  contrasted  with  the  usual  three-year  carry- 
back. The  additional  carryback  provided  by  the  adjustment  assistance  provisions 
of  the  bill  would  permit  a  firm  suffering  a  net  operating  loss  resulting  from  import 
competition  to  receive  a  refund  of  taxes  paid  in  previous  years.  The  firm,  in 
accordance  with  its  readjustment  plan,  would  be  able  to  use  such  tax  refunds  to 
finance  new  investments  designed  to  restore  profitable  operation. 

Other  forms  of  adjustment  assistance  which  the  bill  would  authorize  include 
loans,  technical  assistance  to  firms,  and  special  readjustment,  training,  and 
relocation  benefits  for  workers. 

The  impact  of  imports  will  be  gradual  enough  to  allow  almost  all  of  the  readjust- 
ment to  be  accomplished  through  normal  retirements  of  workers,  through  normal 
writeoffs  and  abandonment  of  obsolete  production  equipment,  and  the  like,  just 
as  is  the  case  in  response  to  domestic  competition.  The  adjustment  assistance 
provisions,  plus  the  escape  clause,  which  will  be  retained,  are  intended  to  take 
care  of  the  cases  of  hardship  that  are  likely  to  arise. 

The  expenditure  for  adjustment  assistance  to  firms  is  not  expected  to  exceed 
$50  million  annually,  even  after  five  years,  when  the  program  approaches  full 
operation.  As  the  program  is  continued  over  a  period  of  years,  any  outlays 
would  be  offset  to  an  increasing  extent  by  repayments  on  prior  loans.  The 
additional  expenditures  arising  ifrom  benefits  to  workers  are  not  expected  to 
exceed  $20  million  annually. 

In  closing,  I  want  to  emphasize  my  personal  conviction  that  the  Trade  Expan- 
sion Bill  is  one  of  the  indispensable  tools  which  must  be  provided  to  allow  our 
Nation  to  move  toward  the  full  realization  of  its  opportunities  for  economic 
growth,  and  toward  mutually  advantageous  economic  association  with  the  rest 
of  the  free  world. 

If  we  decide  not  to  press  for  wider  trading  opportunities,  what  developments 
should  we  expect?  I  would  hope  that  most  of  our  trading  partners  would  resist 
any  new  resort  to  increased  tariffs  against  us,  involving  deliberate  action  to 
curtail  our  trade  opportunities.  But,  as  internal  tariffs  in  the  Common  Market 
disappear,  and  if  we  have  not  been  able  to  bargain  down  the  outside  tariff  wall 
of  the  Common  Market,  it  may  well  prove  impossible  for  the  United  States  to 


EXHIBITS  419 

avoid  serious  shrinkage  of  our  trade  surpluses  from  the  levels  which  are  already 
proving  inadequate. 

H.R.  9900  has  been  carefully  developed  to  meet  our  need  for  more  far-reaching 
trade  negotiations.  I  consider  that  the  trade  adjustment  program  is  financially 
sound  and  that  it  will  furnish,  at  reasonable  cost,  justified  assistance  to  firms  and 
their  employees  encountering  unusual  difficulty  in  adjusting  to  changes  in  tariff 
rates.  I  am  convinced  that  trade  legislation  of  this  scope  is  essential  if  we  are 
to  achieve  and  maintain  a  reliable  balance  between  our  foreign  payments  and 
receipts  in  the  years  ahead. 

Exhibit  34. — Remarks  by  Secretary  of  the  Treasury  Dillon,  March  21,  1962, 
before  the  North  Carolina  Citizens  Association  on  the  President's  trade 
program 

This  Nation  is  faced  today  with  decisions  that  will  reach  far  beyond  the  time 
of  the  men  who  make  them.  Such  a  decision  is  now  before  the  U.S.  Congress, 
It  is  posed  by  the  President's  trade  program,  which  is  not  just  a  new  tariff  plan, 
but  a  bold  proposal  that  we  compete  on  equal  terms  with  Europe's  Common 
Market. 

If  the  Congress  approves  the  President's  program,  the  resulting  competition 
will  benefit  both  sides  of  the  Atlantic  and  contribute  to  free  world  growth  and 
cooperation  for  years  to  come. 

If  the  President's  proposal  is  rejected,  if  we  attempt  to  retreat  behind  a  high 
tariff  wall,  we  will  have  ignored  an  opportunity  of  lasting  importance  both  to 
our  domestic  economic  growth  and  to  the  international  stability  of  the  dollar. 

The  President's  trade  program  is  a  response  to  the  challenge  of  the  new  Western 
Europe  that  has  risen  miraculously  from  the  ashes  of  postwar  devastation.  We 
are  proud  that  Marshall  Plan  aid  helped  that  recovery.  But  we  recognize  the 
importance  of  economic  and  political  cooperation  within  Europe  in  that  expansion. 
For  the  European  integration  movement,  which  many  hope  will  eventually  produce 
a  United  States  of  Europe,  was  largely  responsible  for  a  spurt  of  economic  growth 
almost  without  parallel  in  history. 

That  growth  has  great  significance  for  the  United  States.  During  the  last 
decade,  our  economic  growth  has  lagged,  while  Western  Europe's  economy  has 
expanded  at  a  rate  roughly  double  our  own.  In  addition,  while  our  defense,  aid, 
and  investment  expenditures  overseas  have  contributed  throughout  that  period 
to  an  outflow  of  dollars,  and  more  recently  of  gold  as  well.  Western  Europe's 
reserves  have  been  mounting,  largely  as  the  counterpart  of  our  losses. 

This  contrast  illustrates  our  two  main  economic  tasks — to  increase  our  rate  of 
long-term  growth,  and  to  ehminate  the  continuing  deficits  in  our  international 
payments.  One  major  way  of  making  significant  progress  toward  both  goals  is 
by  expanding  our  export  trade. 

Increasing  our  exports  to  meet  the  demand  in  new  and  growing  markets  abroad 
will  stimulate  production  in  our  domestic  economy.  It  will  broaden  our  indus- 
trial base  and  help  to  create  the  miUions  of  new  jobs  that  are  needed  in  the  years 
ahead  to  reduce  our  present  unacceptably  high  level  of  unemployment,  to  provide 
for  new  workers  entering  the  labor  force,  and  to  help  those  whose  jobs  will  be 
affected  by  advancing  technology. 

An  expanded  export  trade  is  also  an  essential  step  toward  eliminating  our  bal- 
ance-of-payments  deficits,  which  have  totaled  more  than  $13  biUion  over  the  last 
four  years  and  have  reduced  our  gold  reserves  by  almost  $6  billion. 

We  have  traditionally  exported  more  goods  and  services  than  we  import,  and 
last  year  this  gave  us  a  commercial  surplus  of  $5  billion.  This  surplus  was  not 
great  enough,  however,  to  offset  the  dollar  outflow  from  our  defense,  aid,  and 
investment  expenditures  abroad.  When  all  the  factors  involved  in  our  balance 
of  payments  were  added  up,  the  result  was  a  deficit  of  almost  $2.5  billion.  This 
was  a  third  less  than  in  1960,  but  still  much  too  high. 

Our  currently  prosperous  allies  are  now  beginning  to  help  offset  our  deficit 
through  increased  military  procurement  in  the  United  States,  and  we  expect  them 
to  shoulder  an  increasing  share  of  the  foreign  aid  burden  in  the  future.  But 
any  effective  cure  for  our  continuing  deficit  will  also  require  a  larger  trade  surplus, 
and  this  means  expanded  exports.  To  illustrate:  If  our  commercial  exports  last 
year  had  been  only  14  percent  higher,  about  one-half  of  one  percent  of  our  overall 
national  output,  our  deficit  would  have  been  eliminated. 


420   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  administration  is  taking  steps  to  increase  American  sales  abroad.  These 
include  special  efforts  to  step  up  the  flow  of  information  on  export  opportunities 
and  to  make  our  producers  more  export-conscious,  and  a  new  and  comprehensive 
export  insurance  program  developed  by  the  Export-Import  Bank  in  cooperation 
with  57  casualty  insurance  companies.  Almost  all  administration  economic 
policies  are  designed  to  spur  domestic  investment  in  productive  equipment, 
thereby  creating  greater  efficiency  and  competitive  potential.  Such  policies  in- 
clude a  balanced  budget  which  will  free  funds  to  finance  private  investment 
instead  of  Government  spending;  monetary  and  debt  management  policies  that 
help  to  assure  adequate  investment  funds  at  reasonable  long-term  rates;  the 
proposed  tax  credit  for  productive  investment;  and  modernization  of  tax  depre- 
ciation to  encourage  purchase  of  new  equipment. 

This  broad  program  to  stimulate  investment,  and  thereby  bring  our  industries 
into  step  with  foreign  producers  who  have  been  modernizing  more  rapidly,  will 
put  American  business  in  a  position  both  to  expand  sales  abroad,  and  to  better 
meet  import  competition  in  our  home  markets.  However,  it  will  be  doomed  to 
failure  if  we  allow  prices  and  wages  to  get  out  of  hand.  Wage  increases  in  excess 
of  average  productivity  gains  could  touch  off  a  round  of  wage-price  inflation  that 
could  do  serious  damage  to  our  export  chances. 

Furthermore,  all  our  efforts  to  put  our  producers  in  a  position  to  better  compete 
with  foreign  producers  will  be  meaningless  if  high  tariff  walls  abroad  keep  our 
goods  out  of  foreign  markets. 

That  is  just  what  will  happen  if  Congress  fails  to  give  President  Kennedy  the 
trade  legislation  he  has  asked  for.  Without  it,  our  negotiators  cannot  bargain 
down  the  tariff  wall  around  the  Common  Market.  And  bargain  it  down  we  must. 
As  internal  trade  barriers  go  down  in  Europe,  the  effect  is  to  strengthen  the  ex- 
ternal wall  around  the  Market.  Member  countries  are  pledged  to  ehminate 
internal  barriers,  permitting  their  producers  to  sell  duty-free  anywhere  within 
the  Market  by  1970.  However,  unless  we  negotiate  access  to  the  Market,  Ameri- 
can producers  would  have  to  compete  over  a  tariff  wall — a  wall  that  for  some 
products,  in  some  nations,  would  be  higher  than  it  is  today. 

At  present,  our  exports  to  the  Common  Market  exceed  our  imports  from  it  by 
$1.4  billion — almost  half  of  our  commercial  merchandise  trade  surplus.  While  a 
large  proportion  of  this  surplus  is  due  to  the  sale  of  our  agricultural  products, 
including  cotton,  we  also  have  a  surplus  of  $300  milhon  in  trade  in  manufactured 
products — exports  of  $2.3  billion,  versus  imports  of  only  $2  billion.  Our  surplus 
with  that  area  increased  last  year,  but  without  reductions  in  the  tariff  wall  around 
the  Market,  we  could  not  expect  further  gains.  On  the  contrary,  we  would  expect 
our  surplus  to  shrink. 

Significant  future  reduction  of  the  Market's  outside  tariff  wall  would  be  im- 
possible with  the  type  of  authority  the  President  has  under  existing  law.  That 
law  now  requires  item-by-item  negotiation.  The  Common  Market  countries 
have  found  across-the-board  bargaining  for  whole  groups  of  items  at  a  time  the 
only  practical  method  for  their  own  tariff  negotiations,  hence,  they  have  little 
interest  in  further  item-by-item  negotiation  with  us.  The  recent  tariff  negotia- 
tions between  the  United  States,  the  six  Common  Market  countries,  and  25  other 
nations  at  Geneva  took  17  months.  While  they  resulted  in  20  percent  cuts  in 
tariff's  for  most  Common  Market  industrial  items,  in  exchange  for  smaller  cuts  in 
our  tariffs,  our  effective  authority  under  the  present  law  was  exhausted.  If  we 
want  further  concessions  from  the  Market  countries,  we  must  be  prepared  to 
negotiate  for  whole  groups  of  items. 

That  is  precisely  the  authority  the  Trade  Expansion  Act  of  1962  would  provide. 
Under  the  proposed  legislation,  products  in  which  the  United  States  and  the 
Common  Market  provide  four-fifths  or  more  of  world  trade  would  be  put  in  a 
"dominant  supplier"  group,  on  which  tariffs  could  eventually  be  entirely  elimi- 
nated. Other  tariffs  in  general  could  not  be  reduced  more  than  50  percent. 
Any  tariff  changes  would  go  into  effect  gradually  during  a  five-year  transition 
period,  and  a  i)roposcd  adjustment  assistance  program  would  help  firms  and 
workers  affected  by  increasing  imports  to  meet  new  conditions. 

At  present,  our  tariffs  and  those  of  the  Connnon  Market  are  at  roughly  the 
same  average  level.  This  is  a  good  point  from  which  to  bargain.  Passage  of 
the  new  trade  legislation  would  be  the  best  insurance  we  could  have  for  full  rec- 
iprocity in  tariff  reduction,  since  across-the-board  cuts  by  uniform  percentages 
offer  the  best  opportunity  for  obtaining  full  value  in  tariff  cuts  for  any  concessions 
we  maj'  make. 


1 


EXHIBITS  421 

The  potential  that  Western  Europe's  burgeoning  markets  has  for  our  goods 
cannot  be  overemphasized.  Already  our  exports  to  the  Common  Market  exceed 
our  imports  by  more  than  50  percent,  and  Western  Europe  is  expanding  rapidly. 
New  cars  jam  its  highways — three  times  as  many  as  there  were  10  years  ago.  If 
European  consumption  expands  as  ours  has,  the  implications  for  American  export 
opportunities  could  be  extremely  promising. 

Furthermore,  many  familiar  American  products  are  still  virtually  unknown  in 
Europe.  As  supermarkets,  modern  drugstores,  and  shopping  centers  become 
more  and  more  numerous,  and  Western  Europe  develops  a  high-income,  high- 
consumption  economy  similar  to  ours,  American  manufacturers  will  find  this  to 
be  a  market  in  which  they  can  compete  very  effectively,  because  it  will  be  so 
similar  to  their  home  market. 

Unquestionably,  the  Common  Market  presents  a  challenge,  but  opportiuiity 
far  outweighs  the  risk.  We  must  accept  the  challenge,  which  is  simply  a  challenge 
to  compete  on  equal  terms.  Failure  to  accept  would  involve  risks  far  more  serious 
than  the  threat  of  competition.  We  could  not  ignore  this  challenge  and  expect 
to  maintain  an  adequate  export  trade,  or  expect  to  take  full  advantage  of  our 
potential  for  domestic  growth.  By  failing  to  compete,  we  would  take  the  chance 
of  losing  our  place  as  the  greatest  trading  nation  in  the  world. 

This  audience  is,  of  course,  concerned  with  the  particular  interests  of  North 
Carolina,  and  I  will  take  a  moment  to  discuss  them: 

North  Carolina's  textile  industry  is  outstanding,  and  the  future  of  that  industry 
is  important  to  the  entire  State.  Imports  of  textiles  have  increased  from  just 
over  2  percent  of  total  consumption  in  1957  to  6  percent  in  1960,  and  last  year 
President  Kennedy  promised  to  aid  our  domestic  textile  industry  in  meeting  this 
problem.  He  appointed  a  Cabinet  Committee  on  the  textile  industry  which  was 
headed  by  your  own  illustrious  former  Governor,  Secretary  of  Commerce  Luther 
Hodges.  This  Committee,  on  which  I  also  served,  developed  a  seven-point 
program  which  was  announced  a  little  less  than  a  year  ago. 

As  part  of  that  program,  the  Treasury  gave  top  priority  to  a  review  of  tax 
depreciation  allowances  on  productive  equipment  in  the  textile  and  apparel  in- 
dustry, with  the  result  that  the  guidelines  for  depreciable  "lives"  of  such  ma- 
chinery were  reduced  by  40  percent.  This  allowed  manufacturers,  to  write  off 
the  cost  of  this  machinery  in  15  years,  on  the  average,  rather  than  25.  The  guide- 
line for  sewing  machines,  the  most  important  item  used  by  apparel  manufacturers, 
was  cut  from  15  to  9  years.  This  move  will  result  in  substantial  savings  to  the 
textile  and  apparel  industries  in  North  Carolina.  The  investment  tax  credit  I 
have  already  mentioned  should  be  an  even  more  potent  source  of  help. 

In  addition,  there  was  recently  negotiated  in  Geneva  an  international  cotton 
textile  agreement  which  will  have  the  effect  of  regularizing  textile  imports  into 
the  United  States  for  the  next  five  years.  Under  this  agreement,  no  increase  in 
imports  over  the  level  of  the  year  ending  June  30,  1961,  is  required  for  two  years. 
Thereafter,  the  required  annual  increase  in  imports  from  all  sources  does  not 
exceed  5  percent,  or  15  percent  over  the  5-year  period.  On  the  other  hand,  the 
European  countries  which  have  traditionally  kept  strict  controls  on  imports  of 
Japanese  textiles  have  agreed  to  double  their  imports  over  the  coming  5-year 
period.  I  would  like  to  emphasize  that  this  result  was  not  accomplished  through 
the  unilateral,  protectionist  approach  of  imposing  mandatory  import  quotas. 
Rather,  the  agreement  was  made  under  the  auspices  of  the  General  Agreement  on 
Tariffs  and  Trade  and  in  a  framework  of  mutual  international  consent.  This 
shows  that  it  is  possible  to  work  effectively  with  the  other  free  nations  of  the 
world  on  problems  which  directly  affect  us  here  at  home. 

North  Carolina  also  has  a  tremendous  stake  in  our  export  trade.  In  1960, 
for  instance.  North  Carolina  exported  more  than  $600  million  worth  of  goods 
to  other  nations.  North  Carolina  sold  abroad  $400  million  worth  of  manufac- 
tured goods  giving  employment  to  an  estimated  28,000  workers.  An  additional 
51,000  farm  workers  in  this  State  were  estimated  to  be  involved  in  producing 
the  more  than  $200  million  worth  of  agricultural  products  exported  from  North 
Carolina.  The  top  exporting  industry  in  this  State  is  the  tobacco  products 
industry,  with  almost  $200  million  in  exports.  It  is  significant  that  among 
the  best  customers  for  such  products  are  France,  Belgium,  the  Netherlands 
and  Luxembourg,  four  of  the  six  members  of  the  Common  Market.  The  second 
major  exporting  industry  was  textile  mill  products,  with  more  than  $80  million 
exported  from  North  Carolina  in  1960. 


422   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  President's  trade  program  then,  is  as  important  to  North  Carolina  as 
it  is  to  other  States,  It  would  not  be  fair  to  discuss  it,  however,  without  con- 
sidering some  of  the  objections  that  have  been  raised. 

There  are  those  who  believe  that  our  industry  will  be  imable  to  compete  against 
low-wage  foreign  competition.  It  is  true  that  our  wages  are  higher  than  foreign 
wages,  but  wages  alone  don't  determine  price.  The  important  factor  is  overall 
unit  cost,  not  hourly  wage  rates,  and  that  is  why  we  are  emphasizing  domestic 
investment,  to  keep  overall  unit  cost  down.  Our  high-wage  industries  often 
do  better  against  foreign  competition,  both  at  home  and  abroad,  than  do  our 
low-wage  industries.  An  American  coal  miner,  for  example,  is  paid  eight  times 
as  much  as  a  Japanese  miner,  but  produces  14  times  as  much  coal.  The  result 
is  that  despite  higher  wages,  we  sell  tens  of  millions  of  dollars  worth  of  coal  to 
Japan  annually.  It  should  also  be  remembered  that  rapid  economic  expansion 
in  other  industrialized  countries  has  produced  severe  labor  shortages,  which, 
with  other  factors,  are  creating  increasing  upward  pressure  on  foreign  wages 
and  prices. 

Another  objection  is  based  on  the  belief  that  lowering  our  tariff  barriers  would 
result  in  a  flow  of  imports  that  would  seriously  damage  domestic  industries  and 
hurt  our  economy.  Quite  the  contrary,  a  major  reason  for  the  trade  legislation 
is  to  provide  further  scope  for  growth.  We  are  now  importing  about  $15  billion 
worth  of  goods  from  abroad,  but  60  percent  of  our  imports  do  not  offer  any  serious 
competition  to  domestic  products,  either  because  there  is  no  domestic  production 
of  the  commodities  involved,  or  because  the  commodities  are  not  produced 
here  in  any  significant  quantity. 

It  would,  however,  be  unrealistic  to  assume  that  no  domestic  industries  will 
be  injured.  For  that  reason.  President  Kennedy  has  included  in  the  proposed 
trade  bill  provisions  for  temporary  assistance  to  such  firms  and  workers.  This 
assistance  includes  loans  and  technical  assistance  to  affected  businesses  as  well 
as  special  readjustment,  training,  and  relocation  benefits  for  workers.  In  addi- 
tion, eligible  firms  could  get  tax  relief,  by  allowing  a  carryback  of  operating 
losses  over  five  years  instead  of  three.  This  would  permit  some  firms  to  get 
refunds  of  taxes  paid  in  previous  years.  Such  refunds  could  be  used  to  finance 
investments  designed  to  restore  profitable  operation. 

A  third  objection  is  that  such  adjustment  assistance  will  prove  extremely 
expensive,  and  will  provide  a  chronic  drain  on  the  Treasury.  This  is  not  the 
case,  because  the  impact  of  increased  imports  will  be  gradual  enough  to  allow 
almost  all  of  the  readjustment  to  be  accomplished  through  the  normal  retirement 
of  workers  and  the  normal  writeoffs  and  abandonment  of  obsolete  production 
equipment,  just  as  is  the  case  in  response  to  domestic  competition.  The  adjust- 
ment assistance  provisions,  plus  the  escape  clause,  which  will  be  retained,  are 
intended  to  take  care  of  the  cases  of  hardship  that  are  likely  to  arise.  The  ex- 
penditure for  adjustment  assistance  to  firms  is  not  expected  to  exceed  $50  million 
annually,  even  after  five  years,  when  the  full  effect  of  tariff  cuts  would  be  felt. 
As  the  program  is  continued  over  a  period  of  years,  any  outlays  would  be  offset 
to  an  increasing  extent  by  repayments  on  prior  loans.  The  additional  expendi- 
tures arising  from  benefits  to  workers  are  not  expected  to  exceed  $20  million 
annually. 

A  fourth  objection  sometimes  made  to  the  trade  program  is  that  increased 
imports  will  take  jobs  away  from  American  workers  at  a  time  when  the  United 
States  needs  to  provide  more  jobs.  Secretary  of  Labor  Arthur  Goldberg  has 
estimated  that  over  the  five-year  period  during  which  tariff  reductions  would  be 
put  into  effect,  the  nation  as  a  whole  would  lose  only  18,000  jobs  a  year  as  a  result 
of  rising  imports,  only  one-fortieth  of  one  per  cent  of  our  labor  force.  Far  more 
important,  however,  is  the  expected  increase  in  jobs  during  the  same  period  as  a 
result  of  expanding  exports.  While  it  is  impossible  to  make  accurate  measure- 
ments of  such  matters.  Secretary  Goldberg  estimated,  on  the  basis  of  past  ex- 
perience, that  three  times  as  many  jobs  would  be  created  by  new  exports  as  would 
be  lost  through  increased  imports. 

We  must  also  consider  the  workers  whose  jobs  now  depend  on  exports,  a  group 
that  far  outnumbers  the  workers  involved  in  imports,  and  take  account  of  what 
trade  means  to  them.  One  out  of  every  eight  farm  workers  produces  for  export, 
and  nearly  eight  percent  of  our  employment  in  manufacturing  is  attributable 
to  exports.  In  all,  more  than  three  million  workers  directly  or  indirectly  owe 
their  jobs  to  exports.  Failure  to  pass  the  trade  program,  by  making  it  rnore 
difficult  to  sell  our  goods  in  Western  Europe,  would  certainly  threaten  the  jobs 
of  those  who  depend  on  exports. 


EXHIBITS  423 

We  have  no  cause  to  fear  competition  on  equal  terms  with  the  Common  Market, 
Such  competition  will  have  broad  benefits  for  us  and  for  the  entire  free  world. 
With  the  new  trade  legislation  we  can  look  forward  to  a  strong  free  world  com- 
munity of  thriving  nations,  with  ever-expanding  trade  between  them.  Without 
it  we  face  the  possibility  tliat  tariff  barriers  will  create  a  number  of  separate 
trading  blocs,  each  the  potential  economic  and  political  rival  of  the  others.  Delay 
or  inadequate  authority  could  encourage  the  Common  Market  to  develop  its  new 
and  growing  markets  without  us,  making  it  difficult  or  impossible  for  us  to  regain 
lost  export  markets  at  a  later  date. 

We  in  this  nation  have  never  doubted  our  productive  ability.  It  has  given  us 
the  highest  standard  of  living  in  the  world,  and  we  expect  it  will  continue  to  do  so. 
The  trade  program  is  an  opportunity  to  demonstrate  to  the  entire  world  the  vitality 
and  strength  of  our  free  market  economy.  I  urge  that  you  give  it  your  strong 
support. 

Exhibit  35.— Report  to  the  President  by  Secretary  of  the  Treasury  Dillon, 
March  26,  1962,  on  the  balance  of  payments 

A  little  more  than  a  year  ago,  shortly  after  taking  office,  you  outlined  in  a  spe- 
cial message  to  the  Congress  a  broad  and  energetic  attack  on  the  balance-of-pay- 
ments  problem  facing  this  country.  In  response  to  the  clear  and  urgent  need,  a 
wide  variety  of  measures  have  been  introduced  and  pursued  with  vigor  by  all  agen- 
cies concerned.  At  your  direction,  I  have  assumed  special  responsibility  for 
continuous  review  of  all  these  activities,  and  for  reporting  to  you  at  frequent 
intervals  on  the  status  of  our  international  accounts.  It  is  time  now  for  me  to 
measure  our  progress  over  the  past  year,  and  to  assess  the  hard  tasks  that  still  lie 
ahead. 

During  1961,  the  immediate  pressures  apparent  at  the  time  you  took  office 
were  relieved.  Confidence  in  the  dollar  was  strengthened;  the  gold  outflow 
slowed;  and  the  deterioration  in  our  world  competitive  position  arrested.  Never- 
theless, I  must  report  that  the  task  of  eliminating  our  balance-of-payments  deficit 
has  only  begun.     Until  it  is  finished,  we  cannot  rest  easy. 

The  main  responsibility  for  righting  our  deficit  lies  in  our  own  hands — in  the 
sustained  efforts  of  Government,  business,  and  labor.  But  the  cooperation  of 
other  free  countries  is  also  essential  if  we  are  to  build  a  stronger  international 
financial  system.  That  system  must  be  capable  not  only  of  supporting  and  nour- 
ishing expanded  trade  among  the  free  nations  but  also  of  withstanding  the  strains 
and  pressures  that  are  an  inevitable  part  of  progress  in  this  restless  world. 

The  results  of  our  efforts  thus  far  have  been  good  enough  to  justify  confidence 
that  we  have  made  the  right  start;  they  are  not  so  good  as  to  justify  complacency. 
Part  of  our  improvement  in  1961  came  from  palliatives,  and  palliatives  must  be 
continued  in  1962.  But  the  cure  has  also  begun  to  work,  and  it  can  be  a  lasting 
cure,  so  long  as  we  recognize  that  it  can  be  neither  simple  nor  painless. 

Full  success  will  require  time.  The  necessary  time  is  ours — if  we  use  it  effec- 
tively. Today  the  dollar  is  still  strong,  bulwarked  by  over  40  percent  of  the  mon- 
etary gold  stock  of  the  free  world.  Time  will  not  be  our  ally  if  we  waste  it,  for 
then  confidence  will  be  shaken,  the  basis  for  essential  cooperation  among  the 
leading  financial  powers  lost,  and  the  future  will  be  in  doubt. 

The  nature  of  the  problem 

In  1961,  our  basic  accounts,  which  sum  up  all  our  recorded  transactions  with 
foreigners  except  flows  of  short-term  capital,  were  in  deficit  to  the  extent  of  $600 
million,  a  substantial  reduction  from  the  basic  deficits  of  $1.9  billion  in  1960  and 
$4.3  billion  in  1959.  This  reduction  reflected  both  a  larger  export  surplus  and  re- 
duced net  payments  abroad  on  Government  account — progress  in  the  directions 
we  must  move.  But,  it  is  clear  that  our  progress  did  not  stem  entirely  from  fac- 
tors of  a  lasting  sort. 

The  large  surplus  of  over  $3  billion  in  our  trade  accounts,  excluding  those 
exports  financed  by  Government  grants  and  capital,  resulted  in  part  from  the  low 
import  levels  that  accompanied  the  recent  recession.  In  addition,  special  debt 
prepayments  to  the  United  States — by  the  Federal  Republic  of  Germany,  the 
Netherlands,  the  Philippines,  and  Italy — contributed  almost  $700  million  to  our 
receipts,  a  much  larger  amount  than  can  be  expected  year  after  year.  Because 
these  special  factors  were  concentrated  in  the  early  part  of  the  year,  our  basic 
deficit  increased  appreciably  during  the  final  six  months. 


424   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Moreover,  on  top  of  the  basic  deficit,  short-term  capital  continued  to  flow- 
abroad  in  amounts  only  slightly  less  than  during  1960.  These  flows  were  much 
less  disturV^ing  than  in  1960,  when  speculation  against  the  dollar  developed.  They 
did  not  reflect  or  arouse  the  same  doubts  over  the  future  of  the  dollar.  Instead, 
more  of  the  outflow  in  1961  consisted  of  commercial  credits  to  other  countries, 
w^hich  helped  to  support  a  continued  expansion  of  trade.  But  this  was  only  part 
of  the  cause,  and  last  year  the  size  of  the  short-term  capital  outflow  clearly  aggra- 
vated our  problem. 

Altogether,  our  deficit  in  1961  amounted  to  nearly  $2.5  billion.  While  sharply 
below  the  average  of  $3.7  billion  for  the  three  previous  years,  this  is  still  far  from 
our  target  of  equilibrium  in  our  international  accounts.  A  deficit  of  the  propor- 
tions of  1961  could  be,  and  was,  financed  without  placing  new  strains  on  the 
monetary  system  only  because  confidence  in  the  dollar  was  strong  and  our  determi- 
nation to  meet  our  problem  was  apparent. 

A  little  over  a  third  of  our  deficit  in  1961,  or  $857  million,  was  reflected  in  gold 
sales  from  our  monetary  stocks.  Of  this,  $324  million  was  purchased  by  foreigners 
in  the  single  month  of  January,  before  you  had  made  clear  the  determination  of 
this  administration  to  maintain  the  value  of  the  dollar  and  to  take  the  vigorous 
measures  neccessary  to  restore  a  balance  to  our  international  accounts  without 
resort  to  direct  controls  or  restrictions. 

Our  ability  to  finance  our  deficit  in  1961  cannot  be  permitted  to  obscure  the 
nature  of  the  continuing  problem  Vjefore  us.  This  country  is  agreed  on  its  vital 
responsibilities  for  leadership  in  the  defense  of  the  free  world  and  for  assisting 
the  developing  nations  to  find  a  better  life  in  free  societies.  But  it  is  not  always 
understood  that  these  burdens  cannot  be  carried  if  we  do  not,  over  a  series  of 
years,  earn  a  larger  surplus  in  our  commercial  accounts. 

Equally  important  is  the  fact  that  a  sound  dollar  is  essential  to  the  strength 
and  stability  of  the  whole  international  monetary  system,  and  thus  a  vital  con- 
cern to  all  our  allies  and  trading  partners.  American  dollars,  side  by  side  with 
gold,  are  a  part  of  the  basic  reserves  of  nearly  every  country  in  the  free  world. 
They  use  dollars  to  finance  much  of  their  worldwide  trade,  to  pay  for  shipping 
and  transportation,  and  to  support  their  foreign  investment  or  borrowing.  It  is 
this  universal  acceptability  of  the  dollar  as  a  reserve  and  trading  currency  that 
has  made  possible  a  vast  expansion  in  world  trade. 

The  dollar  can  continue  to  perform  these  functions  onl}-  so  long  as  it  is  reliable. 
It  must  be  immediately  reliable  as  a  currency  that  can  be  converted  into  gold 
at  a  fixed  price.  It  must  be  ultimately  reliable  as  a  solid  claim  on  the  enormous 
and  richly  varied  resources  of  our  abundant  economy,  a  claim  undiluted  by  infla- 
tion, creeping  or  rapid. 

The  broad  challenge  before  us  is  to  maintain  the  value  of  the  dollar  unques- 
tioned, and  to  do  so  without  impairing  our  vital  domestic  objectives,  the  strength 
of  our  mutual  defense,  or  our  ability  to  assist  the  less  fortunate  nations  along  the 
path  to  prosperity  and  freedom.  In  the  end,  these  tasks  are  mutually  reinforcing. 
We  cannot  afford  to  neglect  one  for  another,  for  only  when  our  economy  is  expand- 
ing at  home,  our  defenses  strong,  and  the  poorer  countries  are  making  visible 
progress  can  we  command  the  sort  of  confidence  in  our  own  future  that  is  necessary. 

The  overall  objectives 

Our  programs  and  policies  to  maintain  the  strength  of  the  dollar  within  a  frame- 
work of  free  and  expanding  markets  at  home  and  abroad  are  focused  on  two 
broad  and  related  objectives: 

First,  we  must  eliminate  the  deficits  in  our  international  accounts,  taking  the 
good  years  and  the  bad  together,  so  that  prolonged  and  excessive  drains  on  our 
own  reserves  cease.  This  will  require,  above  all,  that  we  achieve  a  still  larger 
commercial  surplus  by  competing  more  \igorously  with  producers  of  other  coun- 
tries both  in  foreign  markets  and  at  home.  It  also  requires  that  we  reduce  our 
net  payments  to  other  countries  on  Government  account  to  the  minimum  required 
by  national  security  and  economic  development  objectives.  And,  we  must  elim- 
inate from  our  tax  system  artificial  incentives,  grounded  in  neither  equity  nor 
economic  efficiency,  to  moving  capital  abroad. 

Second,  on  this  firm  base,  we  must  build  a  stronger  framework  of  mutual  coop- 
eration among  governments  and  monetary  authorities.  Acting  with  our  partners, 
we  must  be  able  to  defend  the  international  monetary  structure  from  speculative 
excesses  and  other  strains.  In  particular,  while  allowing  short-term  funds  to  move 
freely  from  country  to  country  in  accordance  with  private  initiative,  we  must 


EXHIBITS  425 

make  it  impossible  for  sudden   and   capricious  movements  to   undermine  the 
stability  of  the  payments  system. 

To  achieve  these  objectives,  the  energies  and  resources  of  all  agencies  of  the 
U.S.  Government  have  been  mobilized  to  specific  tasks  in  the  area  of  their  respon- 
sibilities. To  assure  that  the  proper  priorities  are  maintained  and  the  appropriate 
sense  of  urgency  prevails  throughout  Government,  1  have,  under  your  authority, 
established  procedures  for  continuous  review  of  all  these  activities.  Full  reports 
on  the  actions  of  all  Government  departments  and  agencies  are,  as  you  know, 
prepared  for  your  review  at  least  once  every  three  months.  Special  actions  being 
taken  or  needed  throughout  the  Government  to  overcome  our  balance-of-pay- 
ments  problem  are  brought  to  your  attention  promptly,  and  you  have  issued  a 
series  of  directives,  and  sent  to  Congress  a  number  of  proposals,  to  intensify  and 
coordinate  these  efforts. 

Eliminating  the  deficit 

The  balance  of  payments  is  made  up  of  countless  individual  transactions,  each 
responding  to  a  wide  variety  of  factors.  Among  these  factors,  some  are  under 
the  direct  control  of  Government;  others  reflect  the  performance  of  our  whole 
domestic  economy,  and  still  others  the  policies  and  performance  of  other  nations. 
Amid  these  complexities,  there  can  be  no  satisfactory  single  solution  to  the  deficit. 
What  is  needed  is  a  concerted  effort  on  all  fronts — by  the  Government,  business, 
labor,  and  finance  in  this  country  and  by  other  leading  countries  as  well,  particu- 
larly those  whose  balance-of-payments  surpluses  rejjresent  the  opposite  side  of 
our  deficit. 

The  first  line  of  attack 

The  first  line  of  attack  on  our  balance-of-payments  deficit  consists  of  measures 
to  curtail  the  outflow  of  dollars  stemming  from  the  activities  of  Government  itself. 
Many  of  these  measures  are  now  well  advanced,  and  contributed  to  the  improve- 
ment in  1961.  Others  are  just  now  becoming  effective,  and  should  provide  needed 
help  this  year.  But  still  more  can  and  is  being  done  to  assure  that  all  Govern- 
ment programs  are  fully  adjusted  to  the  needs  of  today. 

The  Secretary  of  Defense  is  conducting  negotiations  with  certain  of  our  allies 
to  offset,  through  the  purchase  by  them  of  additional  U.S.  military  equipment 
and  services,  the  heavy  payments  which  we  must  make  to  maintain  and  support 
American  forces  in  their  countries  participating  in  the  common  defense.  Ex- 
penditures for  defense  purposes  overseas  were  close  to  $3  billion  in  1961.  It  is 
expected  that  our  total  sales  of  military  equipment  and  services  will  result  in 
payments  to  the  United  States  of  more  than  $1  billion  this  year,  compared  to  less 
than  half  as  much  in  1961.    This  will  help  greatly  in  reducing  our  1962  deficit. 

The  Defense  Department  has  also  directed  the  return  of  procurement  to 
United  States  sources  of  a  portion  of  the  major  equipment,  supplies,  and  services 
formerly  purchased  in  foreign  countries  for  the  supply  of  our  armed  forces  overseas. 
It  is  streamlining  overseas  deploynients  and  pruning  installations  with  a  view  to 
conserving  dollars  within  the  framework  of  our  needed  defense  requirements. 
Military  and  civilian  personnel  and  their  dependents  are  being  urged  to  reduce 
their  personal  expenditures  overseas  and  to  channel  their  family  savings  into 
U.S.  savings  bonds  and  other  American  securities  or  savings  institutions. 

In  our  economic  assistance  programs,  we  are  reducing  the  portion  transferred 
to  foreign  countries  in  the  form  of  dollars  rather  than  U.S.  goods  and  services. 
Conversely,  the  share  of  our  aid  transferred  in  the  form  of  U.S.  goods  and  services 
is  being  increased.  Because  a  substantial  part  of  current  expenditures  stems  from 
commitments  made  under  earlier  policies,  the  full  results  of  our  new  emphasis 
have  not  yet  been  reflected  in  the  balance-of-payments  data.  Roughly  two-thirds 
of  the  funds  expended  for  all  our  foreign  economic  assistance  programs  in  1961 
(including  foreign  currency  sales  of  agricultural  surpluses)  were  initially  utilized 
for  expenditure  in  the  United  States.  The  portion  spent  in  this  country  will 
increase  as  procurement  orders  under  present  directives  become  more  fully  re- 
flected in  our  balance  of  payments.  Ways  are  being  developed  to  reduce  still 
further  the  impact  of  economic  assistance  on  our  balance  of  payments — without 
damage  to  the  objectives  of  the  AID  program. 

Our  program  for  bartering  agricultural  surpluses  under  Public  Law  480  is 
being  reexamined  to  make  sure  it  will  not  adversely  affect  the  balance  of  payments 
of  the  United  States.  The  danger  is  that,  in  some  instances,  potential  export  sales 
for  dollars  may  be  diverted  into  barter  arrangements  that  return  to  this  country 


426   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

imports  for  which  there  is  no  current  need.  This  problem  should  be  recognized 
in  any  modification  of  legislation  or  additional  appropriations  for  the  barter 
programs  contemplated  by  the  Congress. 

Longer  range  programs 

The  task  of  reaching  a  balance  in  our  international  accounts  is  not  one  that 
Government  can  achieve  alone.  The  private  sector  of  the  economy  has  an  even 
more  vital  role  to  play.  Long-run  equilibrium  will  be  reached  and  maintained 
only  if  private  industry  improves  its  efficiency  more  rapidly,  produces  goods  and 
services  fully  competitive  in  world  markets,  and  actively  seeks  out  and  fully  ex- 
ploits its  export  opportunities. 

Here,  Government  can  act  as  a  prod  and  catalyst  and  help  assure  the  proper 
environment.  We  have  recognized  that,  if  business  moves  ahead  as  we  expect, 
a  balanced  budget  in  fiscal  1963  is  an  essential  part  of  this  environment.  It  will 
assure  that  the  overall  fiscal  program  of  the  Government  is  in  keeping  with  the 
need  to  avoid  excesses  in  our  domestic  economy  and  to  release  savings  and  re- 
sources for  productive  investment.  Moreover,  our  monetary  policies  are  being 
conducted  in  a  manner  to  assure  that  ample  credit  is  available  to  finance  domestic 
growth  without  providing  new  fuel  for  inflation.  But,  in  the  last  analysis,  the 
critical  decisions  and  the  crucial  actions  are  those  of  private  citizens. 

Above  all  else  is  the  compelling  need  for  business  and  labor  to  exert  conscious 
restraint  in  shaping  wage  and  price  policies.  Our  industry  cannot  remain  com- 
petitive if  we  repeat  the  pattern  of  the  1950's,  when  prices  of  industrial  goods  in 
this  country  advanced  more  rapidly  than  those  of  our  leading  competitors.  Prices 
of  American  manufactured  goods  exports,  for  instance,  rose  14  percent  relative  to 
those  of  other  industrialized  nations  from  1953  to  1960.  Over  the  same  period, 
our  share  of  world  exports  of  manufactures  declined  from  25.9  percent  to  21.6 
percent. 

All  the  agencies  of  Government  directly  concerned — the  Council  of  Economic 
Advisers,  the  Departments  of  Labor  and  Commerce,  and  we  in  the  Treasury — are 
cooperating  in  the  effort  to  bring  home  to  all  Americans  the  key  fact  that  the 
United  States  can,  in  this  intensely  competitive  world,  win  the  battle  for  markets 
only  by  doing  a  better  job  in  restraining  our  own  prices  and  costs.  Your  Labor 
and  Management  Advisory  Committee,  too,  is  fully  aware  of  the  importance  of 
price  stability  to  our  international  payments  situation,  as  well  as  to  our  domestic 
economic  welfare.  That  Committee  can  be  of  continued  and  even  greater  help 
in  the  future. 

The  Council  of  Economic  Advisers  has  set  forth  guideposts  for  wage  and  price 
decisions  consistent  with  our  longrun  needs.  These  guideposts  would  permit 
increases  in  average  wages  over  time  in  line  with  increases  in  national  productivity. 
They  would  allow  for  the  correction  of  existing  inequities  in  the  wage  structure, 
and  would  permit  market  forces  to  be  appropriately  reflected  in  relative  wages  and 
prices.  They  do  not  provide  precise  answers  to  every  question  that  arises  amid 
the  tug  and  pull  of  collective  bargaining  and  pricing  decisions.  But  they  can 
indicate,  amid  the  strong  pressures  on  both  labor  and  management  to  seek  what- 
ever bargaining  advantage  the  moment  offers,  where  the  public  interest  lies. 

Fortunately,  we  have  so  far  come  out  of  the  recent  recession  without  price 
increases.  Wholesale  prices  of  industrial  commodities  are  actually  a  bit  lower 
than  a  year  ago  despite  a  gain  in  production  of  over  12  percent — altogether  the 
best  performance  of  the  postwar  years.  At  the  same  time,  prices  in  most  foreign 
countries  have  tended  to  rise.  But,  as  the  domestic  economy  moves  ahead,  and 
the  benefits  of  extraordinary  gains  in  productivity  tj'pical  of  the  early  stages  of 
recovery  are  absorbed,  we  cannot  relax  our  vigilance. 

A  year  ago,  in  taking  office,  you  suggested  that  it  was  the  responsibility  of  every 
citizen  to  ask  what  he  could  do  for  his  country.  In  this  area  of  price  and  wage 
decision,  that  challenge  is  clear  and  specific. 

More  rapid  modernization  of  our  industrial  plants,  so  that  the  United  States 
can  retain  its  leadership  in  efficient  production,  is  another  essential  part  of  our 
longer  run  effort  to  achieve  and  maintain  a  stronger  position  in  export  markets. 
Improved  efficiency  is  the  only  way  that  we  can  hope  to  achieve  faster  growth  at 
home  and  a  better  life  for  all  of  our  citizens,  while  still  meeting  our  commitments 
abroad  and  remaining  competitive  in  world  markets. 

This  improved  efficiency  is  in  good  part  dependent  on  bringing  to  our  factories 
the  fruits  of  modern  science  and  technology.  Congress  now  has  before  it  a  bill 
that  would  provide  a  tax  credit  to  be  applied  against  purchases  of  new  industrial 
equipment.     Within  the  framework  of  existing  laws,  the  Treasury  also  has  under- 


EXHIBITS  427 

way  a  program  of  depreciation  reform,  updating  the  outmoded  guidelines  set 
years  ago  and  permitting  faster  writeoffs  in  line  with  current  experience  and 
technology.  Together,  these  key  reforms  will  provide  incentives  for  new  in- 
vestment in  the  United  States  comparable  to  those  available  to  investment  in 
productive  facilities  in  other  industrialized  countries  of  the  free  world. 

At  the  same  time,  our  payments  situation  underlines  the  importance  of  removing 
from  our  tax  laws  those  provisions  that  give  an  unwarranted  stimulus  to  in- 
vestment by  American  firms  in  the  developed  countries  abroad.  American 
business  does  not  require  the  use  of  special  tax  privileges,  and  particularly  access 
to  tax  havens  that  avoid  practically  all  taxes,  to  operate  effectively  in  developed 
countries  with  business  tax  systems  comparable  to  ours. 

Price  stability  and  improved  efficiency  provide  the  essential  underpinnings  for 
any  effort  to  expand  our  commercial  trade  surplus  by  penetrating  export  markets 
aggressively  while  at  the  same  time  meeting  import  competition  without  resort 
to  restrictions.  But,  in  addition,  Government  officials  and  businessmen  alike 
must  become  export  minded — much  more  so  than  ever  before.  To  assure  that 
the  opportunities  open  to  us  are  fully  exploited,  efforts  within  Government  to 
facilitate  and  encourage  the  flow  of  American  goods  and  services  to  foreign 
markets  have  been  greatly  increased. 

The  foreign  trade  functions  of  the  Foreign  Service  and  the  Department  of 
Commerce  have  been  reshaped  and  infused  with  fresh  energy  so  that  American 
business  can  be  made  aware  of  export  opportunities  as  they  arise.  Foreign  market 
surveys  by  our  Foreign  Service  numbered  over  34,000  in  1961,  an  increase  of 
73  percent  over  1960.  The  Commerce  Department  has  established  a  National 
Export  Expansion  Council,  linked  to  14  regional  councils  throughout  the  United 
States  on  which  1,000  business  executives  are  being  asked  to  serve. 

Efforts  to  familiarize  foreign  businessmen  with  American  products  and 
firms  are  also  being  intensified.  The  U.S.  Trade  Center  Program,  initiated 
successfully  in  London  last  year,  is  being  expanded — centers  in  Bangkok, 
Frankfurt,  and  Tokyo  will  open  in  1962.  Last  year  we  participated  in  11  inter- 
national trade  fairs  and  sent  special  trade  missions  to  12  countries. 

The  Department  of  Agriculture,  utilizing  foreign  currencies  received  from 
our  sales  of  surpluses  abroad,  has  expanded  its  program  to  develop  foreign  markets 
for  American  wheat,  feed  grains,  rice,  and  other  agricultural  products.  Forty 
private  trade  groups  are  associated  with  the  Department  in  this  effort.  In  1961 
alone,  agricultural  trade  promotion  exhibits  were  provided  at  20  international 
fairs  in  Europe,  Africa,  the  Far  East,  and  Latin  America. 

The  Export-Import  Bank,  in  cooperation  with  60  insurance  companies,  has 
developed  a  broad  program  of  export  credit  insurance  to  be  carried  out  through 
the  newly  created  Foreign  Credit  Insurance  Association.  The  FCIA,  which 
began  operations  early  in  February,  is  offering  to  exporters  throughout  the  United 
States  a  single  insurance  policy,  backed  by  extensive  Government  guarantees, 
covering  both  commercial  and  political  risks  connected  with  U.S.  export  sales 
to  buyers  in  friendly  foreign  countries.  When  fully  effective,  this  new  insurance 
program,  together  with  existing  Government  and  private  facilities,  should  permit 
the  American  exporter  to  offer  export  credit  on  a  footing  at  least  as  favorable  as 
available  to  his  foreign  competitors. 

To  promote  foreign  travel  to  the  United  States,  and  thereby  reduce  our 
deficit  of  roughly  $1  billion  a  year  on  foreign  travel  account,  the  Department  of 
Commerce  has  established  a  new  agency,  the  U.S.  Travel  Service,  assisted  by  a 
36-man  Travel  Advisory  Committee  drawn  from  our  private  travel  and  tourist 
industry.  United  States  travel  promotion  personnel  are  now  established  in 
seven  foreign  cities  and  are  working  with  travel  agents,  carriers,  and  the  general 
public  in  30  foreign  countries. 

Procedures  for  entry  into  the  United  States  for  foreign  business  and  vacation 
travelers  have  been  simplified.  Most  visas  for  such  visitors  are  now  issued  in  less 
than  30  minutes.  The  Department  of  State  last  year  recommended  legislation 
designed  to  simplify  visa  requirements  for  travelers  still  further  and  eliminate 
them  entirely  on  the  basis  of  reciprocity.  Congress  failed  to  act  on  this  proposal 
last  year,  but  it  will  be  resubmitted  at  the  present  session. 

To  assure  that  the  maximum  potential  from  this  wide  variety  of  efforts  is 
reached.  Secretary  Hodges  and  I  recommend  that  you  appoint  an  Export  Co- 
ordinator in  the  Department  of  Commerce.  He  should  be  a  top  level  official, 
concentrating  wholly  on  the  overriding  need  to  expand  our  export  sales. 

The  Export  Coordinator  would  be  responsible  for  developing,  in  consultation 
with  private  business,  meaningful  export  targets  by  industry,  and  by  country  and 


428   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

region  of  destination.  He  would  assure  that  the  vast  facilities  of  Government 
are  used  to  best  advantage  in  helping  our  exporters  to  reach  these  targets.  He 
would  keep  a  close  watch  on  performance,  pursuing  through  his  own  small  staff 
and  existing  channels  the  reasons  for  any  shortfalls  and  assisting  in  the  removal 
of  obstacles  as  they  develop.  Finally,  he  should  identify  new  problems  that 
might  arise,  and  make  recommendations  for  dealing  with  them  to  the  proper 
officials. 

The  role  of  other  countries 

The  deficit  in  our  own  balance  of  payments  has  its  counterpart  in  the  surpluses 
of  other  countries.  These  surpluses,  in  recent  years,  have  been  largely  concen- 
trated in  several  of  the  industrialized  countries  in  continental  Western  Europe. 
These  countries  have  as  great  a  responsibility  for  cutting  down  their  surpluses  as 
we  have  for  reducing  our  deficit,  if  the  international  monetary  system  is  to  be 
both  strong  and  stable. 

Substantial  advances  have  occurred  over  the  past  year  in  this  sharing  of 
responsibility.  There  were  the  military  arrangements  and  sizable  debt  prepay- 
ments by  certain  of  our  allies  already  mentioned.  Further  agreements  along 
these  lines  are  anticipated  during  1962.  But  there  must  be  more.  We  are  hard 
at  work  now  developing  the  means. 

Only  a  beginning  has  been  made  in  mutual  support  for  the  expanding  needs 
of  the  developing  countries  for  economic  assistance,  on  terms  and  conditions 
suited  to  their  circumstances.  Conventional  loans,  repayable  within  relatively 
short  periods  at  high  rates  of  interest,  do  not  adequately  meet  these  needs. 
Other  industrialized  countries,  in  the  years  ahead,  must  contribute  much  more 
assistance  to  the  developing  countries,  and  on  better  terms.  Tliis  must  be  a 
continuing  objective  of  our  foreign  policy. 

In  most  industrialized  countries,  businesses  and  individuals  are  still  not  free 
to  invest  where  and  when  they  wish  outside  their  own  currency  areas.  Frequently, 
they  are  not  free  to  invest  in  the  United  States  when  they  want  to,  and  in  ways 
they  prefer.  Such  restrictions  can  no  longer  be  generallj'  justified  on  balance-of- 
payments  grounds.  Continued  use  of  them  is  especially  anomalous  in  the  case 
of  the  countries  with  large  and  growing  monetary  reserves. 

Surplus  countries  should  move  boldly  now  in  freeing  those  capital  movements. 
Moreover,  our  longtime  objective — removal  of  controls  over  trade  itself — is  only 
partially  fulfilled.  To  be  sure,  quotas  and  other  quantitative  restrictions,  so 
common  earlier  in  the  postwar  period,  are  now  largely  gone  for  manufactured 
goods  in  the  industrialized  countries.  That  has  been  a  great  gain.  But  l^arriers 
remain  for  agricultural  goods.  And  the  progress  of  the  Common  Market, 
desirable  as  it  is,  will  bring  into  being  a  common  external  tariff,  a  barrier  which 
must  be  lowered  if  the  United  States  is  to  expand  its  sales  to  this  great  and  growing 
market. 

A  breakthrough  is  imperative  in  this  area.  Broad-scale  trade  negotiations 
under  the  authority  of  the  Trade  Expansion  Act  that  you  have  already  proposed 
to  the  Congress  offers  the  only  realistic  opportunity. 

Strengthening  the  world  monetary  system 

The  first  requisite  for  a  strong  and  healthy  international  monetary  system 
is  progress  toward  resolving  our  own  basic  balance-of-payments  problem.  Only 
in  that  way  can  there  be  a  firm  basis  for  continuing  confidence  in  the  dollar. 
But  even  then  the  system  will  remain  exposed  to  potential  shocks  and  strains 
arising  from  large-scale  shifts  of  licjuid  funds  from  one  country  to  another. 

Normally,  these  short-term  capital  flows  serve  a  constructive  pvn-pose  in 
moving  funds  to  the  point  of  greatest  need.  But,  these  flows  can  also  magnify 
temporary  fluctuations  in  a  nation's  balance  of  payments  and  become  a  vehicle 
for  speculation  against  one  currency  or  another.  No  nation,  however  strong 
in  reserves,  could  withstand  alone  the  potential  pressures  that  could  conceivably 
arise.  The  industrialized  nations  therefore  have  a  common  interest  in  protecting 
the  system  upon  which  we  all  rely  to  facilitate  the  flow  of  trade  among  us. 

Basic  to  progress  in  meeting  this  problem  are  frank  consultations  and  close 
understanding  among  the  leading  financial  nations.  The  working  groups  within 
the  OECl)  and  the  regular  meetings  of  European  Central  Bankers  at  Basle,  to 
which  the  Federal  Reserve  now  regularly  sends  an  observer,  have  provided 
approi)riate  forums  for  such  discussions,  and  I  can  report  that  the  cooperative 
spirit  displayed  has  been  gratifying.  As  a  result,  we  can  now  shape  our  policies 
with  fuller  understanding  of  the  needs  and  responses  of  others.    The  uncertainties 


EXHIBITS  429 

and  lack  of  information  that  can  be  a  breeding  ground  for  speculation  and 
instability  have  been  largely  dissipated. 

It  was  this  understanding  and  cooperative  approach  toward  our  mutual  problems 
which  made  possible  the  agreement  announced  in  December  by  ten  leading  in- 
dustrialized countries  to  supplement  the  resources  of  the  International  Monetary 
Fund  by  means  of  a  new  system  of  lending  arrangements  totaling  $6  billion. 
These  arrangements  will  greatly  enhance  the  ability  of  the  Fund  to  cushion  any 
significant  shocks  to  the  monetary  system,  from  whatever  source,  and  to  diffuse 
the  impact  among  the  surplus  countries  best  able  to  bear  it.  In  particular,  the 
new  arrangements  would  greatly  increase  the  potential  resources  of  the  Fund  in 
currencies  of  the  surplus  countries  of  Western  Europe,  upon  which  the  United 
States  would  need  to  draw  in  the  event  of  need.  We  are  awaiting  final  approval 
of  the  enabling  legislation  by  the  Congress. 

The  Treasury  also  began,  during  the  past  year,  to  operate  directly  in  the  foreign 
exchange  markets.  Using  in  part  currencies  borrowed  in  foreign  markets,  this 
intervention  was  helpful  in  damping  down  the  kinds  of  temporary  fluctuations  in 
the  exchanges  that  can  set  off  excessive  short-term  capital  movements.  The 
Federal  Reserve,  acting  under  its  existing  statutory  authority,  began  in  March 
to  engage  in  foreign  exchange  operations  in  full  consultation  and  cooperation  with 
the  Treasury.  This  participation  by  the  Federal  Reserve  will  strengthen  this 
country's  resources  and  facilities  for  countering  any  threatening  pressures  against 
the  dollar  in  world  exchange  markets.  It  will,  in  the  end,  contribute  to  the  further 
use  of  the  dollar  as  a  reserve  and  trading  currency. 

There  is  one  area  in  which  the  United  States  can  itself  take  action  to  eliminate 
an  incentive  for  short-term  capital  flows  that  serve  no  real  economic  purpose. 
Certain  recently  imposed  taxes  abroad,  in  combination  with  the  current  provisions 
of  our  tax  laws  permitting  a  credit  for  foreign  taxes  paid,  have  created,  for  some 
companies,  an  entirely  artificial  incentive  to  transfer  liquid  balances  abroad. 
A  specific  recommendation  for  dealing  with  this  quirk  in  the  application  of  our  tax 
laws  is  being  prepared  by  the  Treasury  so  that  an  appropriate  remedy  may  be 
included  in  the  tax  bill  now  before  Congress. 

Prospects  for  1962 

Changes  in  any  nation's  balance  of  payments  from  year  to  year,  reflecting  a 
mass  of  cross  currents  in  both  the  domestic  and  foreign  economies,  are  never  fully 
predictable.  Nevertheless,  it  is  clear  that  the  measures  already  taken  and  proposed 
will  not  have  had  time  to  work  their  full  effect  in  the  space  of  1962.  We  must 
therefore  be  prepared  for  another  deficit  this  year. 

The  principal  factor  working  against  a  balance  in  1962  is  the  prospect  of  a 
sharp  increase  in  imports  over  the  unusually  low  level  during  the  early  part  of 
1961.  This  can  be  expected  in  response  to  the  growth  of  our  domestic  economy. 
The  same  sort  of  increase  cannot  safely  be  assumed  for  exports,  tied  closely  to 
market  conditions  abroad,  although  we  will  be  doing  all  we  can  to  expand  our 
foreign  markets.  Our  commitments  for  defense  and  economic  assistance  should, 
however,  impose  a  smaller  burden,  because  of  offsetting  payments  to  the  United 
States — related  both  to  military  purchases  and  debt  prepayments — and  necessary 
tying  of  aid. 

We  must  also  be  prepared  for  a  possible  further  outflow  of  short-term  capital. 
Borrowings  in  the  American  market  by  residents  of  other  countries  and  foreign 
governments,  unusually  large  over  the  past  two  years,  are  likely  to  slacken,  but 
not  to  cease.  In  the  conduct  of  our  monetary  and  debt  management  policies, 
we  must  remain  continually  alert  to  assure  that  our  own  short-term  market  does 
not  become  so  liquid  that  credit  spills  over  unnecessarily  into  foreign  lending. 

The  means  for  financing  our  prospective  deficit  in  1962  are  available.  In  the 
process,  some  portion  will  need  to  be  settled  in  gold  as  some  countries  exchange 
part  of  their  dollar  holdings  for  gold  to  restore  or  maintain  their  varied  rule-of- 
thumb  ratios  of  gold  to  their  total  international  reserves,  although  ratios  of  that 
sort  have  less  relevance  as  international  cooperation  becomes  closer  and  the 
payments  system  is  strengthened. 

These  gold  losses  in  1962  should  not  be  of  a  size  or  character  to  cause  dismay. 
But  they  will  be  a  forceful  reminder  that,  until  our  accounts  are  fully  in  order,  we 
are  using  our  reserves  to  buy  time. 

We  still  have  the  time  for  the  most  important  element  in  any  real  cure  consistent 
with  the  maintenance  of  our  commitments  to  free  world  security  and  economic 
progress  in  the  developing  countries,  an  expanded  commercial  surplus.  To  achieve 
that  expanded  commercial  surplus  we  shall  have  to  apply  ourselves  to  the  job  at 


430   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

hand  with  the  same  urgency  it  would  need  if  little  or  no  time  were  left.  And  we 
shall  also  have  to  insist  that  other  free  countries  able  to  do  so  assume  and  discharge 
their  full  share  of  the  common  burden,  and  provide  us  with  the  sort  of  trading 
opportunities  that  will  permit  us  to  carry  our  own  full  share. 

Needed  legislative  action 

Essential  parts  of  this  overall  program  still  require  legislative  action  for  their 
full  implementation: 

Authority  to  participate  in  the  supplementary  IMF  arrangements. 

Authority  to  bargain  effectively  for  lower  tariffs  with  the  European  Common 
Market  and  other  countries  under  the  terms  of  the  Trade  Expansion  Act. 

Incentives  for  more  rapid  modernization  of  industrial  equipment  by  means  of 
an  investment  tax  credit. 

The  removal  of  special  inducements  to  invest  abroad  by  eliminating  the  possi- 
bilities for  tax  avoidance  on  foreign  operations  through  the  use  of  tax  havens 
and  unwarranted  deferrals  of  taxes  on  operations  of  foreign  subsidiaries. 

New  appropriations  adequate  to  staff  and  operate  effectively  the  office  of  the 
recommended  Export  Coordinator  and  the  enlarged  functions  of  the  De- 
partments of  Commerce  and  State  in  stimulating  exports. 

Simplified  visa  requirements  for  foreign  visitors. 

Continuation  of  Public  Law  480  in  a  form  that  will  not  adversely  affect  our 
balance  of  payments. 

Conclusion 

Recognition  of  the  problems  before  us,  the  wisdom  to  devise  and  forcefully  apply 
appropriate  remedies,  the  understanding  cooperation  of  our  allies  abroad^ — all  of 
these  are  critical  elements  in  a  successful  resolution  of  our  current  difficulties. 
But  in  the  end  we  will  succeed,  as  in  all  our  endeavors,  only  as  all  Americans  grasp 
the  challenge,  and  demonstrate  that  combination  of  restraint  in  setting  wages  and 
prices  and  bold  initiative  in  seizing  export  opportunities  that  the  circumstances 
require.  The  stability  of  the  dollar  is  a  key  to  economic  progress  at  home  and 
abroad.  Beyond  that,  it  will  stand  as  a  symbol  of  our  own  determination  to 
discharge  the  responsibility  that  is  ours  for  leadership  of  the  free  world. 


Exhibit  36. — Statement  by  Secretary  of  the  Treasury  Dillon,  April  24,  1962, 
before  the  Economic  Club  of  New  York  on  responding  to  the  challenge  of  the 
Common  Market 

The  fabulous  success  of  the  European  Common  Market  presents  this  Nation 
with  a  challenge,  an  opportunity,  and  a  promise: 

A  challenge,  because  the  industrial  might  and  know-how  of  the  Common 
Market  make  it  a  formidable  competitor  in  the  trading  centers  of  the  world. 

An  opportunity,  because  the  increasing  demands  of  its  thriving  peoples  are 
creating  potentially  vast  new  markets  for  American  products. 

A  promise,  because  the  prospering  nations  in  the  Common  Market  now  have  the 
capacity  to  assume  a  larger  and  more  appropriate  share  of  the  cost  of  strengthen- 
ing the  defensive  forces  of  freedom  and  of  assisting  less  fortunate  nations  along 
the  path  to  progress. 

In  responding  to  the  challenge  of  the  Common  Market,  we  must  realize  that 
we  live  today  in  a  highly  competitive,  fast-changing  new  world,  in  which  trade 
barriers  are  rapidly  being  lowered  or  eliminated.  President  Kennedy's  new 
trade  program  recognizes  that  without  mutual  tariff  reductions,  we  will  be  hobbled 
in  our  efforts  to  compete  with  foreign  producers  and  will  be  unable  to  take  ad- 
vantage of  the  opportunities  posed  by  the  Common  Market.  But  trade  legisla- 
tion alone  will  not  keep  us  competitive.  We  must  compete  effectively.  This 
calls  for  ingenuity  and  energy  in  developing  new  products  and  new  markets, 
and  it  demands  that  the  costs  of  American  production  be  competitive. 

These  are  not  simple  tasks.  They  will  require  concerted  effort  by  every  sector 
of  our  economy.  For  every  sector  of  our  economy  is  intimately  involved.  There 
is  far  more  at  stake  than  trade.  The  real  stakes  are  the  continued  strength  and 
well-being  of  this  Nation  and  the  survival  of  freedom  itself. 

In  shaping  our  overall  response  to  the  challenge  of  the  Common  Market, 
we  must  keep  constantly  in  mind  these  major  national  economic  goals: 

First,  achieving  the  more  rapid  rate  of  economic  growth  that  we  must  have 
to  solve  our  persistent  unemployment  problem,  as  well  as  to  remain  competitive. 


EXHIBITS  431 

Second,  maintaining  reasonable  price  stability,  which  is  essential  if  we  are  to 
increase  our  export  sales,  solve  the  imbalance  in  our  international  payments, 
and  ensure  the  full  enjoyment  of  their  later  years  by  senior  citizens  living  on 
fixed  retirement  incomes. 

Third,  achieving  and  maintaining  balance-of-payments  equilibrium  in  a 
fashion  that  will  permit  us  to  carry  our  proper  share  of  the  free  world's  defense 
and  furnish  a  fair  proportion  of  the  assistance  needed  by  the  newly-developing 
nations. 

Growth  is  essential  to  our  continuing  prosperity  because  we  must  grow  faster 
if  we  are  to  provide  reasonably  full  employment  for  our  swelling  labor  force. 
And  only  through  rapid  growth  can  new  technology  be  put  to  work  fast  enough 
to  keep  us  competitive.  Growth  is  also  essential  to  long-term  equilibrium  in 
our  balance  of  payments.  We  cannot  hope  to  solve  our  payments  difficulties 
if  our  growth  rate  continues  to  drag  along  at  little  more  than  half  that  of  our 
friends  and  competitors  in  Western  Europe  and  Japan. 

If  we  are  to  increase  our  growth  from  the  rate  of  about  three  percent  a  year 
that  characterized  the  fifties,  to  the  4}^  percent  that  has  been  set  by  the  Organi- 
zation for  Economic  Cooperation  and  Development  as  a  fair  and  reasonable 
goal  for  its  members  in  the  sixties,  we  must  have  an  economic  environment  that 
will  stimulate  productive  investment  and  business  activity.  Demand  must  be 
adequate  to  absorb  our  production.  We  must  make  every  effort  to  avoid  reces- 
sions and,  if  they  occur,  to  mitigate  their  effect.  We  must  have  a  tax  system  that 
will  stimulate  both  individual  initiative  and  private  investment.  And  we  must 
have  capital  readily  available  to  finance  the  needs  of  the  economy. 

The  administration  is  moving  actively  in  all  these  areas.  The  President  has 
submitted  a  three-point  program  to  the  Congress  that  would  improve  the  effect 
of  the  so-called  automatic  stabilizers  in  moderating  recessions.  These  automatic 
stabilizers  are  the  increased  unemployment  payments  and  the  decUne  in  income 
tax  revenues,  particularly  in  corporate  taxes,  that  automatically  accompany 
any  recession.  Their  action  simultaneously  decreases  the  Government's  tax 
take  from  the  economy,  and  increases  Government  payments  in  the  area  where 
they  will  do  the  most  good.  These  automatic  stabilizers  have  softened  postwar 
recessions,  which  have  had  little  resemblance  to  the  depressions  of  earlier  days. 
Even  so,  we  still  spend  too  much  time  in  recession  and  it  is  these  recessions, 
moderate  though  they  have  been,  that  are  primarily  responsible  for  our  inadequate 
growth  rate  over  the  past  decade. 

The  President's  program  is  designed  to  give  us  the  tools  we  need  to  effectively 
combat  these  economic  slowdowns: 

First,  there  is  a  need  for  better  unemployment  insurance.  This  need  became 
glaringly  apparent  during  the  past  two  recessions,  when  we  were  caught  with  an 
inadequate  unemployment  compensation  system  that  made  no  provision  for 
the  longtime  unemployed,  whose  ranks  swell  every  time  business  slows  down. 
Congress  has  twice  been  forced  to  improvise  with  temporary  unemployment 
compensation  measures.  The  time  has  clearly  come  to  take  account  of  those 
experiences  and  enact  a  permanent  law  along  the  lines  proposed  by  the  President, 
a  law  which  would  adequately  meet  the  problem. 

Second,  the  President  has  asked  for  limited  authority  to  order  modest  tempo- 
rary tax  reductions  that  would  further  speed  the  automatic  reduction  in  tax 
revenues  that  has  been  so  effective  during  recent  recessions.  While  there  is 
understandable  reluctance  to  grant  such  new  authority,  the  concept  of  temporary 
tax  reduction  as  an  antirecession  measure  appears  to  be  generally  accepted. 
Limited  authority  to  the  President  under  strict  congressional  control  would 
seem  the  best  way  of  carrying  out  this  concept. 

The  third  element  in  the  President's  antirecession  program  is  limited  standby 
authority  to  initiate  or  speed  up  public  works  programs  of  the  type  that  could  be 
gotten  underway  rapidly,  and  substantially  completed  within  twelve  months. 

These  three  new  tools  would  greatly  enhance  our  abihty  to  deal  with  the 
economic  slowdowns  that  have  characterized  our  postwar  economy.  In  so  doing 
they  should  make  possible  a  substantially  more  rapid  rate  of  growth  over  the 
years  ahead. 

Rapid  growth  in  our  free  enterprise  system  also  requires  a  tax  setting  conducive 
to  risk-taking — a  setting  that  will  give  full  play  to  individual  initiative  and 
effort — one  that  will  genuinely  stimulate  investment.  Such  a  tax  structure  calls 
for  a  basic  revision  of  our  income  tax  system,  and  that  is  exactly  what  the  Presi- 
dent has  had  in  mind  for  the  past  year.  At  his  direction,  we  in  the  Treasury  have 
been  working  hard  to  develop  such  a  new  tax  program.    But  taxes  are  complex. 


432   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

They  eflfect  every  facet  of  our  lives.  They  take  time  to  develop,  as  well  as  to 
enact.  The  initial  program  submitted  last  year  is  still  before  the  Congress.  This 
has  slowed  our  progress  in  developing  the  new  program,  but  our  work  is  pro- 
gressing and  we  fully  intend  to  submit  proposals  for  overall  reform  of  the  income 
tax  rate  structure. 

In  the  meantime,  we  are  hopeful  of  rapid  congressional  approval  of  the  current 
tax  bill,  since  its  major  element,  the  investment  credit,  is  absolutely  essential 
both  to  our  growth  and  to  our  competitive^  position  in  the  world. 

During  the  past  year,  I  have  found  general  agreement  that  it  is  necessary  to 
liberalize  our  treatment  of  depreciation  so  as  to  stimulate  investment.  A  good 
deal  can  be  done  under  present  law,  for  our  depreciation  statutes  are  not  as  bad 
as  they  are  often  depicted.  It  is  the  administration  of  the  law  that  has  been 
jjrimarily  at  fault.  Revenue  agents  have  been  recjuired  to  use  as  their  guide  for 
depreciation  allowances,  a  bulletin  i)ut  out  by  the  Intiirnal  Revenue  Service 
twenty  years  ago  and  never  since  modified.  And,  as  if  this  obsolescence  of  the 
guid(!lines  were  not  enough,  it  has  also  become  clear  that  the  basic  concept  in  the 
guidelines  of  separate  depreciable  lives  for  each  and  every  tool  and  machine 
Ijrings  with  it  a  great  deal  of  uniK^cessary  pajx'rwork  and  argument.  We  intend 
to  thoroughly  revise  and  update  th(!se  instructions.  In  our  revision  we  will  set 
forth  broad  classes  of  equipment  to  replace  the  5000  odd  items  presently  listcid  in 
Bulletin  F,  as  it  is  called. 

Treasury  studies,  underway  for  nearly  two  years,  and  which  for  the  first  time 
take  account  of  anticipated  future  obsolescence,  indicate  that  wo  will  also  be  able 
to  substantially  reduce  the  average  guideline  liv(!s  for  depreciation.  In  the  case 
of  the  textile  industry,  where  the  task  has  already  been  completed,  the  reductions 
averaged  forty  percent.  However,  since  our  manufacturers  are  already  legally 
writing  off  their  equij)ment  at  considerably  faster  rates  than  are  provided  in 
existing  guidelines,  the  actual  benefit  of  the  revisions  now  underway  will  be  con- 
siderably less  than  the  projected  percentage  reductions  in  the  guidelines.  Present 
rates  of  depreciation  are  the  result  of  agreements  with  revenue  agents.  The.se 
agreements  have  not  been  reached  easily.  They  have  involved  a  great  deal  of 
debate  and  compromise.  Sometimes,  they  have  required  resort  to  the  courts. 
Such  unfortunate  controversy  has  been  the  inevitable  result  of  out-of-date  guide- 
lines wiiich  f()rc(!d  revenue  agents  to  rely  upon  their  own  judgment  in  determining 
depreciabh?  lives  for  the  various  pieces  of  equipmemt  used  by  industry.  One  of 
our  major  aims  in  modernizing  administrative  dei)reciation  practices  is  to  reduce 
this  area  of  contention  and  uncertainty  to  a  minimum.  We  are  confident  that 
very  significant  progress  is  possible. 

But  all  we  can  accomplish  by  the  administrative  route  is  not  sufficient  to  meet 
the  needs  of  American  industry  in  today's  competitive  world.  All  of  our  com- 
petitors in  Europe,  Canada,  afid  Japan  go  farther  by  providing  some  form  of 
special  incentive  to  modernize.  Some  of  them  use  unrealistically  short  lives, 
which  work  in  the  same  manner  as  the  five-year  amortization  we  have  used  in 
times  of  defense  emergency.  Others  provide  substantial  special  writeoffs  in  the 
first  year,  usually  called  initial  allowances.  More  recently,  some  of  them  have 
been  turning  to  allowances  over  and  above  one  hundred  percent  of  depreciation, 
the  same  principle  we  are  advocating  in  our  investment  credit.  Such  investment 
allowances  are  presently  in  effect  in  Belgium,  the  United  Kingdom,  and  the 
Netherlands,  and  are  now  being  adopted  in  Australia. 

The  resulting  contrast  with  current  practices  h(;re  is  dramatic.  Taking  the 
case  of  a  i)iece  of  eciuipment,  which  has  a  fifteen-year  life  under  our  present  laws, 
we  find  that  manufacturers  in  Western  Europe  and  Jai)an  can  write  off  an  average 
of  twenty-nine  percent  on  similar  equipment  in  the  first  year,  compared  to  only 
13.3  percent  for  American  industrialists.  Modernizing  administrative  i)ractices 
can  clos(!  only  a  small  percentage  of  this  gap.  If  American  industry  is  to  compete 
effectively,  we  must  provide  special  incentives  comparable  to  those  available 
abroad.  The  only  jjossible  question  can  be  over  the  way  in  which  these  incentives 
should  be  provided.  The  investment  credit  is  one  such  way — and  an  extremely 
effective  one.  The  combination  of  an  eight  i)ercent  investment  credit  and 
modernized  administrative  procedures  will  put  American  manufacturers  on  a 
comparable  footing  with  their  foreign  competitors  as  far  as  investment  in  ma- 
chinerv  and  eciuiiiment  is  concerned. 

The;'  same  result  can,  of  course,  l)e  accomi)lishe(l  by  various  methods  of  ac- 
celerating dejjreciation  beyond  what  is  called  for  by  realistic  depreciable  lives. 
But  in  the  Treasury's  view,  the  investment  credit  has  two  clear-cut  and  important 
advantages  over  all  methods  of  accelerated  depreciation.     The  first  i.s  that  the 


EXHIBITS  433 

investment  allowance  or  credit,  utilizing  the  principal  of  an  allowance  over  and 
above  100  percent  of  original  cost,  increases  the  profitability  of  a  given  investment 
far  more  than  any  equivalent  acceleration  of  depreciation.  One  of  the  most 
thorough  studies  on  the  subject,  prepared  for  its  membership  in  the  machine  tool 
industry  by  the  Machinery  and  Allied  Products  Institute,  finds  that  on  a  typical 
fifteen-year  asset,  an  eight  percent  investment  credit  has  the  same  effect  on 
profitability  as  a  forty  percent  first-year  depreciation  writeoff.  Let  me  repeat 
that.  The  eight  percent  investment  credit  which  we  are  recommending  has  the 
same  effect  on  profitability  of  investment  as  a  special  forty  percent  first-year 
depreciation  writeoff.  However,  when  we  calculate  the  effect  of  these  two 
methods  on  our  tax  revenues,  we  find  that  the  first-year  revenue  cost  of  the  credit 
is  $1.35  billion,  while  the  cost  of  the  forty  percent  initial  allowance  is  $5.3  billion. 
Over  a  five-year  period,  assuming  steady  growth  in  the  economy,  the  credit 
might  cost  somethmg  like  $10  billion,  compared  to  $24  billion  for  the  comparable 
forty  percent  first-year  writeoff.  Similar  results  are  reached  when  we  compare 
the  cost  of  other  methods  of  accelerating  depreciation  to  that  of  the  credit. 

I  think  you  will  all  agree  that  government  in  these  days  should  make  every 
effort  to  get  the  most  out  of  its  dollars.  Avoidance  of  waste  is  just  as  important 
in  tax  policy  as  it  is  in  expenditure  policy.  And  that  is  one  very  good  reason 
why  we  prefer  the  investment  credit  to  the  more  expensive  and  less  effective  route 
of  accelerated  depreciation. 

The  second  unique  advantage  of  the  credit  is  that  it  will  not  adversely  effect 
costs  or  prices.  Accelerated  depreciation  is  often  entered  as  an  item  of  cost. 
This  naturally  inflates  costs  and  shrinks  profits,  thus  tending  to  promote  the  very 
price  increases  we  must  avoid. 

I  think  you  are  all  aware  that  the  single  largest  increase  in  general  manu- 
facturing costs  over  the  past  few  years  has  come  from  the  increased  depreciation 
writeoffs  permitted  by  the  1954  law  which  updated  and  liberaUzed  depreciation 
procedures.  This  increase  in  costs  was  fully  warranted,  since  it  recognized  the 
actual  obsolescence  rates  of  machinery.  That  is  what  depreciation  is  for  and 
this  will,  of  course,  also  be  the  effect  of  our  administrative  reforms.  However, 
when  it  comes  to  an  incentive,  over  and  beyond  reahstic  depreciation,  the  situa- 
tion is  quite  different.  As  I  have  pointed  out,  the  use  of  accelerated  depreciation 
for  this  purpose  would  be  wasteful  of  the  Government's  tax  dollar  as  compared 
to  the  credit,  and  would  also  tend  to  distort  earnings  and  prices.  For  these  two 
reasons,  we  stand  firmly  for  the  investment  credit  approach  as  the  most  feasible 
and  practicable  method  of  providing  the  stimulus  to  investment  in  machinery 
and  equipment  that  we  must  have  if  we  are  to  achieve  the  rate  of  growth  re- 
quired for  a  competitive  and  reasonably  fully-employed  economy. 

Enactment  of  the  investment  credit  also  has  an  immediate  importance.  The 
greatest  uncertainty  and  the  major  soft  spot  in  our  current  economic  situation 
is  the  indication  that  business  investment  over  the  next  year  may  be  inadequate 
to  sustain  the  pace  of  our  recovery.  Enactment  of  the  credit  will  immediately 
generate  new  business  in  the  machine  tool  and  allied  industries  and  will  accel- 
erate the  incorporation  of  the  latest  technology  into  our  productive  system.  It 
will  shorten  the  lag-time  between  development  and  manufacture  of  new  products, 
and  thus  help  to  open  up  new  markets.  It  will  stimulate  industrial  expansion 
and  thus  help  to  create  the  new  jobs  we  so  badly  need.  In  short  it  will  give  a 
lift  to  our  economy  in  exactly  the  place  where  it  is  most  needed  and  at  the  very 
time  it  is  most  needed. 

To  the  extent  that  investment  is  stimulated,  new  capital  will  be  required. 
The  national  monetary  and  debt  management  policies  that  have  been  followed 
for  the  past  year  give  assurance  that  the  needed  funds  will  be  available  at  rea- 
sonable rates  of  interest.  Today,  with  the  recovery  fourteen  months  old,  the  cost 
of  new  long-time  corporate  borrowing  is  lower  than  at  any  time  since  the  eco- 
nomic advance  got  underway.  At  the  same  time,  for  balanco-of-payments  rea- 
sons, we  have  maintained  and  even  moderately  increased  short-term  interest  rates, 
so  as  to  equalize  them  with  those  obtainable  abroad. 

The  investment  credit,  by  promoting  the  use  of  modern,  cost-cutting  machinery, 
will  help  us  to  achieve  our  two  other  major  economic  goals:  reasonable  price 
stability  and  balance-of-payments  equilibrium.  Price  stability  is  a  must  if  we 
are  to  compete  successfully  in  world  market  places,  and  it  also  makes  for  healthy 
economic  and  social  conditions  at  home.  Fortunately,  conditions  today  in  the 
United  States  are  favorable  to  price  stability,  if  only  we  use  restraint. 

The  strongest  type  of  inflation  is  classical  demand-inflation,  too  much  money 
chasing  too  few  goods      It  is  because  of  the  danger  of  demand-inflation  that  we 

661496—63 29 


434   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

are  wary  of  budget  deficits.  For  Federal  budget  deficits  create  purchasing  power. 
Whenever  capacity  is  tight  and  demand  is  strong,  deficits  lead  almost  inevitably 
to  a  rise  in  prices  which  diminishes  the  value  of  all  savings  and  helps  no  one  but 
the  lucky  speculator. 

However,  for  at  least  the  past  four  or  five  years,  we  have  had  no  problem  with 
demand-inflation.  We  have  not  known  reasonably  full  employment  since  1957. 
The  slack  in  our  economy  was  revealed  by  the  fact  that  the  record  $12J^  billion 
deficit  of  fiscal  year  1959  had  no  noticeable  effect  on  wholesale  prices.  Neither 
has  there  been  any  effect  from  the  $7  billion  deficit  we  are  running  this  fiscal 
year.  As  a  matter  of  fact,  wholesale  prices  are  lower  today  than  a  year  ago. 
I  by  no  means  wish  to  imply  that  we  should  not  be  concerned  by  deficits.  But 
I  do  want  to  point  out  that  the  effect  of  a  deficit  on  a  slack  economy  is  totally 
different  from  the  effect  of  the  same  deficit  on  a  full  employment  economy.  We 
cannot  afford  deficits  at  full  employment.  Indeed,  we  anticipate  substantial 
surpluses  in  such  periods.  With  the  prospect  of  rapid  economic  growth  that 
led  to  last  January's  forecast  of  a  gross  national  product  of  $570  billion  for  1962, 
the  President  wisely  presented  a  balanced  budget.  While  the  January  and  Feb- 
ruary slowup  has  made  the  achievement  of  this  goal  considerably  more  difficult, 
it  is  still  possible.  If  we  achieve  it,  there  is  no  reason  why  we  should  not  have 
a  balanced  budget  as  well.  The  main  point  to  remember  about  our  deficits  is 
that  they  have  been  a  reflection  of  the  uneven  pace  of  our  economy.  Cure  the 
recessions  and  the  deficits  will  also  disappear. 

While  we  are  on  the  subject  of  fiscal  policy,  I  would  like  to  digress  for  a  moment 
to  compare  our  experience  with  that  of  some  of  our  European  friends.  There  is 
a  common  misconception,  both  here  and  abroad,  that  our  fiscal  or  budgetary 
performance  is  poor  compared  to  such  countries  as  France,  the  United  Kingdom, 
and  West  Germany.  That  is  simply  not  so.  A  recently  completed  stud}'  which 
converts  the  budgets  of  those  countries  to  our  accounting  system,  shows  that  our 
record  is  quite  good.  By  adapting  their  data  to  our  budget  accounting  methods 
Germany  would  show  a  budget  deficit  in  everj'  one  of  the  past  four  years,  the 
only  3'ears  in  which  her  postwar  defense  expenditures  have  been  of  any  signifi- 
cance. France  would  show  them  in  everj^  one  of  the  past  ten  j^ears.  And  the 
United  Kingdom  would  show  deficits  in  nine  of  the  past  eleven  years,  and,  in 
this  connection,  the  Chancellor  of  the  Exchequer  has  just  forecast  another  deficit 
for  the  upcoming  fiscal  year.  In  contrast,  the  consolidated  cash  budget  of  the 
United  States  has  been  in  deficit  in  only  six  out  of  the  last  eleven  j^ears. 

Perhaps  even  more  impressive  is  the  fact  that,  over  those  same  periods  of  time, 
the  cumulative  American  deficit,  as  a  percentage  of  gross  national  product,  was 
the  lowest.  France's  was  the  highest,  with  Germany  next,  and  the  United 
Kingdom  third. 

It  is  worthy  of  note  that  France  and  Germanj^,  which  run  persistent  deficits 
in  their  budgets,  also  run  the  greatest  and  most  persistent  surpluses  in  their 
balance  of  payments.  That,  of  course,  is  not  because  of  their  deficits,  but  rather 
because  they  have  maintained  competitive  prices  on  their  export  goods — the 
key  to  payments  surpluses — and  have  maintained  them  in  the  face  of  continuing 
full  employment. 

Despite  the  fortunate  absence  of  demand  inflation  from  the  American  scene, 
we  must  continue  to  guard  vigilantly  against  wage-price  inflation,  which  can  be 
just  as  dangerous  and  can  strike  at  anj^  time.  If  we  are  to  avoid  this  type  of 
inflation,  prices  should  remain  level  or  drop,  and  wage  increases  should  be  gov- 
erned by  increases  in  labor  productivity.  To  help  in  defining  these  limits,  the 
President's  Council  of  Economic  Advisers,  in  their  annual  report,  set  forth 
guidelines  based  on  the  performance  of  our  economy,  which  has  shown  an  average 
annual  increase  in  productivity  of  from  2\i  to  3H  percent.  As  long  as  our  economy 
continues  to  grow  and  productivity  continues  to  increase  at  this  rate,  it  should 
be  possible  to  absorb  wage  increases  of  like  magnitude  without  any  increases  in 
price.  And  remember  that  productivity  also  applies  to  capital.  As  the  produc- 
tivity of  capital  increases,  there  should  also  be  room  for  increases  in  profits,  to 
correspond  with  the  increased  wages  of  labor.  All  this  will  be  possible  if  manage- 
ment and  labor  work  jointly  to  make  it  possible — bearing  the  national  interest 
in  mind  at  all  times. 

Price  stability  is  essential  if  we  are  to  achieve  our  third  major  goal — balance-of- 
payments  equihbrium.  Without  it,  there  can  be  no  hope  of  achieving  balance 
unless  we  invoke  drastic  actions  that  would  do  as  much  harm  as  good.  That 
was  the  major  reason  for  the  President's  great  concern  when,  for  a  few  days 
earlier  this  month,  price  stability  appeared  to  be  threatened. 


I 


EXHIBITS  435 

Growth  and  price  stability  must  both  make  their  contribution  to  improving 
our  payments  problem  by  keeping  our  exports  competitive.  But  still  more  is 
needed.  For  we  have  been  forced  to  assume  exceptional  responsibilities  in  the 
defense  of  the  free  world.  Those  responsibilities  put  a  great  drain  on  our  balance 
of  payments,  a  drain  which  has  recently  averaged  about  .$3  billion  a  year.  We 
must  work  to  reduce  this  outflow  by  cutting  out  all  nonessential  costs  and  by 
obtaining  offsetting  payments  from  our  European  allies  for  U.S.  military  materiel 
and  services. 

A  good  start  has  been  made.  You  have  heard  the  President  state  that  Secre- 
tary McNamara  has  accepted  a  goal  of  a  billion-dollar  reduction  in  the  net 
outflow  of  defense  dollars.  About  half  of  that  goal  has  already  been  achieved 
through  the  recent  agreement  with  West  Germany,  by  which  she  is  sharply 
increasing  her  purchases  of  U.S.  military  equipment.  We  are  hopeful  that 
similar  arrangements  can  be  made  with  other  countries.  The  rest  of  the  billion- 
dollar  goal  will  have  to  be  achieved  through  economies  in  dollar  expenditures. 

We  are  also  using  every  opportunity  to  channel  the  maximum  amount  of  our 
foreign  aid  funds  into  purchases  in  the  United  States,  where  they  do  not  affect 
our  balance  of  payments. 

But  there  is  another  important  area  affecting  our  balance  of  payments  where 
action  is  required  if  we  are  to  achieve  overall  balance.  I  refer  to  the  steadily  in- 
creasing outflow  of  private  investment  capital.  The  easiest  way  to  handle  this 
problem  would  be  to  utilize  the  standard  European  method — -exchange  controls. 
But  we  are  firmly  opposed  to  this  approach,  and  so  are  pursuing  two  other  avenues: 
We  are  working  with  our  European  friends  in  the  OECD  to  liberalize  their  con- 
trols on  capital  movements,  and  we  are  urging  them  to  develop  their  own  internal 
capital  markets  so  that  they  will  not  have  to  rely  so  heavily  on  our  capital  market. 
This  is  a  slow  process,  but  progress  is  being  made.  Our  second  method  of  slowing 
the  capital  outflow  is  by  eliminating  that  portion  of  the  outflow,  perhaps  as  much 
as  ten  percent,  that  is  induced  by  tax  reasons.  That  is  the  basic  aim  of  the  ad- 
ministration's foreign  tax  proposals.  Those  proposals  are  not  directed  against 
foreign  investment  as  such.  They  merely  attempt  to  put  investment  in  the  other 
industrialized  countries  on  a  par  with  investment  here  at  home,  as  far  as  tax 
treatment  is  concerned.  Their  enactment  would  not  only  reduce  the  outflow  of 
capital  for  direct  investment  in  the  other  industrialized  countries  by  some  ten 
percent,  it  would  also  remove  the  artificial  tax  incentive  to  retain  profits  abroad 
and  so  would  improve  their  return  flow  to  the  United  States  by  roughly  the  same 
amount.  The  resulting  overall  balance-of-payments  improvement  should  be 
something  like  $400  million  a  year.  The  great  bulk  of  foreign  investment — and 
I  am  confident  it  is  not  made  for  tax  purposes — would  continue  as  in  the  past. 
But  that  relatively  small  part  that  is  purely  tax-induced,  and  we  all  know  that  it 
does  exist,  would  be  eliminated,  with  substantial  benefit  to  our  balance  of  payments. 

At  the  outset  of  my  remarks,  I  said  that  the  Common  Market  presents  us  with 
a  challenge.  But  the  greatest  challenge  lies  within  ourselves.  We  have  the  means 
at  hand  to  solve  our  economic  problems,  if  only  we  will  use  them  wisely  and  well. 
The  most  important  is  the  stimulation  of  additional  private  investment  in  produc- 
tive equipment.  We  must  use  that  means  to  the  full,  and  in  a  manner  that  will 
not  jeopardize  the  national  interest  by  shortsighted  decisions,  be  they  public  or 
private. 

If  we  do  so,  we  can  make  significant  progress  toward  achieving  our  goals  of 
more  rapid  growth,  price  stability,  fuller  employment,  and  payments  equilibrium. 
We  can  move  boldly  to  take  advantage  of  the  competitive  challenge  of  the  Com- 
mon Market,  secure  in  the  knowledge  that  our  nation  is  capable  of  seizing  oppor- 
tunities in  foreign  trade  to  help  make  a  reality  of  America's  vast  promise  of  a 
fuller  life  for  our  own  people  and  for  free  peoples  everywhere. 


Exhibit  37.— Statement  by  Secretary  of  the  Treasury  Dillon  as  Governor  for 
the  United  States,  April  25,  1962,  at  the  third  annual  meeting  of  the  Board  of 
Governors  of  the  Inter-American  Development  Bank 

It  is  a  genuine  pleasure  for  me  to  join  my  fellow  Governors  and  the  management 
of  the  Inter-American  Development  Bank  at  our  Third  Annual  Meeting.  I  regret 
that  long-standing  commitments  at  home  made  it  impossible  for  me  to  participate 
in  yourMiscussions'earlier  this  week.  But  I  have  read  with  appreciation  President 
Herrera's  admirable  opening  address,  upon  which  I  congratulate  him,  and  look 
forward  to  studying  the  statements  that  were  made  by  other  Governors  before 


436   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

my  arrival.  May  I  add  a  word  of  personal  thanks  to  our  host  Government  for 
the  warm  hospitality  which  it  has  extended  to  us  in  this  beautiful  city  of  Buenos 
Aires. 

The  first  year  of  operations  of  the  Inter-American  Development  Bank  coincides 
with  the  first  year  of  the  Alliance  for  Progress.  The  solid  achievements  of  the 
Bank,  both  in  its  own  capacity  as  a  Bank  and  as  administrator  of  the  Social 
Progress  Trust  Fund,  encourage  us  in  our  conviction  that  this  unique  and  capable 
institution  will  in  succeeding  years  fulfill  our  best  hopes  in  assisting  the  economic 
and  social  development  of  the  Latin  American  countries  and  will  continue  to  play 
a  leading  part  in  furthering  the  Alliance  for  Progress. 

It  is  appropriate  that  I  should  speak  first  of  the  Bank's  excellent  progress  in 
managing  its  own  resources,  progress  reflected  in  those  parts  of  the  Annual  Report 
dealing  with  the  Ordinary  Capital  Resources,  the  Fund  for  Special  Operations, 
and  technical  assistance  operations. 

In  the  year  ending  December  31,  1961,  55  loans  totaling  $178  million  were  made 
to  18  member  countries  from  the  Bank's  Ordinary  Capital  Resources  and  its  Fund 
for  Special  Operations.  This  is  a  remarkable  record  for  a  newly-established  bank- 
ing institution. 

Over  half  of  the  $178  million  represented  loans  to  assist  private  enterprise  in 
the  member  countries,  thus  fulfilling  one  of  the  important  purposes  of  the  Bank's 
charter  to  promote  private  investment  in  economic  development.  In  large  part, 
these  funds  were  provided  to  development  institutions  for  relending  to  small- 
and  medium-sized  private  industrial  and  agricultural  undertakings.  These 
enterprises,  in  their  thousands  of  small  beginnings,  stimulate  each  other,  create 
centers  of  local  prosperity,  and  lay  a  basis  for  the  accelerating,  self-generating 
growth  so  important  in  creating  a  modern,  integrated  free  market  economy. 
The  Bank  has  thus  been  reaching  a  truly  vital  area  of  Latin  American  economic 
development,  an  area  which,  moreover,  has  hitherto  been  literally  starved  for 
credit. 

The  technical  assistance  loans  and  grants  provided  by  the  Bank  during  1961 — 
amounting  to  well  over  five  million  dollars — also  made  a  valuable  contribution  to 
economic  growth  in  Latin  America.  Preinvestment  studies,  such  as  those  being 
made  for  an  Argentine  hydroelectric  project,  for  the  Bolivian  mining  industry, 
for  the  highway  system  in  Honduras,  are  often  essential  for  sound  investment 
decisions.  The  technical  assistance  which  the  Bank  has  extended  for  both 
national  and  regional  planning  and  development  organizations  should  also  yield 
a  rich  harvest  in  the  years  to  come.  Of  immediate  practical  help  to  many  member 
countries  was  the  technical  assistance  to  development  institutions,  in  helping  to 
reorganize  their  structure  and  administration  so  as  to  enable  them  to  utilize  the 
Bank's  loans  more  efficiently. 

I  am  sure  that  all  of  us  are  especially  gratified  by  the  confidence  which  the 
financial  community  has  shown  in  the  Bank's  lending  operations  from  its  Ordinary 
Capital  Resources.  A  large  number  of  leading  commercial  banks,  including 
several  in  Western  Europe,  have  participated  in  22  of  these  loans  without  the 
Bank's  guarantee.  And — even  more  striking  evidence  of  this  confidence — was 
the  action  of  a  group  of  leading  Italian  banks  in  subscribing  to  the  Bank's  first 
bond  issue  of  more  than  24  million  dollars  in  lira  bonds,  the  net  proceeds  of  which 
will  enlarge  the  Bank's  Ordinary  Capital  Resources.  This  kind  of  foreign  finan- 
cial operation,  during  an  international  bank's  first  years,  is  both  exceptional  and 
significant.  The  Bank  has  acted  promptly  to  implement  the  spirit  of  the  Act  of 
Bogota  and  the  wishes  of  the  Board  of  Governors  that  efforts  be  made  to  attract 
the  resources  of  Europe  towards  the  development  of  Latin  America. 

I  am  glad  to  hear  that  the  Governors  have  already  adopted  this  proposal. 
I  am  also  most  interested  to  learn  that  the  Governors  early  today  adopted  a 
resolution  calling  on  the  Executive  Director  to  study  the  question  of  export 
financing.  Certainly  the  diversification  of  exports  is  a  most  important  part  of 
long-range  plans  for  the  development  of  Latin  America.  The  growth  of  what 
I  might  call  "export-mindedness"  among  both  the  government  and  the  business 
community  of  the  region  must  also  form  part  of  this  process.  The  increasing 
attention  being  devoted  to  the  export  of  capital  goods  is  a  very  encouraging  sign 
I  will  look  forward  with  great  interest  to  the  results  of  the  forthcoming  study. 
We  are  prepared  to  consider  with  an  open  mind  any  practical  proposals  which 
emerge  from  this  study. 

As  President  Ilerrera  has  pointed  out,  the  Bank  has  already  committed  a  sub- 
stantial part  of  its  resources.  It  is  clear  that,  if  the  Bank  is  to  continue  to  lend 
in  the  future  at  the  same  rate  as  in  the  past,  the  time  is  not  far  distant  when  its 


EXHIBITS  437 

existing  resources  will  have  been  exhausted.  The  United  States  therefore  wel- 
comes the  proposal  of  the  management  that  the  executive  directors  be  asked  to 
study  the  question  of  the  future  replenishment  of  the  Bank's  lendable  assets. 

I  would  like  now  to  speak  of  the  very  important  work  of  the  Bank  in  dealing, 
as  administrator  under  the  Social  Progress  Trust  Fund  Agreement,  with  the  $394 
million  of  resources  placed  in  that  Fund  by  the  Government  of  the  United  States. 
This  sum  was,  as  you  know,  the  bulk  of  the  half-billion  dollars  voted  by  the 
Congress  of  the  United  States  in  response  to  the  call  for  social  progress  in  the 
Act  of  Bogota.  It  testified  to  our  belief  that  economic  progress  cannot  be  suc- 
cessfully achieved  if  social  needs  are  ignored. 

In  its  first  10  months  of  administering  that  Fund,  the  Bank  has  made  loans 
totaling  over  $200  million.  These  loans  from  the  Social  Progress  Trust  Fund, 
and  others  to  come,  will  help  to  provide  adequate  homes  for  those  who  lack  them 
to  give  the  small  farmer  access  to  credit  on  terms  he  can  afford,  to  bring  the 
blessing  of  pure  water  to  many  now  forced  to  use  contaminated  supplies.  In 
the  true  spirit  of  a  common  purpose,  those  who  receive  these  benefits  will  also 
share  in  their  creation.  They  and  their  neighbors  will  help  to  build  homes  with 
their  own  hands;  the  homes  will  not  be  rented  but  sold,  so  that  the  pride  and 
satisfaction  of  family  ownership  can  be  realized;  and  those  who  receive  pure  water 
in  their  homes  will  pay  for  it,  loans  for  all  these  purposes  are  being  provided  on 
liberal  terms  which  the  home  owner,  the  small  farmer,  the  water-user  can  afford. 
Self-help,  and  the  dignity  and  independence  of  the  individual,  are  thus  being 
emphasized. 

These  accomplishments  of  the  Bank  have  been  achieved  within  the  framework 
of  the  Alliance  for  Progress.  The  Alliance  has  had  a  year  of  solid  achievement. 
I  say  this  in  the  full  knowledge  of  all  that  remains  to  be  done,  of  all  the  obstacles 
that  must  still  be  overcome,  of  the  wide-spread  poverty,  disease,  hunger,  and 
despair  that  still  exists  in  our  hemisphere.  But  we  can  here  take  note  of  the 
progress  that  has  been  made,  with  the  understanding  that  we  are  far  from  satisfied 
with  it,  and  that  we  will  not  be  satisfied  until  our  task  is  accomplished. 

My  Government  has  fulfilled  the  promise  which  it  made  at  Punta  del  Este  last 
August  to  commit  more  than  a  billion  dollars  in  public  assistance  to  Latin  America 
during  the  first  year  of  the  Alliance.  More  than  $400  million  came  from  the 
Agency  for  International  Development,  $375  million  from  the  Export-Import 
Bank,  $135  million  under  the  food  for  peace  program,  $130  million  from  the 
Social  Progress  Trust  Fund,  and  several  millions  more  for  other  assistance, 
including  activities  of  the  Peace  Corps. 

As  you  know,  President  Kennedy  has  asked  the  U.S.  Congress  for  $3  billion 
to  finance  development  aid  programs  under  the  Alliance  for  Progress  during  the 
next  four  fiscal  years.  He  asked  that  $600  million  be  appropriated  by  the  U.S. 
Congress  for  the  fiscal  year  1963,  which  starts  this  July.  This  amount  would  be 
in  addition  to  the  amounts  to  be  provided  by  the  Export-Import  Bank,  by  the 
food  for  peace  program  and  from  the  Social  Progress  Trust  Fund  during  fiscal  1963. 

Latin  America  must  also  look  to  the  other  industrialized  countries  of  Western 
Europe,  Japan,  and  Canada  for  development  assistance.  The  Alliance  for  Prog- 
ress is  important  to  the  entire  free  world.  Other  industrialized  countries,  along 
with  the  United  States,  must  help  if  its  success  is  to  be  assured.  This  will  mean 
development  loans  on  flexible  terms  to  replace  and  supplement  the  high  interest 
suppliers'  credits  which  up  to  now  have  constituted  the  bulk  of  European  credits 
to  Latin  America.  It  is  my  sincere  hope  that  the  other  industrial  nations  of  the 
free  world  will  play  a  greater  role  in  the  development  of  Latin  America  in  the 
future  than  they  have  in  the  past.  Each  of  our  governments  must  do  everything 
in  its  power  to  achieve  this  result.  The  new  era  in  international  economic  co- 
operation which  is  just  beginning,  as  evidenced  by  the  Common  Market,  the 
Organization  for  Economic  Cooperation  and  Development,  and  the  Alliance  itself, 
is  an  opportune  time  to  encourage  outside  aid  and  investment  for  Latin  America. 

The  participation  of  the  Government  of  the  Federal  Republic  of  Germany  with 
the  Inter-American  Development  Bank,  the  Government  of  Argentina,  and  the 
Government  of  the  United  States  in  the  program  for  the  rehabilitation  of  the 
Bolivian  Mining  Corporation  is  an  interesting  and  welcome  move  towards  inter- 
national cooperation.  My  Government  will  continue  to  seek  such  cooperation  by 
other  capital  exporting  countries  in  increasing  the  flow  of  long-term  public 
development  capital  for  Latin  America. 

I  was  glad  to  learn,  in  this  connection,  that  the  Bank  had  established  a  Euro- 
pean representative  office,  under  the  direction  of  an  able  Argentine,  Julio  Gon- 


438   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

zalez  del  Solar,  which  should  be  of  assistance  in  interesting  European  capital  in 
Latin  America. 

In  addition,  private  capital  must  be  encouraged  both  within  Latin  America  and 
from  the  industrialized  countries.  Private  funds  in  large  amounts  are  essential 
if  economic  growth  is  to  be  stimulated  to  the  point  where  it  will  outstrip  the 
population  gain  and  provide  a  significant  rise  in  the  standard  of  living.  The 
goal  of  2}{  percent  yearly  increase  in  per  capita  economic  growth  which  we  estab- 
lished in  the  Charter  of  Punta  del  Este  is  not  excessive  in  a  continent  where  the 
average  per  capita  annual  gross  product  is  about  $300.  But  this  goal  cannot  be 
achieved  without  more  private  investment.  Private  capital  will  also  bring  with  it 
the  needed  technicians,  skilled  help  and  know-how  so  important  to  creating  real 
growth.  If  private  enterprise  follows  a  policy  of  mixed  capital  financing,  part 
foreign  and  part  local  funds,  there  will  be  benefits  for  all  concerned,  not  the  least 
of  which  will  be  the  training  and  utilization  of  Latin  America's  own  people.  Such 
ventures  will  encourage  the  development  of  local  technical  and  managerial  talents 
and  will  allow  existing  talent  to  gain  greater  experience. 

The  broad  charter  upon  which  we  all  agreed  at  Punta  del  Este,  and  the  Act  of 
Bogota  which  preceded  it,  were  based  upon  the  principles  of  self-help  and  eco- 
nomic and  social  reform.  Before  the  end  of  1961,  beginning  steps  had  been  taken 
to  achieve  the  land,  tax,  and  administrative  reforms  that  must  be  carried  out  if 
assistance  funds  from  the  United  States  and  elsewhere  are  to  produce  the  effect 
for  which  they  are  designed.  These  steps  are  reflected  in  the  detailed  report  of 
the  Bank,  as  administrator  of  the  Social  Progress  Trust  Fund  for  the  calendar 
year  1961,  with  respect  to  each  member  country.  In  some  countries,  beginnings 
have  been  made  by  law  or  are  under  legislative  consideration.  More  than  half  the 
members  of  the  Alliance  either  have  national  development  plans  completed  or 
under  way.  Our  progress  so  far  offers  hope  for  the  future,  even  as  we  recognize 
that  much  more  remains  to  be  done. 

In  the  period  ahead  we  shall  need  sounder  tax  laws  and  better  tax  administration 
to  provide  the  revenue  to  finance  needed  self-help  measures,  to  assure  that  all 
bear  an  equitable  share  of  the  burden  of  providing  that  revenue,  and  to  end  the 
huge  annual  losses  from  tax  evasion.  Each  country's  needs  are  different,  but 
nearly  all  need  more  efficient  tax  systems.  For  only  through  more  efficient  tax 
systems,  tighter  administration,  and  stricter  enforcement  of  legislation  already  in 
effect,  can  widespread  tax  inequities,  noncompliance,  and  evasion  be  stopped,  and 
the  vital  resources  of  the  continent  marshalled  for  progress. 

In  the  period  ahead  we  shall  need  greater  land  productivity,  including  a  better 
system  of  land  distribution,  so  that  land  does  not  lie  idle  or  ineffectively  used,  and 
so  that  hard-pressed  farmers  are  not  exploited.  The  type  of  land  reform  needed 
also  varies  widely  from  country  to  country.  In  some,  the  need  may  be  for  the 
opening  up  of  new  public  lands,  by  irrigation  or  by  building  roads.  In  others, 
the  acquisition  and  reallocation  of  private  land  holdings  may  be  in  the  national 
interest.  The  need  for  reform,  particularly  reform  and  investment  to  increase 
efficiency,  is  indicated  by  the  fact  that  while  roughly  half  of  Latin  America's  labor 
force  is  involved  in  agriculture,  agriculture  represents  considerably  less  than  half 
its  total  output.  Increasing,  and  at  the  same  time  diversifying,  agricultural 
productivity  is  an  urgent  need. 

Above  all,  we  shall  need  wise  planning,  with  a  real  sense  of  priorities.  The 
nine-man  panel  set  up  to  review  national  plans  is  a  major  step  to  efficient  planning. 
I  wish  to  reiterate  that  it  will  be  the  policy  of  the  United  States  to  give  great 
weight  to  the  views  of  the  panel  in  providing  development  assistance  under  the 
AUiance  for  Progress. 

At  our  last  meeting  a  year  ago  in  Rio  de  Janeiro  I  suggested  that  the  objectives 
of  the  Alliance  for  Progress  could  be  defined  as  growth,  stability,  and  social  equity 
for  the  individual.  In  particular,  I  stated  the  conviction  of  the  United  States 
that  financial  stabilization  must  be  accompanied  by  social  progress  and  economic 
growth  if  the  goals  of  the  Alliance  for  Progress  are  to  be  realized.  I  should  like 
on  this  occasion  to  restate  and  reemphasize  that  belief.  I  think  it  is  clear  beyond 
any  possible  doubt  that  in  our  modern  era  democratic  governments  cannot  long 
endure  if  they  neglect  the  needs  of  the  people  for  social  improvement  and  rising 
standards  of  living.  That  is  why  government  policy  in  a  free  society  must  be 
directed  to  offering  education  to  the  illiterate;  assuring  homes,  laud,  and  food  for 
the  homeless,  landless,  and  hungry;  bringing  productive  work  to  the  unemployed; 
and  instilling  in  the  hearts  of  the  underprivileged  hope  for  the  future  instead  of 
despair.  These  are  tasks  of  statesmanship  which  require  positive  and  forward- 
looking  programs,   not   merely   negative  restraints.     They  demand  intelligent, 


EXHIBITS  439 

imaginative  planning  for  the  use  of  national  resources.  They  call  for  courageous 
political  leadership  to  bring  about  changes  in  society  often  contrary  to  the  im- 
mediate interests  of  powerful  opposing  minorities.  Financial  stabilization,  even 
though  it  is  essential  to  the  process  of  widely-shared  growth,  cannot  by  itself 
meet  the  insistent  demands  of  the  people  for  the  better  hfe  denied  them  by  the 
existing  order  of  things.  And  experience  shows  that  efforts  to  achieve  financial 
stabilization  will  themselves  be  overthrown  by  irresistible  pressures  in  the  absence 
of  effective  and  concrete  programs  to  bring  economic  growth  and  social  improve- 
ment in  a  measurable  and  tangible  form.  What  is  called  for  are  policies  which 
continually  blend  financial  stability  with  economic  and  social  development. 

The  Alliance  for  Progress  is  a  ten-year  program  which  is  only  a  year  old.  We 
have  accomplished  much  in  one  year,  but  history  is  in  a  hurry. 

Whether  we  delay  or  act,  whether  we  succeed  or  fail,  we  know  that  present 
conditions  will  not  endure.  The  winds  of  change  are  blowing  throughout  the 
world.  Let  us  then  employ  our  wisdom,  our  energy,  and  our  dedicated  efi"orts 
in  striving  for  a  peaceful  change  to  a  better  life  in  freedom,  in  striving  to  save  our 
peoples  from  the  violent  change  of  bloodshed  and  tyranny. 

I  offer  the  words  of  the  President  of  the  United  States,  delivered  last  month  on 
the  first  anniversary  of  the  Alliance: 

"The  Charter  of  Punta  del  Este  which  last  August  established  the  Alliance  for 
Progress  is  the  framework  of  goals  and  conditions  for  what  has  been  called  'a 
peaceful  revolution  on  a  Hemispheric  scale.' 

"That  revolution  had  begun  before  the  Charter  was  drawn.  It  will  continue 
after  its  goals  are  reached.  If  its  goals  are  not  achieved,  the  revolution  will 
continue,  but  its  methods  and  results  will  be  tragically  different.  History  has 
removed  for  governments  the  margin  of  safety  between  the  peaceful  revolution 
and  the  violent  revolution.  The  luxurj^  of  a  leisurely  interval  is  no  longer  avail- 
able." 

Exhibit  38. — Remarks  by  Secretary  of  the  Treasury  Dillon,  May  18,  1962,  at  the 
ninth  annual  monetary  conference  of  the  American  Bankers  Association,  Rome, 
Italy 

I  am  delighted  to  join  with  you  in  this  Annual  Monetary  Conference,  which 
has  brought  together  so  many  of  those  who,  as  public  officials  or  private  citizens, 
share  responsibility  for  the  financial  policies  of  the  free  world.  Our  common 
objective  of  a  durable  international  payments  system,  capable  of  supporting  and 
nourishing  economic  growth  and  expanded  trade,  cannot  be  achieved  by  nations 
working  in  isolation.  Lasting  progress  depends  upon  concerted  action  by  all  of 
our  governments  and  by  labor,  business,  and  finance  within  each  country.  Such 
cooperation  can  flourish  only  in  an  atmosphere  of  frank  discussion — the  sort  of 
atmosphere  provided  by  this  meeting.  The  opportunity  which  we  Americans 
have  had  to  meet  in  such  pleasant  surroundings  with  our  eminent  European  col- 
leagues has  been  most  useful  in  giving  us  a  clearer  appreciation  of  our  common 
problems.  I  am  thankful  to  the  American  Bankers  Association  and  to  our  Italian 
hosts  for  making  this  possible. 

The  free  world's  monetary  system,  as  it  has  evolved  since  World  War  II,  rests 
inescapably  on  the  full  acceptability  of  the  dollar  as  a  supplement  to  gold  in  financ- 
ing world  trade.  No  practicable  alternative  is  in  sight.  This  means  that  the 
dollar  holdings  of  central  banks  must  continue,  in  the  future  as  in  the  past,  to  be 
readily  convertible  into  gold  upon  demand  at  the  fixed  price  of  $35  an  ounce. 

It  further  means  that  all  of  us — every  nation  with  a  stake  in  a  stable  inter- 
national financial  mechanism — have  a  strong  interest  in  the  elimination  of  the 
lingering  United  States  payments  deficit. 

The  chief  responsibility  for  righting  that  deficit  rests,  of  course,  with  the  United 
States.  We  recognize  this  responsibility,  and  we  are  prepared  to  do  what  is 
necessary  to  eliminate  the  deficit  and  to  preserve  the  value  of  the  dollar.  But 
the  nature  of  the  eventual  solution,  and  the  speed  with  which  it  is  reached,  also 
depends  upon  the  degree  to  which  the  surplus  countries  of  Western  Europe 
accept  a  complementary  responsibility. 

Recognition  of  the  need  for  coordinated,  cooperative  action  has  been  apparent 
in  many  areas  over  the  past  year.  This  provides  solid  ground  for  confidence  as 
we  look  ahead.  Nevertheless,  much  remains  to  be  done.  And  this  is  nowhere 
more  true  than  in  one  area  of  direct  concern  to  everyone  in  this  room:  the  arrange- 
ments for  raising  and  distributing  credit  and  capital  in  world  markets.     Potential 


440   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

investment  funds  are  still  too  often  damtnsd  up  behind  national  boundaries  by 
legal  restrictions  or  institutional  barriers,  even  when  any  need  for  these  restric« 
tioiis  has  lon<^  since  passed.  Capital  doas  not,  as  it  should,  flow  freely  from  those 
with  ample  resourcei  to  the  points  of  greatest  need.  Benefits  and  burdens  often 
bear  little  relationship  to  current  patterns  of  trade  or  to  the  underlying  payments 
position  of  a  country. 

This  is  reflected  in  the  fact  that  most  governments  or  businesses,  when  raising 
funds  outside  their  own  country,  still  look  to  the  United  States  as  the  only  readily 
available  source.  Conversely,  American  investors,  unlike  those  in  most  other 
countries,  have  both  the  facilities  and  freedom  to  place  their  funds  abroad  without 
restriction,  on  a  basis  comparable  to — and  sometimes  even  more  favorable 
than — domestic  investment. 

These  conditions  are  an  anomaly  in  a  world  of  convertible  currencies,  a  world 
in  which  barriers  to  trade  have  been  steadily  reduced,  a  world  characterized  by 
American  deficits  and  European  surpluses.  I  am  not  suggesting  that  the  United 
States,  as  the  richest  and  most  productive  nation  on  earth,  should  cease  to  export 
capital.  Nor  do  I  suggest  that  action  to  free  the  flow  of  investment  funds  from 
other  countries  would  relieve  the  United  States  of  its  responsibiHties  for  vigorous 
and  effective  action  in  other  directions  to  reduce  its  payments  deficit.  But 
progress  toward  a  broader,  more  fluid  international  market  for  capital  docs  seem 
to  me  to  be  an  essential  part  of  our  American  effort  to  achieve  and  sustain  inter- 
national payments  equilibrium.  At  the  same  time,  more  effective  means  of 
mobilizing  the  huge  potential  for  savings  implicit  in  the  dramatic  economic  ex- 
pansion of  Western  Europe  must  be  developed  if  Europe  is  to  fulfill  its  hopes  for 
continued  rapid  economic  growth  in  the  years  ahead. 

Western  Europe  is  in  a  period  of  economic  growth  that  can  and  should  lead  to 
standards  of  living  comparable  to  those  in  the  United  States.  But  we  in  the 
United  States  would  not  have  been  able  to  achieve  our  present  standard  without 
the  development  of  a  capital  market  whose  breadth  and  flexibility  remain  un- 
paralleled. The  plain  fact  is  that  Western  Europe  will  not  be  able  to  approach 
the  American  standard  of  living  until  it  develops  ways  and  means  of  mobilizing 
its  own  extensive  savings  and  capital  that  are  fully  as  effective  as  those  of  the 
New  York  market.  This  is  an  area  where  the  interests  of  the  United  States  and 
Western  Europe  coincide  completely.  Western  European  economic  growth  will 
require  an  enormous  mobilization  of  capital.  Because  of  balance-of-payments 
realities,  as  well  as  our  own  competing  domestic  needs,  the  amount  of  capital 
that  we  will  be  able  to  furnish  is  simply  not  enough  to  go  around.  If  Europe  is 
to  have  adequate  funds  for  the  expansion  that  is  now  within  its  grasp,  it  must 
develop  up-to-date  mechanisms  to  mobilize  its  own  capital  resources — mecha- 
nisms that  do  not  exist  today  in  most  of  continental  Europe. 

To  return  to  our  balance  of  payments  and  to  put  it  into  proper  perspective, 
let  me  review  the  broad  strategy  that  lies  behind  all  of  our  efforts  to  restore  a 
balance  in  our  international  accounts. 

As  you  know,  spending  for  the  defense  and  economic  support  of  the  free  world 
imposes  a  uniquely  heavy  burden  on  the  U.S.  balance  of  payments.  The  annual 
dollar  cost  of  our  defense  expenditures  overseas  has  been  roughly  $3  billion  in 
recent  years,  substantially  more  than  our  average  basic  payments  deficit.  I 
would  like  to  emphasize  that  the  $3  biUion  figure  is  the  balance-of-payments 
impact,  not  the  budgetary  cost  to  the  United  States,  which  is  several  times  higher. 

Approximately  $2  billion  of  this  is  spent  in  NATO  countries.  Our  dollar  costs 
for  defense  are  heaviest  in  Germany,  where  they  amount  to  about  $700  miUion  a 
year.  In  France,  they  are  more  than  $300  million  per  year;  in  the  United  Kingdom 
about  $250  million,  and  in  Italy,  about  $100  million. 

These  expenditures  represent  the  dollar  cost  of  maintaining  U.S.  forces  over- 
seas, and  the  heavy  expenditures  in  NATO  countries  result  from  the  fact  that  our 
largest  overseas  troop  deployments  are  here  in  the  NATO  area. 

There  can  be  no  doubt  of  the  necessity  to  maintain  large  U.S.  forces  overseas  for 
our  own  security,  for  that  of  our  NATO  allies,  and  for  the  entire  free  world.  Nor 
can  there  be  any  doubt  of  our  firm  determination  to  meet  in  full  our  responsibilities 
for  the  defense  of  NATO  and  the  free  world.  As  President  Kennedy  has  stated, 
the  United  States  is  prepared  to  make  any  sacrifice  necessary  for  free  world 
security.  We  are  prepared  to  maintain  fully  effective  military  forces  ovenseas, 
wherever  necessary  and  for  as  long  as  needed.  Even  as  we  meet  today,  American 
troops  are  deploying  in  Thailand  in  response  to  a  request  for  assistance  by  the 
Royal  Thai  Government  as  a  result  of  renewed  communist  aggression  in  Laos. 
But  at  the  same  time  that  we  fulfill  these  military  responsibilities  we  must  exercise 


EXHIBITS  441 

all  prudence  to  ensure  that  the  adverse  impact  on  our  balance  of  payments  is 
minimized. 

The  United  States  must  trim  all  nonessential  foreign  exchange  expenditures 
from  its  defense  programs.  Therefore,  we  are  emphasizing  U.S.,  rather  than 
foreign  procurement.  We  are  economizing  in  manpower  wherever  possible 
without  loss  of  military  strength  and  we  are  encouraging  our  forces  to  hold  down 
the  level  of  their  personal  expenditures  overseas.  But  this  can  only  accomplish  a 
relatively  small  part  of  the  job. 

More  important  is  our  effort  to  work  out  arrangements  in  cooperation  with  our 
NATO  allies  for  offsetting  our  defense  expenditures  by  increasing  their  procure- 
ment of  military  equipment  and  services  from  the  United  States.  This  not  only 
assists  the  U.S.  balance  of  payments,  it  also  strengthens  the  military  capabilities 
of  our  allies,  for  we  are  usually  in  a  position  to  produce  the  needed  equipment 
faster  and  at  less  cost  than  it  can  be  produced  in  Europe. 

As  a  first  and  most  important  step  in  this  effort,  agreement  has  been  reached  on 
the  establishment  of  a  cooperative  logistics  system  whereby  the  armed  forces  of 
the  Federal  Republic  of  Germany  will  increase  the  level  of  military  procurement 
in  the  United  States  and  will  utilize  American  supply  lines,  depots,  and  mainte- 
nance and  support  facilities.  By  this  means  the  Federal  Republic  of  Germany 
will  fully  offset  the  dollar  costs  of  maintaining  U.S.  troops  in  Germany  during 
1961  and  1962.  Discussions  are  under  way,  or  will  soon  be  initiated,  with  certain 
of  our  other  NATO  allies.  Our  objective  during  1962  for  total  military  cash 
receipts  is  approximately  $1.2  billion.  I  believe  that  we  will  be  successful  in 
attaining  this  objective. 

It  is  our  view  that  such  military  offset  arrangements  are  both  equitable  and 
mutually  beneficial.  They  provide  a  means  whereby  our  allies  can  strengthen 
their  own  military  forces  at  minimum  cost  and  in  ways  that  often  would  not 
otherwise  be  possible,  while  at  the  same  time  offsetting  the  dollar  costs  which  we 
incur  in  maintaining  our  forces  on  their  territory  in  the  joint  defense  of  the  precious 
heritage  of  freedom.  Thus,  these  agreements,  at  one  and  the  same  time,  build  up 
both  the  military  and  economic  defenses  of  the  West. 

The  dimensions  of  the  actual  drain  on  our  balance  of  payments  from  economic 
aid,  while  important,  are  currently  much  smaller  than  many  have  assumed. 
A  sizeable  fraction  of  our  $4  billion  expenditure  for  aid,  over  two-thirds  in  1961,  is 
furnished  in  the  form  of  U.S.  goods  and  services.  And  in  terms  of  the  funds  being 
committed  at  the  present  time,  the  portion  furnished  by  our  own  goods  and 
services  is  even  higher  and  is  still  increasing.  But  just  as  in  the  case  of  defense 
spending  overseas,  there  are  limits  to  the  further  dollar  savings  that  can  safely  be 
made  in  this  area.  The  needs  of  the  developing  countries  are  likely  to  rise  in  the 
years  ahead,  not  decline.  Hence,  much  remains  to  be  done  in  sharing  this  burden 
more  equitably  among  all  the  countries  able  to  bear  it.  I  am  hopeful  that  con- 
tinued progress  can  be  made  along  those  lines  this  year. 

On  balance,  a  realistic  appraisal  of  actions  now  underway  suggests  that  the  total 
drain  on  our  balance  of  payments  from  aid  and  defense  will  be  reduced  by  some- 
thing over  a  billion  dollars  a  year,  to  a  figure  on  the  order  of  S3  billion. 

This  means  that  the  United  States  must  have  a  continuing  surplus  of  about  $3 
billion  a  year  in  the  other  elements  of  our  basic  balance — trade,  services,  and  long- 
term  capital  movements  if  we  are  to  achieve  a  balance  in  this  account  which,  as 
you  know,  does  not  include  short-term  capital  flows.  This  is  a  tall  order.  But  it  is 
one  we  can,  and  must,  achieve.  Last  year,  when  circumstances  were  particularly 
favorable  for  our  trade  account,  our  commercial  trade  surplus  amounted  to  $3 
billion.  This  reflected  the  abnormally  low  imports  of  the  first  six  months  of  1961, 
which  resulted  from  the  slowdown  in  our  economy.  We  must,  however,  accept 
this  as  a  minimum  target  for  the  future  and  strive  to  do  even  better.  Such  a 
target  will  not  be  easy  to  achieve.  But  it  is  feasible  and  realistic,  if  we  Americans 
continue  to  apply  ourselves  to  the  task  with  all  the  vigor  and  imagination  it 
requires. 

I  will  not  review  in  detail  here  all  the  measures  we  have  undertaken  to  make 
Americans  exijort-conscious  as  never  before,  to  support  industry  with  short-term 
credit  insurance  comparable  to  that  available  in  other  industrialized  countries, 
and  to  provide  comprehensive  and  speedy  information  on  foreign  markets.  I 
am  certain,  howevt^r,  that  all  of  you  here  will  see  visible  results  from  these  efforts 
in  the  months  and  years  ahead,  as  American  businessmen  move  more  aggressively 
to  participate  in  growing  world  markets. 

All  of  this  effort  will,  of  course,  avail  us  nothing  if  American  industry  cannot 
or  does  not  deliver  its  goods  at  attractive  prices.     Restraint  on  costs  and  stable 


442   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

prices  must  lie  at  the  very  heart  of  American  efforts  to  sharpen  our  competitive 
drive  in  world  markets. 

Our  overall  approach  to  this  objective  is,  I  believe,  clear:  the  thought  that 
price  stability  depends  on  keeping  wage  rates  in  line  with  national  trends  in 
productivity  is  hardly  new.  But  never  before  has  an  American  administration 
assumed  the  responsibility  for  defining  that  principle  in  such  clear  terms — and 
never  before  has  an  American  administration  so  carefully  spelled  out  its  impli- 
cations for  collective  bargaining  and  pricing  decisions.  The  object  is  simply 
this:  to  ensure  that  labor  and  business  alike,  in  weighing  all  the  complex  pres- 
sures that  enter  into  any  wage  price  decision,  are  also  fully  aware  of  the  overall 
national  interest. 

The  past  j^ear  has  seen  some  success  in  these  efforts.  Despite  our  economic 
recovery  the  very  significant  fact  is  that  wholesale  prices  in  the  United  States 
are  low^er  today  than  they  were  a  year  ago.  They  have  now"  remained  stationary 
for  four  years.  This  price  stability  has  served  to  improve  the  competitive 
position  of  the  United  States  versus  our  friends  in  Europe,  reversing  the  trend 
of  earlier  years.  We  will  continue  to  do  everything  in  our  power  to  see  that 
this  new  trend  continues.  Important  among  our  efforts  is  the  promotion  of  a 
more  favorable  environment  for  investment.  An  investment  tax  credit,  included 
within  a  broader  program  of  tax  reform  now  before  our  Congress,  is  a  key  element 
in  our  approach.  And  updating  and  simplification  of  outmoded  depreciation 
guidelines  to  take  full  account  of  the  impact  of  swiftly  changing  technology 
on  the  useful  life  of  equipment  is  another.  Together,  these  measures  will  provide 
incentives  for  investment  in  new  equipment  comparable  to  those  that  have 
long  existed  in  other  leading  industrialized  nations. 

Monetary  and  debt  management  policies  are  being  conducted  in  a  manner 
to  ensure  that  ample  funds  are  available,  at  reasonable  cost,  to  finance  new 
capital  outlays.  Fiscal  policy,  too,  has  been  closely  attuned  to  the  need  to 
encourage  investment,  and  to  avoid  the  sort  of  demand  pressures  that  could 
menace  price  stability. 

As  you  know,  we  have  succeeded  this  year  in  keeping  the  deficit  in  our  Federal 
budget  far  below  the  level  of  fiscal  year  1959,  the  last  similar  recovery  period. 
This  has  been  of  major  assistance  in  our  effort  to  forestall  any  significant  tight- 
ening of  the  credit  markets,  with  government  draining  off  resources  and  funds 
that  might  better  be  devoted  to  productive  investment.  For  the  fiscal  year 
beginning  next  July,  we  have  programmed  a  balanced  budget  on  the  presumption 
that  the  economy  will  continue  to  expand  vigorously,  approaching  full  employ- 
ment by  the  end  of  the  fiscal  year. 

Under  such  conditions,  our  budget  would  gradually,  and  quite  properly,  exert 
increasing  restraint  on  demand  as  the  year  progresses.  This  is  better  illustrated 
by  the  projected  surplus  of  $1.8  billion  in  the  overall  cash  account  which,  in 
contrast  with  the  administrative  budget,  reflects  all  the  activities  of  the  Federal 
Government. 

Whether  or  not  our  budget  target  will,  in  fact,  be  reached,  cannot  be  foretold 
with  certaint}"  today.  We  won't  know  the  answer  until  time  has  tested  the 
basic  assumptions  that  underlie  the  revenue  estimates.  But  as  you  all  know. 
Government  receipts  in  the  United  States  are  very  sensitive  to  business  conditions 
because  of  the  heavy  reliance  on  the  income  tax.  I  can  assure  you  that  expendi- 
tures are  being  kept  within  the  limits  of  the  revenue  estimates.  I  would  be 
less  than  frank  if  I  did  not  admit  that  our  first  quarter  results  were  disappointing, 
although  the  shortfall  was  not  so  great  that  it  cannot  be  made  up  in  the  months 
ahead.  Certainly  my  own  readings  of  the  latest  business  news  and  profits 
figures  suggest  that  it  is  still  premature  to  conclude  that  we  cannot  attain  our 
goal. 

Whatever  the  precise  budgetary  outcome  14  months  hence,  the  really  crucial 
fact  is  that  the  economic  effect  of  any  particular  surplus  or  deficit  can  be  judged 
only  in  the  context  of  the  existing  business  environment.  If  our  economy  fails 
to  sustain  the  momentum  we  anticipate,  labor  will  remain  freely  available  and 
industry  will  continue  to  operate  well  below  capacity.  Under  such  circum- 
stances, experience  shows  that  a  moderate  deficit  would  not  be  inflationary,  just 
as  the  rather  substantial  deficit  of  the  past  twelve  months,  with  manpower  and 
goods  in  ample  supply,  has  not  been  inflationary — and,  for  that  matter,  just 
as  the  much  larger  deficit  in  fiscal  1959  was  not  accompanied  by  any  general 
price  increase.  And  here  I  would  like  to  say  that  our  deficit  for  the  current 
fiscal  year  ending  on  June  30th  is  today  estimated  at  $7  billion,  exactly  the  same 
as  our  official  estimates  of  last  October  and  last  January. 


EXHIBITS  443 

The  fact  that  there  is  no  automatic  relationship  between  budgetary  deficits  and 
price  inflation,  or  between  budget  deficits  and  the  balance  of  payments,  is  brought 
home  forcefully  by  a  recent  study  comparing  the  budgets  of  the  United  States 
with  those  of  the  three  largest  European  countries.  I  do  not  recommend  it  for 
light  reading.  It  is  a  highly  technical  statistical  exercise  designed  to  adjust  the 
data  to  a  common  basis  so  that  they  accurately  reflect  the  net  impact  of  central 
government  operations.  But  the  conclusion  stands  out  clearly  and  unambig- 
uously: Britain,  France,  and  Germany  have  all  been  more  "deficit-prone"  than 
the  United  States.  Converting  European  budgets  to  the  more  rigorous  standards 
of  American  budget  accounting,  we  find  that  Germany,  for  example,  has  had  a 
deficit  ever  since  defense  spending  became  a  significant  portion  of  its  budget  four 
years  ago,  and  that  France  has  had  a  deficit  in  every  year  of  the  past  decade. 
'Moreover,  the  deficits  of  all  three  of  these  European  countries  have,  much  of  the 
time,  been  considerably  larger,  relative  to  gross  national  product,  than  that  of  the 
United  States. 

What  is  one  to  conclude  in  view  of  the  fact  that  two  countries,  France  and 
Germany,  which,  using  our  basis  of  budgetary  accounting,  have  had  relatively 
large  budgetary  deficits  in  recent  years,  have  also  had  the  largest  surpluses  in 
their  international  accounts? 

Certainly  not  that  large  deficits  are  the  road  to  salvation. 

We  all  know  that  the  wrong  deficit  at  the  wrong  time  can  pave  the  road  to 
inflation.  But,  in  discussing  budget  policy,  we  too  often  fall  into  the  trap  of 
forgetting  that  it  is  inflation  which  is  the  real  enemy.  We  should  always  bear  in 
mind  that  moderate  budget  deficits  incurred  during  periods  of  inadequate  demand 
and  which  do  not  exert  upward  pressures  on  price  levels  are  quite  different  in  their 
economic  effect  from  deficits  incurred  when  the  economy  is  operating  at  full 
capacity. 

In  this  connection,  the  relationship  of  the  Federal  debt  to  the  gross  national 
product — in  other  words,  the  ability  of  the  national  economy  to  carry  the  debt 
burden — is  also  pertinent.  In  this  area,  the  record  of  the  United  States  has  been 
and  continues  to  be  very  good.  From  a  situation  at  the  end  of  the  war  when  the 
Federal  debt  amounted  to  about  125  percent  of  our  gross  national  product,  the 
percentage  has  continually  declined  and  today  stands  at  about  53  percent.  This 
compares  with  a  ratio  of  56  percent  just  one  year  ago,  and  a  ratio  of  about  50 
percent  in  1941,  before  wartime  expenditures  sent  our  debt  soaring.  The  addition 
of  our  growing  State  and  local  debt  would  modify  these  percentages  only  slightly. 
The  general  picture  would  not  be  changed. 

Price  stability,  investment  in  modern  machinery,  an  e.xport-minded  Govern- 
ment and  industry,  these  are  the  keys  to  an  expanding  trade  surplus  for  the  United 
States  in  the  years  ahead,  a  surplus  achieved  not  by  retreat  to  controls  or  deflation, 
but  firmly  grounded  in  the  ability  of  American  business  to  pour  out  into  world 
markets  new  and  improved  products  at  attractive  prices.  Our  trade  surplus  is 
already  large.  But  it  is  not  quite  large  enough  to  cover  our  commitments  for 
defense  and  aid,  as  well  as  our  current  volume  of  private  investment  abroad. 
However,  the  needed  margin  is  within  reach,  and  reach  it  we  mean  to  do. 

The  preliminary  results  from  the  first  quarter  of  1962  clearly  show  that  our 
efforts  are  beginning  to  bear  fruit.  Despite  an  increase  of  $550  million  in  our 
imports  as  compared  to  the  unusually  depressed  level  of  the  first  quarter  of  1961 — 
an  increase  that  is  the  natural  reflection  of  our  economic  recovery — our  overall 
deficit  for  the  quarter  was  just  $100  million  larger  than  in  the  same  quarter  last 
year.  Leaving  imports  aside,  this  represents  a  solid  improvement  of  $450  million 
in  all  the  other  elements  of  our  balance  of  payments.  Overall  these  results  show 
an  improvement  of  a  billion'dollars  over  the  deficit  incurred  during  the  fourth 
quarter.  During  the  first  quarter  of  this  year  our  basic  deficit  ran  at  an  annual 
rate  approximately  $1.2  billion,  and  our  overall  deficit  at  an  annual  rate  of  $1.8 
billion.  The  continuing  and  growing  effect  of  our  various  efforts  to  correct  our 
balance  of  payments  should  serve  to  maintain  or  improve  these  results  as  the  year 
progresses. 

We  should  not,  however,  center  all  our  attention  and  all  our  efforts  on  our 
trade  balance.  A  danger  will  remain  so  long  as  the  United  States  stands  virtually 
alone  in  providing  a  free  and  effective  capital  market,  absorbing  the  bulk  of  the 
marginal  demands  for  funds  from  other  countries,  surplus  and  deficit  alike.  Then, 
the  dollars  saved  in  defense  and  aid,  and  the  dollars  earned  in  trade,  could  too 
easily  be  drained  away  in  an  accelerating  outflow  of  American  capital. 

I  am  not  referring  to  sudden  and  massive  shifts  of  liquid  funds  in  response  to 
interest  rate  differentials,  to  speculative  considerations,  or  to  other  factors.     That 


444   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

diflflcult  problem  has  already  received  much  attention,  and  our  mutual  defenses 
are  being  strengthened.  I  am  referring  to  the  basic  world  market  for  long-term 
capital. 

This  long-term  capital  market  has  two  major  facets:  direct  investment  and 
portfolio  investment.  It  is  the  latter,  or  rather  a  portion  of  the  latter  which  is 
my  chief  interest  today,  although  I  will  say  a  few  words  first  on  the  subject  of 
direct  investment. 

The  United  States  has  consistently  favored  free  capital  movement,  the  ability 
of  individuals  or  companies  to  invest  their  funds  where  they  will.  There  has 
been  no  change  in  that  view.  We  are,  however,  asking  our  Congress  to  end  the 
tax  inducements  to  American  investment  in  other  industrialized  countries,  partic- 
ularly the  inducements  which  flow  from  the  mushrooming  use  of  so-called  tax 
havens.  The  object  is  not  to  discourage  capital  from  going  abroad  in  search  of 
higher  gross  return.  That  sort  of  investment  will,  in  the  long  run,  serve  the 
investor,  the  United  States,  and  the  recipient  country  alike.  We  recognize  that 
the  great  bulk  of  our  foreign  investment  is  of  this  type  and  is  not  tax-induced. 
We  do,  however,  want  to  make  sure  that  our  tax  system  does  not  unwittingly, 
and  artificially,  spur  this  outflow.  We  wish  only  to  eliminate  marginal  foreign 
investment  that  is  induced  primarily  by  tax  considerations.  While  there  is  no 
expectation  that  such  action  will  dramatically  reduce  the  outflow  of  direct  invest- 
ment funds  from  the  United  States,  it  will  be  of  some  help — and  every  bit  counts 
in  the  effort  to  eliminate  our  payments  deficit. 

In  the  field  of  portfolio  investment,  I  am  not  interested  in  the  purchase  of 
foreign  equities  by  American  investors,  a  process  that  is  an  essential  element  of 
free  capital  movement.  What  I  am  concerned  with  is  the  increasing  use  of  the 
various  mechanisms  of  the  New  York  capital  market  by  European  borrowers  to 
raise  funds  for  their  own  internal  purposes.  Today,  the  plain  fact  is  that  under- 
writing and  distributing  facilities  in  the  industrialized  countries  of  continental 
Western  Europe,  are  generally  inadequate  to  meet  the  foreseeable  needs  of 
domestic  borrowers,  much  less  those  from  abroad.  That  is  not  a  healthy  environ- 
ment for  long-term  domestic  growth.  It  inevitably  means  higher  borrowing 
costs  and  a  shortage  of  funds  for  firms  and  industries  that  lack  their  own  internal 
sources  of  capital.  And,  when  combined  with  controls  and  restrictions  on 
capital  movements  lingering  on  from  earlier  days,  it  has  the  incongruous  effect 
of  shunting  to  the  New  York  market  new  issues  from  the  surplus  countries, 
even  as  we  in  the  United  States  are  endeavoring  to  erase  our  deficit. 

While  the  current  relatively  favorable  interest  rates  in  the  New  York  market 
are,  of  course,  attractive  to  foreign  borrowers,  there  is  plenty  of  evidence  that 
a  large  part  of  the  current  European  borrowing  in  New  York  is  as  much  a  reflec- 
tion of  the  greater  and  more  ready  availability  of  funds  in  the  New  York  capital 
markets  as  it  is  of  interest  rates.  In  other  words,  the  indications  are  that  many 
of  the  current  European  borrowers  would  be  coming  to  New  York  even  if  our 
interest  rate  structure  were  somewhat  higher.  They  would  be  coming  because 
they  find  it  more  difficult  to  raise  the  needed  funds  in  Europe  than  in  New  York. 
A  case  in  point  is  the  current  $25  million  borrowing  by  the  European  Coal  and 
Steel  Community. 

This  does  not  seem  to  me  to  be  a  very  efficient  use  of  the  world's  capital  re- 
sources. The  years  to  come  will  certainly  see  a  growing  demand  for  capital  from 
countries  which  cannot  be  expected  to  develop  their  own  capital  markets.  Such 
countries  have  traditionally  looked  to  the  capital  markets  of  New  York  and 
London  to  raise  their  funds.  This  is  a  normal  procedure  and  should  continue. 
But  it  will  be  more  difficult  for  these  countries  to  meet  their  needs  if  they  must 
compete  in  the  New  York  market  for  necessarily  limited  funds  with  continental 
European  borrowers  who,  given  fully  adequate  European  capital  markets,  should 
normally  be  able  to  find  the  needed  funds  without  having  to  cross  the  Atlantic. 

It  is  true  that  a  large  proportion  of  the  European  issues  that  have  been  publicly 
floated  in  New  York  have  ultimately  been  taken  up  by  European  investors, 
which,  among  other  things,  shows  that  these  investors  are  prepared  to  lend  their 
money  long-teim  at  lower  rates  than  are  currently  quoted  in  their  own  capital 
markets.  Thus,  the  burden  on  our  international  accounts  has  not  been  as  large 
as  it  may  have  appeared  from  a  simple  total  of  the  volume  of  new  issues  sold  in 
New  York.  But  the  burden  is  nonetheless  real.  And  so  long  as  the  imbalance 
in  facilities  and  controls  remains,  so  will  the  threat  that  an  accelerating  flow  of 
these  issues  could  undermine  our  efforts  in  other  directions.  And  as  long  as 
continental  Western  Europe  continues  to  operate  with  inadequate  and  outmoded 
capital  markets  it  can  have  no  solid  assurance  that  the  capital  required  to  ensure 


EXHIBITS  445 

steady  and  rapid  growth  will,  in  fact,  be  available.  I  am  glad  that  the  Organiza- 
tion for  Economic  Cooperation  and  Development  (OECD)  has  now  recognized 
the  importance  of  this  problem  and  has  commenced  to  work  actively  in  this 
field.     We  should  all  of  us  give  this  effort  our  full  support. 

I  recognize  that  progress  toward  relaxing  some  of  the  formal  controls  on  external 
capital  flows  is  already  evident  in  most  industrialized  countries.  Nevertheless, 
residents  of  only  a  few  Western  European  countries  have  freedom  today  to  invest 
abroad  wherever  they  may  wish,  and  in  whatever  form  they  may  desire.  Some 
type  of  official  authorization  and  approval  is  still  commonplace,  and  outright 
prohibition  is  not  infrequent.  The  volume  of  foreign  bonds  offered  in  Western 
European  countries  in  recent  years  has,  except  in  one  or  two  of  the  smaller  coun- 
tries, been  negligible,  and  in  some  countries,  nonexistent.  And,  it  still  appears 
that  bank  funds  are  readily  available  to  foreign  borrowers,  in  substantial  volume 
and  without  ties  to  exports,  only  when  they  are  in  the  form  of  U.S.  dollars. 

Thus,  we  have  a  long  way  to  go  before  we  can  be  satisfied  that  our  arrangements 
for  raising  and  distributing  capital  within  the  free  world  are  in  step  with  our 
progress  toward  freer  trade  and  higher  standards  of  living.  I,  for  one,  shall  be 
uneasy  so  long  as  virtually  all  the  world,  surplus  and  deficit  countries  alike,  those 
capable  of  generating  a  high  level  of  savings  internally  and  those  operating  close 
to  subsistence  levels,  must  look  to  the  United  States  as  their  principal,  if  not 
only,  source  of  marginal  capital. 

Progress  in  this  area  cannot  come  with  dramatic  speed.  Markets  have  been 
insulated  too  long.  The  whole  psychology  of  a  generation  of  investors  must  be 
changed.  New  institutional  structures  must  be  developed.  But  as  I  look  at 
the  development  of  Western  Europe  from  a  distance,  it  seems  to  me  that  the  logic 
of  internal  growth  and  development  points  in  this  direction. 

More  efficient  capital  markets  will  be  essential  to  sustain  growth  and  should 
themselves  tend  to  reinforce  other  factors  that  could  bring  about  a  lower  level  of 
long-term  interest  rates  more  in  line  with  those  typical  of  the  American  market. 
Already,  some  tendency  in  that  direction  has  developed.  In  this  interdependent 
world  of  ours,  I  would  expect  that  tendency  to  continue. 

I  am  not  calling  today  for  any  radical  new  departures  in  policy.  I  am  asking 
only  that  we  willingly  accept  the  logic  of  our  evolving  woi'ld  economy,  and  press 
ahead  with  all  our  vigor  to  cast  off  those  restrictions  that  still  impede  the  free 
flow  of  capital,  both  within  and  between  nations.  This  is  clearly  not  a  job  for 
governments  alone,  but  for  banking  leadership  and  banking  statesmanship  as  well. 
I  submit  it  as  a  special  challenge  for  all  of  you  who  have  a  vital  interest  in  expanded 
trade  between  nations,  growth  at  home,  a  durable  payments  system,  and  a  strong 
free  enterprise  economy. 


Exhibit  39.^ — Statement  by  Secretary  of  the  Treasury  Dillon  as  Governor  for 
the  United  States,  September  19,  1962,  at  the  discussion  of  the  Annual  Report 
of  the  International  Monetary  Fund 

First  of  all  I  wish  to  pay  tribute  to  our  retiring  Deputy  Managing  Director, 
Mr.  Merle  Cochran.  His  long  diplomatic  and  financial  experience  has  been  an 
important  element  in  the  Fund's  success,  and  his  vigor  and  impartiality  have 
enhanced  its  high  standards. 

The  Annual  Report  makes  clear  that  the  International  Monetary  Fund  has 
had  an  exceptionally  active  and  successful  year.  That  is  evident  from  the 
statistical  summary  of  the  Fund's  operations — total  drawings  by  22  countries 
of  $2.2  billion  spread  over  10  different  currencies,  and  repurchases  of  $1.3  billion. 
It  is  also  evident  in  the  continued  growth  of  the  Fund's  membership.  I  should 
like  to  welcome  the  new  members  who  have  joined  since  we  met  in  Vienna: 
Cyprus,  Kuwait,  Liberia,  Senegal,  Sierra  Leone,  Somalia,  Tanganyika,  and  Togo, 
and  to  express  my  pleasure  over  the  large  number  of  pending  applications  for 
membership,  of  which  many  are  on  our  agenda. 

One  basic  function  of  our  international  monetary  system  is  to  assure  the  time 
and  resources  necessary  to  facilitate  the  adjustments  that  are  an  inevitable 
consequence  of  economic  change  and  progress.  But,  no  matter  how  soundly 
conceived  and  operated,  no  monetary  arrangement  can  absolve  a  country  of  the 
responsibilities  that  go  hand  in  hand  with  the  benefits  of  participating  in  world 
trade  and  investment.  That  is  why  the  first  order  of  business  for  each  of  us  must 
be  the  development  of  programs  that  combine  external  financial  equilibrium  with 
economic  growth  at  home. 


446   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

There  are  no  simple  prescriptions  that  can  be  readily  utilized  at  all  times  and 
by  every  country.  That  is  recognized  by  the  United  States,  which  experienced 
relatively  slow  growth  and  sizable  external  deficits  during  the  later  1950's.  We 
are  now  attacking  both  of  these  problems  with  vigor,  and  the  results  are 
encouraging. 

Since  the  end  of  the  mild  recession  18  months  ago,  the  value  of  total  output 
has  expanded  by  more  than  $55  billion,  or  roughly  11  percent.  Unemployment 
has  been  appreciably  reduced.  At  the  same  time  increases  in  average  wage 
rates  in  manufacturing,  roughly  3  percent  per  year,  have  been  smaller  than  during 
other  postwar  recoveries,  and  have  remained  within  the  limits  of  rising  produc- 
tivity. Prices  for  manufactured  goods  are  now  slightly  lower  than  during  the 
recession  months  of  1961,  and  in  fact  have  remained  virtually  stable  for  four 
years. 

Although  our  economy  continues  to  move  steadily  ahead  unmarred  by  the 
excesses  that  characterized  earlier  periods  of  expansion,  we  are  not  satisfied. 
The  rate  of  investment  in  new  productive  facilities  has  continued  to  lag,  and  we 
still  have  too  many  idle  human  and  physical  resources.  To  meet  our  obligations 
to  ourselves  and  to  other  nations,  we  must  put  those  idle  resources  to  work,  and 
we  must  do  so  in  ways  that  will  add  to  our  productive  efficiency  and  reinforce  the 
prospects  for  price  stability. 

Broad  agreement  has  developed  among  our  citizens  that  one  of  the  keys  to 
progress  is  tax  reform — reform  designed  to  stimulate  investment  and  to  release 
the  brakes  on  growth  inherent  in  our  present  rate  structure.  A  good  beginning 
has  already  been  made.  The  tax  treatment  of  depreciation  has  been  thoroughly 
modernized.  A  7  percent  tax  credit,  similar  to  the  investment  allowances  now 
used  in  many  other  countries,  has  been  approved  by  both  houses  of  our  Congress 
and  is  expected  to  become  law  shortly.  Together  and  for  the  first  time  in  many 
years,  these  reforms  will  place  investment  in  new  equipment  in  the  United  States, 
so  far  as  taxes  are  a  factor,  on  a  basis  roughly  comparable  to  that  in  the  other 
industrialized  countries.  We  intend  to  submit  the  remainder  of  the  tax  reform 
program  to  Congress  in  January  at  the  start  of  its  next  session. 

Although  we  had  hoped  for  a  balanced  budget  in  the  current  fiscal  year,  ending 
next  June  30,  we  now  recognize  that  another  moderate  budget  deficit  appears 
likely.  Because  our  business  recovery  has  not  moved  as  rapidly  as  we  had  antic- 
ipated, revenues  will  fall  below  projected  levels.  However,  the  currently  en- 
visaged deficit,  accompanied  by  appropriate  monetary  and  debt  management 
policies,  should  not  give  rise  to  fears  of  inflation.  For  our  problem  is  not  excessive 
demand  and  scarce  resources,  but  rather  excess  capacity,  too  much  unemployment 
and  a  tax  structure  that  has  become  a  drag  on  productivity,  new  investment  and 
growth. 

With  this  in  mind,  the  basic  aim  of  our  monetary  and  debt  management 
policies  over  the  past  year  has  been  to  assure  an  ample  supply  of  credit  to  support 
domestic  expansion,  while  simultaneously  maintaining  a  rough  equality  between 
the  return  available  on  short-term  investments  in  the  United  States  and  in  the 
leading  money  markets  abroad.  We  have  concentrated  the  bulk  of  new  Treasury 
borrowing  in  the  short-term  area  of  the  market,  and,  as  a  result,  key  short-term 
rates  are  now  a  full  half  of  one  percent  higher  than  a  year  ago.  Meanwhile  funds 
for  productive  long-term  investment  have  remained  in  ample  supply.  And 
long-term  rates  for  corporate  bonds,  mortgages,  and  State  and  local  government 
securities,  which  have  a  far  more  important  relationship  to  domestic  investment, 
have  held  at  or  below  the  levels  to  which  they  had  declined  in  the  recession  months 
of  1961. 

While  concentrating  our  new  cash  borrowing  in  the  short-term  area,  we  have, 
at  the  same  time,  undertaken  a  significant  restructuring  of  the  outstanding 
Federal  debt.  The  slow  but  steady  shortening  of  the  average  maturity  of  the 
marketable  debt  that  had  proceeded  throughout  the  1950's  has  been  reversed. 
After  allowing  for  the  effects  of  last  week's  advance  refunding,  the  average  length 
of  the  debt  has  been  increased  by  20  percent  since  January  1960.  The  general 
public  now  has  more  of  its  funds  in  Government  bonds  of  longer  than  20-year 
maturity  than  at  any  time  since  the  early  fifties.  We  have  not  jeopardized 
prospects  for  price  stability  by  monetizing  excessive  amounts  of  debt  through 
the  banking  system.  The  money  supply,  demand  deposits  and  currency,  istoday 
less  than  2  percent  larger  than  a  year  ago  and  certainly  no  cause  for  inflationary 
concern  during  a  period  in  which  overall  economic  activity  has  risen  by  some 
6  percent. 


EXHIBITS  447 

As  we  move  ahead  in  financing  the  current  budget  deficit,  we  will  continue  to 
tap  a  cross  section  of  the  vast  amount  of  funds  becoming  available  in  the  market. 
Some  of  those  funds  will  come  from  the  rapidly  growing  savings  accounts  in  our 
commercial  banks.  Some  will  represent  a  prudent  increase  in  the  money  supply, 
as  our  productive  capacity  increases.  Meanwhile,  the  Treasury  will  continue  to 
seek  opportunities  for  placing  longer-term  bonds  with  individuals  and  with 
investment  institutions. 

That  should  not  be  interpreted  as  an  intention  to  press  ahead  with  long-term 
financing,  or  to  constrict  the  money  supply,  to  the  point  of  impeding  the  avail- 
ability of  funds  for  business  investment.  Should  the  economic  advance  generate 
a  growing  and  buoyant  demand  for  funds  for  domestic  investment,  with  conse- 
quent pressures  on  the  supply  of  resources,  a  moderate  rise  in  long-term  interest 
rates  would  be  a  natural  and  appropriate  response.  But  a  blunt  effort  at  this 
time  to  push  long-term  rates  up,  in  an  attempt  to  crowd  out  of  our  markets  some 
marginal  amount  of  foreign  borrowing,  seems  to  me  both  contrary  to  the  needs 
of  the  free  world  for  an  expanding  economy  in  the  United  States  and  quite  futile 
in  terms  of  our  balance  of  payments. 

It  is  true  that  a  sizable  number  of  foreign  securities  have  been  floated  in  the 
New  York  market  this  year.  However,  such  borrowing  is  attracted  as  much  by 
our  well  developed  market  facilities  and  by  our  complete  freedom  from  controls 
as  by  relatively  small  diff'erences  in  overall  interest  costs  to  borrowers,  costs 
that  for  many  foreign  offerings  have  run  to  six  percent  or  more.  I  have  suggested 
on  other  occasions  that  the  fundamental,  longrun  solution  to  the  anomaly  apparent 
today,  with  borrowers  in  some  of  the  surplus  countries  seeking  credit  in  a  deficit 
country,  lies  in  the  further  development  of  the  capital  markets  in  Western  Europe 
and  the  abandonment  of  outmoded  controls  and  restrictions  on  the  free  flow  of 
capital  that  still  are  far  too  prevalent. 

Imposition  of  capital  controls  by  the  United  States  would  not  be  a  satisfactory 
solution.  It  would  be  contrary  to  all  that  we  have  been  striving  for  in  freeing 
trade  and  payments  between  countries.  It  would  not  be  in  keeping  with  our 
special  responsibilities  as  custodian  of  a  reserve  currency.  And  it  would  be 
contrary  to  our  own  longrun  interest  in  ensuring  that  funds  move  to  where  they 
will  be  used  most  productively. 

The  magnitude  of  this  type  of  portfolio  investment,  in  relation  to  our  balance 
of  payments,  should  not  be  overstated.  Foreign  bonds  and  notes  totaUng  just 
under  $600  million  were  sold  in  our  market  during  the  first  six  months  of  this  year. 
Of  this  amount  as  much  as  one-third  was  for  the  purpose  of  refunding  other  dollar 
obligations.  Often  a  quarter,  and  sometimes  much  more,  of  the  individual  issues 
were  taken  up  by  investors  abroad:  one  indication  that  it  is  market  facilities  as 
much  as  long-term  rate  differentials  that  tend  to  attract  these  issues  to  the  New 
York  market.  Moreover,  in  some  cases,  the  new  funds  raised  have  been  used  for 
investment  in  productive  facilities  in  this  country  or  for  purchases  of  American 
goods  and  services. 

At  the  same  time,  in  cooperation  with  some  of  the  principal  surplus  countries, 
a  reverse  capital  flow  has  developed  in  the  form  of  prepayments  of  debt  owed  to 
the  United  States,  a  flow  that  so  far  this  year  has  totaled  nearly  $550  million  from 
France,  Italy,  and  Sweden.  And  it  is  also  worth  pointing  out  that  the  return 
flow  of  earnings  from  our  rapidly  growing  private  investments  abroad,  which  now 
amount  to  nearly  $60  billion,  was  running  at  an  annual  rate  of  $3.6  billion  during 
the  first  half  of  this  year,  $300  million  higher  than  in  1961,  and  $1.1  billion  higher 
than  just  four  years  ago  in  1958. 

So  far  as  our  overall  balance  of  payments  is  concerned,  further  improvement 
has  been  apparent.  The  deficit  for  the  first  eight  months  of  the  year  ran  at  an 
annual  rate  somewhat  over  $1}^  billion,  in  contrast  to  last  year's  $2}i  billion,  and 
to  the  average  of  $3.7  billion  during  the  years  1958-60.  These  eight  month 
results  were  influenced  both  by  a  substantial  inflow  of  Canadian  funds  during  the 
first  half  of  the  year,  and  by  a  sharp  reversal  of  these  flows  during  July  and 
August. 

A  particularly  encouraging  development  for  the  longer  run  has  been  our  ability 
to  maintain  a  decidedly  favorable  balance  of  trade,  even  while  domestic  recovery 
was  generating  a  sizable  increase  in  our  imports.  An  important  factor,  of  course, 
has  been  price  stability  which  laid  the  foundation  for  the  increase  of  6H  percent 
which  we  achieved  in  our  exports  during  the  first  half  of  this  year  as  compared  to 
the  same  period  a  year  ago.  We  intend  to  continue  to  strengthen  the  competitive 
capacity  of  our  industry  over  the  coming  years.     That  is  one  of  the  chief  reasons 


448   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

why  our  tax  program  has  placed  so  much  emphasis  on  improving  the  cUmate  for 
productive  investment. 

In  recent  years,  our  military  effort  in  defense  of  the  free  world  has  resulted  in 
a  net  balance-of-payments  outflow  averaging  roughly  $2.6  billion  a  year.  Through 
our  own  economies,  and  arrangements  for  the  procurement  of  additional  American 
equipment  and  services  by  our  allies,  that  figure  will  drop  to  about  $P/4  billion  in 
1962.  We  firmly  intend  to  bring  about  substantial  further  reductions  over  the 
next  few  years.  Our  intention  reflects  our  conviction  that  a  more  equitable 
sharing  of  these  defense  burdens  can  and  must  be  reached. 

Our  economic  assistance  programs  total  about  $4  biUion  a  year.  We  are 
aiming  to  provide  80  percent  of  that  aid  in  the  form  of  United  States  goods  and 
services,  as  compared  with  an  average  of  about  two-thirds  in  recent  years. 
Meanwhile,  we  look  to  other  industrialized  free  nations  to  provide  a  fair  share  of 
the  expanding  needs  for  development  assistance. 

The  reduction  in  dollar  outflows  that  are  being  achieved  by  these  and  other 
Government  actions,  together  with  the  growing  returns  from  our  overseas  invest- 
ments and  the  improved  competitive  position  of  our  exports,  underlie  our  goal  of 
the  early  achievement  of  balance  in  our  international  payments. 

Progress  toward  a  basic  equiliVrium  in  the  payments  position  of  deficit  and 
surplus  countries  alike  is  the  true  foundation  for  any  lasting  international  monetary 
stability,  but  alone  it  is  not  enough.  We  must  also  be  prepared  to  cope  with  those 
sudden,  and  potentially  large,  movements  of  short-term  funds  that  can  be  set  off, 
often  with  little  or  no  warning,  by  a  variet}^  of  influences.  This  is  partly  a  matter 
of  the  amount  of  international  liquidity  that  exists  at  a  given  time,  which  in 
turn  rests  on  our  joint  ability  to  maintain  the  usefulness  of  key  currencies,  side 
by  side  with  gold  itself.  But  equally  important,  it  is  essential  that  we  have  the 
facilities  for  quickly  mobilizing  additional  resources,  when  and  as  they  are  required, 
and  applying  them  effectively  at  the  point  of  need. 

That  is  the  significance  of  the  special  borrowing  arrangements  which  are  being 
established  through  the  Fund  by  a  number  of  the  industrialized  countries.  We 
expect  to  receive  final  approval  of  these  arrangements  for  the  United  State-  from 
our  Congress  before  the  end  of  the  current  legislative  session.  Thanks  to  earlier 
action  by  other  participating  countries,  the  agreements  will  then  become  effective. 

Meanwhile,  we  have  initiated  actions  in  other  directions  to  reinforce  the  defenses 
of  our  monetary  system,  supplementing  and  complementing  the  facihties  available 
through  the  Fund.  These  new  initiatives  started  more  than  a  year  ago,  when  the 
United  States  for  the  first  time  in  a  generation  began  to  intervene  in  the  foreign 
exchange  markets  and  to  hold  convertible  foreign  currencies  as  a  part  of  its  inter- 
national reserves.  Working  closely  with  other  countries,  various  techniques  have 
been  carefully  tested  in  a  wide  variety  of  situations.  Their  usefulness  for  dealing 
with  incipient  disturbances  in  the  exchange  markets  and  unusual  swings  of  short- 
term  money  has,  I  believe,  now  become  clear  to  all. 

The  amounts  of  convertible  currencies  presently  at  the  disposal  of  the  United 
States,  largely  as  a  result  of  reciprocal  currency  agreements  and  direct  Treasury 
borrowing,  are  not  inconsequential.  They  amount  to  approximately  $900  milUon 
in  cash  or  standby  facihties.  Should  large  and  potentially  disruptive  flows  of 
funds  actually  develop,  these  facihties  could  be  further  enlarged.  In  addition, 
should  the  need  arise,  the  United  States  is  also  prepared,  in  concert  with  other 
affected  countries,  to  provide  forward  exchange  to  the  market,  thereby  facili- 
tating the  holding  by  private  parties  abroad  of  dollars  that  have  passed  into 
their  hands  for  what  may  prove  eventually  to  have  been  a  temporary  period. 
In  these  ways,  a  pattern  has  been  estabhshed  for  prompt  and  effective  inter- 
national action  to  meet  unusual  pressures  when  and  if  they  develop,  and  to  contain 
and  diffuse  their  impact. 

The  potential  value  of  such  cooperative  arrangements  was  vividly  demon- 
strated by  the  experience  in  1961  when  sterling  was  under  heavy  pressure.  More 
recently,  the  shock  of  the  temporary  Canadian  difficulties  and  the  potentially 
disturbing  effects  of  the  sharp  break  in  the  stock  markets  of  the  United  States 
and  other  industriaUzed  countries  this  spring  were  accommodated  smoothly  and 
effectively. 

Responsible  cooperation  among  monetary  authorities  has  also  borne  fruit  in 
new  techniques  for  handling  transactions  on  the  London  gold  market  so  that  it 
may  better  fulfill  its  basic  purpose  of  providing  a  workable  and  flexible  mechanism 
for  distributing  the  supply  of  newly  mined  gold.  It  is  clear  that  temporary  and 
erratic  fluctuations  in  the  market  price  of  gold  in  response  to  real  or  fancied 
political  and  economic  developments  serve  no  legitimate  interest.     It  is  equally 


EXHIBITS  449 

clear  that  it  does  not  serve  the  interests  of  the  official  participants  in  the  market 
to  engage  in  transactions  in  ignorance  of  their  implications  for  each  other. 

That  is  why  the  authorities  of  a  number  of  countries  have  begun  to  exchange 
information  and  to  coordinate  their  operations  in  the  gold  market,  not  on  the 
basis  of  hard  and  fast  rules,  but  in  accordance  with  common  understandings 
reached  in  frequent  consultations.  The  object  is  to  contain  within  a  reasonable 
range  those  fluctuations  which  occur  in  response  to  passing  influences — to  empha- 
size that  the  private  purchase  of  gold  is  unlikely  to  yield  speculative  profits,  and 
instead  can  be  expected  to  be  a  costly  and  unrewarding  use  of  funds. 

In  all  these  ways,  we  are  justified  in  looking  back  upon  the  past  year  as  a 
period  of  striking  progress  in  strengthening  our  international  monetary  system — a 
system  that,  in  the  last  analysis,  rests  firmly  on  the  maintenance  of  the  dollar 
at  its  present  gold  value  as  a  key  reserve  and  trading  currency. 

But,  necessary  as  it  has  been  to  strengthen  the  defenses  against  temporary 
swings  of  short-term  funds,  we  must  not  allow  progress  in  this  area  to  divert  our 
attention  from  the  fundamental  need  to  achieve  an  overall  equihbrium  in  basic 
trade  and  investment  flows. 

For  the  United  States,  this  requires  continued  and  vigorous  effort  in  many 
directions.  We  must  maintain  and  improve  the  competitive  position  of  our 
exports  through  price  stability  at  home  and  aggressive  seUing  abroad.  We  must 
also  continue  to  reduce  the  dollar  flows  associated  with  our  defense  effort  overseas 
and  with  our  widespread  economic  assistance  programs. 

Continued  effort  is  also  required  by  the  surplus  countries  to  open  their  markets 
to  foreign  products  and  borrowers,  to  minimize  the  foreign  exchange  costs  of 
our  defense  deployments,  and  to  assume  a  fairer  share  of  the  burden  of  economic 
assistance. 

Those  are  the  basic  challenges  of  the  day.  They  are  challenges  that  can 
and  must  be  met.  They  can,  of  course,  be  met  most  readily  by  cooperative 
action  among  nations.  But  we  recognize  that  in  the  final  analysis,  each  nation 
must  accept  the  responsibility  for  taking  the  actions  needed  to  maintain  the 
soundness  of  its  own  currency  in  international  markets.  This  we  in  the  United 
States  are  fully  prepared  to  do,  in  the  knowledge  that  a  sound  dollar  is  essential 
not  only  for  us  at  home,  but  also  for  the  continued  and  healthy  growth  of  trade 
and  commerce  throughout  the  entire  free  world. 


Exhibit  40. — Remarks  by  Under  Secretary  of  the  Treasury  Fowler,  June  20, 
1962,  at  the  Commerce  Department  Regional  Conference  on  business  and  the 
balance  of  payments 

Scarcely  five  years  ago  most  people  in  the  United  States  were  unacquainted 
with  the  term  "balance  of  payments." 

Today  the  United  States  balance  of  payments  is  a  major  problem.  Our  place 
in  world  affairs,  our  free  world  security  and  development  program,  the  free  world 
trade  and  payments  system — all  depend  upon  a  solution  of  our  balance-of-pay- 
ments  problem.  We  are  determined  to  solve  it.  We  are  making  significant  prog- 
ress. But  we  are  well  aware  that  for  the  foreseeable  future  all  our  national  and 
international  policies  will  have  to  take  account  of  our  balance-of-payments 
position. 

Necessarily,  the  solution  of  the  problem  will  depend  heavily  upon  the  efforts 
of  the  American  businessman  who  has  an  important,  indeed,  an  indispensable, 
role  to  play.     So,  it  deserves  our  attention  today. 

Our  balance  of  international  payments  is  nothing  more  than  the  balance — 
either  net  surplus  or  net  deficit — between  the  payments  and  receipts  during  a 
given  period  between  the  United  States  and  the  remainder  of  the  world. 

Immediately  after  World  War  II  when  much  of  Europe's  industrial  capacity 
had  been  reduced  to  rubble,  the  United  States  was  left  as  the  only  major  nation 
with  its  industrial  capacity  intact.  We  exported  vast  quantities  of  goods  to  the 
rest  of  the  world,  a  world  which,  except  for  raw  materials,  did  not  ship  very  much 
back  to  us. 

This  situation  brought  about  the  "dollar  shortage,"  and  this  was  a  source  of 
great  concern  to  economists  and  responsible  officials  for  many  years  after  the  war. 
The  problem  was  not  only  how  to  maintain  markets  for  our  goods  in  countries 
which  had  no  way  of  obtaining  an  adequate  amount  of  dollars  with  which  to 

661496—63 30 


450   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

purchase  them,  but  to  give  Western  Europe  the  vital  purchasing  power  needed  to 
rebuild  its  industries. 

The  problem  then  was  exactly  the  opposite  of  the  problem  now.  The  change 
resulted  from  three  major  developments. 

The  first  was  the  decision  of  the  United  States  to  shoulder  a  heavy  share  of 
the  burden  of  the  reconstruction  and  development  of  the  free  world.  This  de- 
cision, as  you  know,  began  with  aid  to  Greece  and  Turkey,  and  grew  into  the 
Marshall  Plan  of  aid  to  Europe.  Economic  aid  to  the  emerging  nations  was  the 
next  step  and  it  remains  today,  a  cornerstone  of  our  foreign  policy. 

The  second  development  was  the  emergence  of  the  cold  war.  This  meant  that 
the  United  States,  in  order  to  maintain  not  only  its  own  security  but  that  of  its 
allies,  was  obliged  to  maintain  troops,  bases  and  military  assistance  programs 
abroad,  which,  like  its  aid  programs,  increased  U.S.  payments  to  other  nations 
without  any  corresponding  increase  in  receipts. 

The  third  development  resulted  from  the  economic  recovery  and  growth  of 
Western  Europe  in  the  last  decade.  The  European  integration  movement  in- 
creased the  momentum  of  this  growth,  and  with  the  development  of  the  Common 
Market,  Western  Europe  has  become  a  center  of  prosperity,  with  a  promise  for 
the  future  even  brighter  than  the  past. 

The  result  of  the  European  recovery  and  expansion  and  a  similar  development 
in  Japan  was  that  the  United  States  now  had  rival  producers  of  exports  to  the 
remainder  of  the  world.  This  new  competition  for  exports,  combined  with  the 
increase  in  the  amount  the  United  States  imported  from  these  nations,  put  pres- 
sure on  our  trade  surplus  by  squeezing  it  from  both  ends.  At  the  same  time  our 
necessary  foreign  aid  and  overseas  defense  expenditures  were  mounting,  American 
private  capital  was  starting  to  flow  abroad  in  increasing  amounts,  particularly 
into  Canada,  Western  Europe,  Japan,  and  to  oil  producing  areas,  to  take  advan- 
tage of  inviting  opportunities  there  for  long-term  direct  investment. 

The  result  of  all  this  was  to  change  the  U.S.  balance-of-payments  position  from 
surplus  to  deficit.  Western  Europe,  on  the  other  hand,  as  e.xports  increased,  and 
American  investment  funds  flowed  in,  began  to  experience  a  steady  rise  in  its 
balance-of-payments  surpluses.  Those  surpluses,  of  course,  were  in  large  part 
the  counterpart  of  our  deficits. 

It  is  not  surprising,  then,  that  all  during  the  fifties,  the  U.S.  balance-of-pay- 
ments position  was  in  deficit,  with  the  exception  of  1957,  when  the  closing  of  the 
Suez  Canal  temporarily  raised  our  export  level  to  a  very  high  point. 

Early  in  the  1950's  the  deficits  averaged  only  about  a  biUion  dollars  a  year, 
and  were  not  accompanied  by  any  appreciable  net  reduction  in  our  gold  stocks, 
because  other  nations  were  more  than  happy  to  rebuild  the  low  level  of  their 
dollar  reserves.  But  late  in  the  fifties  the  deficit  rose  sharply.  For  the  past  four 
years  our  deficits  have  averaged  almost  $3.5  biUion  a  year,  of  which  almost 
$1.5  billion  per  year  resulted  in  gold  losses.  Also,  late  in  1960,  speculation,  often 
in  the  background  of  the  international  exchange  markets,  became  a  factor. 
This  speculation,  combined  with  an  outflow  of  short-term  capital  from  the  United 
States  by  those  who  found  they  could  get  a  greater  interest  return  in  other  than 
dollar  investments,  greatly  increased  the  deficit,  to  a  level  of  almost  $4  billion. 
About  $1.7  billion  of  this  deficit  was  reflected  in  gold  withdrawals. 

This  piHng  up  of  deficits  year  after  year,  and  the  loss  of  gold  by  the  United 
States,  represents  the  disequilibrium  in  the  international  payments  system  which 
must  be  corrected.  There  is  nothing  alarming  in  this  situation,  but  it  emphasizes 
the  considerable  importance  of  the  confidence  of  foreign  central  bankers  in  the 
dollar  and  of  their  willingness  to  hold  dollars  rather  than  convert  them  into  a 
call  on  our  gold  reserves. 

When  President  Kennedy  took  oflSce,  he  immediately  began  a  vigorous  program 
to  reduce  and  eventually  eliminate  the  deficit  in  our  balance  of  payments,  and 
initiated  a  series  of  measures  to  build  up  confidence  in  and  protection  for  the 
dollar. 

The  near-crisis  of  confidence  in  the  dollar  of  late  1960  was  soon  dissipated  and 
the  improvement  in  our  position  during  1961  was  significant.  The  overall  annual 
deficit  was  cut  by  a  third,  from  $3.9  bilUon  in  1960  to  $2.5  billion  in  1961,  and 
the  gold  outflow  was  cut  in  half. 

So  far  this  year  the  reduction  in  our  balance-of-payments  deficit  has  continued. 
Compared  to  last  year's  $2.5  biUion,  to  date  this  j'ear  it  has  run  at  an  annual 
rate  of  about  $1.5  billion.  Our  target  is  the  elimination  of  the  deficit  entirely, 
and  we  hope  to  reach  that  by  the  end  of  next  year.  Whether  we  will  or  not 
depends  upon  too  many  factors  to  make  any  definite  promises,  but  I  will  give 


I 


EXHIBITS  451 

you  my  assurance  that  the  U.S.  Government  will  continue  to  do  everything  in 
its  power  to  restore  an  equilibrium. 

Our  gold  losses  so  far  this  year  are  greater  than  they  were  for  the  same  period 
last  year,  despite  the  improvement  in  our  payments  position.  This  is  partly  the 
result  of  a  shift  in  dollars  among  countries  abroad,  to  those  countries  which 
traditionally  hold  gold  rather  than  dollars  in  their  reserve.  It  is  quite  possible 
this  year  that  there  will  be  improvement  in  our  payments  position,  without 
improvement  in  our  gold  position.  Indeed,  our  deficit  may  turn  out  to  be  lower, 
and  yet  we  could  lose  more  gold. 

We  are  convinced  beyond  the  shadow  of  a  doubt  that  it  is  absolutely  essential 
that  the  dollar  be  maintained  in  a  fixed  relationship  to  gold  and  that  we  continue 
to  offer  gold  for  sale  at  the  fixed  price  of  $35  an  ounce. 

At  present  we  have  roughly  40  percent  of  the  gold  reserves  of  the  free  world, 
and  these  reserves  are  important  to  maintaining  confidence  in  our  currency  and 
in  assuring  the  continued  smooth  functioning  of  the  international  monetary 
system.  But  the  essential  factor  is  the  confidence  others  have  in  our  currency, 
and  in  the  health  and  competitive  efficiency  of  our  economy,  and  gold  can  never 
be  a  substitute  for  that  confidence.  The  way  to  maintain  this  confidence  and 
arrest  the  gold  outflow  is  to  reduce  and  eliminate  our  balance-of-payments 
deficit. 

This  raises  properly  the  question:  Why  does  the  United  States  have  a  deficit 
at  all?  Since  the  balance  of  payments  is  made  up  of  a  number  of  different  cate- 
gories of  payments  and  receipts,  one  might  say  that  if  exports  were  higher  we 
would  have  no  deficit,  or  if  there  were  less  long-term  private  U.S.  capital  invest- 
ment placed  each  year  in  other  countries  we  would  have  no  deficit,  or  if  imports 
were  lower  we  would  have  no  deficit,  and  so  on. 

The  deficit  is  frequently  blamed  on  the  cold  war,  by  pointing  to  our  defense 
expenditures  abroad,  which  last  year  had  an  impact  of  nearly  $3  billion  on  our 
balance-of-payments  position. 

But  that  does  not  mean  that  U.S.  defense  spending  abroad  alone,  or  indeed, 
any  one  single  factor,  causes  the  deficit.  The  deficit  is  the  result  of  all  the  different 
payments  and  receipts,  and  no  single  one  of  them  by  itself  can  be  pointed  to  as 
the  cause  of  our  problem.  Thus,  it  would  be  possible  to  have  a  deficit  without 
any  defense  expenditures  abroad,  or  to  continue  defense  expenditures  abroad  on 
a  scale  adequate  for  our  security  and  still  eliminate  the  deficit,  which  is  just  what 
we  plan  to  do. 

We  have  sought  to  reduce  the  deficit  by  reducing  or  offsetting  the  impact  of 
governmental  expenditures  outside  the  United  States  for  aid  and  defense.  The 
use  of  U.S.  goods  instead  of  dollars  in  foreign  aid  is  being  maximized  to  reduce 
the  effect  on  our  balance  of  payments,  and  at  present  only  about  one  aid  dollar 
out  of  every  three  is  being  spent  abroad.  This  ratio,  however,  is  lower  in  recent 
aid  commitments;  the  objective  is  to  get  it  down  to  one  dollar  in  five. 

Furthermore,  the  cost  of  our  miUtary  aid  is  being  increasingly  offset  by  military 
procurement  by  our  allies  through  purchases  from  the  United  States.  This 
year,  for  instance,  our  mihtary  expenditures  will  be  offset  by  about  $1.2  billion 
in  military  receipts,  a  sharp  increase  over  last  year.  This  will  reduce  by  more 
than  a  third  the  impact  on  our  balance  of  payments  of  our  defense  expenditures 
overseas. 

So  much  for  the  balance-of-payments  impact  of  our  foreign  aid  and  defense 
spending.  Our  efforts  in  both  areas  are  continuing,  to  expand  the  significant 
progress  already  made.  There  is  still  the  short-term  effect  on  our  balance  of  pay- 
ments of  long-term  private  investment  abroad  by  U.S.  companies.  The  Govern- 
ment does  not  wish  to  interfere  with  the  free  flow  of  that  investment,  where  it  is 
based  on  practical  business  and  competitive  considerations  of  a  long-term  nature 
rather  than  short-term  desires  to  avoid  U.S.  taxes. 

The  proposed  tax  bill  would  limit  certain  existing  special  tax  preferences  which 
favor  investment  and  earnings  by  American  citizens  and  corporations  outside  the 
United  States,  thereby  encouraging  the  repatriation  of  these  earnings  and  dis- 
couraging outflows  primarily  motivated  by  tax  considerations.  This  proposal 
would  result,  among  other  things,  in  improving  our  balance-of-payments  position. 

So  much  for  the  attack  upon  the  elements  that  have  contributed  most  sub- 
stantially to  our  basic  balance-of-payments  deficit  in  recent  years.  Let  us  look 
for  a  moment  at  a  more  mysterious  area — short-term  capital  movements. 

Last  year  the  dollar  outflow  from  short-term  capital  and  unrecorded  transactions 
totaled  $1.9  billion,  almost  as  great  as  in  the  preceding  year,  1960.  But  it  is 
precisely  here  that  the  importance  of  the  form  of  this  movement  is  demonstrated. 


452   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

While  the  overall  figures  are  nearly  the  same,  close  analysis  reveals  that  the  under- 
lying causes  of  much  of  the  short-term  flow  in  1961  were  considerably  different 
from  those  of  1960.  There  was  an  absence  of  the  speculation  against  the  dollar 
which  had  been  a  disruptive  influence  in  1960,  and  which  had  played  such  an 
important  role  in  the  sudden  worsening  of  the  situation  late  in  1960. 

This  lack  of  speculation  reflected  the  much  improved  atmosphere  of  inter- 
national financial  cooperation,  and  the  speculators'  belief  that  such  cooperation 
would  thwart  attempts  to  profit  by  speculating  in  the  international  money 
markets. 

Also,  the  international  interest  rate  differentials  that  encouraged  large  move- 
ments of  short-term  funds  in  1960  became  less  pronounced  in  1961  in  some  cases, 
resulting  in  part  from  this  cooperation. 

Of  the  $1.4  biUion  in  recorded  U.S.  private  capital  outflow  in  1961,  almost  half 
represented  commercial  bank  credits  to  Japan,  largely  to  finance  U.S.  exports. 
We  are  happy  to  see  our  exports  rise,  and  we  should  recognize  that  money  bor- 
rowed to  buy  exports  is  a  useful  form  of  extension  of  credit. 

One  of  the  signs  of  our  progress  is  the  increasing  atmosphere  of  international 
cooperation  which  is  perhaps  the  most  important  single  factor  currently  aiding 
our  efforts.  This  attitude  is  based  on  the  realization  that  it  is  not  merely  the 
U.S.  payments  position  that  is  involved,  but  the  trade  and  payments  system  of 
the  free  world  which  is  based,  in  large  part,  on  the  soundness  of  the  dollar.  There 
is  a  growing  awareness  in  other  nations  that  while  the  primary'  responsibility  for 
ending  our  payments  deficit  rests  with  the  United  States,  the  cooperation  of  other 
nations  is  essential  to  the  success  of  our  efforts,  and  that  our  success  is  just  as  vital 
to  those  other  nations  as  it  is  to  the  United  States. 

The  greatly  increased  international  cooperation  has  considerably  improved  the 
ability  of  the  major  industrial  nations  to  prevent  or  cope  with  the  threat  of  sudden 
disruptive  flows  of  short-term  capital.  In  addition,  it  has  given  rise  to  an  even 
more  important  manifestation,  which  has  been  largely  overlooked.  I  refer  to  two 
areas  in  which  our  allies  are  aiding  directly  in  our  efforts  to  reduce  our  balance-of- 
payments  deficit:  first,  as  I  mentioned  earlier,  by  their  increased  military  procure- 
ment in  the  United  States;  and  second,  by  prepayment  of  debts  owed  to  the 
United  States. 

In  the  case  of  the  Federal  Republic  of  Germany,  our  receipts  from  mihtary  sales 
are  being  raised  to  the  point  where  the  $700  million  balance-of-payments  impact  of 
gross  U.S.  defense  expenditures  in  foreign  exchange  in  that  country  will  be  com- 
pletely offset  this  year.  Similar  arrangements  will  be  sought  wherever  practicable 
with  our  other  major  allies.  Our  objective,  as  I  noted  earlier,  is  to  achieve  a  total 
in  military  cash  receipts  of  $1.2  billion  this  year. 

Debt  prepayments  scheduled  for  this  year  are  already  approaching  the  quarter- 
of-a-billion-dollar  mark,  with  almost  $60  million  from  France  and  the  recent 
arrangement  for  payment  from  Italy  in  July  of  $178  miUion.  Last  year's  military 
receipts  ran  about'  $400  miUion,  and  with  debt  prepayments  of  almost  $700 
million,  provided  more  than  a  billion  dollars  in  international  receipts.  This  year 
we  expect  to  exceed  that  overall  total.  The  willingness  of  our  allies  to  make  these 
contribiitions  to  improvement  of  our  payments  situation  also  provides  a  basis  for 
the  broader  questions  of  a  more  equitable  sharing  of  the  cost  of  defending  and 
developing  the  free  world. 

There  are  other  ways  in  which  cooperation  can  be  used  to  increase  the  efficiency 
and  stability  of  the  international  monetary  system.  Among  the  indirect  ways  is 
the  opening  up  of  European  capital  markets.  There  has  lately  been  an  increasing 
tendency  for  Europeans  and  others,  governmental  bodies  and  private  businesses, 
to  gravitate  toward  the  United  States  in  the  search  for  new  capital.  This  is 
natural.  Our  capital  markets  have  played  an  important  role  in  the  industrial 
and  economic  progress  of  our  nation,  and  they  now  offer  an  economical  and  highly 
reliable  market  for  foreign  governments  and  concerns  seeking  investment  funds. 

We  have  neither  the  desire  nor  the  intention  to  take  any  action  which  would 
inhibit  the  free  flow  of  capital  between  nations. 

It  is  important  to  the  sound  development  of  the  European  countries,  whose 
surpluses  are  the  counterpart  of  our  deficits,  that  they  expand  and  improve  their 
own  capital  and  savings  markets,  and  make  every  effort  to  remove  the  many 
restrictions  which  burden  these  markets  and  inhibit  the  movement  of  funds  into 
investment  in  other  countries  and  areas.  This  wiU  provide  a  sound  basis  for 
future  European  expansion,  while  at  tlie  same  time  removing  a  drain  on  U.S. 
capital  which  contributes  to  the  deficit  in  our  balance  of  payments.  It  will  also 
create  increased  opportunities  for  the  flow  of  European  funds  into  increased 


EXHIBITS  453 

direct  and  portfolio  investment  into  other  parts  of  the  free  world  including  the 
United  States. 

I  should  add  that  the  full  benefits  of  this  removal  of  restrictions  on  the  free 
flow  of  capital  by  other  countries  in  the  free  world  can  only  be  achieved  if  U.S. 
businessmen  themselves  voluntarily  encourage  the  sort  of  response  that  is  neces- 
sary. It  is,  for  example,  important  to  the  nation  and  to  American  firms  them- 
selves, to  encourage  increasing  interest  in  investing  in  American  securities  and 
in  the  American  capital  market  by  European  institutions  and  individual  investors. 
The  shares  of  major  American  corporations  should  be  listed  on  foreign  stock 
exchanges,  particularly  in  Europe  and  Japan,  in  greater  numbers.  American 
firms  might  also  explore  and  seek  out  more  fully  opportunities  for  borrowing 
abroad,  especially  in  support  of  the  operations  of  their  own  foreign  branches  and 
subsidiaries,  instead  of  relying  as  heavily  as  they  do  on  the  easy  alternative  of 
seeking  funds  from  familiar  American  sources. 

I  might  also  add,  in  a  similar  vein,  that  U.S.  businesses  operating  abroad 
should  not  neglect  to  fully  explore  possibilities  for  procuring  their  supplies, 
equipment,  and  services  from  American  sources  on  an  economical  basis. 

Finally,  we  come  to  the  most  important  aspect  of  our  balance-of-payments 
program,  the  development  of  commercial  exports  of  U.S.  goods  and  services  in 
quantities  sufficient  to  assure  an  increasing  trade  surplus.  Only  an  increasing 
trade  surplus  will  wipe  out  our  deficit  without  weakening  our  national  security 
position  overseas,  diminishing  our  vital  role  in  helping  the  growth  of  the  develop- 
ing countries  of  the  free  world,  or  inhibiting  U.S.  business  in  its  legitimate  and 
proper  investment  activities  abroad. 

It  is  to  the  American  businessman  that  the  nation  must  look  to  provide  this 
trade  surplus  on  which  our  international  position  depends.  For,  in  the  final 
analysis,  it  is  the  American  businessman,  on  the  land,  in  the  plant,  or  in  the 
channels  of  distribution,  who  must  sell  U.S.-made  products  and  services  abroad 
and  at  home  in  competition  with  foreigners  on  a  scale,  at  a  price,  and  with  the 
quality  that  will  assure  the  expanding  trade  surplus  the  nation  requires. 

If,  for  instance,  we  could  have  doubled  our  commercial  export  trade  surplus 
last  year,  we  would  have  wiped  out  our  payments  deficit  and  replaced  it  with  a 
small  surplus. 

Doubling  our  export  surplus  may  sound  like  an  impossible  job,  but  actually, 
since  the  surplus  on  non-U. S.  financed  exports  totaled  $3  billion,  it  would  have 
required  only  a  15  percent  increase  in  overall  exports  to  achieve  that  result, 
assuming  a  constant  import  level. 

That  need  to  expand  exports  is  the  real  key  to  improving  our  balance-of- 
payments  situation,  and  that  is  why  President  Kennedy  places  such  stress  on  it. 
That  is  why  he  has  asked  businessmen  to  cooperate,  by  forming  a  balance-of- 
payments  group  in  the  U.S.  Chamber  of  Commerce,  and  another  in  the  Business 
Council.  These,  as  well  as  a  number  of  similar  groups  already  in  existence,  are 
important  in  finding  new  ways  to  expand  exports,  and  in  improving  the  old  ways. 
The  revival  of  the  wartime  "E"  flags  for  those  industries  making  a  significant 
contribution  to  our  program  of  export  expansion  is  another  step  in  the  campaign 
to  raise  American  exports,  and  particularly  to  find  ways  to  bring  the  creative, 
driving  enterprise  of  American  business  to  this  task. 

Our  job,  yours  and  mine,  is  to  make  every  American  producer  and  businessman 
export-conscious,  and  to  urge  that  each  of  them  give  serious  consideration  to 
what  they  can  do  to  initiate  or  expand  export  production,  not  only  for  their  own 
profit,  and  export  trade  can  be  highly  profitable,  but  even  more  important,  for 
the  profit  of  their  country,  and  for  the  important  contribution  a  higher  export 
level  will  make  to  the  international  stability  of  the  dollar. 

This  need  to  expand  our  export  trade  is  the  basic  reason  behind  President 
Kennedy's  trade  program.  The  fantastic  growth  of  Western  Europe  in  the  last 
decade  has  created  vast  new  markets  for  just  the  kind  of  goods  that  our  own 
manufacturers  are  so  skilled  and  experienced  in  producing.  New  cars,  new 
highways,  new  shopping  centers,  new  suburban  developments,  all  these  are 
characteristic  of  the  rapidly  expanding  European  scene.  As  the  Common  Market 
takes  in  new  members,  and  as  this  self-stimulating  growth  continues,  these 
markets  will  grow  also. 

It  is  essential  for  the  maintenance  of  United  States  export  trade  that  we  have 
a  part  in  this  future.  If  we  fail  to  maintain  our  access  to  European  markets 
at  this  critical  time  when  new  trade  patterns  are  being  evolved,  when  new  cus- 
tomers are  forming  preferences,  we  may  find  ourselves  at  some  later  date  unable  to 
regain  that  access,  no  matter  what  concessions  we  may  be  prepared  to  offer, 


454  1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

because  the  pattern  may  have  been  set  without  us.  This  goes  much  deeper, 
of  course,  than  customer  preferences.  It  encompasses  the  whole  range  of  business 
relationships,  both  here  and  abroad.  Firms  will  be  either  geared  to  deal  with 
the  United  States,  or  not.  Furthermore,  the  more  we  allow  this  new  pattern 
to  be  set  without  us,  the  more  difficulty  we  will  have  in  dealing  with  a  Europe 
whose  own  special  interests  will  have  become  accustomed  to  a  Europe-oriented 
market,  and  which  may  look  upon  exports  from  the  United  States  as  a  disturbing 
and  threatening  influence. 

Now  is  obviously  the  time  to  deal  with  the  Common  Market,  and  with  other 
nations,  on  the  vital  question  of  mutual  tariff  reduction.  Mutual  tariff  reduction 
now  will  require  some  readjustment  on  our  part,  and  the  program  provides  for 
assisting  those  workers  and  those  industries  which  will  be  obliged  to  adjust  to 
the  imports  that  will  result  from  lower  tariffs.  The  important  thing,  however, 
is  to  see  to  it  that  American  goods  are  in  from  the  beginning,  and  in  force,  in  the 
new  and  growing  markets  of  Western  Europe. 

Export  trade  offers  today,  as  never  before,  a  new  frontier  for  American  business, 
comparable  to  the  days  when  our  own  mighty  internal  market  was  developing 
and  expnading.  Now  is  the  time  for  American  business,  which  has  used  its 
competitive  ability  and  resources  to  help  this  nation  develop  the  highest  standard 
of  living  on  the  face  of  the  earth,  to  use  that  same  talent,  drive,  and  enterprise 
to  maintain  our  position  as  the  greatest  trading  nation  in  the  world. 

This  new  competitive  frontier  for  American  producers  means  they  will  have 
to  have  cooperation  from  Government,  and  we  are  making  every  effort  to  provide 
that  cooperation. 

It  is  well  known  that  Western  European  producers  have  been  modernizing 
more  rapidly  than  have  producers  in  the  United  States,  and  that  their  productivity 
has  been  increasing  as  a  result.  This  allows  them,  through  improved  quality 
and  lower  unit  costs,  to  be  more  competitive  than  ever  in  world  markets.  We 
need  the  trade  program  to  ensure  that  our  goods  have  access  to  European  markets, 
but  that  is  not  the  end  of  the  story.  Once  there,  they  must  be  competitive, 
and  that  is  an  area  where  we  are  moving  forward  on  several  fronts. 

At  present  the  tax  measure  before  the  Senate  Finance  Committee  provides 
for  a  tax  reduction  or  credit  equal  to  seven  percent  of  the  expenditure  of  a  business- 
man or  farmer  for  new  machinery  or  equipment  used  in  his  business.  We  are 
attempting  to  have  that  increased  to  eight  percent,  but  the  important  thing 
is  that  this  measure,  too  often  misunderstood  in  the  business  community,  is  a 
really  effective  tool  in  assisting  business  to  modernize  to  meet  foreign  competition. 

The  importance  of  the  need  to  modernize  to  meet  foreign  competition  was 
underlined  in  the  recent  episode  over  steel  prices.  If  you  recall,  that  was  the 
reason  given  for  seeking  the  price  increase.  There  are  other  ways  of  financing 
modernization  besides  price  increases  however,  ways  which  would  not  damage 
the  economy  as  widespread  price  increases  might.  The  investment  credit  is  one 
of  them,  and  an  essential  one.  It  is  far  more  effective  and  efficient  than  other 
alternatives,  such  as  the  various  forms  of  accelerated  depreciation,  in  that  it 
offers  a  maximum  of  stimulus  to  modernization  for  each  dollar  of  tax  revenue  lost. 

The  proposed  investment  tax  credit  to  stimulate  modernization  is  linked  with 
the  Treasury  Department's  administrative  program  for  overall  revision  of  guide- 
lines and  procedures  affecting  depreciation  of  equipment,  a  program  which  we 
will  announce  early  next  month.  These  two  programs,  depreciation  revision  and 
the  investment  credit,  will  give  our  businessmen  and  farmers  using  substantial 
quantities  of  machinery  and  equipment  a  tax  treatment  which  is  on  a  par  with 
that  received  by  their  major  foreign  competitors. 

The  Government  is  initiating  other  measures  to  fulfill  its  responsibility  to 
cooperate  with  business  in  efforts  to  expand  exports,  and  to  make  sure  that  this 
will  be  both  a  successful  and  a  profitable  enterprise.  At  present  the  Commerce 
Department  has  greatly  increased  its  listing  of  export  trade  opportunities,  and 
the  publication  and  distribution  of  these  opportunities  has  been  widened. 

Even  more  important  is  the  new  export  credit  insurance  system,  which  went 
into  effect  early  this  year.  Through  this,  American  exporters  for  the  first  time 
can  avail  themselves  of  insurance  and  guarantee  benefits  comparable  to  that 
provided    their    foreign    competitors.     Later    this    year,    when    medium-term 


EXHIBITS  455 

insurance   becomes   available,    the   protection   afforded   exporters   will   be    even 
greater. 

What  this  insurance  amounts  to  is  a  network  of  67  private  insurance  companies, 
working  in  cooperation  with  the  U.S.  Export-Import  Bank,  a  Government  agency, 
to  write  policies  covering  both  political  and  commercial  export  credit  risks.  The 
Bank  underwrites  the  political  risks  and  shares  with  the  pool  the  commercial 
risks.  Hundreds  of  exporters  have  already  taken  out  insurance  binders  totaling 
hundreds  of  millions  of  dollars,  and  hundreds  more  have  requested  detailed  infor- 
mation on  the  program.  As  time  goes  on,  this  can  be  expected  to  have  an  increas- 
ing effect  on  our  overall  export  level,  and  is  particularly  important  in  encouraging 
new  firms  to  enter  the  export  field. 

In  summary,  then,  increasing  our  trade  surplus  is  the  most  promising  way  of 
solving  our  balance-of-payments  problem.  While  Government  will  help  where  it 
can,  the  primary  responsibility  for  this  expansion  will  depend,  in  the  end,  upon 
the  imagination,  ability  and  energy  of  the  American  businessmen.  Upon  their 
ability  to  increase  the  efficiency  of  their  own  manufacturing,  distribution  and 
research  and  development,  the  future  of  the  international  position  of  the  United 
States  primarily  depends. 

In  the  face  of  the  excellent  recovery  and  the  promising  outlook  for  the  economy 
we  can  take  great  satisfaction  in  the  fact  that  there  has  been  substantially  no 
inflation.  Prices  have  remained  virtually  stable,  and  both  industrial  and  whole- 
sale price  indices  have  actually  declined.  The  consumer  price  index  rose  about 
one  percent  during  the  recovery,  but  most  of  this  reflected  the  increasing  cost  of 
services  rather  than  goods. 

This  brings  me  to  the  final  and  perhaps  the  most  important  point  I  have  to 
make  to  you.  That  is  simply  this:  all  our  efforts  to  restore  international  stability 
will  be  undermined  if  we  are  unable  to  continue  to  maintain  reasonable  price 
stabihty. 

European  bankers  today  are  aware  of  this.  They  are  not  seriously  concerned 
today  about  our  fiscal  policy  provided  it  is  disciplined  and  controlled  and  is  not 
allowed  to  contribute  to  an  inflationary  surge.  They  do,  however,  have  con- 
siderable concern  over  our  capacity  to  maintain  price  stability,  and  what  failure 
in  this  area  would  do  to  our  payments  position.  While  there  is  no  great  danger 
of  inflation  at  present,  we  must  not  forget  for  one  instant  that  continued  price  or 
wage  increases  beyond  average  productivity  gains  could  represent  a  real  threat  to 
our  international  economic  position.  A  higher  export  level  is  dependent  on  price 
stability.  Excessive  price  rises  could  do  serious  damage  by  reducing  our  share  of 
trade  in  world  markets. 

The  President's  Council  of  Economic  Advisers  has  already  laid  down  valuable 
guidelines  for  evaluating  the  significance  of  productivity  in  wage  increases. 
These  merit  careful  attention.  It  will  require  cooperation  by  Government,  busi- 
ness, labor,  and  the  financial  sectors  of  our  society  if  we  are  to  meet  our  problems 
at  home  and  abroad  without  resorting  to  unnecessary  monetary  or  other 
restrictions. 

Without  question,  at  least  for  the  next  twelve  months,  some  self-restraint  and 
possibily  some  sacrifice  is  called  for  to  avoid  excessive  wage  or  price  increases  at 
this  very  sensitive  time  when  our  economy  is  moving  toward  full  employment  and 
an  equilibrium  in  our  balance  of  payments.  This  means,  in  blunt  terms,  that 
both  management  and  labor,  acting  on  a  voluntary  basis,  should  content  them- 
selves with  somewhat  less  than  they  believe  the  market  will  bear.  If  they  do 
so,  and  price  stability  is  maintained,  we  can  expect  the  measures  we  have  taken 
and  will  take  to  have  the  desired  effects.  If,  however,  shortsighted  leaders  of 
business  or  labor  pursue  limited  special  interests  to  the  exclusion  of  the  national 
interest,  the  natural  laws  of  domestic  and  international  economics  will  see  to  it 
that  their  gains  are  short-lived,  and  they,  as  well  as  the  nation,  will  have  lost 
something  of  lasting  value- — our  strategic  position  in  free  world  security,  economic 
development,  and  its  trade  and  payments  systems. 

If,  on  the  other  hand,  we  all  act  in  the  public  interest,  we  can  confidently  expect 
that  our  problems — both  in  the  balance-of-payments  area  and  in  our  domestic 
economy — will  prove  amenable  to  solution,  and  that  the  solutions  to  both  will 
not  be  in  conflict,  but  will  harmonize  to  provide  greater  prosperity  at  home  and 
an  extension  of  the  frontiers  of  freedom  and  security  abroad. 


456   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Exhibit  41. —  Remarks  by  Under  Secretary  of  the  Treasury  for  Monetary  Affairs 
Roosa,  February  7,  1962,  at  the  American  Bankers  Association  Mid-Winter 
Trust  Conference  on  the  balance  of  payments  and  international  financial 
cooperation 

You  were  very  courageous  to  invite  a  Government  securities  salesman  to  address 
such  an  impressive  group  of  customers,  particularly  while  our  books  are  still  open 
for  such  an  attractive  offering.  But  in  spite  of  all  temptation,  I  will  stay  with  my 
subject  for  today — the  balance  of  payments  and  its  implications  for  international 
financial  cooperation. 

We  are  now  thankfully,  and  at  last,  living  in  a  highly  competitive  world.  To- 
gether with  the  other  free,  democratic,  capitalistic  countries,  the  United  States 
has  begun  over  the  past  few  years  to  experience  some  of  the  shocks  of  actually 
living  in  economic  conditions  which  resemble,  rather  closely,  many  of  the  ideals 
which  we  have  for  generations  been  endorsing.  Europe  has  for  several  years 
had  greater  mobility  of  labor  than  the  nationalism  of  earlier  times  could  ever 
have  permitted,  and  at  the  same  time  a  rate  of  economic  growth  that  no  one 
would  have  dreamed  possible  a  decade  ago.  The  constructive  force  of  active 
competition  in  manufacturing  and  trade,  both  for  us  and  for  others,  has  been 
greatly  strengthened  by  the  striking  adaptations  to  rapid  technological  advance 
that  have  occurred  in  Western  Europe,  Japan,  and  elsewhere.  In  the  United 
States  we  seem  to  have  come  much  closer  to  our  aim  for  reasonable  price  stability. 
And  for  more  than  three  years  now  there  has  been  a  free  interconvertibility  among 
the  currencies  of  nearly  all  of  the  major  industrial  countries. 

These  are  the  kinds  of  conditions  we  want  to  hve  with;  they  are  part  of  the 
framework  for  a  vigorous,  expanding,  prosperous  community  of  free  nations. 
But  they  did  not  just  happen;  and  we  will  not  keep  them  if  we  ever  relax  into  just 
taking  them  for  granted.  The  base  on  which  all  our  performance  rests,  of  course, 
is  the  effort  of  the  individual  as  laborer,  farmer,  employer,  investor,  and  indeed, 
as  public  servant.  What  I  want  to  center  on  today,  though,  is  the  part  of  Govern- 
ment policy  and  action  in  helping  to  construct  some  of  the  new  international 
financial  arrangements,  public  and  private,  we  will  need  to  sustain  the  remarkable 
advances  of  these  past  few  years  in  western  capitalism  as  an  economic  system. 
Even  for  much  of  the  sphere  of  government,  our  own  and  others,  I  can  scarcely 
begin  a  catalogue.  But  I  can  start  at  the  center,  the  balance  of  payments,  and 
work  out  from  there  into  several  areas  of  real  significance  for  international 
financial  cooperation: 

First,  a  cursory  restatement  of  the  links  that  remain  between  the  old  gold 
standard  and  the  balance-of-payments  disciplines,  within  a  system  of  fixed 
exchange  rates,  which  govern  the  world  economy  of  the  1960's. 

Then,  a  look  at  the  present  U.S.  deficit  and  its  counterpart,  the  surpluses  of 
some  of  the  European  countries. 

From  this,  a  review  of  what  has  been  done  or  can  be  done  to  improve  the 
payments  arrangements  among  all  countries,  the  developed  and  the  developing, 
in  the  nonCommunist  world. 

And  finally,  a  sweeping  glance  forward  toward  the  outlines  of  the  kind  of 
international  monetary  system  for  which  we  may  be  heading. 

II. 

The  gold  standard,  as  a  concept  and  as  a  symbol,  has  always  been  a  convenient 
abbreviation  for  the  need  that  every  country  faces  to  keep  its  balance  of  payments 
in  equilibrium  within  the  context  of  fixed  exchange  rates.  That  is,  whether  a 
country  formally  adheres  to  the  gold  standard  or  not,  it  must  have  a  reserve  of 
some  kind  of  internationally  acceptable  purchasing  power — either  gold,  o" 
dollars,  or  possibly  pounds  sterling,  or  an  equally  useable  quick  line  of  credit. 
Whenever  its  current  receipts  from  sales  or  the  inflow  of  capital  do  not  equal  its 
current  outpaymcnts,  it  has  to  draw  on  this  reserve.  Consequently,  the  size  and 
ready  usaV^ility  of  the  reserve,  together  with  the  quick  claims  against  it,  must  be 
watched  continually  as  an  indication  of  changes  in  each  country's  external 
economic  strength  or  weakness. 

No  country  can  pursue  policies  indefinitely  which  consume  its  external  reserves, 
and  draw  down  its  potential  credit  abroad.  Though  the  United  States  has  for  a 
long  time  been  .shielded  from  this  hard  fact,  all  of  you  know  well  that  any  country 


EXHIBITS  457 

must,  in  time,  if  it  is  to  retain  contact  with  the  world  outside  its  borders,  balance 
its  international  accounts  and  maintain  some  foreign  exchange  reserves.  On  the 
other  hand,  no  country,  and  for  that  matter  no  bank,  nor  even  any  trust  depart- 
ment, can  afford  to  build  liquidity  indefinitely.  Sooner  or  later  the  strong 
countries  acquire  all  the  liquidity  they  want,  or  at  least  they  slow  down  ther 
accumulations,  so  that  they  can  increasingly  acquire  other  kinds  of  profitable 
assets.  Once  it  has  acquired  substantial  liquid  reserves,  the  creditor  country 
rightly  encounters  pressures  to  change  its  ways  that  are,  in  the  end,  just  as  strong 
and  just  as  clear,  as  those  impelling  the  deficit  countries  to  change.  But  for 
about  a  quarter  of  a  century,  until  these  past  three  or  four  years,  it  was  only  the 
United  States  among  the  leading  countries  which  had  been  faced  with  the  need 
to  behave  as  a  creditor  country. 

Under  the  theoretical  conditions  of  the  full  gold  standard,  these  offsetting 
adjustments  by  debtor  and  creditor  countries  in  order  to  restore  equilibrium 
could  be  direct  and  automatic.  When  gold  left  the  debtor  country,  its  internal 
monetary  system  contracted,  prices  fell,  and  eventually  sales  abroad  rose 
while  imports  declined  until  balance  was  restored.  The  creditor  country, 
receiving  the  gold,  had  a  corresponding  rise  in  its  internal  money  supply;  its 
prices  rose;  its  exports  fell  off;  its  imports  went  up;  and  eventually  balance 
returned.  This  was,  in  its  simplest  terms,  the  old  gold  standard  version  of  the 
balance-of-payments  disciplines.  Of  course,  things  never  did  really  work  out  in 
just  that  way.  But  what  matters  most  for  us  now  is  that  the  world  has  for  some 
time  rejected  the  harshness  of  a  system  of  correctives  which  presumed  that 
creditor  countries  must  undergo  iiaflation,  and  debtor  countries  must  create 
unemployment,  to  reach  a  suitable  equilibrium.  The  solutions  now  must  take  a 
different  form,  but  the  balance-of-payments  disciplines  which  must  be  served  are 
still  the  same,  and  are  still  inescapable. 

The  difference  now  is  that  the  world  is  finding  new  ways  to  serve  these  disciplines, 
ways  that  reflect  the  new  conditions  in  which  sustained  economic  growth,  and  the 
minimizing  of  cyclical  fluctuations  in  business  activity,  are  also  important  goals 
And  they  must  also  reflect  the  other  conditions  which  I  mentioned  a  few  minutes 
ago,  those  of  price  stability,  of  labor  mobility,  of  aggressive  and  open  competition 
in  production  and  trade,  and  of  currenc}^  convertibility.  In  a  complex  of  such 
varied  and  such  important  conditions  as  these,  there  can  be  no  single  golden  formula. 
There  must  be  some  reliance  upon  the  judgment  of  men,  expressed  through 
governmental  action,  to  help  achieve  a  continuing  reconciliation  between  the 
imperatives  of  the  balance  of  payments,  the  competitive  forces  of  the  market 
place,  and  the  other  broad,  vital  objectives  of  modern  economic  society. 

My  own  view  is  that  there  are  two  strong  surviving  attributes  of  the  gold 
standards  of  earlier  eras  that  must  be  continued,  if  the  balance-of-payments  dis- 
ciplines are  to  be  effectively  fulfilled  within  the  array  of  differing  monetary  and 
fiscal  policies  now  pursued  by  the  various  countries.  One  is  that  a  fixed  link 
must  be  preserved  between  gold — the  universal  monetary  metal  of  timeless  ac- 
ceptability— and  at  least  one  national  currency.  Since  the  mid-thirties,  the 
dollar  alone  has  served  that  function.  It  is  essential  that  the  United  States 
continue  freely  buying  gold,  and  selling  it  to  the  monetary  authorities  of  the 
world,  at  the  price  of  $35  per  fine  ounce.  The  second  requirement,  in  my  judgment, 
is  that  all  leading  countries  maintain  fixed  (rather  than  variable)  rates  of  exchange 
in  relation  to  the  dollar,  with  narrow  permissible  spreads  around  the  declared  par 
value — such  as  the  1  percent,  each  way,  established  by  the  International  Monetary 
Fund.  There  must  be  room  for  market  forces  to  demonstrate,  through  small 
changes  within  such  a  band,  whether  a  given  currency  is  presently  strengthening 
or  weakening.  But  there  must  not  be  an  escape  hatch  through  which  one  country 
or  another  can  seek  temporary  refuge  from  balance-of-payments  disciplines  by 
juggling  its  own  exchange  rate,  beggaring  its  neighbors,  and  disrupting  the  orderly 
processes  of  cost  and  price  adjustment  among  the  various  products  and  services 
that  are  required  for  eventual  balance-of-payments  equilibrium. 

A  fixed  price  for  monetary  gold,  and  fixed  exchange  rates,  are  essential.  But 
in  place  of  the  other  automatic  features  of  the  old  gold  standard,  there  are  now 
new  arrangements  for  common  appraisal  and  concerted  action,  centering  in  the 
International  Monetary  Fund.  Other  important  supplements,  arising  from  con- 
sultation among  the  leading  industrial  countries  themselves,  as  well  as  from  a 
variety  of  reinforcing  bilateral  arrangements,  also  offer  new  potentialities.  But 
before  turning  to  these,  I  think  we  can  usefully  look  briefly  at  our  own  current 
balance-of-payments  deficit  and  its  counterpart,  the  European  surpluses. 


458   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

III. 

On  present  estimates,  the  combined  balance-of-payments  deficits  of  the  United 
States,  the  United  Kingdom,  and  Canada,  were  only  slightly  larger  in  1961  than 
the  combined  surpluses  of  France,  Germany,  and  Italy.  Of  course,  all  six 
countries,  for  reasons  arising  partly  from  their  own  domestic  institutions,  prepare 
their  balance-of-payments  records  in  different  ways,  so  that  little  arithmetic 
exercises  of  this  kind  can  be  quite  misleading.  The  U.S.  method  of  balance-of- 
payments  accounting,  for  a  variety  of  reasons,  takes  no  credit  for  any  of  the  short- 
term  claims  of  its  nationals  on  foreigners  in  calculating  its  overall  balance-of- 
payments  deficit.  Unlike  some  other  countries,  we  treat  short-term  foreign 
private  capital  inflows  as  part  of  our  deficit  rather  than  as  an  offset  to  the  outflow 
of  U.S.  private  capital.  The  rather  paradoxical  result  is  that  the  whole  of  our 
reported  deficit  is  currently  much  larger  than  the  sum  of  its  parts  (as  reported  in 
the  surpluses  of  other  countries). 

Statistics  aside,  however,  we  have  been  undergoing  far  too  long  a  balance-of- 
payments  deficit  that  is  far  too  large.  It  is  of  little  avail  either  to  the  British  or 
ourselves  to  find  temporary  respite  through  passing  our  deficits  back  and  forth 
between  each  other.  It  is  useful,  though,  in  appraising  our  own  prospects,  to  pay 
some  attention  to  the  sources  and  the  durability  of  the  European  surpluses.  This 
is  particularly  relevant  since  the  United  States  is  itself,  and  has  been  almost  un- 
interruptedly, a  large  creditor  country  too,  so  far  as  the  trade  and  services  accounts 
are  concerned.  We  are  in  trouble  partly  because  we  continue  to  perform,  on  a 
substantial  scale,  the  role  of  a  good  creditor  country,  while  the  newer  creditor 
countries  have  until  quite  recently  either  been  too  awed  by  their  new  strength,  or 
too  uncertain  of  its  continuation,  to  follow  our  earlier  example. 

As  they  do,  through  extending  more  foreign  aid,  through  prepaying  debts  owed 
to  us,  through  offsetting  more  of  our  military  outlays  by  compensating  arrange- 
ments, through  opening  up  their  markets,  and  through  removing  the  restrictions 
that  many  of  them  still  retain  on  the  outward  flow  of  their  own  capital,  they  will 
be  giving  further  evidence  of  the  two  theses  that  have  run  through  my  remarks 
thus  far: 

(1)  that  the  adjustment  process  toward  balance-of-payments  equilibrium, 
though  no  longer  of  the  old  gold  standard  form,  still  does  require  change  and 
adaptation  by  both  the  deficit  and  the  surplvis  countries;  and, 

(2)  that  the  process  requires,  increasingly,  the  exercise  of  positive  judgment 
and  action  by  governments,  and  perhaps  more  particularly  by  their  financial 
officials,  on  the  basis  of  extensive  cooperation  and  joint  analysis  of  many  inter- 
related problems. 

Yet  the  underpinning  for  all  successful  cooperation  must  still  be  aggressive  and 
effective  corrective  action  on  the  part  of  the  deficit  countries  themselves.  That 
ranks  first  among  the  various  implications  of  international  financial  cooperation 
that  I  am  discussing  here.  That  is  why,  regardless  of  all  the  essential  action 
which  the  surplus  countries  can  undertake  (and  such  action  is  essential),  the  U.S. 
Government  has  given  the  highest  priority  to  reducing  the  net  outflow  of  dollars 
for  our  military  effort,  for  our  aid,  and  for  our  other  governmental  operations, 
while  expanding  in  every  practicable  way  the  program  for  stimulating  the  export 
performance  of  American  business.  We  must  sell  abroad,  on  commercial  terms, 
enough  to  pay  for  all  of  our  imports,  for  all  of  the  governmental  programs  which 
prudence  commands,  and  at  the  same  time  support  the  unrestricted  flows  of 
Cc^pital  that  our  national  interest  requires.  That  is  the  only  fundamental  solution 
to  the  balance-of-payments  problem  which  is  also  consistent  with  all  of  our  other 
goals— market  freedom,  growth,  stability,  steady  prices,  currency  convertibility, 
and  expanding  commerce  among  all  of  the  free  nations. 

It  is  the  urgent  need  to  strengthen  our  balance  of  payments  that  underlies,  of 
course,  the  President's  effort  to  modernize  our  tariff  procedures  through  the  pro- 
posed Trade  Expansion  Act  of  1962.  That  same  need  also  explains  the  determined 
eff'ort  to  promote  productive  investment  in  the  United  States  through  depreciation 
reform.  It  motivates  the  formulation  of  a  balanced  Federal  budget  for  the  fiscal 
year  1963,  in  order  to  create  an  atmosphere  of  business  confidence  conducive  to 
even  greater  competitive  effort  in  the  j^ears  ahead,  and  to  avoid  the  drain  which 
Federal  budget  deficits  might  otherwise  place  upon  the  supply  of  capital  and  sav- 
ings available  for  new  investment.  It  underscores  the  need  to  continue  our  present 
efforts  to  maximize  the  use  of  our  foreign  aid  money  in  the  United  States,  and  to 
minimize  the  dollar  outflow  for  maintaining  our  miHtary  forces  overseas.  It 
explains  the  intensified  promotion  of  export  markets  through  all  available  means. 


EXHIBITS  459 

Most  notably  and  recently,  the  export  drive  has  been  sparked  by  the  opening, 
just  two  days  ago,  of  the  Foreign  Credit  Insurance  Association,  which  supplements 
the  export  credit  insurance  already  available  tlirough  commerical  banks,  in  con- 
junction with  the  Government's  Export-Import  Bank.  By  utiUzing  the  facilities 
of  57  associated  private  insurance  companies,  also  in  cooperation  with  the  Export- 
Import  Bank,  the  new  association  will  guarantee  (for  a  fee)  the  political  and  com- 
mercial risks  of  extending  short-term  credits  to  buyers  in  other  countries. 

Even  more  important  for  the  longer  run,  both  in  terms  of  domestic  growth  and 
of  balance-of-payments  equilibrium,  will  be  the  recognition  by  labor  and  by 
management  of  the  guidelines  presented  two  weeks  ago  in  the  Annual  Report  of 
the  Council  of  Economic  Advisers,  for  relating  changes  in  wages  and  prices  to  pro- 
ductivity over  the  years  ahead.  These  clearly  stated  principles  (pages  185  to  190,  in 
case  you  have  not  seen  them) ,  and  the  Council's  straightforward  handling  of  their 
possible  statistical  ambiguities,  represent  in  my  judgment  the  most  promising  ad- 
vance yet  made  in  this  country  toward  assisting  (without  controlling  or  regulating) 
the  processes  of  collective  bargaining.  They  should  help  all  responsible  citizens 
to  proceed,  not  only  in  wage  bargaining  but  also  in  price  determination,  along 
lines  that  can  and  will  serve  best  the  general  interest  of  the  public  as  a  whole. 
As  acceptance  of  these  principles  spreads,  and  if  their  significance  can  actually  be 
amplified  through  a  succession  of  specific  settlements,  the  United  States  wiU  not 
only  gain  greatly  in  its  internal  affairs  but  will  also  have  passed  a  most  crucial 
milestone  on  the  road  toward  lasting  equilibrium  in  its  balance  of  payments. 

Meanwhile,  the  Government's  present  attack  on  the  balance-of-payments  deficit 
is  proceeding  aggressively  on  all  other  fronts.  The  net  dollar  drain  for  military 
purposes,  which  was  reduced  substantially  last  year,  will  be  cut  by  at  least  a  third 
this  year.  With  only  one-third  of  our  economic  aid  now  flowing  out  on  an  untied 
basis,  we  are  determinedly  at  work  to  reduce  that  fraction  to  one-fifth,  leaving  the 
remainder  to  go  largely  to  countries  and  purposes  that  are  likely  to  result  in  spend- 
ing here,  in  any  case.  And  we  are  negotiating  actively  with  various  creditor 
countries  for  the  further  prepayment  of  the  large  debts  still  owed  to  us. 

These  measures  and  policies  are  all  aimed  at  restoring  balance  in  our  basic  ac- 
counts, that  is,  covering  all  of  our  imports,  everything  the  Government  has  to  spend 
abroad,  and  our  net  outflow  of  long-term  investment.  It  was  this  basic  deficit 
that  reached  $4.3  billion  in  1959,  dropped  to  $1.9  billion  in  1960  as  exports  rose 
dramatically  while  imports  dechned  and  the  economy  went  into  recession,  and  has 
apparently  dropped  further  on  the  strength  of  trade  factors  to  about  $1}^  billion 
in  1961  (before  allowing  for  debt  prepayment,  which  reduced  the  figure  to  about 
half  of  that  amount,  or  $600  to  $700  miUion).  To  continue  progress  in  1962, 
as  our  surging  economy  draws  in  more  and  more  imports,  will  be  difficult;  it  will 
require  all  of  the  vigor  that  the  exporters  of  America  can  exert,  alongside  the  deter- 
mined governmental  efforts  which  I  have  just  reviewed.  But  the  place  to  look  for 
evidence  that  the  underlying  correctives  are  still  at  work  will  be  mainly  in  the 
record  of  our  commercial  exports,  that  is,  after  deducting  all  exports  dependent 
upon  our  own  aid  program.  For  if  these  exports  can  continue  to  expand,  there 
will  be  a  continued  and  strengthened  basis  for  that  confidence  of  others  in  our 
capabilities  which  has  so  much  to  do  with  the  movements  of  short-term  capital 
in  and  out  of  the  United  States. 

It  is  these  short-term  capital  movements  to  which  we  should  now  turn,  both  in 
rounding  out  a  quick  view  of  our  present  balance-of-payments  position  and  in 
preparing  the  way  for  some  discussion  of  those  aspects  of  international  financial 
cooperation  which  I  personally  find  most  interesting — the  various  forms  of  pay- 
ments arrangements,  and  the  consultative  facilities,  which  we  have  introduced 
or  expanded  during  the  past  year. 

The  outflow  of  short-term  capital  in  1961,  including  that  elusive  statistical 
aberration,  the  "errors  and  omissions,"  will  probably  prove  to  have  been  almost 
as  large  as  in  1960.  It  looks  as  though  it  will  have  accounted  for  roughly  three- 
quarters  of  the  total  deficit  in  the  United  States  balance  of  payments.  What 
does  this  mean?  Is  it  evidence  of  declining  confidence  in  the  dollar?  Or,  if  not, 
does  it  imply  possible  trouble  ahead?  What  can  we  learn  at  this  stage,  before 
the  detailed  data  have  been  completed  and  disclosed,  from  an  analysis  of  that 
experience? 

Four  characteristics  of  the  outflow  of  short-term  funds  this  past  year  stand 
out.  First,  they  did  not  reflect  a  flight  from  the  dollar;  there  was  a  gain,  not  a 
loss,  of  confidence  in  our  determination  and  ability  to  hold  the  value  of  the  dollar. 
That  is  confirmed  by  the  shrinkage  of  our  gold  loss  to  one-half  that  of  1960,  as 
central  banks  added  to  their  holdings  of  dollars  by  amounts  nearly  equal  to  their 


460   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

purchases  of  gold  from  us.  It  is  further  confirmed  by  the  fact  that  foreign  private 
holdings  of  dollars  rose,  perhaps  by  as  much  as  three-quarters  of  a  billion  dollars, 
whereas  in  1960  they  had  actually  fallen.  What  this  meant  was  that  in  1960 
the  entire  outward  flow  of  dollars  had  been  unloaded  upon  the  central  banks 
which  were  engaged  in  supporting  their  own  exchange  parities  with  the  dollar. 

A  second  factor,  which  partly  accounted  for  the  willingness  of  private  recipients 
to  retain  the  dollars  they  received,  was  the  removal  of  much  of  the  interest  rate 
advantage  in  moving  short-term  funds  abroad.  Short  rates  here  wer?  held 
much  higher  than  in  any  previous  recession-recovery  period  since  the  war.  Some 
key  rates  abroad  were  lowered.  And  after  giving  effect  to  the  costs  of  forward 
cover,  there  was  from  April  onward  no  obvious  advantage  in  shifting,  so  far  as 
the  customary  money  market  instruments  were  concerned.  But  investors  will 
be  investors,  and  some  Americans,  at  any  rate,  sought  out  the  more  unusual, 
perhaps  I  should  say  exotic,  forms  of  short-term  paper  abroad  in  order  to  better 
their  yields,  thereby  adding  to  our  overall  balance-of-paymants  deficit. 

Although  neither  confidence  factors  nor  the  more  simple  forms  of  interest  rate 
arbitrage  had  much  to  do  with  our  short-term  outflows  this  year,  various  aspects 
of  commercial  banking  operations  did — these  are  third  in  my  list  of  four  char- 
acteristics. Loans  for  the  financing  of  foreign  trade — the  most  normal  and 
healthy  component  of  short-term  capital  outflows — rose  sharply.  The  increases 
to  Japan  alone  accounted  for  more  than  two-fifths  of  the  entire  recorded  short-term 
capital  outflow  during  1961.  If  the  new  facilities  for  export  credit  insurance 
serve  their  purpose,  this  kind  of  short-term  capital  outflow  will  probably  continue, 
though  no  doubt  the  special  needs  of  Japan  have  been  nearly  satiated  for  the 
present. 

But  there  is  another  commercial  banking  component  of  the  outflow,  which  also 
loomed  large  during  1961,  and  which  seems  quite  different  in  nature.  Foreign 
commercial  banks,  some  of  them  functioning  in  New  York  through  their  agencies, 
have  taken  advantage  of  a  favorable  competitive  position  costwise  to  attract 
American  deposits  and  in  turn  lend  these  proceeds  in  the  call  market  in  New  York 
and  in  other  ways.  This  shift,  involving  in  many  cases  no  net  movement  of 
funds  out  of  the  United  States,  gives  rise  to  added  short-term  claims  on  the 
United  States.  These  added  claims  are  part  of  our  recorded  balance-of-payments 
deficit.  But  there  is  no  offsetting  credit  for  the  claims  by  the  original  depositor 
on  the  foreign  banks.  Whether  or  not  all  of  this  is  good  banking,  or  good  for 
banking,  it  has  the  statistical  result  of  increasing  our  recorded  balance-of-payments 
deficit. 

The  fourth  factor  to  be  mentioned  here  has  worked  both  ways  on  our  short-term 
capital  movements  over  this  past  year,  perhaps  not  accounting  for  any  great 
part  of  the  final  total  for  the  year  as  a  whole,  but  going  far  toward  explaining 
some  of  the  variations  we  have  had  from  quarter  to  quarter  in  our  overall  short- 
term  flows.  This  is  the  reverse  influence  upon  us  of  disturbing  economic  or 
political  developments  abroad.  In  March,  when  the  German  mark  and  the 
Dutch  guilder  were  appreciated,  a  wave  of  rumors  began  to  spread  concerning 
other  possible  currency  moves.  The  position  of  the  United  States  had  just  been 
so  resolutely  restated  by  the  new  administration  that  this  wave  passed  us  by, 
and  tended  to  center,  so  far  as  drains  were  concerned,  upon  the  pound  sterling. 
But  after  the  British  Government  initiated  a  vigorous  new  program  in  July, 
and  borrowed  $1}^  biUion  (plus  a  $500  million  standby)  from  the  International 
Monetary  Fund,  the  flows  turned  sharply  around.  Jlluch  of  our  rather  large 
outflow  that  will  soon  be  published  for  the  fourth  quarter  of  1961,  including  (as 
already  announced)  a  sizeable  part  of  our  gold  sales,  is  attributable  directly  or 
indirectly  to  the  gratifying  improvement  shown  by  the  British  pound — the  only 
other  currency  now  used  extensively  as  part  of  the  monetary  reserves  of  other 
countries. 

There  was,  of  course,  another  wave  of  unsettlement  through  the  foreign  exchange 
markets,  that  associated  with  the  events  in  Berlin,  triggered  particularly  on 
August  13.  For  a  brief  time  this,  too,  sent  some  funds  moving.  But  perhaps 
because  the  British  position  with  respect  to  governmental  action  affecting  the 
balance  of  payments  was  then  somewhat  comparable  to  ours  of  the  spring,  the 
greater  part  of  any  initial  flows  benefited  the  British  reserves  rather  than  our 
own.  Fortunately,  Berlin  soon  subsided  as  a  factor  in  the  exchanges,  but  it  did 
play  a  large  part  in  holding  our  net  outflow  of  short-term  capital  in  the  third 
quarter  to  an  unusually  small  figure. 


EXHIBITS  461 

IV. 

Both  of  these  dramatic  events,  the  sterling  strain  early  in  the  year  and  the 
Berlin  crisis  of  the  summer,  taking  place  within  a  structure  of  convertible  cur- 
rencies, gave  rise  to  immense  shifts  of  short-term  capital.  The  fact  that  these 
movements  were  contained  within  orderly  patterns,  and  their  potentially  dis- 
ruptive influences  were  avoided,  can  and  should  be  attributed  in  considerable 
part  to  the  implementation  during  the  year  of  several  new  approaches  to  inter- 
national financial  cooperation.  All  of  these  steps  had  been  in  the  making  since 
the  return  of  convertibility  at  the  beginning  of  1959.  It  was  no  doubt  the  pres- 
sure for  action,  first  stimulated  by  the  events  of  last  March,  which  brought  the 
new  arrangements  more  quickly  and  effectively  into  functioning  form.  But  they 
had  their  origin  in  a  new  spirit  of  international  cooperation,  a  spirit  fostered  by 
the  existence  of  convertibility  and  the  widening  recognition  of  the  responsibilities 
which  its  preservation  imposes  upon  all  of  the  leading  industrial  countries.  There 
were  four  important  kinds  of  innovations  during  1961,  innovations  which  helped 
greatly  to  check  any  cumulative  speculative  distortions  in  the  structure  of  the 
world  payments  system. 

The  first  of  these  came  to  be  called  the  "Basle  Agreements."  The  governors 
of  the  various  leading  European  central  banks  attend  each  month  in  Basle  the 
meetings  of  the  Bank  for  International  Settlements,  meetings  to  which  senior 
representatives  of  our  own  Federal  Reserve  System  have  always  been  invited  and 
which,  for  nearly  tw^o  years  now,  they  have  attended  regularly.  It  was  at  such  a 
meeting  last  March,  when  massive  money  flows  around  Europe  had  been  set  off 
by  the  German  and  Dutch  currency  revaluations,  that  the  governors  of  the  central 
banks  receiving  large  inflows  undertook  to  lend  them  back  to  the  Bank  of  England, 
from  which  most  of  the  drains  were  flowing.  Thus  the  potentiality  of  a  currency 
crisis  was  avoided  and  time  gained  for  the  orderly  development  of  measures  to 
strengthen  the  British  balance  of  payments  and  attract  a  return  flow  of  funds  to 
the  United  Kingdom. 

Although  the  United  States  was  an  active  participant  in  many  of  the  delibera- 
tions, it  was  not  in  a  position  to  lend  substantial  amounts  back  to  the  United 
Kingdom  because  no  substantial  inflows  here  had  occurred.  We  did  have  another 
direct  and  important  interest,  however.  Virtually  all  of  the  funds  withdrawn 
from  London  took  the  form  either  of  gold  or  of  dollars,  apparently  somewhat  more 
of  the  latter.  If  these  dollars  were  to  remain  long  in  the  hands  of  central  banks 
which  normally  maintained  high  gold  ratios,  or  if  any  of  the  central  bank  holders 
had  entertained  any  serious  concern  over  the  position  of  the  dollar,  the  next 
round  of  consequences  following  the  initial  strain  upon  the  British  w'ould  have 
been  a  resumption  of  our  heavy  gold  outflow. 

In  fact,  the  United  States  received  a  small  gold  inflow  during  the  second  quarter. 
To  be  sure,  that  mainly  represented  a  redistribution  of  some  of  the  gold  which 
the  British  had  already  paid  out.  But  it  was  also  symbolic  evidence  that  the 
new  spirit  of  mutual  understanding  and  responsibility,  developed  not  only  in  the 
meetings  at  Basle  but  in  others  that  I  will  describe  in  a  moment,  had  begun  to 
affect  the  actions  of  central  banks  and  governments.  It  had  become  apparent 
to  them  that  they,  too,  had  an  important  share  in  maintaining  the  conditions  of 
stability  in  the  international  monetary  system. 

It  was  in  these  circumstances  that  the  U.S.  Treasury  began,  for  the  first  time 
in  more  than  a  generation,  to  conduct  operations  in  foreign  currencies  through  the 
good  offices  of  its  fiscal  agent,  the  Federal  Reserve  Bank  of  New  York.  We 
began  with  the  German  mark  and  then  the  Swiss  franc,  the  two  currencies  toward 
which  the  great  bulk  of  the  short-term  movements  of  dollars  had  gone  from  the 
United  Kingdom.  As  the  events  slip  further  into  the  background  and  the  possi- 
bilities for  speculative  inference  recede,  we  are  taking  steps  to  describe  fully  these 
and  other  later  operations  in  our  various  official  publications.  For  now,  it  is 
sufficient  to  stress  that  the  second  powerful  innovation  of  1961,  in  helping  to  calm 
potential  unsettlement  in  the  sensitive  markets  of  a  convertible  world,  was  the 
active  entrance  of  the  United  States  into  the  markets  for  several  of  the  other 
leading  currencies  of  the  Western  world.  It  is  with  great  anticipation  that  we  in 
the  Treasury  now  look  forward  to  the  early  entry  of  the  Federal  Reserve  System 
itself,  operating  for  its  own  account,  into  the  area  of  foreign  exchange  operations. 
Certainly  we  have  already  found  our  own  operations  helpful  in  1961,  even  when 
operating  on  the  very  slender  resources  available  to  the  U.S.  Treasury  for  these 
purposes. 


462   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

The  third  innovation  is  still  not  formally  completed,  but  it  was  the  subject  of 
continuing  negotiations  from  the  early  spring  until  the  end  of  December  in  1961. 
I  am  referring,  of  course,  to  the  decision  taken  by  the  Executive  Board  of  the 
International  Monetary  Fund  on  January  5,  1962,  to  provide  for  supplemental 
standby  resources  of  $6  billion  to  be  loaned  by  ten  industrial  countries.  This 
was  another  of  the  needs  which  became  so  clearly  evident  at  the  frequent  dis- 
cussions among  the  financial  officials  of  various  affected  countries  that  began  to 
take  place  in  the  early  months  of  1961.  For  in  the  new  world  of  convertibility, 
uses  abound  for  other  convertible  currencies;  not  all  drawings  on  the  International 
Monetary  Fund,  by  the  larger  or  the  smaller  countries,  need  be  made  in  dollars. 
The  practices  of  the  IMF  had  already  begun  to  recognize  this,  and  its  supplies 
of  some  of  the  other  strong  currencies  were  rapidly  dwindling.  Thus,  where 
there  might  indeed  be  a  general  need  for  an  overall  increase  in  the  Fund's  re- 
sources, to  keep  pace  with  the  continual  expansion  of  its  useful  activities,  the 
clearest  need  was  to  replenish  its  supply  of  the  newly  convertible  currencies  of 
the  other  leading  industrial  countries. 

As  you  know,  proposals  respecting  the  U.S.  participation  in  these  new  arrange- 
ments were  sent  to  the  Congress  by  the  President  only  last  Thursday,  on  Febru- 
ary 1.  We  are  hopeful  that  action  can  be  completed  by  the  necessary  number 
of  participating  countries  before  the  middle  of  this  year.  The  standby  resources 
are  designed,  particularly,  for  use  in  the  event  of  massive  movements  of  funds, 
such  as  those  which  affected  the  pound  sterhng  last  spring.  It  is  significant  that 
when  the  British  drawing  actually  was  made  in  August,  in  order  to  restore  British 
reserves  and  permit  them  very  largely  to  repay  the  central  bank  credits  of  the 
Basle  Agreements,  roughly  two-thirds  of  the  initial  drawings  were  made  in  cur- 
rencies other  than  the  U.S.  dollar.  The  same  proportion  is  being  preserved  under 
the  standby  arrangements. 

But  I  said  there  were  four  main  avenues  of  innovation  and  development:  the 
first  was  that  among  the  central  banks;  the  second,  our  own  entry  into  the  foreign 
exchange  markets  of  the  world;  and  the  third,  expanded  use  of  the  International 
Monetary  Fund.  The  fourth  is  the  growing  rehance  which  all  of  the  leading  in- 
dustrial countries  in  Western  Europe  can  now  place  upon  the  Organization  for 
Economic  Cooperation  and  Development,  the  OECD.  At  the  suggestion  of  the 
United  States,  at  the  first  meeting  of  the  Economic  Policy  Committee  of  OECD 
held  last  April,  two  special  working  parties  were  established,  one  to  deal  with  the 
problems  of  growth,  the  other  with  the  monetary,  financial,  and  balance-of- 
payments  problems  of  common  interest.  My  own  involvement  has  been  heaviest 
with  this  second  group.  And  I  can  indeed  affirm,  despite  the  stresses  of  incessant 
trans-Atlantic  journeys  to  attend  meetings  held  at  intervals  of  four  to  six  weeks 
in  Paris,  that  the  progress  achieved  has  already  amply  repaid  all  of  our  efforts. 

For,  at  these  meetings,  active  financial  officials  from  the  capitals  of  each  of 
ten  participating  countries  are  present,  full  of  the  current  problems  confronting 
them  and  eager  to  analyze  together  the  financial  forces  at  work  which  affect  the 
balance  of  payments  of  any  or  all  of  the  participating  countries.  Not  much  can 
or  should  be  said,  on  a  current  basis,  concerning  the  work  of  a  committee  of  this 
kind.  It  is  a  pioneering  experiment;  it  is  being  conducted  with  tlie  flexibility 
and  the  uninhibited  freedom  of  inquiry  that  is  appropriate  to  such  an  experiment. 
The  aim  is  understanding,  not  negotiation  from  prepared  positions,  and  least  of 
all  the  semantic  exercise  of  preparing  communiques.  But  the  results  of  1961, 
not  only  in  terms  of  what  has  occurred  at  the  meetings,  or  in  the  parallel  discus- 
sions which  the  meetings  make  possible,  but  also  in  broadening  our  immediate 
awareness  of  what  is  going  on  abroad  as  we  work  out  our  own  domestic  financial 
programs,  assure  great  potentialities  for  the  future  of  this  regular,  frequent,  face- 
to-face  contact  for  international  financial  consultations.  They  enlarge,  they 
supplement,  but  they  do  not  in  any  way  replace  or  supplant,  all  of  the  other  exist- 
ing forms  of  contact  and  exchange  through  the  staffs  permanently  assigned  to  the 
various  international  institutions  in  the  economic  and  financial  fields. 

These  remarks  have  ranged  widely  over  our  balance  of  payments  and  the  grow- 
ing and  related  role,  not  only  for  last  year  and  for  this  year  but  more  importantly 
for  the  future,  of  international  financial  cooperation.  Step  by  step,  the  fresh 
approaches  which  began  at  Bretton  Woods  in  1944,  and  carried  us  through  nearly 
fifteen  years  of  postwar  inconvertibility,  are  now  being  reshaped  for  a  world  in 
which  the  currencies  of  the  principal  industrial  countries  have  assui'ed  converti- 
bility, at  fixed  rates  of  exchange. 

The  emerging  pattern  has  at  its  center,  of  course,  the  International  Monetary 
Fund  with  a  membership  now  of  75  countries  and  resources,  on  hand  or  on  call, 


EXHIBITS  463 

soon  hopefully  to  exceed  the  equivalent  of  $21  billion,  distributed  among  all 
manner  of  currencies,  both  the  weak  and  the  strong.  Operating  within  the 
framework  of  Fund  practices  are  the  central  banks  or  treasuries  of  the  various 
member  countries,  all  of  them  also  engaging,  for  their  day-by-day  affairs,  in  a 
network  of  contacts  with  each  other,  and  concentrating  in  a  thick  web  of  inter- 
relations among  the  financial  institutions,  both  public  and  private,  of  the  leading 
industrial  countries.  Somewhere  in  the  middle  stands  the  United  States,  with 
the  largest  holdings  in  the  IMF,  with  some  two-fifths  of  the  world's  known  mone- 
tary gold  reserves,  with  $50  billion  of  other  financial  assets  or  resources  in  other 
countries,  and  with  short-term  liabilities  of  some  $18  billion  to  foreigners  (about 
equally  divided  between  official  and  private  foreign  accounts^,  and  buying  and 
selling  gold  at  the  fixed  price  of  $35  per  ounce. 

Clearly  the  strong  performance  of  this  country  is  crucial,  for  us  and  for  the 
international  monetary  system.  That  is  why  the  first  order  of  priority  in  the 
Government's  financial  program,  and  in  the  President's  own  thinking  and  concern, 
has  been,  and  continues  to  be,  the  restoration  of  equilibrium  in  our  balance  of 
payments.  That  is  why,  too,  we  have  turned  our  attention  so  concertedly  to  the 
strengthening  of  the  payments  arrangements  that  can  best  surround  the  dollar, 
and  strengthen  or  complement  the  underlying  supporting  role  of  the  IMF  itself, 
through  the  years  ahead.  For  convertibility  brings  problems  with  its  opportu- 
nities, and  it  will  not  be  protection  enough  for  the  system  as  a  whole  to  have  a 
strong  dollar  and  a  sturdy  Fund.  There  must  be  a  growing  set  of  relationships 
and  understandings  among  the  other  leading  countries  which  are  strong  enough 
to  assume  some  responsibility  for  the  defense  of  the  system  as  a  whole  against  the 
capricious  raids  of  speculators  or  the  pressures  set  off  by  threats  to  political  or 
economic  stability  in  various  parts  of  the  world. 

It  is  with  a  view  to  these  longer  run  requirements  that  the  United  States  has 
moved  energetically  toward  developing,  in  the  living  context  of  today's  prob- 
lems, an  experimental  approach  toward  various  ways  to  spread  among  other 
currencies  some  portion  of  the  burden  that  has  for  so  long  been  borne  by  the 
dollar  alone.  That  is  the  most  obvious,  and  compelling,  requirement.  But  be- 
yond that,  in  a  variety  of  ways,  we  have  learned  much,  and  have  hopes  that  the 
machinery  of  payments  arrangements  will  profit  much,  from  the  close  working 
relations  developed  during  the  past  year  with  Germany,  Switzerland,  Italy,  Hol- 
land, France,  Sweden,  and  several  of  the  other  countries  represented  at  Basle 
and  in  the  OECD. 

The  outlines  of  what  may  emerge  can  barely  be  sketched  now.  But  the  promise 
lies  in  the  high  degree  of  understanding,  and  the  close  integration  of  common 
action,  that  has  emerged  in  the  face  of  the  various  tests  presented  by  the  events 
of  1961.  The  answer  will  not  be  found,  I  feel  sure,  in  any  drastic  rewriting  of 
the  codes  or  procedures  of  international  monetary  behavior.  It  will,  instead, 
emerge,  step  by  step,  from  the  kind  of  experimentation  that  has  marked  the 
evolution  of  joint  operations  in  various  currencies,  the  imaginative  lending  of 
funds  among  central  banks  and  between  governments,  the  extensive  use  of  the 
resources  of  the  International  Monetary  Fund,  notably  in  support  of  sterling 
and  the  introduction  of  facilities  for  new  forms  of  frequent  and  intimate  consul- 
tation on  emerging  problems  and  appropriate  action.  This  is  the  pragmatic 
course  from  which  all  of  our  lasting  banking  institutions  have  evolved.  We 
have  much  to  do  now  in  developing  international  arrangements  to  match  the 
effectiveness,  and  the  flexible  adaptation  to  local  conditions,  that  has  been  achieved 
in  the  domestic  monetary  systems  of  most  of  the  leading  industrial  countries  of 
the  world. 

The  essence  of  all  these  new  developments  is  understanding,  but  there  must 
all  along  be  an  intermixture  of  hard  negotiations  and  determined  actions.  For 
both,  the  United  States  is  not  yet  adequately  prepared.  It  is  not  enough  for  a 
few  representatives  of  Government  to  eat,  sleep,  and  dream  the  balance  of  pay- 
ments and  its  implications  for  the  American  economy;  there  must  be  a  spreading, 
permeating  consciousness  of  the  balance  of  payments  and  its  significance  through- 
out the  business  and  labor  communities. 

The  buffeting  which  the  United  States  has  undergone  over  the  last  few  years 
has  led  to  many  good  results.  Everyone  who  travels  from  Washington  out 
through  the  country  returns  with  a  sense  that  the  country  as  a  whole  is  indeed 
aware  of  our  balance-of-payments  position  and  senses  its  significance.  That  is 
the  essential  beginning.  But  we  will  not  have  reached  the  stage  in  which  we 
can,  in  the  best,  responsible  democratic  manner,  adequately  discharge  our  re- 
sponsibilities as  first  among  the  leading  countries  until  the  typical  labor  leader. 


464   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

or  the  typical  business  executive  in  this  country  can  analyze  the  main  lines  of 
economic  development  in  balance-of-payments  terms  in  the  same  taken-for- 
granted  manner  that  characterizes  his  counterpart  in  the  other  industrial  countries 
with  whom  our  contacts  must  now  be  so  much  closer,  in  our  convertible  currency 
world. 

My  observation  is  not  meant  as  a  complaint.  For  so  many  generations  the 
United  States  has  been  able  to  live  without  direct  concern  for  its  external  eco- 
nomic affairs  that  we  have  not  been  forced  by  the  events  of  daily  experience  to 
develop  the  same  consciousness  of  export  markets,  or  of  foreign  trade  finance, 
or  of  the  effects  of  capital  flows,  that  have  been,  equally  for  generations,  the 
every  day  concern  of  people  in  the  European  countries,  whether  they  are  in 
business,  in  finance,  in  trade  unions,  or  in  government. 

That  is  why  I  have  had  the  temerity  today  to  speak  so  long  and  to  try  to 
touch  upon  so  many  aspects  of  our  balance-of-payments  position  when  I  was 
given  the  opportunity  of  appearing  before  this  captive  audience  of  bankers.  For 
it  is  among  bankers  as  in  no  other  single  group  in  the  country  that  a  genuine 
understanding  of  the  elements  in  our  balance  of  payments  has  been,  for  a  much 
longer  period,  an  essential  part  of  the  stock  in  trade.  And  I  think  it  will  fall 
upon  bankers  to  carry  a  major  part  of  the  effort  toward  broadening  and  deepen- 
ing the  general  public  knowledge  of  all  the  questions  that  we  have  been  reviewing 
here  today. 


Exhibit  42. — Remarks  by  Under  Secretary  of  the  Treasury  for  Monetary  Affairs 
Roosa,  May  17,  1962,  at  the  monetary  conference  of  the  American  Bankers 
Association,  Rome,  Italy 

Over  the  past  fourteen  months  the  United  States  has,  for  the  first  time  since 
the  later  1930's,  entered  into  foreign  exchange  transactions  for  monetary  purposes, 
as  distinct  from  the  more  or  less  routine  handling  of  foreign  exchange  to  meet  the 
Government's  operating  needs  abroad.  The  Treasury  began  limited  operations 
in  March  1961,  acting  through  the  Federal  Reserve  Bank  of  New  York  as  its 
fiscal  agent.  In  February  of  this  year  the  Federal  Reserve  System  announced  its 
decision  to  enter  the  exchange  markets  for  its  own  account. 

To  date,  U.S.  action  in  the  foreign  exchange  markets  has  been  largely  explora- 
tory in  character,  designed  to  probe  and  possibly  to  limit  temporary  disturbances 
in  the  exchange  markets.  All  operations  have  been  carried  out  in  close  consulta- 
tion with,  and  usually  jointly  with,  the  financial  authorities  of  the  other  countries 
involved. 

These  activities  in  the  foreign  exchange  markets  have  sometimes  been  referred 
to  as  the  financial  component  in  the  outer  perimeter  defenses  of  the  dollar.  This 
is  probably  a  good  characterization,  since  of  course  the  inner  defenses  depend  upon 
the  productivity,  production,  and  competitiveness  of  the  American  economy. 
But  in  what  we  have  been  doing,  both  basically  and  peripherally,  to  defend  the 
dollar,  we  have  also  been  defending,  in  concert  with  others,  the  whole  sj^stem  of 
convertibility  at  stable  exchange  rates  that  has  been  so  painstakingly  reconstructed 
since  the  end  of  World  War  II.  And  the  effective  functioning  of  that  system  is, 
in  turn,  essential  for  diversified  growth  and  integration  among  the  free,  capitalist 
economies  of  the  World. 

In  addition  to  the  shortrun  objectives  of  our  foreign  exchange  operations,  on 
which  I  shall  say  a  bit  more  in  a  moment,  there  are  longer  run  implications  and 
potentialities  of  an  approach  in  which  a  key  currency  country  becomes  an  active 
participant  in  the  international  exchange  markets.  As  we  go  along  we  are  also, 
therefore,  trying  to  think  through  some  of  these  possible  implications  for  the  long- 
run:  Can  such  participation  aid  in  assuring  the  stability  of  the  international 
financial  mechanism?  Can  it,  if  properly  executed,  reinforce  the  fundamental 
work  of  the  International  Monetary  Fund?  Does  it  afford  a  helpful  means  toward 
providing  sufficient  international  liquidity  for  the  continued  growth  of  the  world 
economy?  Does  it  strengthen  the  role  of  gold  as  the  base  of  our  international 
reserve  arrangements? 

These  are  the  kinds  of  questions  that  central  bankers,  and  commercial  bankers 
and  treasuries  can  usefully  ponder  together,  in  our  joint  efforts  to  find  the  com- 
bination of  private  and  governmental  monetary  facilities  that  a  flourishing  capi- 
talism needs.  While  I  cannot  presume  to  suggest  any  of  the  answers,  it  may  be 
of  some  help  as  background  for  others  who  can,  if  I  discuss  two  themes  that 
seem  to  run  through  our  American  experience  of  these  recent  months.     First, 


EXHIBITS  465 

what  has  thus  far  been  the  nature  of  our  foreign  exchange  operations  within  the 
framework  of  the  system  of  convertibiUty  based  on  fixed  exchange  rates?  Second, 
what  possibiUties  seem  at  this  early  stage  to  be  suggested,  concerning  the  accumu- 
lation by  a  key  currency  country  of  balances  in  the  convertible  currencies  of  other 
leading  countries? 

Other  countries  have  long  accepted  direct  intervention  in  the  exchange  markets 
as  a  customary  way  of  Ufe.  At  the  least,  they  must  be  buyers  or  sellers  as  exchange 
quotations  reach  the  acceptable  limits  of  variation  around  their  own  fixed  exchange 
rates.  The  United  States,  on  the  other  hand,  was,  and  still  is,  the  only  country 
that  maintains  complete  interconvertibility  between  gold  and  its  own  currency 
at  a  fixed  price,  and,  until  recently,  was  content  to  leave  all  operations  concerning 
the  exchange  relations  between  the  dollar  and  other  currencies  to  the  officials  of 
those  other  countries.  The  recent  decision  to  participate  in  the  international 
markets  in  cooperation  with  other  financial  authorities  reflects,  as  do  many  other 
governmental  and  private  actions,  a  growing  awareness  within  the  United  States 
of  the  dual  nature  of  our  own  balance-of-payments  problem. 

We  must  not  only  respect  and  fulfill  the  balance-of-payments  disciplines  to 
which  other  countries  have  been  accustomed  for  so  long;  but  we  must  do  this 
while  also  keeping  our  own  currency  and  gold  equally  and  alternatively  available 
as  reserves  for  all  other  countries.  We  must  gain  and  keep  the  initiative  for 
influencing  the  factors  that  affect  our  balance  of  payments,  but  we  must  do  so  in 
the  impeccable  manner  that  assures  and  retains  bankers'  confidence.  This 
means  that,  both  as  trader  and  as  banker,  the  United  States  has  to  keep  its  markets 
open  and  free.  We  have  therefore  a  major  stake,  which  the  Western  World 
shares  with  us,  in  resolving  our  balance-of-payments  problem  within  the  frame- 
work of  a  free  international  economy,  with  stable  exchange  rates  and  an  immutable 
gold  price  of  $35  an  ounce. 

Let  me  make  it  absolutely  clear,  again,  that  there  is  no  thought  that  foreign 
exchange  operations  can  provide  the  solution  to  the  U.S.  balance-of-payments 
deficit.  More  fundamental  correctives  are  necessary  for  this  end,  and  I  know 
that  you  are  all  famihar  with  the  many-sided  program  of  American  business, 
finance,  and  Government  that  is  moving  forward  toward  a  restoration  of  equilib- 
rium, and  surplus,  in  the  American  balance  of  payments. 

Our  foreign  exchange  operations  have  so  far  been  mainly  designed  to  help  in 
providing  a  breathing  space  during  which  these  basic  programs  could  have  a 
chance  to  become  effective.  In  our  judgment,  they  have  been  most  helpful  in 
deterring  unwarranted  speculation  and  unwanted  capital  flows,  and  in  reducing 
the  drain  on  our  gold  stock,  which  stands  as  the  bulwark  of  the  whole  international 
currency  svstem. 

I  should  emphasize  that  our  operations  have  not  at  any  time  uivolved  an 
attempt  to  "rig"  markets  or  "peg"  prices.  Within  the  relatively  narrow  band 
which  is,  in  any  event,  permitted  for  exchange  fluctuations  under  the  rules  of  the 
International  Monetary  Fund,  there  must  be  room  for  market  prices  to  demon- 
strate the  basic  strength  or  weakness  of  any  currency.  We  could  not,  of  course, 
have  pegged  exchange  rates  even  if  we  had  wanted  to.  In  March  1961,  the  United 
States  held  no  reserves  of  convertible  foreign  exchange,  and  the  balance  of  pay- 
ments was  in  deficit.  As  a  result,  there  was  no  opportunity  to  support  the  dollar 
in  the  exchange  market  through  spot  sales  of  other  currencies  in  the  way  that 
European  monetary  authorities  customarily  do  when  their  own  currencies  come 
under  pressure. 

Some  minor  limited  seUing  operations  in  the  spot  market  have  been  undertaken 
more  recently  to  alleviate  temporary  pressures,  using  foreign  exchange  acquired 
by  borrowing  in  Switzerland  and  Italy  (or  limited  amounts  acquired  at  times  when 
the  rate  would  not  be  adversely  affected).  Operations  have  been  mainly  con- 
centrated, however,  in  forward  exchange.  These  markets  can  at  times  be  quite 
thin  and  even  a  relatively  limited  volume  of  market  demand  can  have  an  excessive 
impact  on  rates  which  are  not  subject  to  limitations  under  IMF  regulations  but 
which  can  generate  great  pressures  upon  the  spot  rates.  When  the  forward  rate, 
whether  because  of  expectations  concerning  future  currency  values  or  for  other 
reasons,  moves  conspicuously  out  of  line  with  its  interest  parity,  short-term 
private  capital  movements  can  be  set  off  that  may  be  disturbing  to  both  the 
country  receiving  and  the  country  losing  funds.  It  is  useful  to  have  facilities  for 
testing"  out  whether  the  particular  developments  are  in  fact  deeply  rooted  and 
sustained,  or  whether  thev  are  short-lived  and  may  soon  be  reversed. 

It  was  precisely  this  sort  of  situation,  in  fact,  that  provided  the  immediate 
motivation  for  Treasury  operations,  in  conjunction  with  the  Bundesbank  (and 

661496—63 31 


466   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

actually  in  response  to  a  very  constructive  initiative  on  the  part  of  the  Bundes- 
bank) in  the  forward  market  for  deutschemarks  in  March  1961.  You  will  recall 
that  the  revaluation  of  the  mark  and  the  guilder  at  that  time  led  to  a  state  of  great 
uncertainty  in  the  markets  and  there  were  widespread  expectations  that  further 
appreciation  of  these,  and  perhaps  other,  currencies  would  shortly  be  forthcoming. 
In  these  circumstances  forward  rates  moved  to  substantial  premiums,  the  deutsche- 
marks approaching  a  4  percent  per  annum  premium  for  a  time,  and  incentives 
were  created  for  heavy  flows  of  funds  out  of  the  dollar  and  into  the  mark.  Actually, 
in  providing  marks  to  the  forward  market,  we  made  it  possible  for  the  recipients 
to  continue  holding  their  dollars,  while  assured  of  later  convertibility  into  marks 
if  their  acquisitions  did  in  fact  prove  to  be  sustained.  Our  own  forward  sales  of 
marks  reached  a  peak  of  about  $350  million  in  mid-June  and  aggregated  consider- 
ably more  as  some  initial  contracts  were  rolled  over  once  or  twice  more.  But 
now,  they  have  all  been  paid  off,  as  the  excessive  flow  of  funds  into  Germany  first 
subsided  and  then  was  reversed  when  the  Berlin  situation  deteriorated  during  the 
late  summer  of  1961  and  expectations  of  further  appreciation  disappeared. 

Operations  were  also  undertaken  in  Swiss  francs  beginning  in  May  1961  on  a 
small  scale,  and  accelerating  in  July  when  the  Berlin  crisis  encouraged  a  stepped 
up  flow  of  funds  into  Switzerland.  The  Swiss  were  anxious  to  encourage  an 
outward  flow  of  short-term  Swiss  capital  to  offset  inflows  from  other  sources  that 
were  creating  domestic  problems  of  excessive  bank  liquidity  and  inflationary 
pressures,  and  the  United  States  was  glad  to  cooperate,  since  we  were  equally 
anxious  to  defend  the  dollar  by  lessening  the  pressure  on  the  Swiss  National  Bank 
to  absorb  more  dollars.  Early  this  year,  for  roughly  similar  reasons,  forward  sales 
of  guilders  and  Italian  lire  were  made.  To  give  you  an  idea  of  the  magnitudes 
involved,  sales  of  forward  Swiss  francs  reached  a  maximum  of  something  over 
$150  million.  Sales  of  Italian  lire  have  been  larger,  while  guilder  sales  have  been 
quite  modest.  All  in  all,  total  forward  exchange  operations  undertaken  by  the 
Treasury  in  the  four  currencies  that  I  have  mentioned,  including  the  rollover 
of  maturing  contracts  in  some  cases,  have  amounted  to  about  $1}^  bilhon  in  the 
14-month  period. 

One  of  the  main  results  of  these  sales  of  forward  exchange,  as  is  obvious  from 
what  I  have  said  so  far,  has  been  to  encourage  foreign  private  investors  to  stay 
invested  in  dollars  (or  to  increase  their  holdings)  and  thus  restrain  the  piling  up  of 
dollars  in  central  banks  abroad. 

As  long  as  the  United  States  continues  to  run  a  sizeable  deficit  in  its  balance  of 
payments  it  is  unlikely  that  we  can  or  should  expect  that  some  part  of  the  dollars 
pumped  into  the  international  financial  stream  will  not  reach  central  bank  hands. 
Nor  should  we  expect  to  avoid  some  resulting  drain  on  our  gold  stock.  And  the 
disciplines  which  such  movements  imply  are  fundamental  and  clear. 

At  the  same  time  we  must  be  constantly  mindful  that  the  dollar  is  not  just 
another  currenc}^  but  that  it  is  a  key  reserve  currency — not  only  for  foreign 
monetary  authorities  but  also  for  foreign  private  banks  and  corporations.  We 
must  remember  that  foreign  monetary  authorities  adjust  their  own  balance-of- 
payments  position  day-by-day  and  week-by-week  b}'  the  purchase  and  sale  of 
dollars  in  the  exchange  market.  Irrespective  of  our  balance-of-payments  position 
the  shift  of  dollars  from  countries  with  traditionally  low  gold  ratios  to  countries 
with  high  ratios  can  result  in  a  gold  drain  for  the  United  States.  Similarily,  with 
8}i  billion  of  liquid  dollar  holdings  in  the  hands  of  private  foreigners,  we  must  make 
sure  that  speculative  forces  are  not  fed  by  uncertainty  about  either  the  ability  or 
the  determination  of  the  United  States  to  stand  firmly  behind  the  interconverti- 
bility  of  the  dollar  with  gold  at  the  fixed  price  of  $35.00  per  fine  ounce. 

A  clear  distinction  has  to  be  drawn — and  it  is  not  always  easy  to  convey  this 
readily,  between  the  absolute  and  unconditional  availability  of  gold  to  foreign 
monetary  authorities  for  legitimate  monetary  purposes  and  the  compulsion  on  us, 
in  cooperation  with  foreign  monetary  authorities — to  avoid  any  unnecessary 
dispersions  of  the  U.S.  gold  reserve,  on  which  our  existing  international  system,  in 
the  last  analysis,  depends.  The  United  States  would,  in  fact,  be  just  as  derelict 
in  its  duty  to  help  support  and  sustain  a  growing  and  viable  international  economy 
if  it  failed  to  defend  the  gold  stock  through  improved  techniques  of  monetary 
cooperation  as  it  would  be  if  it  failed  to  make  gold  available  to  foreign  monetary 
authorities  on  demand. 

A  solution  of  the  balance-of-payments  deficit  is  fundamental  if  we  are  to  ward 
off  a  steady  attrition  of  the  U.S.  gold  stock.  But,  the  problem  goes  even  bej'ond 
this.  The  United  States  is  a  ready  seller  of  gold  on  demand,  but  other  countries 
are  not  necessarily  sellers  to  us  when  they  have  exchange  deficits,  partly  indeed 


I 


EXHIBITS  467 

because  their  own  gold  reserve  is  cushioned,  in  many  cases  substantially,  by 
dollar  reserves. 

It  is  consequently  a  matter  of  first  priority  for  us  to  develop  methods  that  will 
minimize  our  gold  losses  whenever  our  balance  of  payments  swings  into  deficit, 
by  no  means  avoid  them,  but  certainly  avoid  conditions  that  exaggerate  them. 
Under  present  procedures,  we  cannot  be  sure  that  gold  will  return  to  us  when  we 
move  into  surplus,  and  we  must  and  will  have  surpluses  from  time  to  time. 

This  kind  of  consideration  leads  directly  into  my  second  main  theme,  the 
potential  uses  of  foreign  exchange  holdings  by  a  key  currency  country.  As  I  had 
mentioned  earlier,  our  exchange  operations  to  date  have  been  largely  dictated  by 
clear,  current  opportunities  and  needs.  We  have  acted  in  response  to  market 
developments  and  have  not  sought  to  become  permanent  and  regular  participants 
in  the  market  for  any  currency.  Our  spot  exchange  holdings — -which,  on  the  latest 
published  figures  were  about  $150  million,  built  up  partly  from  borrowing  and 
partly  from  purchases  in  the  easier  markets  that  have  prevailed  for  some  cur- 
rencies so  far  this  year — have  mainly  been  acquired  to  back  up  our  forward  sales. 
But  looking  ahead  to  the  future,  there  may  well  be  good  reason  for  more  or  less 
continuous  holding  by  the  United  States  of  some  moderate  amounts  of  the  convert- 
ible exchange  of  various  leading  countries. 

While  it  is  premature  to  see  clearly  where  we  may  be  heading  so  far  as  the 
currency  holdings  of  the  United  States  are  concerned,  it  may  well  turn  out  that 
some  contribution  toward  resolving  a  part  of  our  problem  may  be  found  in  building 
up,  in  time  of  surplus,  holdings  of  other  currencies  that  are  not  thought  of  as 
reserve  currencies  in  the  same  waj^  that  the  dollar  and  the  pound  sterling  are 
viewed.  Should  we  do  that,  either  with  open  holdings  or  through  hedged  forward 
positions,  our  exchange  holdings  might  be  able  subsequently  to  handle  a  consider- 
able part  of  the  normal  swings  in  payment  patterns,  leaving  the  gold  reserves 
available  to  cover  more  fundamental  and  lasting  adjustments.  There  would  be  no 
commitment  to  hold  any  particular  currency,  of  course,  and  the  relative  size  of 
any  such  holdings  would  presumably  be  comparatively  small.  Nor  would  there 
be  any  lessening  of  the  needed  balance-of-payments  disciplines  upon  us  or  upon 
others.  For  changes  in  our  combined  reserves  of  gold  and  foreign  exchange,  taken 
together  with  changes  in  our  short-term  liabilities  to  foreigners,  would  then  become 
as  significant  to  the  determination  of  our  policies  as  changes  in  gold  alone  have 
been  over  recent  years. 

If  such  a  system  were  bolstered  by  suitable  international  arrangements  to  ensure 
a  steady  and  orderly  distribution  of  newly-mined  gold  into  monetary  reserves, 
much  of  the  pressure,  both  psychological  and  real,  that  arises  from  the  accident  of 
shifts  in  reserves  among  other  central  banks  would  be  lifted  from  the  U.S.  gold 
stock.  With  such  a  system  we  might  perhaps  be  able  to  view  in  better  perspective 
our  gold  loss  of  the  past  five  years  as  a  basic  and  healthy  redistribution  of  available 
world  gold  reserves,  a  redistribution  that  has  added  to  the  strength  of  the  inter- 
national financial  community. 

What  I  am  suggesting  is  that  we  need  to  build  further  the  outer  defenses  around 
the  liquidity  of  the  International  Monetary  Fund,  which  will  be  substantially 
augmented  by  the  standby  agreement  on  which  progress  toward  ratification  is 
going  ahead  with  gratifying  despatch.  We  need  to  provide  a  means  of  further 
economizing  on  gold  reserves,  while  ensuring  that  the  liquidity  needs  of  our 
e.xpanding  world  economy  will  be  met  in  a  manner  consistent  with  the  sovereignty 
of  individual  countries  and  with  heavy  reliance  on  the  discipline  provided  by  the 
balance  of  payments. 

The  net  effect,  if  this  line  of  development  should  be  followed,  would  be  to 
multilateralize  a  part  of  the  role  performed  now  by  the  two  key  currencies,  within 
a  framework  that  would  place  great  stress  on  still  further  cooperation  among 
monetary  authorities  of  the  type  that  has  been  so  successfully  developed  over 
the  past  year  or  so.  It  is  clear  that  the  attributes  of  a  key  currency  involve 
many  things:  its  use  in  international  trade,  its  relationship  to  gold  as  the  ultimate 
reserve,  the  existence  of  broad  and  deep  capital  and  money  markets.  In  all  these 
respects  the  dollar  is  now  unique,  although  we  hope  to  see  further  progress  in  the 
freeing  up  of  European  mone.y  and  capital  markets.  But  what  makes  a  currency 
good  basically  is  the  way  the  country  manages  its  economy.  Where  there  are 
a  number  of  strong  countries,  as  there  are  today,  a  plausible  case  would  seem  to 
exist  for  some  sharing  of  the  burdens  placed  on  the  key  currency. 

It  may  be,  too,  that  a  system  such  as  I  have  outlined  would  be  a  sensible  way 
to  provide  for  any  large  increase  in  long-run  liquidity  requirements.  Long 
before  there  can  be  any  agreement  on  any  of  this,  however,  there  are  many  knotty 


468   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

problems  that  will  have  to  be  resolved  by  our  own  policy  makers  and  through 
international  consultations,  through  the  Basle  Group,  through  the  Organization 
for  Economic  Cooperation  and  Development,  and  through  the  International 
Monetary  Fund.  But  explorations  along  these  lines  are  far  preferaljle,  it 
seems  to  me,  to  the  often  proposed  types  of  action  (involving  still  more 
difficult  decisions  and  negotiations)  that  basically  involve  an  oath  of  allegiance 
by  all  governments  and  central  banks  to  a  synthetic  currency  device,  created  by 
an  extra-national  authority  bearing  neither  the  responsibilities  nor  the  disci- 
plines of  sovereignty. 

On  the  other  hand,  a  system  where  countries  maintain  some  mutual  holdings 
of  foreign  exchange  has  the  extreme  advantage  of  using  existing  institutions  and 
practices.  Within  such  a  system  the  patterns  of  reference  are  known  to  all; 
no  one  ^\ill  be  asked  to  do  things  that  fall  outside  the  realm  of  his  experience. 
A  system  erected  on  established  currencies  and  mores,  would  surely  have  a  firmer 
foundation  than  one  based  on  artificial  devices.  At  the  least,  I  suggest,  there 
is  food  for  thought  in  such  a  possibility,  and  that,  along  with  the  excellent  cuisine, 
is  what  I  have  understood  to  be  the  provocative  aim  of  these  meetings. 


Exhibit  43. — Statement  by  Assistant  Secretary  of  the  Treasury  Leddy,  July  31, 
1961,  before  the  Senate  Foreign  Relations  Committee  on  amendment  of  the 
articles  of  agreement  of  the  International  Finance  Corporation 

I  am  glad  to  have  this  opportunity  to  appear  in  support  of  legislation  to 
authorize  United  States  approval  of  an  amendment  to  the  Articles  of  Agreement 
of  the  International  Finance  Corporation.  This  amendment  would  make  it 
possible  for  the  Corporation  to  make  equity  investments  under  limited  conditions. 
It  would  improve  the  Corporation's  effectiveness  in  investing  in  the  developing 
countries  and  would,  therefore,  be  consistent  with  the  purposes  of  the  United 
States  in  participating  in  the  Corporation. 

The  IFC  is  an  affiliate  of  the  International  Bank  for  Reconstruction  and 
Development,  or  World  Bank,  which  has  had  an  inipressive  record  under  the 
leadership  of  its  President,  Mr.  Eugene  Black.  The  Corporation  has  59  member 
countries  and  an  authorized  capital  of  $100  million,  of  which  $96.6  million  has 
been  paid  in  dollars.  The  U.S.  subscription,  which  we  paid  when  we  joined  in 
1956,  is  $35.2  million,  or  36.4%. 

The  Corporation  provides  a  multilateral  source  of  capital  which  directly  en- 
courages the  private  enterprise  sectors  of  the  developing  countries  of  the  free 
world.  IFC  invests  in  small  or  medium-sized  private  enterprise  projects,  generally 
those  involving  light  and  medium  manufacturing  or  production  of  basic  materials. 

Since  its  inception  in  1956,  the  Corporation  has  made  40  investment  commit- 
ments in  18  countries  totaling  $44  million,  of  which  $24  million  has  actually  been 
disbursed.  Its  investments  average  a  little  over  $1  million  each  in  size.  Ad- 
ditional private  investment  funds,  committed  alongside  the  funds  of  the  IFC, 
have  amounted  to  over  $125  million,  or  roughly  $3  of  new  private  investment 
stimulated  by  each  $1  of  IFC  investment.  Thus,  the  total  investment  generated 
by  IFC  participation  has  amounted  to  nearly  $170  million. 

The  legislation  before  you  today  is  necessary  because  of  the  limitation  in  article 
III,  section  2(a)  in  IFC's  articles  that:  ".  .  .  financing  [by  the  Corporation]  is 
not  to  take  the  form  of  investments  in  capital  stock."  This  provision  has  sharply 
restricted  IFC's  freedom  of  action  in  making  investments  and  has  forced  it  to 
resort  to  convertible  debentures,  long-term  stock  options,  and  other  means  of 
making  investments  on  terms  approaching  that  of  equity  participation. 

These  alternative  techniques,  which  have  been  resorted  to  in  order  to  avoid 
direct  stock  purchase,  are  often  complex,  cumbersome,  and  unfamiliar  to  business- 
men in  many  of  the  developing  countries.  A  detailed  explanation  of  these 
problems  and  of  the  need  for  authority  to  make  equity  investments  is  contained 
in  a  memorandum  of  February  10,  1961,  from  the  President  of  the  Corporation 
which  I  would  like  to  submit  for  the  record. 

The  purpose  of  the  original  limitation  on  the  power  of  the  Corporation  to 
invest  in  common  stock,  was  intended  to  keep  the  Corporation  out  of  the  business 
of  daj^-to-day  management.  The  present  proposal,  while  permitting  IFC  to 
make  investments  in  the  form  of  stock,  would  not  project  the  Corporation  into  a 
management  position  in  the  firms  in  which  it  invests.  Management  responsibilities 
would  continue  to  lie  with  the  private  owners  of  these  firms.  This  amendment 
would  not  alter  those  basic  responsibilities. 


EXHIBITS  469 

The  proposed  amendment  to  IFC's  articles  would  eliminate  article  III,  section 
2,  as  presently  drafted  and  substitute  a  new  section  which  would  read: 

"The  Corporation  may  make  investment  of  its  funds  in  such  form  or  forms  as 
it  may  deem  appropriate  in  the  circumstances." 
In  addition,  article  III,  section  3,  subsection  (iv),  which  now  reads: 

"The  Corporation  shall  not  assume  responsibility  for  managing  any  enterprise 
in  which  it  has  invested" 
would  be  amended  by  adding: 

"...  and  shall  not  exercise  voting  rights  for  such  purpose  or  for  any  other 
purpose  which,  in  its  opinion,  properly  is  within  the  scope  of  managerial  control." 

With  these  changes  the  Corporation  will  be  in  a  position  to  make  equity  invest- 
ments and  to  exercise  voting  rights  when  legally  required  in  connection  with  such 
matters  as  Corporate  reorganization,  increase  of  capitalization,  etc.  It  would 
however  be  enjoined  from  voting  on  questions  properly  within  the  management's 
sphere. 

It  is  in  the  interest  of  the  United  States  to  give  the  IFC  this  new  flexibility. 
The  need  for  it  has  been  demonstrated  by  the  course  of  IFC's  operations  in  the 
last  five  years.  The  Board  of  Directors  of  the  Corporation  has  unanimously 
recommended  the  adoption  of  this  amendment,  and  the  National  Advisory  Council 
on  International  Monetary  and  Financial  Problems  has  endorsed  the  action. 
On  June  19,  the  House  of  Representatives  approved  this  measure  by  a  vote  of 
329  to  18. 

This  legislation  would  authorize  the  Secretary  of  the  Treasury,  as  United 
States  Governor  of  the  IFC,  to  vote  in  favor  of  the  amendment.  I  recommend 
that  the  committee  give  its  support  to  passage  by  the  Congress  of  this  bill. 


Exhibit  44. — Treasury  and  Federal  Reserve  foreign  exchange  operations, 

March  1961-August  1962 

This  joint  interim  report  reflects  the  Treasury-Federal  Reserve  policy  of  making 

available  additional  information  on  foreign  exchange  operations  from  time  to  time. 

The  Federal  Reserve  Bank  of  New  York  acts  as  agent  for  both  the  Treasury  and  the 

Federal  Open  Market  Committee  of  the  Federal  Reserve  System  in  the  conduct  of 

foreign  exchange  operations. 

This  report  was  prepared  by  Charles  A.  Coombs,  Vice  President  in  charge  of  the 
Foreign  Department  of  the  New  York  Reserve  Bank.  It  covers  the  period  March 
1961-August  1962. 

The  resumption  of  foreign  exchange  operations  by  the  U.S.  Treasury  in  March 
1961  and  by  the  Federal  Reserve  System  in  February  1962  has  been  part  of  a 
cooperative  effort  by  treasuries  and  central  banks  on  both  sides  of  the  Atlantic 
to  create  a  first  line  of  defense  against  disorderly  speculation  in  the  foreign  ex- 
change markets.  Recognizing  that  the  dollar  is  the  cornerstone  of  the  entire 
international  currency  system,  this  cooperative  effort  has  mainly  taken  the  form 
of  arrangements  between  the  United  States  and  other  leading  industrial  countries 
adapted  to  the  special  needs  of  the  countries  involved.  Continuous,  close  con- 
sultation among  all  the  treasuries  and  central  banks  concerned  has  avoided  any 
conflicts  of  policy  or  operations  within  the  group  as  a  whole. 

BACKGROUND  TO  OPERATIONS 

Under  fair  weather  conditions,  speculation  can  and  does  play  a  highly  useful 
role  in  the  foreign  exchange  market  by  helping  to  correct  temporary  deviations 
of  spot  and  forward  rates  from  the  levels  appropriate  to  underlying  payment 
trends.  Thus  a  decline  in  the  spot  or  forward  rate  of  one  currency  resulting 
from  a  temporary  market  imbalance  may  stimulate  new  demand  for  that  currency 
by  alert  traders  expecting  a  rebound  in  the  rates. 

On  the  other  hand,  when  the  exchange  markets  become  seriously  unsettled  by 
political  or  economic  uncertainties,  normally  beneficial  speculation  may  quickly 
become  transformed  into  a  perverse,  and  sometimes  even  sinister,  force.  The 
latter  type  of  speculation  may  be  motivated,  on  the  one  hand,  either  by  a  natural 
desire  to  protect  capital  values  or,  on  the  other  hand,  by  the  prospect  of  a  quick 
capital  gain.  In  such  periods  of  market  anxiety,  abrupt  declines  in  the  spot  or 
forward  rate  for  a  given  currency  may  take  on  a  grossly  exaggerated  significance, 
the  exchange  market  may  become  a  prey  of  purely  imaginary  fears,  and  selling 
or  buying  pressures  on  the  exchanges  may  quickly  acquire    cumulative    force. 


470   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Even  minor  speculative  squalls  may  have  disturbing  effects  upon  the  normal 
flow  of  trade  and  payments,  while  very  severe  attacks  have  on  occasion  forced 
governments  into  unwanted  changes  of  currency  parities. 

Official  foreign  intervention  in  markets. — -Although  foreign  central  banks 
have  for  many  years  intervened  in  their  foreign  exchange  markets  to  protect 
their  currencies  against  speculative  disturbances,  the  United  States  had  refrained 
from  such  operations  from  the  end  of  World  War  II  until  early  1961,  This 
difference  of  approach  goes  back  to  the  Bretton  Woods  Agreements.  Under 
the  Articles  of  Agreement  of  the  International  Monetary  Fund,  member  countries 
agreed  to  establish  par  values  for  their  currencies  in  terms  of  gold  or  the  U.S. 
dollar  and  to  limit  fluctuations  m  their  exchange  rates  to  no  more  than  1  percent 
above  or  below  the  par  value.  In  many  cases,  foreign  countries  have  fulfilled 
their  obligation  to  the  International  Monetary  Fund  by  purchasing  or  selling 
U.S.  dollars  against  their  own  currencies  in  order  to  keep  their  exchange  rates 
from  rising  above  the  "ceiling"  or  falhng  below  the  "floor."  Foreign  central 
banks  may  also  operate  in  the  exchange  markets  between  the  margins,  and  many 
central  banks  do  so  to  prevent  sharp  movements  in  the  rates.  As  the  exchange 
rate  moves  upward  (or  downward)  a  country  may  buy  (or  sell)  dollars  against 
its  currency  to  slow  the  rate  movement,  or  even  to  halt  it  completely  at  some 
point  within  the  official  margins.  Such  purchases  and  sales,  by  ironing  out 
sharp  fluctuations  in  rates,  help  to  maintain  orderly  conditions  in  the  exchange 
markets,  thereby  facilitate  the  flow  of  trade  and  payments,  and  contribute  ma- 
terially to  the  maintenance  of  confidence  in  currencies. 

Foreign  ofl^cial  intervention  on  the  exchanges  is  generally  conducted  through 
purchases  and  sales  of  U.S.  dollars,  the  principal  reserve  currency.  Such  exchange 
intervention  results  in  changes  in  official  holdings  of  dollars,  increasing  them  when 
the  demand  for  the  foreign  currency  is  strong  and  reducing  them  when  demand 
is  weak.  Most  major  countries  hold  only  a  part  of  their  reserves  in  dollars — 
sometimes  a  very  small  part;  the  rest  are  held  mainly  in  gold.  If  exchange 
intervention  is  undertaken  on  a  large  scale,  such  countries  may  acquire  more 
dollars  than  they  wish  to  hold;  if  so,  they  will  convert  their  excess  dollars  into 
gold.  Conversely  they  may  have  to  sell  gold  to  acquire  the  dollars  necessary 
for  support  operations. 

Role  of  dollar  convertibility  into  gold. — The  willingness  of  foreign  central 
banks  to  acquire  and  hold  dollars  as  part  of  their  reserves  depends  on  the  assured 
convertibility  of  such  dollars  into  gold  at  a  fixed  price.  As  part  of  the  Bretton 
Woods  system,  this  assurance  is  provided  by  the  United  States,  which  undertakes 
to  maintain  a  fixed  par  value  for  the  dollar  by  standing  ready  to  buy  or  sell  gold 
against  dollars  at  a  fixed  price  of  $35  per  ounce  in  whatever  amounts  may  be 
requested  by  foreign  monetary  authorities.  This  system  of  defining  and  main- 
taining the  parity  of  the  dollar  in  terms  of  gold,  while  the  parities  of  other  cur- 
rences  are  maintained  by  buying  and  selling  dollars,  has  greatly  encouraged  the 
development  of  an  international  gold  exchange  standard.  Under  this  system 
the  United  States  serves  as  banker  for  the  dollar  exchange  reserves,  now  more 
than  $11  billion,  of  82  countries  throughout  the  world. 

As  banker  for  the  international  currency  system,  the  role  of  the  United  States 
until  recent  years  has  been  largely  passive.  Although  foreign  central  banks 
resisted  declines  in  their  currency  rates  toward  their  floors,  they  had  no  obligation 
or  incentive  to  resist  similar  declines  in  the  dollar  against  their  own  currencies. 
As  the  dollar  came  under  pressure  from  time  to  time  in  world  exchange  markets, 
the  dollar  rate  therefore  tended  to  slip  to  the  floor.  At  this  point  foreign  central 
banks  would  then  fulfill  their  obligation  to  take  the  surplus  supply  of  dollars  off 
the  market.  If  they  wished,  they  would  then  convert  part  or  all  of  these  dollars 
into  gold. 

Currency  crisis  of  I960.— This  passive  stance  by  the  United  States,  in  which 
both  the  rates  for  the  dollar  against  foreign  currencies  and  the  accumulation  of 
dollar  reserves  by  foreign  central  banks  were  left  entirely  to  market  forces,  and  to 
the  unilateral  decisions  of  foreign  monetary  authorities,  gave  rise  to  no  serious 
problems  for  many  years  after  the  war.  By  1960,  however,  successive  U.S.  bal- 
ance-of-payments  deficits  had  brought  about  both  heavy  gold  losses  and  sizable 
increases  in  our  dollar  liabihties  to  foreigners.  At  this  point,  the  dollar  became 
subject  to  rumors  of  impending  changes  in  U.S.  international  financial  policy, 
with  widespread  doubts  developing  abroad  as  to  whether  the  U.S.  Government 
could  and  would  maintain  the  $35  price  for  gold. 

The  resultant  wave  of  speculation  against  the  dollar  was  effectively  stemmed 
in  early  1961  by  a  Presidential  pledge  to  maintain  the  gold  price,  to  make  our  entire 


EXHIBITS  471 

gold  reserve  available  to  defend  the  dollar,  and,  if  necessary,  to  draw  upon  the 
IMF  as  a  supplementary  source  of  reserves.  Most  fundamental  of  all,  of  course, 
was  announcement  of  action  to  correct  the  balance-of-payments  deficit,  and  this 
program  has  subsequently  shown  gradual  but  solid  results. 

Effects  of  revaluation  of  mark  and  guilder. — Meanwhile,  the  recovery  of  con- 
fidence in  the  dollar  remained  vulnerable  to  sudden  shocks,  and  these  were  not 
long  in  coming.  On  the  weekend  of  March  4,  1961,  the  German  Government 
announced  the  upward  revaluation  of  the  mark  by  5  percent.  Shortly  after  that 
the  Netherlands  Government  announced  a  similar  change  in  the  guilder  parity. 

However  effective  these  moves  may  ultimately  prove  to  be  as  a  contribution 
to  international  balance-of-payments  equilibrium,  their  immediate  effect  was  a 
shattering  blow  to  market  confidence  in  the  system  of  fixed  currency  parities. 
All  major  currencies  immediately  became  labeled  as  candidates  for  either  revalu- 
ation, or  devaluation  and  an  unparalled  flood  of  speculative  funds  swept  across 
the  exchanges. 

Speculation  on  a  revaluation  of  the  Swiss  franc  became  particularly  intense, 
with  the  result  that  more  than  $300  million  flowed  into  that  country  in  4  days. 
Most  of  the  dollars  acquired  by  the  Swiss  National  Bank  and  other  continental 
financial  centers  were  the  counterpart  of  a  major  speculative  attack  on  sterling, 
with  the  Bank  of  England  suffering  heavy  reserve  losses. 

At  this  critical  juncture,  the  central  bank  Governors  attending  the  monthly 
meeting  of  the  Bank  for  International  Settlements  in  Basle  announced  that  their 
central  banks  were  cooperating  in  the  exchange  markets.  The  scale  of  this  co- 
operation in  credits  to  the  Bank  of  England  reached  a  total  of  more  than  $900 
million  and  played  a  vital  role  in  providing  a  breathing  space  during  which  more 
fundamental  measures  could  be  taken  by  the  British  Government. 

TREASURY  INTERVENTION  IN  THE  MARKET 

Although  the  dollar  emerged  relatively  unscathed  from  the  first  speculative 
attacks,  the  massive  reshuffling  of  foreign-owned  funds  resulted  in  heavy  accumu- 
lations of  dollars  by  certain  foreign  central  banks,  with  the  possible  consequence 
of  sizable  drains  upon  U.S.  gold  reserves.  Anticipations  of  a  second  revaluation 
of  the  German  mark  generated  a  continuing  heavy  flow  of  funds  to  Frankfurt, 
with  the  result  that  the  dollar  reserves  of  the  German  Federal  Bank  rose  to  $4.1 
billion  by  March  31  as  compared  with  its  gold  reserves  of  $3.2  billion. 

Operations  in  German  marks. — The  disruptive  effect  of  such  speculation  on 
the  normal  flow  of  German  trade  and  payments  was  reflected  in  a  scramble  by 
non-Germans  with  contractual  liabilities  in  marks  to  anticipate  their  require- 
ments. Meanwhile  German  residents  sought  to  hedge  against  contracts  payable 
to  them  in  dollars  or  other  foreign  currencies.  The  forward  exchange  market 
could  hardly  cope  with  such  an  abrupt  swing  in  expectations,  with  the  result 
that  the  premium  on  the  forward  mark  or,  viewed  the  other  way,  the  discount 
on  the  forward  dollar,  rose  to  nearly  4  percent.  At  that  exaggerated  level  it 
tended  to  reinforce  expectations  of  a  further  revaluation  of  the  mark. 

The  limited  availability  of  forward  cover,  even  at  such  expensive  rates, 
diverted  commercial  hedging  demands  into  foreign  purchases  of  spot  marks  to 
cover  future  mark  contracts  and  German  borrowing  of  dollars,  both  in  New  York 
and  in  the  Euro-dollar  market,  as  a  hedge  against  dollar  receivables.  The 
resultant  shift  of  the  leads  and  lags  in  commercial  payments  against  the  dollar 
and  in  favor  of  the  mark  created  a  potentially  dangerous  situation.  This  situa- 
tion became  the  subject  of  conversations  on  Friday,  March  10,  1961,  among 
officials  of  the  German  Federal  Bank,  Federal  Reserve  Bank  of  New  York,  and 
U.S.  Treasury.  There  emerged  the  decision  to  undertake  on  the  following 
Monday,  March  13,  forward  sales  of  marks  in  the  New  York  market  by  the 
New  York  Federal  Reserve  Bank  as  agent  of  the  U.S.  Treasury,  with  the  dual 
objective  of  providing  an  ample  supply  of  forward  marks  as  an  alternative  to 
anticipatory  purchases  of  spot  marks  by  foreigners  and  dollar  borrowing  by 
Germans,  and  in  the  process,  of  driving  down  the  forward  premium  on  the  mark 
as  closely  as  possible  to  the  1  percent  level. 

These  forward  sales  of  marks  by  the  U.S.  Treasury  were  undertaken  under 
a  "parallel"  arrangement,  generously  suggested  by  the  German  Federal  Bank, 
which  agreed  to  supply  the  U.S.  Treasury  with  marks  (should  they  be  needed), 
at  the  time  the  contracts  matured,  at  the  same  rates  as  that  at  which  the  marks 
had  been  sold  by  the  U.S.  Treasury.  In  effect,  the  U.S.  Treasury's  forward 
commitments  were  entirely  protected  against  any  risk  of  loss.     Forward  oper- 


472   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


ations  undertaken  under  this  arrangement  were  later  supplemented  by  forward 
sales  by  the  U.S.  Treasury  on  the  basis  of  $100  million  equivalent  of  German 
marks  obtained  by  the  United  States  under  the  $587  million  German  debt  repay- 
ment in  April  1961. 


I 


Table  I.— Treasurt  Forward  Operations  in  German  Marks, 
March-December  1961 

[Dollar  equivalent,  in  millions] 


1961 


Future 

commitments 

(beginning 

of  month) 


New  sales 
(during 
month) 


Maturing 

contracts 

not  renewed 

(during 

month) 


Future 

commitments 

(end  of 

month) 


Premium  on 

3-month 

forward  mark 

(percent  per 

annum,  end 

of  month) 


March 

April 

May 

June 

July 

August 

September- 
October 

November. 
December.. 


118.7 

223.1 

301.5 

267.8 

202.6 

126.0 

49.7 

14.2 

.2 


118.7 
104.4 
78.4 
52.8 
32.9 
12.7 
.3 


-86.5 
-98.1 
-89.3 
-76.6 
-35.5 
-14.0 
-.2 


118.7 

223.1 

301.5 

267.8 

202. 6 

126. 0 

49.7 

14.2 

.2 


1.47 

1.59 

1.39 

2.21 

1.45 

1.02 

.88 

.76 

.80 

1.04 


Table  I  illustrates  the  scope  and  pattern  of  the  Treasury's  forward  mark 
operations.  From  March  13  to  the  end  of  the  month,  the  Treasury  forcefully 
resisted  the  speculative  inflow  to  Germany  by  selling  over  $118  million  equivalent 
of  marks  for  delivery  in  3  months.  Market  demand  for  forward  marks  then 
gradually  declined,  perhaps  partly  owing  to  the  reassuring  effect  of  official  oper- 
ations on  so  sizable  a  scale.  But  by  mid-June  the  outstanding  forward  mark 
commitments  of  the  U.S.  Treasury  had  risen  to  $340  million. 

As  the  first  of  the  forward  contracts  began  to  mature,  the  tide  turned  and  the 
spot  dollar  rate  gradually  rose  off  the  floor  to  which  it  had  been  pinned  for  many 
months.  The  improvement  in  the  spot  dollar  rate  was  attributable  in  part  to  a 
market  demand  for  dollars  required  to  pay  the  U.S.  Treasury  for  the  forward  mark 
purchases  previously  contracted  for.  Coordinated  intervention  by  the  German 
Federal  Bank  and  the  U.S.  Treasury  in  the  spot  mark  market  also  helped  to 
strengthen  the  dollar  rate. 

With  the  crisis  of  confidence  more  or  less  weathered,  it  seemed  desirable  to 
allow  the  forward  premium  on  the  mark  to  rise  somewhat,  thereby  increasing  the 
cost  of  forward  cover  and  further  dampening  commercial  hedging  demand.  As  a 
consequence,  the  Treasury's  outstanding  balance  of  the  forward  mark  commit- 
ments declined  rapidly  after  mid-June  as  the  daily  rate  of  new  sales  fell  far  below 
maturing  contracts.  In  September,  in  a  market  also  strongly  influenced  by  the 
Berlin  crisis,  forward  sales  were  discontinued  entirely  as  a  normal  flow  of  forward 
marks  from  private  sources  reappeared.  By  early  December  the  Treasury's 
forward  mark  commitments  had  been  fully  liquidated. 

By  thus  offsetting  a  large-scale  flow  of  speculative  funds  that  proved  to  be 
reversible  within  9  months,  the  U.S.  Treasury  operations  in  forward  marks  clearly 
helped  both  the  United  States  and  Germany.  The  short-term  capital  outflow 
from  the  United  States  was  held  down,  and  the  U.S.  payments  deficit  thereby 
reduced,  while  the  German  Federal  Bank  could  restrain  its  dollar  accumulations 
from  becoming  too  large  and  also  prevent  the  German  money  market  from  being 
flooded  with  a  heavy  volume  of  liquid  funds.  More  generally,  the  forward  mark 
operation  apparently  calmed  a  badly  shaken  exchange  market,  which  needed  time 
and  the  assurance  of  intergovernmental  cooperation  to  recover  confidence. 

As  previously  mentioned,  the  U.S.  Treasury  had  acquired,  in  April  1961,  $100 
million  in  marks  as  part  of  a  German  Government  debt  payment  totaling  $587 
million.  While  about  half  of  this  mark  balance  was  used  to  settle  forward 
contracts  maturing  in  the  fall  of  1961,  the  remainder  was  converted  into  dollars  in 
September  to  make  final  payment  to  the  U.S.  lending  agencies  concerned. 

The  experience  with  the  forward  mark  operation  had  proved  sufficiently  encour- 
aging, however,  to  suggest  that  the  U.S.  Treasur.y  might  usefully  acquire  moderate 
amounts  of  spot  marks  when  that  currency  temporarily  weakened  late  in  1961. 


EXHIBITS  473 

These  mark  acquisitions  by  the  U.S.  Treasury  reached  a  total  of  approximately 
$55  million  equivalent  and  have  been  employed  in  several  operations  during  the 
first  half  of  1962  to  support  the  dollar  rate  during  periods  of  temporary  pressure. 
These  operations  have  not  only  proved  useful  in  producing  the  desired  firming  of 
the  dollar  rate  but  have  also  proved  reversible.  Later  strengthening  of  the  dollar 
rate  has  permitted  replenishinent  of  earlier  drafts  on  the  Treasury's  mark  balances. 

Operations  in  Swiss  francs. — The  second  major  exchange  operation  initiated 
by  the  U.S.  Treasury  during  1961  was  in  forward  Swiss  francs.  The  March 
1961  revaluations  of  the  German  mark  and  Dutch  guilder  resulted  in  a  burst 
of  speculation  on  a  similar  revaluation  of  the  Swiss  franc  and  a  heavy  flow  of 
short-term  speculative  funds  to  Switzerland.  This  influx  created  a  serious 
problem  of  excessive  liquidity  on  the  Swiss  money  market  while  also  raising 
the  dollar  exchange  reserves  of  the  Swiss  National  Bank  far  above  traditional 
levels. 

These  dollar  acquisitions  by  the  Swiss  National  Bank  could  have  been  con- 
verted immediately  into  gold  by  purchases  from  the  U.S.  Treasury.  But  in 
the  interests  of  international  financial  cooperation,  the  Swiss  National  Bank 
refrained  from  effecting  such  conversions  in  order  to  loan  back  to  the  Bank  of 
England  a  large  proportion  of  the  dollar  inflow  to  Switzerland. 

There  was  in  near  prospect,  however,  the  likelihood  of  a  massive  British  Gov- 
ernment drawing  from  the  International  Monetary  Fund  which  would  result 
in  a  liquidation  of  the  short-term  credits  received  by  the  Bank  of  England  from 
the  Swiss  National  Bank  and  other  European  central  banks.  Accordingly, 
the  Swiss  National  Bank  seemed  likely  to  convert  large  amounts  of  surplus  dollar 
holdings  into  gold  unless  some  means  could  be  found  to  stimulate  an  outflow 
of  private  funds  from  Switzerland. 

The  basic  obstacle  to  such  an  outflow  of  private  funds  from  Switzerland  came 
from  the  lingering  fears  and  hopes  of  many  private  individuals  that  the  Swiss 
franc  would  somehow  or  other  provide  a  safer  haven  than  other  currencies 
against  a  wide  range  of  political,  military,  and  financial  risks.  But  it  had  be- 
come quite  clear  to  both  Swiss  and  U.S.  central  bank  officials  that  the  hot  money 
inflow  into  Switzerland  was  disguising  a  significant  deterioration  in  the  basic 
balance  of  payments  of  Switzerland  and  that,  when  some  recovery  of  confidence 
in  currency  parities  reappeared,  a  cessation  of  this  hot  money  inflow  would  result 
in  a  strengthening  of  the  dollar  against  the  Swiss  franc  and  in  drains  on  the 
gold  and  dollar  reserves  of  the  Swiss  National  Bank.  Thus,  the  piling  up  of 
hot  money  in  Swiss  commercial  banks  was  essentially  a  temporary,  reversible 
phenomenon  that  might  properly  be  dealt  with  by  compensatory  action  by 
the  two  central  banks  concerned. 

After  extensive  discussions  among  officials  of  the  U.S.  Treasury,  the  New 
York  Federal  Reserve  Bank,  and  the  Swiss  National  Bank,  it  appeared  that 
a  useful  start  could  be  made  in  offsetting  such  temporary  inflows  of  hot  money 
by  providing  adequate  incentives  to  the  re-export  of  private  investment  funds 
from  Switzerland  on  a  hedged,  or  covered,  basis.  Partly  because  of  specula- 
tive fears  or  hopes  of  a  revaluation  of  the  Swiss  franc,  the  premium  on  the  for- 
ward Swiss  franc  had  risen  to  roughly  V/s  percent  at  which  levels  it  was  pro- 
hibitively costly  to  cover  short-term  placements  in  New  York,  London,  or  other 
financial  markets  abroad. 

Consequently,  in  July  1961  the  U.S.  Treasury  agreed  to  supply  through  the 
agency  of  the  Swiss  National  Bank  forward  Swiss  francs  to  the  market  at  rates 
sufficiently  attractive  to  induce  the  Swiss  commercial  banks  and  other  short- 
term  investors  to  move  funds  into  the  dollar  market.  These  forward  operations 
were  begun  in  a  limited,  experimental  fashion  on  the  basis  of  relatively  small 
Swiss  franc  balances  previously  acquired  by  the  U.S.  Treasury. 

With  the  emergence  of  the  Berlm  crisis  in  August  1961,  however,  the  problem 
was  complicated  by  a  renewed  flow  of  hot  money  to  Switzerland,  and  the  Treas- 
ury accordingly  enlarged  the  scope  of  its  forward  operations.  To  provide  a 
broader  base  for  such  operations,  the  Swiss  National  Bank  agreed  to  provide 
a  sizable  line  of  credit  in  Swiss  francs  to  the  U.S.  Treasury  which  could  be  drawn 
upon  by  issuance  of  3-month  certificates  of  indebtedness  carrying  a  rate  of  V/i 
percent  and  denominated  in  Swiss  francs.  As  the  Treasury's  forward  commit- 
ments rose  rapidly,  it  availed  itself  of  its  drawing  rights  to  the  extent  of  200 
million  Swiss  francs  ($46  million  equivalent)  in  October  1961.  By  the  end  of 
November  the  Treasury's  forward  sales  had  reached  $152.5  million  equivalent, 
which  meant  a  roughly  corresponding  reduction  in  the  dollar  reserves  of  the 
Swiss  National  Bank  and  in  Swiss  gold  purchases  from  the  U.S.  Treasury. 


474   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

J3  During  December  the  Treasury's  forward  commitments  declined  somewhat 
($15  miUion  of  maturing  contracts  were  paid  off  by  the  Treasury  rather  than 
renewed).  This  happened  largely  because  Swiss  commercial  banks  wanted  to 
increase  their  franc  assets  for  yearend  window-dressing.  New  contracts  of 
$9  million  equivalent  were  undertaken  at  the  end  of  January  1962.  And  in 
January  and  February  all  contracts  were  rolled  over  at  maturity,  so  that  by 
the  end  of  February  the  Treasury's  outstanding  forward  franc  market  commit- 
ments amounted  to  $146.5  milUon  equivalent. 

In  February  1962  the  Swiss  franc  began  to  weaken,  as  had  been  expected 
with  Switzerland's  large  current-account  deficit  and  the  tapering  off  of  the  short- 
term  capital  inflow.  In  these  circumstances,  the  Swiss  National  Bank  had 
to  supply  dollars  to  the  market  and,  by  the  end  of  May,  the  New  York  Federal 
Reserve  Bank  as  agent  of  the  U.S.  Treasury  had  sold  $139  million  to  the  Swiss 
National  Bank. 

If  the  U.S.  Treasury  had  elected  to  meet  these  dollar  requirements  of  the 
Swiss  National  Bank  by  accepting  Swiss  francs  in  payment,  the  resultant  in- 
crease in  the  Treasurer's  franc  balances  would  have  been  adequate  to  liquidate 
nearly  all  of  the  forward  Swiss  franc  market  contracts  outstanding.  But  a 
rapid  liquidation  of  these  forward  contracts  would  have  tended  to  recreate  too 
much  liquidity  on  the  Swiss  money  market.  Accordingly,  the  Swiss  National 
Bank  suggested  that  the  U.S.  Treasury  might  accept  gold  rather  than  Swiss 
francs  in  payment  of  part  of  the  Swiss  dollar  requirements.  Swiss  gold  sales  to 
the  U.S.  Treasury  amounted  to  $74  miUion.  The  remaining  $65  million  required 
by  the  Swiss  were  paid  for  in  Swiss  francs. 

The  Swiss  franc  balances  were  gradually  used  to  liquidate  $55  milUon  of  ma- 
turing forward  contracts,  which  by  the  end  of  May  1962  were  less  than  $91.5 
million  equivalent  outstanding.  The  $46  milhon  certificates  of  indebtedness 
issued  to  the  Swiss  National  Bank  in  the  autumn  of  1961  were  also  fully  liquidated, 
as  the  Treasury  found  its  forward  position  could  be  sustained  on  a  smaller  cash 
reserve.  In  effect,  the  program  of  forward  sales  of  Swiss  francs,  initiated  by 
the  U.S.  Treasury  in  July  1961,  proved  to  be  a  self -liquidating  operation,  as 
the  swing  developing  in  the  Swiss  payments  position  would  have  permitted 
nearly  complete  liquidation  of  the  forward  operation  within  a  matter  of  10  months. 
And  the  forward  operations  helped  both  the  United  States  and  Switzerland 
by  damping  U.S.  gold  losses  from  speculative  money  movements  while  relieving 
the  Swiss  market  of  too  much  liquidity. 

Unfortunately  the  pendulum  began  to  swing  back.  During  the  latter  part  of 
May  1962,  capital  funds  again  flowed  to  Switzerland  in  response  to  speculation 
caused  by  the  Canadian  devaluation  and  by  the  subsequent  sharp  decline  of  the 
New  York  stock  market.  But  meanwhile  the  financial  resources  and  market 
techniques  available  to  the  U.S.  Government  had  been  strongly  reinforced  by 
the  entrance  of  the  Federal  Reserve  System  into  the  foreign  exchange  field. 
As  subsequently  outlined,  a  coordinated  program  involving  the  U.S.  Treasury', 
the  Federal  Reserve  System,  and  the  Swiss  National  Bank  succeeded  in  minimizing 
the  impact  of  potentially  dangerous  speculative  pressures. 

Operations  in  Netherlands  guilders. — After  the  revaluation  of  the  Netherlands 
guilder  on  March  7,  1961,  the  premium  on  the  3-month  forward  guilder  rose  to 
well  over  2  percent  and  remained  there  until  the  end  of  April.  The  premium 
encouraged  a  further  inflow  of  short-term  funds  into  the  Netherlands  and  deterred 
any  covered  outflow. 

In  this  context,  early  in  May  the  U.S.  and  Netherlands  authorities  discussed 
whether  the  United  States  should  intervene  in  the  forward  guilder  market  to 
reduce  the  guilder  premium  to  levels  more  consistent  with  interest  rates  on  dollar 
and  guilder  investments.  These  discussions  between  the  United  States  and 
Netherlands  authorities  produced  their  first  tangible  results  in  July,  when  the 
Netherlands  Bank,  whose  dollar  reserves  were  to  be  depleted  by  a  large  British 
IMF  guilder  drawing  (for  conversion  into  dollars)  in  August,  agreed  to  sell  spot 
guilders  to  the  United  States  and  to  provide  for  U.S.  investment  of  these  guilders 
in  Dutch  Treasury  bills.  It  was  agreed  that  it  would  be  useful  for  the  Treasury 
to  acquire  modest  guilder  balances  for  possible  use  in  exchange  operations  in  the 
future.  Accordingly,  the  Netherlands  Bank  sold  $15  million  equivalent  of 
guilders  to  the  U.S.  Treasury  during  September. 

As  expectations  of  another  revaluation  of  the  guilder  withered  away,  the  for- 
ward guilder  premium  declined  to  more  normal  levels.  But  towards  the  end  of 
1961,  rumors  questioning  the  stability  of  exchange  parities  and  the  beginning  of 
continental  commercial  bank  repatriations  of  funds  for  year-end  window-dressing 


EXHIBITS  475 

operations  induced  a  renewed  rise  in  both  spot  and  forward  guilder  rates.  By 
December  20  the  premium  on  the  3-month  forward  guilder  was  again  over  2  per- 
cent (though  moving  erratically)  and  was  clearly  out  of  line  with  comparative 
interest  rates. 

Although  the  premium  declined  somewhat  after  the  turn  of  the  year,  the  U.S. 
Treasury  concluded  that  it  might  usefully  test  the  market  by  a  small  offering  of 
forward  guilders  which  might  succeed  in  nudging  the  rate  down  to  a  more  normal 
level.  After  further  negotiations  it  was  agreed  that  the  Netherlands  Bank  would 
sell  forward  guilders  in  the  market  for  the  Treasury's  account. 

The  sales  were  first  made  in  January  1962  and  reached  $20.8  million  equiv- 
alent by  early  February.  As  the  availability  of  forward  cover  stimulated  Nether- 
lands investment  demand  for  short-term  placements  in  New  York  and  other 
financial  markets,  the  spot  guilder  rate  weakened  to  about  par  and,  in  the  process, 
enabled  the  U.S.  Treasury  to  acquire  more  spot  guilders  from  the  Netherlands 
Bank  against  dollars. 

The  forward  operations  were  terminated  on  February  13  as  the  Netherlands 
money  market  had  become  less  liquid,  and  the  U.S.  Treasury  later  liquidated 
each  contract  at  maturity.  The  remaining  guilder  balances  of  the  U.S.  Treasury 
were  used  to  intervene  occasionally  in  the  market  to  slow  down  a  strong  rise  of 
the  guilder  spot  rate  during  the  spring  months  as  a  result  of  a  tightening  of  liquid- 
ity in  the  Netherlands  financial  market.  Also  a  sizable  foreign  exchange  inflow 
was  expected  as  a  result  of  the  Philips  Lamp  stock  issue. 

Operations  in  Italian  lire. — A  continuing  surplus  in  Italy's  balance  of  payments 
has  made  the  Italian  lira  one  of  the  strongest  continental  currencies.  From 
mid- April  1961  until  the  present  the  lira  has  usually  remained  at  its  upper  limit 
against  the  dollar. 

In  these  circumstances,  in  late  1961  discussions  began  on  the  possibility  of 
U.S.  Treasury  operations  in  the  lira  market.  In  January  1962  it  was  agreed 
that  the  Treasury  would  take  over  a  substantial  block  of  forward  lira  contracts 
from  the  Italian  foreign  exchange  office  and  that  the  Bank  of  Italy  would  simul- 
taneously extend  to  the  Treasury  a  $150  million  line  of  credit  in  lire  to  support 
such  spot  as  well  as  forward  operations  in  lire  as  might  appear  desirable. 

The  Treasury  made  the  first  drawing  on  this  line  of  credit  on  January  26,  1962, 
when  it  issued  a  3-month  certificate  of  indebtedness  for  the  equivalent  of  $25 
million  in  lire.  It  made  a  second  drawing  of  $50  million  in  March,  and  a  third 
drawing  of  $75  million  in  August. 

Both  spot  and  forward  operations  by  the  U.S.  Treasury  in  lire  are  continuing 
and  have  lessened  the  accumulation  of  dollar  reserves  during  the  recent  seasonal 
inflows  to  Italy. 

BEGINNING  OF  FEDERAL  RESERVE  OPERATIONS 

While  the  exchange  operations  undertaken  by  the  Treasury  with  the  limited 
resources  of  its  Stabilization  Fund  had  yielded  encouraging  results,  Federal 
Reserve  officials — with  the  full  concurrence  of  the  Treasury — considered  whether 
it  might  not  also  be  desirable  to  reactivate  Federal  Reserve  exchange  operations. 
After  many  months  study,  the  Federal  Open  Market  Committee  on  February  13, 
1962,  authorized  open  market  transactions  in  foreign  currencies,  i 

Currencies  involved.- — Under  this  authorization,  the  Special  Manager  of  the 
Open  Market  Account  for  foreign  currency  operations  received  Committee 
approval  to  inaugurate  operations  by  purchasing  from  the  Stabilization  Fund 
at  market  rates  the  following  foreign  currencies  in  order  to  open  accounts  with 
the  central  banks  responsible  for  these  currencies  and  develop  procedures  for 
future  operations  (Table  II). 


Table  II.— Federal  Reserve  Purchases  of  Foreign  Currencies  from  the  U.S.  Treasury 

Currency 

Dollar 
equivalent 
(in  millions) 

German  marks 

32.0 

Swiss  francs . 

5 

Netherlands  guilders 

.5 

Italian  lire 

5 

'  The  text  of  the  authorisation  appears  in  the  Appendix  to  this  exhibit. 


476   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Accounts  had  previously  been  opened,  and  maintained  for  some  years  with  more 
or  less  nominal  balances,  with  the  central  banks  of  Canada,  Great  Britain,  and 
France. 

With  the  authorization  of  the  Committee,  the  Special  Manager  proceeded 
to  negotiate  a  series  of  reciprocal  credit,  or  swap,  facilities  with  seven  foreign 
central  banks  and  with  the  Bank  for  International  Settlements.  The  amounts 
and  dates  of  these  swap  arrangements  are  shown  in  Table  III. 


Table  III.— Federal  Reserve  REapROCAL  Currency  Agreements 

Other  party  to  agreement 

Amount 

(in 

millions 

of  dollars) 

Date  (of 
originol 
agree- 
ment) 

Term 

(in 

months) 

Bank  of  France 

50 

50 

50 

50 

250 

100 

100 

50 

1962 

Mar.    1 
May  31 
June  14 
June  20 
June  2G  "■ 
July   16 
July   16 
Aug.    2 

3 

Bank  of  England  

3 

Netherlands  Bank .  

3 

National  Bank  of  Belgium                                                                   

6 

Bank  of  Canada _.. 

3 

Bank  for  International  Settlements' 

3 

Swiss  National  Bank. 

3 

German  Federal  Bank.  

3 

Total  for  all  ban  Irs 

700 

1 


1  In  Swiss  francs. 

*  Announced  on  Sunday.  June  24. 


Mechanics  of  swap  arrangements. — The  details  of  the  swap  arrangements 
varied  somewhat  from  agreement  to  agreement,  reflecting  differing  institutional 
arrangements  and  operational  procedures  among  the  central  banks.  However, 
certain  general  principles  ran  throughout  all  of  the  agreements.  They  may  be 
summarized  as  follows: 

1.  A  swap  constitutes  a  reciprocal  credit  facility  under  which  a  central  bank 
agrees  to  exchange  on  request  its  own  currency  for  the  currency  of  the  other  party 
up  to  a  maximum  amount  over  a  limited  period  of  time,  such  as  3  months  or 
6  months. 

2.  If  such  a  standby  swap  between  the  Federal  Reserve  and  the  Bank  of 
England,  for  example,  were  to  be  drawn  upon  by  the  Federal  Reserve,  the 
Federal  Reserve  would  credit  the  dollar  account  of  the  Bank  of  England  with 
$50  million  at  a  rate  of,  say,  $2.80  to  the  pound  while  obtaining  in  exchange  a 
credit  on  the  books  of  the  Bank  of  England  of  about  £18  milHon.  Both  parties 
would  agree  to  reverse  the  transaction  on  a  specified  date,  saj-,  within  3  months, 
at  the  same  rate  of  exchange,  thus  providing  each  with  forward  cover  against 
the  remote  risk  of  a  devaluation  of  either  currency. 

3.  The  foreign  currency  obtained  by  each  party  as  a  result  of  such  cross  credits 
to  each  other's  accounts  would,  unless  disbursed  in  exchange  operations,  be 
invested  in  a  time  deposit  or  other  investment  instrument,  earning  an  identical 
rate  of  interest  of,  say,  2  percent  and  subject  to  call  on  2  days'  notice. 

4.  After  consultation  with  the  other,  each  party  would  be  free  to  draw  upon 
the  foreign  currency  acquired  under  the  swap  to  conduct  spot  transactions  or 
meet  forward  exchange  obligations. 

5.  Each  swap  arrangment  is  renewable  upon  agreement  of  both  parties. 

Use  of  swaps. — Use  of  these  various  swap  arrangements  has  followed  a  varied 
pattern.  The  $250  million  swap  with  the  Bank  of  Canada  was  immediately 
drawn  upon  through  a  cross-crediting  of  Canadian  and  U.S.  dollars  as  part  of 
a  Canadian  stabilization  program.  The  Canadian  Government  also  received 
financial  assistance  from  the  International  Monetary  Fund,  the  Export-Import 
Bank,  and  the  Bank  of  England. 

In  the  swaps  with  the  Bank  of  France,  the  Bank  of  England,  and  the  National 
Bank  of  Belgium,  in  amounts  of  $50  million  each,  the  standby  facility  was  imme- 
diately drawn  upon  by  the  Federal  Reserve  in  order  to  test  communications, 
investment  procedures,  and  other  operational  arrangements.  In  both  the  French 
and  British  swaps,  no  occasion  has  arisen  for  either  party  to  use  the  proceeds 
of  the  swap  in  exchange  operations.  Consequently,  after  one  renewal  on  June 
1,  the  swap  with  the  Bank  of  France  was  Uquidated  in  advance  of  maturity  on 


EXHIBITS  477 

August  2  and  placed  on  a  standby  basis.  The  swap  with  the  Bank  of  England, 
which  matured  on  August  30,  was  similarly  placed  on  a  standby  basis. 

The  swaps  of  .$100  million  each  with  the  Swiss  National  Bank  and  the  Bank 
for  International  Settlements  were  negotiated  as  standby  facilities  but  with 
anticipation  of  an  early  necessity  for  their  use  to  mop  up  a  speculative  flow  of 
hot  money  to  Switzerland  in  June  and  early  July  of  1962.  Similarly  a  standby 
swap  witli  the  Netherlands  Bank  has  been  actively  utilized  to  mop  up  temporary 
flows  of  funds  to  the  Netherlands.  Finally,  the  $50  million  swap  with  the  German 
Federal  Bank  was  negotiated  as  a  standby  facility  and  no  drawings  have  been 
effected  to  date. 

Swiss  francs. — As  previously  noted,  the  standby  swap  arrangements  of  $100 
milhon  each  negotiated  in  mid-July  by  the  Federal  Reserve  with  the  Swiss  Na- 
tional Bank  and  the  Bank  for  International  Settlements  anticipated  an  early 
drawing  on  these  swaps  to  mop  up  surplus  dollars  taken  in  by  the  Swiss  National 
Bank.  Under  these  swap  arrangements,  the  Federal  Reserve  drew,  during  July 
and  August,  $60  million  of  Swiss  francs  under  its  swap  arrangement  with  the  Bank 
for  International  Settlements  and  $50  milhon  equivalent  in  Swiss  francs  under  the 
swap  with  the  Swiss  National  Bank.  The  total  proceeds  of  $110  milhon  in  Swiss 
francs  were  immediately  employed  to  buy  back  an  equivalent  amount  of  dollars 
on  the  books  of  the  Swiss  National  Bank. 

During  the  same  period,  the  U.S.  Treasury  enlarged  somewhat  its  forward  opera- 
tions in  Swiss  francs  and  thereby  absorbed  an  additional  amount  of  dollars  held  by 
the  Swiss  National  Bank.  As  a  result  of  these  operations,  the  dollar  holdings  of 
the  Swiss  National  Bank  were  substantially  reduced,  and  the  Bank  purchased  no 
more  than  $50  milhon  of  gold  from  the  United  States  during  a  period  of  intense 
speculation  following  the  June  dechne  in  the  New  York  and  other  stock  exchanges. 

Federal  Reserve  drawings  under  the  Swiss  franc  swaps  also  indirectly  served  to 
absorb  e.xcess  liquidity  on  the  Swiss  money  market  since  the  Swiss  francs  suppUed 
under  the  swap  by  the  Bank  for  International  Settlements  came  from  deposits  of 
Swiss  commercial  banks.  The  Swiss  National  Bank  similarly  absorbed  Swiss 
francs  from  the  market  by  various  forward  operations  involving  investments  by 
Swiss  commercial  banks  in  U.S.  Treasury  bills  on  a  covered  basis.  Subsequently, 
the  speculative  fever  subsided,  the  dollar  strengthened  significantly  against  the 
Swiss  franc,  and  the  Federal  Reserve  has  already  begun  to  acquire  Swiss  franc  bal- 
ances in  anticipation  of  an  eventual  liquidation  of  the  drawing  under  these  two 
swaps. 

Netherlands  guilders  and  Belgian  francs. — Similarly,  a  heavy  influx  of  funds  into 
the  Netherlands  following  the  stock  market  declines  in  June  was  absorbed  by 
drawings  upon  the  Federal  Reserve  swap  with  the  Netherlands  Bank,  combined 
with  a  resumption  of  Treasury  forward  operations  in  Dutch  guilders.  Sizable 
foreign  payments  for  certain  special  purposes  by  the  Netherlands  have  since  re- 
duced the  dollar  holdings  of  the  Netherlands  Bank  and  thereby  enabled  the  Federal 
Reserve  to  completely  repay  drawings  under  the  swap,  which  has  now  reverted  to 
a  standby  facility. 

Here  again,  U.S.  Government  exchange  operations  have  succeeded  in  dealing 
with  what  proved  to  be  a  reversible  flow  of  funds  and,  as  a  result,  the  Netherlands 
Bank  refrained  entirely  from  purchases  of  gold  from  the  United  States  during  this 
difficult  period.  Intervention  on  a  small  scale  in  Belgian  francs  by  drafts  upon 
the  swap  with  the  National  Bank  of  Belgium  has  served  a  similar  purpose,  with 
subsequent  repurchases  of  Belgian  francs  by  the  Federal  Reserve  as  the  dollar 
strengthened. 

Canadian  dollars. — The  $250  million  Federal  Reserve  swap  with  the  Bank  of 
Canada  on  June  25,  1962,  played  an  important  role  in  a  broad  program  of  inter- 
national financial  cooperation  designed  to  reinforce  the  Canadian  Government's 
efforts  to  defend  the  Canadian  dollar.  Between  January  1  and  June  25,  about 
$900  milhon,  or  44  percent  of  Canada's  gold  and  dollar  reserves  of  $2,056  milhon 
were  swept  away  by  a  mounting  balance-of-payments  deficit  which  threatened  to 
force  the  Canadian  dollar  off  its  newly  established  parity.  If  this  had  happened, 
it  would  have  been  an  extremely  serious  setback,  not  only  to  Canada  but  to  the 
entire  international  financial  system  of  fixed  parities,  and  might  easily  have 
touched  off  a  worldwide  burst  of  speculation  against  other  currencies,  including 
the  U.S.  dollar. 

In  this  atmosphere  of  emergency,  a  combined  program  of  $1,050  milhon  was  put 
together  within  4  days.  This  included  a  $300  million  Canadian  drawing  upon  the 
Fund,  a  $250  million  swap  between  the  Federal  Reserve  and  the  Bank  of  Canada, 
a  $100  milhon  credit  to  the  Bank  of  Canada  from  the  Bank  of  England,  and  a  $400 


478   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

million  standby  credit  to  the  Canadian  Government  by  the  Export-Import  Bank. 
Annoimcement  of  financial  assistance  on  this  massive  scale,  coupled  with  a  Cana- 
dian Government  announcement  of  fiscal  and  other  measures  of  restraint,  imme- 
diately broke  the  speculative  wave.  Between  June  25  and  the  end  of  August, 
Canada  recovered  more  than  $500  million  of  its  earher  reserve  losses.  Once  again, 
the  potentialities  of  central  bank  and  intergovernmental  financial  cooperation  in 
defending  currency  parities  against  essentially  reversible  flows  of  speculative  funds 
was  demonstrated. 

The  great  bulk  of  the  exchange  operations  undertaken  by  the  Federal  Reserve 
for  its  own  account  have  involved  transactions  directly  with  foreign  central 
banks,  rather  than  in  the  exchange  market.  The  foreign  central  banks  have  con- 
tinued their  policy  of  active  direct  participation  in  the  market,  and  their  activity  has 
been  supplemented  from  time  to  time  by  appropriate  Treasury  operations.  The 
Federal  Reserve  has  not  thus  far  undertaken  any  forward  operations  in  the  ex- 
change markets  for  its  own  account.  Spot  operations  in  support  of  the  dollar  in 
the  markets  have  so  far  been  limited  to  moderate  sales  of  German  marks,  some- 
times accompanied  by  similar  sales  of  marks  by  the  Treasury.  These  transactions 
have  proved  fully  reversible,  with  both  the  Federal  Reserve  and  Treasury  sub- 
sequently replenisliing  their  mark  holdings  as  the  dollar  strengthened. 

COORDINATION  OF  TREASURY  AND  FEDERAL  RESERVE  EXCHANGE  OPERATIONS 

Treasury  and  Federal  Reserve  exchange  operations  are  continuously  coordinated 
by  frequent  telephone  communications  each  day  between  Treasury  and  Federal 
Reserve  officials  concerned  with  market  operations.  At  2:30  p.m.  each  day  the 
Foreign  Exchange  Trading  Desk  in  the  Foreign  Department  of  the  Federal  Re- 
serve Bank  of  New  York  provides  a  full  and  detailed  report  over  a  Treasury  and 
Federal  Reserve  telephone  conference  circuit,  of  exchange  rates,  market  conditions, 
and  operations  undertaken  during  the  day  by  both  the  Federal  Reserve  and  the 
Treasury  Stabilization  Fund.  The  very  fact  that  the  Special  Manager  of  the 
System  Account  is  an  officer  of  the  Federal  Reserve  Bank  of  New  York  which  also 
conducts  exchange  operations  on  behalf  of  the  Treasury  eliminates,  insofar  as  is 
humanly  possible,  any  risk  of  an  inadvertent  clash  of  operations  by  the  two  agen- 
cies and  greatly  facilitates  the  task  of  insuring  a  coordination  of  both  Federal 
Reserve  and  Treasury  operations  with  the  foreign  central  banks  concerned. 

With  both  agencies  pursuing  identical  poUcy  objectives  and  employing  a  single 
instrument  of  operations,  it  has  proved  possible  during  recent  months  to  carry  out 
an  effective  meshing  of  Federal  Reserve  and  Treasury  operations  in  several  Euro- 
pean currencies. 

APPENDIX 

AUTHORIZATION     REGARDING     OPEN     MARKET     TRANSACTIONS 

IN  FOREIGN  CURRENCIES 

Pursuant  to  Section  12A  of  the  Federal  Reserve  Act  and  in  accordance  with 
Section  214.5  of  Regulation  N  (as  amended)  of  the  Board  of  Governors  of  the 
Federal  Reserve  System,  the  Federal  Open  Market  Committee  takes  the  follow- 
ing action  governing  open  market  operations  incident  to  the  opening  and  main- 
tenance by  the  Federal  Reserve  Bank  of  New  York  (hereafter  sometimes  referred 
to  as  the  New  York  Bank)  of  accounts  with  foreign  central  banks. 

I.  ROLE  OF  FEDERAL  RESERVE  BANK  OF  NEW  YORK 

The  New  York  Bank  shall  execute  all  transactions  pursuant  to  this  authori- 
zation (hereafter  sometimes  referred  to  as  transactions  in  foreign  currencies)  for 
the  System  Open  Market  Account,  as  defined  in  the  Regulation  of  the  Federal 
Open  Market  Committee. 

IL  BASIC  PURPOSES  OF  OPERATIONS 

The  basic  purposes  of  System  operations  in  and  holdings  of  foreign  currencies 
are: 

(1)  To  help  safeguard  the  value  of  the  dollar  in  international  exchange 
markets ; 

(2)  To  aid  in  making  the  existing  system  of  international  payments  more 
eflScient  and  in  avoiding  disorderly  conditions  in  exchange  markets; 

(3)  To  further  monetary  cooperation  with  central  banks  of  other  countries 


EXHIBITS  479 

maintaining  convertible  currencies,  with  the  International  Monetary  Fund,  and 
with  other  international  payments  institutions; 

(4)  Together  with  these  banks  and  institutions,  to  help  moderate  temporary 
imbalances  in  international  payments  that  may  adversely  affect  monetary  re- 
serve positions;  and 

(5)  In  the  long  run.  to  make  possible  growth  in  the  liquid  assets  available  to 
international  money  markets  in  accordance  with  the  needs  of  an  expanding  world 
economy. 

III.  SPECIFIC  AIMS  OF  OPERATIONS 

Within  the  basic  purposes  set  forth  in  Section  II,  the  transactions  shall  be  con- 
ducted with  a  view  to  the  following  specific  aims: 

(1)  To  offset  or  compensate,  when  appropriate,  the  effects  on  U.S.  gold  re- 
serves or  dollar  liabilities  of  those  fluctuations  in  the  international  flow  of  pay- 
ments to  or  from  the  United  States  that  are  deemed  to  reflect  temporary  disequili- 
brating  forces  or  transitional  market  unsettlement; 

(2)  To  temper  and  smooth  out  abrupt  changes  in  spot  exchange  rates  and 
moderate  forward  premiums  and  discounts  judged  to  be  disequiUbrating; 

(3)  To  supplement  international  exchange  arrangements  such  as  those  made 
through  the  International  Monetary  Fund ;  and 

(4)  In  the  long  run,  to  provide  a  means  whereby  reciprocal  holdings  of 
foreign  currencies  may  contribute  to  meeting  needs  for  international  liquidity  as 
required  in  terms  of  an  expanding  world  economy. 

IV.  ARRANGEMENTS  WITH  FOREIGN  CENTRAL  BANKS 

In  making  operating  arrangements  with  foreign  central  banks  on  System  hold- 
ings of  foreign  currencies,  the  New  York  Bank  shall  not  commit  itself  to  maintain 
any  specific  balance,  unless  authorized  by  the  Federal  Open  Market  Committee. 

The  Bank  shall  instruct  foreign  central  banks  regarding  the  investment  of  such 
holdings  in  excess  of  minimum  working  balances  in  accordance  with  Section  14(e) 
of  the  Federal  Reserve  Act. 

The  Bank  shall  consult  with  foreign  central  banks  on  coordination  of  exchange 
operations. 

Any  agreements  or  understandings  concerning  the  administration  of  the  ac- 
counts maintained  by  the  New  York  Bank  with  the  central  banks  designated  by 
the  Board  of  Governors  under  Section  214.5  of  Regulation  N  (as  amended)  are  to 
be  referred  for  review  and  approval  to  the  Committee,  subject  to  the  provision  of 
Section  VIII.,  paragraph  1,  below. 

V.  AUTHORIZED  CURRENCIES 

The  New  York  Bank  is  authorized  to  conduct  transactions  for  System  Account 
in  such  currencies  and  within  the  limits  that  the  Federal  Open  Market  Committee 
may  from  time  to  time  specify. 

VI.  METHODS  OF  ACQUIRING  AND  SELLING  FOREIGN  CURRENCIES 

The  New  York  Bank  is  authorized  to  purchase  and  sell  foreign  currencies  in  the 
form  of  cable  transfers  through  spot  or  forward  transactions  on  the  open  market 
at  home  and  abroad,  including  transactions  with  the  Stabilization  Fund  of  the 
Secretary  of  the  Treasury  established  by  Section  10  of  the  Gold  Reserve  Act  of 
1934  and  with  foreign  monetary  authorities. 

Unless  the  Bank  is  otherwise  authorized,  all  transactions  shall  be  at  prevailing 
market  rates. 

VIL  PARTICIPATION  OF  FEDERAL  RESERVE  BANKS 

AU  Federal  Reserve  Banks  shall  participate  in  the  foreign  currency  operations  for 
System  Account  in  accordance  with  paragraph  3G(1)  of  the  Board  of  Governors' 
Statement  of  Procedure  with  Respect  to  Foreign  Relationships  of  Federal  Reserve 
Banks  dated  January  1,  1944. 

VIIL  ADMINISTRATIVE  PROCEDURES 

The  Federal  Open  Market  Committee  authorizes  a  Subcommittee  consisting 
of  the  Chairman  and  the  Vice  Chairman  of  the  Committee  and  the  Vice  Chairman 
of  the  Board  of  Governors  (or  in  the  absence  of  the  Chairman  or  of  the  Vice  Chairman 
of  the  Board  of  Governors  the  members  of  the  Board  designated  by  the  Chairman 
as  alternates,  and  in  the  absence  of  the  Vice  Chairman  of  the  Committee  his 
alternate)  to  give  instructions  to  the  Special  Manager,  within  the  guidelines  issued 
by  the  Committee,  in  cases  in  which  it  is  necessary  to  reach  a  decision  on  opera- 
tions before  the  Committee  can  be  consulted. 


480   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

All  actions  authorized  under  the  preceding  paragraph  shall  be  promptly  reported 
to  the  Committee. 

The  Committee  authorizes  the  Chairman,  and  in  his  absence  the  Vice  Chairman 
of  the  Committee,  and  in  the  absence  of  both,  the  Vice  Chairman  of  the  Board 
of  Governors: 

(1)  With  the  approval  of  the  Committee,  to  enter  into  any  needed  agreement 
or  understanding  with  the  Secretary  of  the  Treasury  about  the  division  of  respon- 
sibility for  foreign  currency  operations  between  the  System  and  the  Secretary; 

(2)  To  keep  the  Secretary  of  the  Treasury  fully  advised  concerning  System 
foreign  currency  operations,  and  to  consult  with  the  Secretary  on  such  policy 
matters  as  may  relate  to  the  Secretary's  responsibilities; 

(3)  From  time  to  time,  to  transmit  appropriate  reports  and  information  to 
the  National  Advisory  Council  on  International  Monetary  and  Financial 
Problems. 

IX.  SPECIAL  MANAGER  OF  SYSTEM  OPEN  MARKET  ACCOUKT 

A  Special  Manager  of  the  Open  Market  Account  for  foreign  currency  operations 
shall  be  selected  in  accordance  with  the  established  procedures  of  the  Federal 
Open  Market  Committee  for  the  selection  of  the  Manager  of  the  System  Open 
Market  Account. 

The  Special  Manager  shall  direct  that  all  transactions  in  foreign  currencies  and 
the  amounts  of  all  holdings  in  each  authorized  foreign  currency  be  reported 
daily  to  desiginated  staff  officials  of  the  Committee,  and  shall  regularly  consult 
with  the  designated  staff  officials  of  the  Committee  on  current  tendencies  in  the 
flow  of  international  payments  and  on  current  developments  in  foreign  exchange 
markets. 

The  Special  Manager  and  the  designated  staff  officials  of  the  Committee  shall 
arrange  for  the  prompt  transmittal  to  the  Committee  of  all  statistical  and  other 
information  relating  to  the  transactions  in  and  the  amounts  of  holdings  of  foreign 
currencies  for  review  by  the  Committee  as  to  conformity  with  its  instructions. 

The  Special  Manager  shall  include  in  his  reports  to  the  Committee  a  statement 
of  bank  balances  and  investments  payable  in  foreign  currencies,  a  statement  of 
net  profit  or  loss  on  transactions  to  date,  and  a  summary  of  outstanding  unmatured 
contracts  in  foreign  currencies. 

X.  TRANSMITTAL  OF  INFORMATION  TO  TREASURY  DEPARTMENT 

The  staff  officials  of  the  Federal  Open  Market  Committee  shall  transmit  all 
pertinent  information  on  System  foreign  currency  transactions  to  designated 
officials  of  the  Treasury  Department. 

XL  AMENDMENT  OF  AUTHORIZATION 

The  Federal  Open  Market  Committee  may  at  any  time  amend  or  rescind  this 
authorization. 


Exhibit  45. — Press  release,  July  14,  1961,  announcing  the  signing  of  an  exchange 
agreement  between  the  United  States  and  El  Salvador 

Secretary  of  the  Treasury  Douglas  Dillon  and  Rafael  Glower  Valdivieso,  the 
Minister  of  Economy  of  El  Salvador,  today  signed  an  exchange  agreement  in  the 
amount  of  $6  million. 

Under  the  agreement,  which  will  run  for  one  year.  El  Salvador  may  request 
the  U.S.  Exchange  Stabilization  Fund  to  purchase  Salvadoran  colones  should 
the  occasion  for  such  purchases  arise.  Any  colones  so  acquired  by  the  U.S. 
Treasury  would  subsequently  be  repurchased  by  El  Salvador  for  dollars. 

This  exchange  agreement  is  designed  to  assist  El  Sah^ador  to  maintain  its 
present  unified  exchange  rate  and  to  restore  equilibrium  in  El  Salvador's  balance 
of  payments. 

The  Board  of  Directors  of  the  Export-Import  Bank  today  authorized  a  credit 
of  $10,000,000  to  the  Banco  Central  de  Reserva  de  El  Salvador  to  maintain 
essential  imports  from  the  United  States. 

The  agreement  with  the  U.S.  Treasur}'^  supplements  the  $11,250,000  standby 
arrangement  with  the  International  Monetary  Fund  which  became  effective 
July  13,  1961. 


I 


EXHIBITS  481 

Exhibit  46. — Press  release,  September  7,  1961,  announcing  the  signing  of  an 
exchange  agreement  between  the  United  States  and  Costa  Rica 

The  United  States  and  Costa  Rica  today  concluded  a  six  million  dollar  exchange 
agreement  designed  to  assist  Costa  Rica's  efforts  to  simplify  its  foreign  exchange 
rate  structure  and  to  achieve  an  exchange  system  free  of  restrictions. 

The  agreement  was  signed  by  U.S.  Treasury  Secretary  Douglas  Dillon,  Manuel 
Escalante,  Ambassador  of  Costa  Rica,  and  Dr.  Alvaro  Vargas,  Assistant  Manager 
of  the  Central  Bank  of  Costa  Rica. 

The  exchange  agreement  with  the  U.S.  Treasury  will  be  in  effect  for  one  year. 
It  supplements  a  $15  million  standby  arrangement  with  the  International  Mone- 
tary Fund,  which  was  announced  yesterday. 


Exhibit  47. — Joint  announcement,  April  3,  1962,  by  Secretary  of  the  Treasury 
Dillon  and  the  Minister  of  Finance  of  Brazil  at  the  conclusion  of  financial 
discussions  between  the  two  governments 

The  Minister  of  Finance  of  Brazil,  Walther  Moreira  Salles,  and  Secretary  of 
the  Treasury  Douglas  Dillon  announced  today  the  successful  completion  of 
financial  discussions  between  the  two  governments. 

The  Government  of  Brazil  recently  adopted  a  new  program  for  financial 
recovery  and  has  taken  steps  to  put  that  program  into  effect.  The  U.S.  Govern- 
ment is  prepared  to  effect  releases  out  of  the  remaining  balance,  totaling  $129 
million,  of  the  funds  earmarked  for  Brazil  in  May  1961,  as  the  financial  program 
is  effectively  carried  out  and  as  mutually  agreed  between  the  two  governments. 


Exhibit  48. — Press  release,  June  7,  1962,  announcing  the  signing  of  an  exchange 
agreement  between  the  United  States  and  Argentina 

Douglas  Dillon,  Secretary  of  the  Treasury,  and  Roberto  Alemann,  the  appointed 
Ambassador  of  Argentina,  today  signed  a  $50,000,000  exchange  agreement  between 
the  U.S.  Treasury  and  the  Government  and  Central  Bank  of  Argentina. 

The  agreement,  which  replaces  one  for  a  similar  amount  signed  in  December 
1961,  is  designed  to  assist  Argentina  in  its  continuing  efforts  to  promote  economic 
stability  and  freedom  in  its  trade  and  exchange  system.  Exchange  operations 
on  the  part  of  the  Argentine  authorities  will  be  for  the  purpose  of  maintaining 
an  orderly  foreign  exchange  system. 

Under  the  Treasury  exchange  agreement,  Argentina  may  request  the  U.S. 
Exchange  Stabilization  Fund  to  purchase  Argentine  pesos.  Any  pesos  acquired 
by  the  U.S.  Treasury  would  subsequently  be  repurchased  by  Argentina  with 
dollars. 

On  June  6,  1962,  the  International  Monetary  Fund  entered  into  a  standby 
agreement  with  Argentina  in  the  amount  of  $100  million  to  assist  the  Argentine 
Government  in  continuing  its  stabilization  efforts. 


Exhibit  49. — Press  release,  June  19, 1962,  announcing  the  signing  of  an  exchange 
agreement  between  the  United  States  and  the  Philippines 

Secretary  of  the  Treasury  Douglas  Dillon  and  Andres  V.  Castillo,  Governor  of 
the  Central  Bank  of  the  Philippines,  today  signed  an  exchange  agreement  in  the 
amount  of  $25  million. 

This  exchange  agreement  is  designed  to  assist  the  Philippines  in  its  continuing 
efforts  to  promote  economic  stability  and  freedom  in  its  trade  and  exchange  sys- 
tem. Exchange  operations  on  the  part  of  the  Philippine  authorities  will  be  for 
the  purpose  of  maintaining  an  orderly  foreign  exchange  system. 

The  agreement  with  the  U.S.  Treasury  supplements  the  $40,400,000  standby 
arrangement  with  the  International  Monetary  Fund  which  became  effective 
April  11,  1962. 


661496—63 32 


482        19  62    REPORT    OF   THE    SECRETARY    OF    THE    TREASURY 

ExfflBiT  50. — Cuban  import  regulations  and  amendments 
UNITED  STATES  TREASURY  DEPARTMENT 

Cuban  Import  Regulations 

February  G,  1962 

Title  31— MONEY  AND  FINANCE:  TREASURY 

Chapter  V — Foreign  Assets  Control,  Department  of  the  Treasury 
PART  515— CUBAN  IMPORT  REGULATIONS 
Regulations  Governing  Importations  of  Cuban  Goods 
§  515.201     Prohibitions. 

(a)  The  importation  into  the  United  States  of  all  goods  of  Cuban  origin  and 
all  goods  imported  from  or  through  Cuba  is  prohibited  except  as  authorized  by 
the  Secretary  of  the  Treasury  (Proclamation  3447). 

(b)  The  effective  date  of  this  prohibition  is  12:01  a.m.,  e.s.t.,  February  7, 
1962  (Proclamation  3447). 

§  515.202    Promulgation  of  regulations. 

Pursuant  to  Proclamation  3447,  the  Secretary  of  the  Treasury  hereby  pro- 
mulgates the  following  regulations. 

§515.301    Definitions  of  licenses. 

(a)  The  definitions  of  license,  general  license,  and  specific  license  contained  in 
§§  500.316,  500.317  and  500.318  of  this  chapter  shall  apply  to  this  part. 

(b)  No  regulation,  ruling,  instruction,  or  license  authorizes  an  importation 
prohibited  under  §  515.201  unless  the  regulation,  ruling,  instruction,  or  license 
is  issued  by  the  Treasury  Department  and  specifically  refers  to  this  part.  No 
regulation,  ruling,  instruction,  or  license  referring  to  this  part  shall  be  deemed 
to  authorize  any  transaction  prohibited  by  §  500.201  of  this  chapter  unless  the 
regulation,  ruling,  instruction,  or  license  specifically  refers  to  §  500.201. 

§  515.401     Reference  to  amended  sections. 

The  provisions  of  §  500.401  of  this  chapter  shall  apply  to  this  part. 

§  515.402    Effect  of  amendment  of  sections  of  tliis  chapter  or  of  other  orders,  etc. 

Any  amendment,  modification,  or  revocation  of  any  section  of  this  chapter 
or  of  any  order,  regulation,  ruling,  instruction,  or  license  issued  thereunder  shall 
not  unless  otherwise  specifically  provided  be  deemed  to  affect  any  act  done  or 
omitted  to  be  done,  or  any  suit  or  proceeding  had  or  commenced  in  any  civil 
or  criminal  case,  prior  to  such  amendment,  modification,  or  revocation,  and  all 
penalties,  forfeitures,  and  liabilities  under  any  such  section,  order,  regulation, 
ruling,  instruction,  or  license  shall  continue  and  may  be  enforced  as  if  such 
amendment,  modification,  or  revocation  had  not  been  made. 

§  515.501     Effect  of  subsequent  license  or  authorization. 

No  license  or  other  authorization  contained  in  this  chapter  or  otherwise  issued 
thereunder  shall  be  deemed  to  authorize  or  validate  any  transaction  effected 
prior  to  the  issuance  thereof,  unless  such  license  or  other  authorization  specifically 
so  provides. 

§  515.502     Exclusion  from  licenses  and  authorizations. 

The  provisions  of  §  500.503  shall  apply  to  this  part. 

§  515.503    Passengers  baggage  general  license. 

The  importation  of  goods  otherwise  prohibited  under  this  part  which  are 
brought  into  the  United  States  as  baggage  by  any  person  arriving  in  the  United 
States  is  hereby  licensed,  provided  that  such  goods  are  not  in  commercial 
quantities  and  are  not  imported  for  resale. 

§  515.601    Records  and  reports. 

The  provisions  of  §§  500.601  and  500.602  of  this  chapter  shall  apply  to  this  part. 

§  515.701     Penalties. 

Persons  violating  this  part  may  be  subject  to  the  penalties  of  (a)  section  592, 
594  and  595a  of  the  Tariff  Act  of  1930,  as  amended  (19  U.S.C.  1592,  1594  and 
1595a);  (b)  section  545  of  the  Criminal  Code  (18  U.S.C.  545);  and  (c)  section 


I 


EXHIBITS  483 

1001  of  the  Criminal  Code   (18  U.S.C.   1001)   and  the  penalties  of  any  other 
applicable  laws  and  regulations. 

§  515.801    Procedures. 

(a)  General  licenses:  General  licenses  are  issued  authorizing  under  appropri- 
ate terms  and  conditions  certain  types  of  transactions  which  are  subject  to  the 
prohibitions  set  forth  in  §  515.201.  Any  such  license  is  set  forth  in  this  part. 
It  is  the  policy  of  Foreign  Assets  Control  not  to  grant  applications  for  specific 
licenses  authorizing  transactions  to  which  the  provisions  of  an  outstanding  gen- 
eral license  are  applicable.  Persons  availing  themselves  of  general  licenses  are 
required  to  file  reports  and  statements  in  the  form  and  in  accordance  with  the 
instructions  specified  in  the  licenses,  when  the  licenses  so  provide. 

(b)  Specific  licenses — general  course  of  procedure.  Transactions  subject  to 
the  prohibitions  set  forth  in  §  515.201  which  are  not  authorized  by  general  license 
may  be  effected  only  under  specific  license.  The  specific  licensing  activities  of 
Foreign  Assets  Control  are  performed  by  the  Foreign  Assets  Control  Division 
of  the  Treasury  Department,  Washington,  D.C.,  and  the  Federal  Reserve  Bank 
of  New  York.  When  an  unusual  problem  is  presented,  the  proposed  action  is 
cleared  with  the  Director  of  Foreign  Assets  Control  or  such  person  as  he  may 

(c)  The  provisions  of  §  500.801  (b)  (2),  (3),  (4),  (5),  and  (6)  and  §§  500.803, 
500.804,  500.805,  and  500.806  shall  apply  to  this  part,  except  that  Form  TFAC-5 
shall  be  used  in  lieu  of  Form  TFAC-1  when  making  applications  for  specific 
licenses. 

(d)  Any  action  which  the  Secretary  of  the  Treasury  is  authorized  to  take 
pursuant  to  Proclamation  3447  may  be  taken  by  the  Director,  Foreign  Assets 
Control  or  by  any  other  person  to  whom  the  Secretary  of  the  Treasury  has 
delegated  authority  so  to  act. 

Authority:  §§  515.201  to  515.801  issued  under  §  620(a)  Public  Law  87-195 
and  Proclamation  3447. 

[seal]  Douglas  Dillon, 

Secretary  of  the  Treasury. 

Filed  with  the  Federal  Register  10:19  a.m.,  e.s.t.,  February  6,  1962. 


UNITED  STATES  TREASURY  DEPARTMENT 
Amendment  of 
Cuban  Import  Regulations 

March  23. 1962 

Title  31— MONEY  AND  FINANCE:  TREASURY 

Chapter  V — Foreign  Assets  Control,  Department  of  the  Treasury 

PART  515— CUBAN  IMPORT  REGULATIONS 

Amendment  of  Cuban  Import  Regulations 

The  Cuban  Import  Regulations,  31  CFR  515.201-515.801,  are  being  amended 
as  follows: 

Section  515.201  is  being  amended  to  prohibit  the  unlicensed  importation  or 
other  transactions  incidental  to  the  importation  of  merchandise  made  or  derived 
in  whole  or  in  part  of  Cuban  articles. 

Section  515.202  is  being  revoked. 

The  authority  for  the  Regulations  is  being  amended  to  provide  that  they  are 
additionally  issued  under  the  authority  of  section  5,  40  Stat.  415,  as  amended,  50 
U.S.C.  App.  5;  E.O.  9193,  July  6,  1942,  7  F.R.  5205,  3  CFR  1943  Cum.  Supp.; 
E.G.  9989,  August  20,  1948,  13  F.R.  4891,  3  CFR  1948  Supp. 

Section  515.201  of  the  Cuban  Import  Regulations  (31  CFR  515.201)  is  hereby 
amended  to  read  as  follows: 

"§  515.201  Prohibitions,  (a)  The  importation  into  the  United  States  of  all 
goods  of  Cuban  origin  and  all  goods  imported  from  or  through  Cuba  is  prohibited 
except  as  authorized  by  the  Secretary  of  the  Treasury. 


484   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

"(b)  The  effective  date  of  subsection  (a)  is  12:01  a.m.,  e.s.t.,  February  7,  1962. 

"(c)  Except  as  specifically  authorized  by  the  Secretary  of  the  Treasury  (or  any 
person,  agency,  or  instrumentality  designated  by  him)  by  means  of  regulations, 
rulings,  instructions,  licenses,  or  otherwise,  no  person,  partnership,  organization, 
association,  or  corporation  actually  within  the  United  States  or  organized  or  doing 
business  under  the  laws  of  the  United  States  or  of  any  territory,  possession,  or 
district  thereof,  may  import,  or  engage  in  any  transaction  in  foreign  exchange, 
transfer  of  credit  or  payment  between,  by,  through  or  to  any  banking;  institution 
(as  defined  in  §  500.314  of  this  chapter),  incidental  to  the  importation  of,  mer- 
chandise from  outside  of  the  United  States  made  or  derived  in  whole  or  in  part  of 
any  article  which  is  the  growth,  produce,  or  manufacture  of  Cuba. 

"(d)  The  effective  date  of  subsection  (c)  is  12:01  a.m.,  e.s.t.,  March  24,  1962." 

Section  515.202  is  herebv  revoked. 

Authority:  §§  515.20rto  515.801  issued  under  §  620(a)  Public  Law  87-195; 
Proclamation  3447;  Sec.  5,  40  Stat.  415,  as  amended,  50  U.S.C.,  App.  5;  E.O. 
9193,  Julv  6,  1942,  7  F.  R.  5205,  3  CFR  1943  Cum.  Supp.;  E.O.  9989,  August  20, 
1948,  13  "F.R.  4891,  3  CFR  1948  Supp. 

[seal]  Douglas  Dillon, 

Secretary  of  the  Treasury. 

Filed  with  the  Federal  Register  9:52  a.m.,  e.s.t.,  March  23,  1962. 

DEPARTMENT  OF  THE  TREASURY 

Amendment  of 

Cuban  Import  Regulations 

May  10,  1962 

Title  31 -MONEY  AND  FINANCE:  TREASURY 

Chapter  V — Foreign  Assets  Control  Department  of  the  Treasury 

PART  515— CUBAN  IMPORT  REGULATIONS 

Amendment  of  Cuban  Import  Regulations 

The  Cuban  Import  Regulations,  31  CFR  515.201-515.801  are  being  amended 
as  follows: 

Section  515.503  of  the  Cuban  Import  Regulations  is  being  amended  so  that  after 
the  effective  date  of  such  amendment,  to  wit,  12:01  a.m.,  e.s.t..  May  21,  1962, 
this  section  will  no  longer  authorize  the  importation  of  goods  otherwise  prohibited 
under  this  part  which  are  brought  into  the  United  States  as  baggage  by  any 
citizen  or  alien  resident  of  the  United  States. 

Section  515.503  of  the  Cuban  Import  Regulations  (31  CFR  515.503)  is  hereby 
amended  to  read  as  follows: 

"§  515.503  Passengers  baggage  general  license.  The  importation  of  goods  other- 
wise prohibited  under  this  part  which  are  brought  into  the  United  States  as  bag- 
gage by  any  person  arriving  in  the  United  States  other  than  a  citizen  or  resident 
of  the  United  States  is  hereby  licensed,  provided  that  such  goods  are  not  in  com- 
mercial quantities  and  are  not  imported  for  resale. 

"Effective  date  12:01  a.m.,  e.s.t.,  May  21,  1962." 

Authority:  §§  515.201  to  515.801  issued  under  §  620(a)  PubUc  Law  87-195; 
Proclamation  3447;  sec.  5,  40  Stat.  415,  as  amended,  50  U.S.C.,  App.  5;  E.O. 
9193,  Julv  6,  1942,  7  F.R.  5205,  3  CFR  1943  Cum.  Supp.;  E.O.  9989,  August  20, 
1948,  13  F.R.  4891,  3  CFR  1948  Supp. 

[seal]  Douglas  Dillon, 

Secretary  of  the  Treasury. 

Filed  with  the  Federal  Register  4:25  p.m..  May  10,  1962. 


EXHIBITS  485 

ExfflBiT  51. — Treasury  Department  orders  relating  to  organization  and  procedure 

No.  107,  Revision  No.  8,  April  16,  1962. — Authority  to  Affix  Seal  of  the 

Treasury  Department 

By  virtue  of  the  authority  vested  in  me  as  Secretary  of  the  Treasury,  including 
the  authority  conferred  by  section  161  of  the  Revised  Statutes,  it  is  hereby  ordered 

that:  .         «.  i.1.     •     J 

1.  Except  as  provided  for  in  paragraph  2,  the  following  officers  are  authorized 
to  affix  the  Seal  of  the  Treasury  Department  in  the  authentication  of  originals 
and  copies  of  books,  records,  papers,  writings,  and  documents  of  the  Department, 
for  all  purposes,  including  the  purposes  authorized  by  28  U.S.C.  1733(b): 

(a)  In  the  Office  of  Administrative  Services: 

(1)  Director  of  Administrative  Services 

(2)  Chief,  General  Services  Division 

(3)  Chief,  Printing  and  Procurement  Division 

(4)  Chief,  Directives  Control  and  Distribution  Branch 

(b)  In  the  Internal  Revenue  Service: 

(1)  Commissioner  of  Internal  Revenue 

(2)  Director,  and  Assistant  Director,  Collection  Division 

(3)  Chief,  and  Assistant  Chief,  Operations  Branch,  Collection  Division 

(4)  Chief,  and  Assistant  Chief,  Miscellaneous  Services  Section,  Opera- 

tions Branch,  Collection  Division 

(c)  In  the  Bureau  of  Customs: 

(1)  Commissioner  of  Customs 

(2)  Assistant  Commissioner  of  Customs 

(3)  Deputy  Commissioner,  Division  of  Management  and  Controls 

(4)  Deputy  Commissioner,  Division  of  Investigations  and  Enforcement 

(5)  Deputy  Commissioner,  Division  of  Appraisement  Administration 

(d)  In  the  Bureau  of  the  PubUc  Debt: 

(1)  Commissioner  of  the  Public  Debt 

(2)  Deputy  Commissioner  in  Charge  of  the  Chicago  Office 

(3)  Assistant  Deputy  Commissioner  in  Charge  of  the  Chicago  Office 

(e)  In  the  U.S.  Coast  Guard: 

(1)  Commandant 

(2)  Assistant  Commandant 

(3)  Administrative  Aide  to  the  Commandant 

2.  Copies  of  documents  which  are  to  be  published  in  the  Federal  Register  may 
be  certified  only  by  the  officers  named  in  paragraph  1(a)  of  this  Order. 

3  The  Director  of  Administrative  Services,  the  Commissioner  of  Internal 
Revenue  Service,  the  Commissioner  of  the  Public  Debt,  and  the  Commandant  of 
the  U.S.  Coast  Guard  are  authorized  to  procure  and  maintain  custody  of  the 
dies  of  the  Treasury  Seal. 

The  officers  authorized  in  paragraph  1(c)  may  make  use  of  such  dies. 

Henry  H.  Fowler, 
Acting  Secretary  of  the  Treasury. 


No.  160,  Revised,  Amendment  No.  1,  June  27,  1962.— Safeguarding  Official 

Information 

Correction  in  Part  I,  section  1,  seventh  line:  change  10818  to  10816.  ^ 

Additional  paragraph  in  Part  I,  section  8:  Under  the  paragraph  captioned 
Accountability  and  Dissemination,  add  the  following:  ,      .     j  x 

Officials  and  employees  of  Federal  Reserve  Banks,  which  are  authorized  to 
serve  as  fiscal  agents  of  the  United  States  and  perform  functions  related  to  the 
issue  and  redemption  of  United  States  securities,  may  be  granted  access  to  classified 


486   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

defense  information  by  the  Under  Secretary  for  Monetary  Affairs,  or  his  designee, 
when  (a)  the  information  was  classified  by  a  Treasury  official  under  section  5  of 
this  Order,  or  consent  for  dissemination  to  the  Federal  Reserve  Bank  was  obtained 
from  the  classifying  agency,  under  section  7(c)  of  Executive  Order  No.  10501,  as 
amended;  (b)  the  Federal  Reserve  Bank  officials  or  employees  need  to  have 
knowledge  of  such  information  in  connection  with  activities  approved  by  the 
Under  Secretary  for  Monetary  Affairs,  or  his  designee,  as  being  in  the  interests 
of  the  United  States;  and  (c)  the  Federal  Reserve  Bank  officials  and  employees 
were  cleared  individually  by  the  Security  Officer  of  the  Treasury  Department 
under  procedures  and  standards  applicable  to  officials  and  employees  of  the 
Treasury  Department. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 

No.  165,  Revised,  Amendment  No.  5,  November  15,  1961. — Amendment  of 
Delegation  Order  Relating  to  Findings  of  Dumping 

By  virtue  of  the  authority  vested  in  the  Secretary  of  the  Treasury  by  Reorgani- 
zation Plan  No.  26  of  1950  (3  CFR,  1950  Supp.  Ch.  Ill),  and  pursuant  to  the 
authorization  given  to  me  by  Treasur}^  Department  Order  No.  190  (26  F.R.  7019), 
it  is  herebv  ordered  that  subparagraph  (c)  of  the  Treasurv  Department  Order 
No.  165,  Revised,  issued  on  November  2,  1954  (T.D.  53654,  19  F.R.  7241),  is 
amended  to  read  as  follows: 

"(c)  Determinations  under  section  201(a),  Antidumping  Act,  1921,  as  amended, 
that  a  class  or  kind  of  foreign  merchandise  is  being,  or  is  likely  to  be,  sold  in  the 
United  States  or  elsewhere  at  less  than  its  fair  value  shall  be  made,  advice  to  the 
United  States  Tariff  Commission  of  each  such  determination  shall  be  given,  and 
public  notice  of  his  determination  and  the  determination  of  the  said  Commission, 
(the  'finding'  contemplated  by  section  201(a),  supra)  shall  be  given,  by  the 
Secretary  of  the  Treasury." 

James  Pomeroy  Hendrick 
Acting  Assistant  Secretary  of  the  Treasury. 


No.  165-12,  August  29,  1961. — Delegation  to  Commissioner  of  Customs 
Certain  Collection  Functions  Relating  to  Imported  Tobacco  Materials, 
Tobacco  Products,  and  Cigarette  Papers  and  Tubes,  Heretofore  Dele- 
gated to  Commissioner  op  Internal  Revenue 

By  virtue  of  the  authority  vested  in  the  Secretary  of  the  Treasury  by  Reorgani- 
zation Plan  No.  26  of  1950  (3  CFR,  1950  Supp.,  Ch.  Ill),  and  pursuant  to  authori- 
zation given  to  me  by  Treasury  Department  Order  No.  190  (26  F.R.  7019),  there 
are  transferred  from  the  Commissioner  of  Internal  Revenue  and  delegated  to  the 
Commissioner  of  Customs  the  functions  of  collecting  the  taxes  imposed  on  tobacco 
materials,  tobacco  products,  and  cigarette  papers  and  tubes  imported  or  brought 
into  the  United  States  on  which  internal  revenue  taxes  under  section  5701  and 
section  7652  of  the  Internal  Revenue  Code,  as  amended,  are  due  and  payable  at  the 
time  of  release  from  customs  custody  in  accordance  with  the  method  prescribed 
by  regulations  of  the  Internal  Revenue  Service. 

It  is  hereby  ordered  that  the  provisions  of  Treasury  Department  Order  No. 
165-2  (18  F.R.  7177)  and  Amendment  1  thereof  (24  F.R.  1991)  are  apphcable  to 
refunds  of  such  collections. 

The  functions  herein  delegated  to  the  Commissioner  of  Customs  may  be 
delegated  by  him  to  subordinates  in  such  manner  as  he  shall  direct. 

This  order  shall  be  effective  October  1,  1961. 

Henry  H.  Fowler 
Under  Secretary  of  the  Treasury. 


No.  167-46  (CGFR  61-43),  November  6,  1961. — Delegation  of  Functions  to 

Commandant,  U.S.  Coast  Guard 

By  virtue  of  the  authority  vested  in  me  by  Reorganization  Plan  No.  26  of  1950 
and  by  14  U.S.C.  631,  there  are  transferred  to  the  Commandant,  U.S.  Coast 
Guard,  those  functions  of  the  Secretary  of  the  Treasury  under  Public  Law  87-167, 


EXHIBITS  487 

the  Oil  Pollution  Act,  1961  (75  Stat.  402-407)  which  are  related  to  the  Coast 
Guard. 

The  Commandant  may  make  provision  for  the  performance  by  subordinates  in 
the  Coast  Guard  of  any  of  the  functions  transferred  except  the  prescribing  of 
rules  and  regulations. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


No.  170-9,  July  28,  1961. — Transfer  of  Responsibilities  to  the  Administra- 
tive Assistant  Secretary 

By  virtue  of  the  authority  vested  in  me  as  Secretary  of  the  Treasury  by  Reor- 
ganization Plan  No.  26  of  1950,  there  are  hereby  transferred  to  the  Administrative 
Assistant  Secretary  from  the  Fiscal  Assistant  Secretary  and  the  Commissioner  of 
Accounts  such  of  their  respective  responsibilities  as  relate  to  the  development  of 
regulations  to  be  observed  in  the  several  bureaus  and  the  general  administration 
of  (1)  fiscal  internal  auditing  pursuant  to  Department  Circular  No.  924,  dated 
June  24,  1953,  and  (2)  administrative  accounting  for  appropriations  and  funds. 

Such  personnel,  records,  equipment,  and  funds  as  are  mutually  determined  by 
the  Commissioner  of  Accounts  and  the  Administrative  Assistant  Secretary  to  be 
related  to  the  performance  of  these  functions  are  hereby  ordered  transferred  from 
the  Bureau  of  Accounts  to  the  Office  of  the  Administrative  Assistant  Secretary. 

The  functions  herein  transferred  may  be  reassigned  by  the  Administrative 
Assistant  Secretary  to  subordinates  in  such  manner  as  he  shall  direct. 

This  order  shall  become  effective  immediately.  Any  previous  orders  in  conflict 
with  the  provisions  of  this  order  are  hereby  amended  accordingly,  including 
Treasury  Department  Order  No.  164,  dated  December  12,  1952. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


No,  177-19,  Revision  No.  1,  December  4,  1961. — Delegation  of  Authority 

FOR  Personnel  Administration 

1.  Authority  is  hereby  delegated  to  the  Administrative  Assistant  Secretary  to 
take  final  action  on  matters  pertaining  to  the  employment,  direction,  and  general 
administration  of  personnel  under  the  Treasury  Department,  except  with  respect 
to  the  selection  and  discipline  of  the  head  and  the  official  next  in  line  to  the  head  of 
a  bureau  and  officials  in  the  Office  of  the  Secretary  who  report  directly  to  the 
Secretary  or  Under  Secretary. 

2.  With  respect  to  positions  in  the  Internal  Revenue  Service,  authority  is 
hereby  delegated  to  the  Commissioner  of  Internal  Revenue  to  take  final  personnel 
actions,  within  Treasury  policies,  except  for  the  positions  of  Deputy  Commissioner 
and  Assistant  Commissioner;  positions  subject  to  the  control  of  the  General 
Counsel;  and  the  classification  of  positions  at  or  above  the  GS-16  level. 

3.  The  Administrative  Assistant  Secretary  and  the  Commissioner  of  Internal 
Revenue  may  redelegate  such  of  their  authority  under  this  order  as  they  deem 
appropriate. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


No.  177-20,  December  22,  1961. — Designation  of  Treasurer  of  the  Board 
OF  Trustees  of  the  Postal  Savings  System 

Pursuant  to  the  authority  contained  in  39  U.S.  Code,  §5203(b),  the  Treasurer 
of  the  United  States  is  designated  as  Treasurer  of  the  Board  of  Trustees  of  the 
Postal  Savings  System. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


488       1962    REPORT   OF   THE    SECRETARY   OF   THE    TREASURY 

No.  179-3,  October  16,  1961. — Transfer  of  Functions — Sale  and  Distri- 
bution OF  Sets  of  Uncirculated  Coins 

By  virtue  of  the  authority  vested  in  me  by  the  Reorganization  Plan  No.  26 
of  1950  there  are  hereby  transferred  from  the  Office  of  the  Treasurer  of  the  United 
States  to  the  Bureau  of  the  Mint  all  functions  and  responsibilities  for  the  sale  and 
distribution  of  sets  of  uncirculated  coin,  other  than  over  the  counter  sales,  begin- 
ning with  coins  minted  in  calendar  year  1962.  In  effecting  this  transfer  of 
functions  neither  funds  nor  personnel  will  be  transferred. 

The  Office  of  the  Treasurer  of  the  United  States  will  continue  over  the  counter 
sales  of  sets  of  uncirculated  coin  and,  beginning  with  coins  minted  in  calendar 
year  1962,  will  be  provided  by  the  Bureau  of  the  Mint  with  supplies  of  proof 
coins  when  available  for  over  the  counter  sales. 

Douglas  Dillon 
Secretary  of  the  Treasury 


i 


No.    190,   July   28,    1961. — Supervision   of   Bureaus   and   Performance   of 
Functions  in  the  Treasury  Department 

1.  The  following  bureaus,  offices,  and  staff  assistants  shall  be  under  the  direct 
supervision  of  the  Secretary  and  the  Under  Secretary: 

Internal  Revenue  Service 

Assistant  to  the  Secretary  (Congressional  Relations) 

Assistant  to  the  Secretary  (Public  Relations) 

Special  Assistants  to  the  Secretary 

Director,  Executive  Secretariat 

2.  The  following  bureaus,  offices,  and  other  organizational  units  shall  be  under 
the  general  supervision  of  the  Secretary  and  the  Under  Secretary  and  under  the 
direct  supervision  of  the  officials  indicated: 

Under  Secretary  for  Monetary  Affairs 

The  Assistant  Secretary  (International  Finance)  and  the  Fiscal  Assistant 
Secretary  to  the  extent  of  their  responsibilities  for  international  and 
domestic  monetary  and  fiscal  policies 

Assistant  to  the  Secretary  (Debt  Management)  Office  of  Debt  Analysis 

Assistant  to  the  Secretary  (Financial  Analysis)  Office  of  Financial 
Analysis 

Office  of  the  Comptroller  of  the  Currency 

United  States  Savings  Bonds  Division 
General  Counsel 

Legal  Division 
Assistant  Secretary 

Bureau  of  Customs 

Bureau  of  Engraving  and  Printing 

Bureau  of  the  Mint 

Bureau  of  Narcotics 

Office  of  Law  Enforcement  Coordination 

United  States  Coast  Guard 

United  States  Secret  Service 
Assistant  Secretary  (International  Finance) 

Office  of  International  Finance  (including  Foreign  Assets  Control) 
Assistant  Secretary  (Tax  Policy) 

Office  of  Tax  Legislation 

Office  of  Tax  Analysis 

Office  of  International  Tax  Affairs 
Fiscal  Assistant  Secretary 

Bureau  of  Accounts 

Bureau  of  the  Public  Debt 

Office  of  the  Treasurer  of  the  United  States 

Office  of  Defense  Lending 
Administrative  Assistant  Secretary 

Office  of  Administrative  Services 

Office  of  Budget 

Office  of  Management  and  Organization 

Office  of  Personnel 

Office  of  Security 


EXHIBITS  /     489 

3.  The  Under  Secretary,  the  Under  Secretary  for  Monetary  Affairs,  the  General 
Counsel,  and  the  Assistant  Secretaries  are  authorized  to  perform  any  functions 
the  Secretary  is  authorized  to  perform.  Each  of  these  officials  shall  perform 
functions  under  this  authority  in  his  own  capacity  and  under  his  own  title,  and 
shall  be  responsible  for  referring  to  the  Secretary  anj^  matter  on  which  action 
should  appropriately  be  taken  by  the  Secretary.  Each  of  these  officials  will  ordi- 
narily perform  under  this  authority  only  functions  which  arise  out  of,  relate  to, 
or  concern  the  activities  or  functions  of  or  the  laws  administered  by  or  relating 
to  the  bureaus,  offices,  or  other  organizational  units  over  which  he  has  supervision. 
Any  action  heretofore  taken  by  any  of  these  officials  in  his  own  capacity  and 
under  his  own  title  is  hereby  affirmed  and  ratified  as  the  action  of  the  Secretary. 

4.  The  following  officers  shall,  in  the  order  of  succession  indicated,  act  as  Secre- 
tary of  the  Treasury  in  case  of  the  death,  resignation,  absence,  or  sickness  of  the 
Secretary  and  other  officers  succeeding  him,  until  a  successor  is  appointed  or 
until  the  absence  or  sickness  shall  cease: 

(1)  Under  Secretary 

(2)  Under  Secretary  for  Monetary  Affairs 

(3)  General  Counsel 

(4)  Presidentially  appointed  Assistant  Secretaries  in  the  order  in  which  they 

took  the  oath  of  office  as  Assistant  Secretary. 

5.  Treasury  Department  Orders  No.  148,  183,  and  183-2  are  rescinded. 

Douglas  Dillon 
Secretary  of  the  Treasury. 

No.  190,  Revision  No.  1,  December  1,  1961. — Supervision  of  Bureaus  and 
Performance  of  Functions  in  the  Treasury  Department 

1.  The  following  bureaus,  offices,  and  staff  assistants  shall  be  under  the  direct 
supervision  of  the  Secretary  and  the  Under  Secretary: 

Internal  Revenue  Service 

Assistant  to  the  Secretary  (Congressional  Relations) 

Assistant  to  the  Secretary  (Public  Affairs) 

Special  Assistants  to  the  Secretary 

Director,  Executive  Secretariat 

2.  The  following  bureaus,  offices,  and  other  organizational  units  shall  be  under 
the  general  supervision  of  the  Secretary  and  the  Under  Secretary  and  under  the 
direct  supervision  of  the  officials  indicated: 

A.  Under  Secretary  for  Monetary  Affairs 
Deputy  Under  Secretary  for  Monetary  Affairs 

Office  of  Financial  Analysis 

Office  of  Domestic  Gold  and  Silver  Operations 
The  Assistant  Secretary  (International  Finance)  and  the  Fiscal  Assistant 

Secretary  to  the  extent  of  their  responsibilities  for  international  and 

domestic  monetary  and  fiscal  policies 
Assistant  to  the  Secretary  (Debt  Management) 

Office  of  Debt  Analysis 
Office  of  the  Comptroller  of  the  Currency 
United  States  Savings  Bonds  Division 

B.  General  Counsel 
Legal  Division 

C.  Assistant  Secretary 
Bureau  of  Customs 

Bureau  of  Engraving  and  Printing 
Bureau  of  Narcotics 

Office  of  Law  Enforcement  Coordination 
United  States  Coast  Guard 

D.  Assistant  Secretary  (International  Finance) 

Office  of  International  Finance  (including  Foreign  Assets  Control) 

E.  Assistant  Secretary  (Tax  Policy) 
Office  of  Tax  Legislation 
Office  of  Tax  Analysis 

Office  of  International  Tax  Affairs 

F.  Fiscal  Assistant  Secretary 
Bureau  of  Accounts 
Bureau  of  the  Public  Debt 


490   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

OflBce  of  the  Treasurer  of  the  United  States 

Office  of  Defense  Lending 
G.  Administrative  Assistant  Secretary 

Office  of  Administrative  Services 

Office  of  Budget 

Office  of  Management  and  Organization 

Office  of  Personnel 

Office  of  Security 
H.  Assistant  to  the  Secretary 

Bureau  of  the  Mint 

United  States  Secret  Service 

3.  The  Under  Secretary,  the  Under  Secretary  for  Monetary  Affairs,  the  General 
Counsel,  the  Assistant  Secretaries,  and  the  Assistant  to  the  Secretary  in  2-H 
above,  are  authorized  to  perform  any  functions  the  Secretary  is  authorized  to 
perform.  Each  of  these  officials  shall  perform  functions  under  this  authority  in 
his  own  capacity  and  under  his  own  title,  and  shall  be  responsible  for  referring 
to  the  Secretary  any  matter  on  which  action  should  appropriately  be  taken  by 
the  Secretary.  Each  of  these  officials  will  ordinarily  perform  under  this  authority 
only  functions  which  arise  out  of,  relate  to,  or  concern  the  activities  or  functions 
of  or  the  laws  administered  by  or  relating  to  the  bureaus,  offices,  or  other  organi- 
zational units  over  which  he  has  supervision.  Any  action  heretofore  taken  by 
any  of  these  officials  in  his  own  capacity  and  under  his  own  title  is  hereby  affirmed 
and  ratified  as  the  action  of  the  Secretary. 

4.  The  following  officers  shall,  in  the  order  of  succession  indicated,  act  as 
Secretary  of  the  Treasury  in  case  of  the  death,  resignation,  absence,  or  sickness 
of  the  Secretary  and  other  officers  succeeding  him,  until  a  successor  is  appointed 
or  until  the  absence  or  sickness  shall  cease: 

A.  Under  Secretary 

B.  Under  Secretary  for  Monetary  Affairs 

C.  General  Counsel 

D.  Presidentially  appointed  Assistant  Secretaries  in  the  order  in  which  they 

took  the  oath  of  office  as  Assistant  Secretary  / 

5.  Treasury  Department  Order  No.  190  is  rescinded. 

Douglas  Dillon 
Secretary  of  the  Treasury. 

No.  191,  August  2,  1961. — Designation  of  Deputies 

1.  In  addition  to  their  other  assignments,  the  following  are  designated  to  serve, 
at  the  pleasure  of  the  Secretary,  as  the  respective  deputies  of  the  principals 
indicated: 

Principal  Deputy 

Under  Secretary  for  Monetary  Affairs __  Assistant  to   the   Secretary    (Debt 

Management). 

General  Counsel Senior  Assistant  General  Counsel. 

Assistant  Secretary Deputy  to  the  Assistant  Secretary. 

Assistant    Secretary    (International     Deputy  Assistant  Secretary  (Inter- 
Finance),  national  Finance). 
Fiscal  Assistant  Secretary Assistant   to   the    Fiscal   Assistant 

Secretary. 
Administrative  Assistant  Secretary Deputy    Administrative    Assistant 

Secretary. 

2.  Each  deputy  shall  have  authority  to  perform,  during  the  absence  of  his 
principal,  any  function  his  principal  is  authorized  to  perform. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


No.  191,  Revision   No.   1,   November  17,   1961. — Designation   of  Deputies 

1.  In  addition  to  their  other  assignments,  the  following  are  designated  to 
serve,  at  the  pleasure  of  the  Secretary,  as  the  respective  deputies  of  the  principals 
indicated: 


EXHIBITS  491 

Principal  Deputy 

Under  Secretary  for  Monetary  Aflfairs Deputy  Under  Secretary  for  Mone- 
tary Affairs. 

General  Counsel Senior  Assistant  General   Counsel. 

Assistant  Secretary Deputy  to  the  Assistant  Secretary. 

Assistant  Secretary  (International  Deputy  Assistant  Secretary  (Inter- 
Finance),  national  Finance). 

Fiscal  Assistant  Secretary Assistant   to   the   Fiscal   Assistant 

Secretary. 

Administrative  Assistant  Secretary Deputy    Administrative    Assistant 

Secretary. 

2.  Each  deputy  shall  have  authority  to  perform,  during  the  absence  of  his 
principal,  any  function  his  principal  is  authorized  to  perform. 

3.  Treasury  Department  Order  No.  191  is  rescinded. 

Douglas  Dillon 
Secretary  of  the  Treasury. 

No.  191,  Revision  No.  2,  May  25,  1962. — Designation  op  Deputies 

1.  In  addition  to  their  other  assignments,  the  following  are  designated  to  serve, 
at  the  pleasure  of  the  Secretary,  as  the  respective  deputies  of  the  principals 
indicated: 

Principal  Deputy 

Under  Secretary  for  Monetary  Affairs Deputy  Under  Secretary  for  Mone- 
tary Affairs. 

General  Counsel Senior  Assistant  General  Counsel. 

Assistant  Secretary Deputy  to  the  Assistant  Secretary. 

Assistant  Secretary  (International  Deputy  Assistant  Secretary  (Inter- 
Finance),  national  Finance). 

Assistance  Secretary  (Tax  Policy) Deputy   Assistant   Secretary    (Tax 

Policy) . 

Fiscal  Assistant  Secretary Assistant   to   the   Fiscal   Assistant 

Secretary. 

Administrative  Assistant  Secretary Deputy    Administrative    Assistant 

Secretary. 

2.  Each  deputy  shall  have  authority  to  perform,  during  the  absence  of  his 
principal,  any  function  his  principal  is  authorized  to  perform. 

3.  Ti-easury  Department  Order  No.  191  (Revision  1)  is  rescinded. 

Douglas  Dillon 
Secretary  of  the  Treasury, 

No.  191,  Revision  No.  3,  June  15,  1962. — Designation  op  Deputies 

1.  In  addition  to  their  other  assignments,  the  following  are  designated  to  serve, 
at  the  pleasure  of  the  Secretary,  as  the  respective  deputies  of  the  principals 
indicated: 

Principal  Deputy 

Under  Secretary  for  Monetary  Affairs Deputy  Under  Secretary  for  Mone- 
tary Affairs. 

General  Counsel Deputy  General  Counsel. 

Assistant  Secretary  (International  Deputy  Assistant  Secretary  (Inter- 
Finance),  national  Finance). 

Assistant  Secretary  (Tax  Policy) Deputy   Assistant   Secretary    (Tax 

Policy) . 

Assistant  Secretary Deputy  Assistant  Secretary. 

Fiscal  Assistant  Secretary Deputy  Fiscal  Assistant  Secretary. 

Administrative  Assistant  Secretary Deputy    Administrative    Assistant 

Secretary. 

2.  Each  deputy  shall  have  authority  to  perform,  during  the  absence  of  his 
principal,  any  function  his  principal  is  authorized  to  perform. 

3.  Treasury  Department  Order  No.  191  (Revision  2)  is  rescinded. 

Douglas  Dillon 
Secretary  of  the  Treasury. 


492        1962    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 

No.   192,     September     15,     1961. — Assignment     of     Emergency     Planning 
Responsibilities  to  the  Administrative  Assistant  Secretary 

The  Administrative  Assistant  Secretary  is  designated  to  direct  and  coordinate 
the  preparation  of  national  emergency  plans  and  preparedness  programs  for  the 
essential  emergency  functions  of  the  Department  of  the  Treasury  consistent  with 
the  National  Plan  for  Civil  Defense  and  Defense  Mobilization.  These  plans  and 
programs  will  be  designed  to  develop  a  state  of  readiness  by  the  Department  with 
respect  to  all  conditions  of  national  emergency  including  an  attack  upon  the 
United  States. 

He  is  authorized  and  directed  to  make  provision  for  the  necessary  personnel  and 
facilities  to  carry  out  this  responsibility  and  provide  an  Executive  Secretary  for 
the  Secretary's  Steering  Committee  for  Emergency  Planning. 

This  function  may  be  reassigned  by  the  Administrative  Assistant  Secretary  to 
subordinates  in  such  manner  as  he  shall  direct. 

Henry  H.  Fowler, 
Acting  Secretary  of  the  Treasury. 

No.  192-1,  September  15,  1961. — Establishment  of  Steering  Committee  for 

Emergency  Planning 

There  is  established  the  Secretary's  Steering  Committee  for  Emergency  Plan- 
ning, with  one  member  to  be  designated  from  each  of  the  following  offices: 
Office  of  Administrative  Assistant  Secretary  (Chairman) 
Office  of  the  General  Counsel 
Office  of  Tax  Analysis 
Office  of  the  Comptroller  of  the  Currency 
Office  of  International  Finance 
Office  of  Debt  Analysis 
Office  of  Fiscal  Assistant  Secretary 
The  Committee  will  serve  in  an  advisory  capacity  to  the  Secretary  and  his 
principal  assistants  and  meet,  on  call  of  the  Chairman,  to  review  proposed  emer- 
gency preparedness  policies,  plans,  and  programs  requiring  their  attention. 

The  Administrative  Assistant  Secretary  shall  provide  an  Executive  Secretary 
for  the  Committee. 

Henry  H.  Fowler, 
Acting  Secretary  of  the  Treasury. 

No.   193,   October  9,   1961. — Establishment  of  Office  of  Domestic  Gold 

AND  Silver  Operations 

There  is  established  in  the  Office  of  the  Under  Secretary  for  Monetary  AflFairs 
an  Office  of  Domestic  Gold  and  Silver  Operations.  The  head  of  this  office  shall 
be  known  as  the  Director,  Office  of  Domestic  Gold  and  Silver  Operations. 

The  Under  Secretary  for  Monetary  Affairs  may  from  time  to  time  delegate  any 
of  the  responsibilities  imposed  upon  him  by  Parts  54,  80,  and  92  of  Title  31  of 
the  Code  of  Federal  Regulations. 

Such  personnel,  records,  equipment,  and  funds  as  are  determined  by  the  Under 
Secretary  for  Monetary  Affairs  to  be  related  to  the  performance  of  the  functions 
transferred  to  him  by  the  amendments  to  Parts  5-1,  80,  and  92  of  Title  31  of  the 
Code  of  Federal  Regulations  issued  as  of  October  10,  1901,  are  hereby  ordered 
transferred  from  the  Bureau  of  the  Mint  to  the  Office  of  the  Secretary. 

Douglas  Dillon, 
Secretary  of  the  Treasury. 


No.  193-1,  October  20,  1961. — Authorizing  the  Director,  Office  op 
Domestic  Gold  and  Silver  Operations,  to  Sign  and  Issue  Certain 
Documents 

The  Director,  Office  of  Domestic  Gold  and  Silver  Operations,  is  authorized  to 
sign  and  issue  under  his  official  title,  any  documents,  licenses,  and  other  papers 
which  are  appropriate  to  the  performance  of  the  responsibilities  and  functions 


EXHIBITS  493 

imposed  upon  the  Under  Secretary  for  Monetary  AflFairs  by  Parts  54,  80,  and  92 
of  Title  31  of  the  Code  of  Federal  Regulations. 

Robert  V.  Roosa, 
Under  Secretary  of  the  Treasury  for  Monetary  Affairs. 


Memorandum,  March  23,  1962. — Foreign  Exchange  Operations 

Effective  this  date  there  has  been  established  a  Foreign  Exchange  Operations 
Staff  under  the  supervision  of  Mr.  J.  Dewey  Daane. 

Messrs.  Page  Nelson  of  the  Office  of  International  Finance  and  Frank  Dietrich 
of  the  Fiscal  Service  have  been  assigned  to  this  Staff  and  Mr.  Alan  Holmes  has 
been  designated  as  Adviser  on  foreign  gold  and  exchange  operations. 

The  Staff  will  be  engaged  in  the  conduct  of  daily  operations  in  foreign  exchange 
and  of  transactions  with  foreign  countries  involving  the  purchase  or  sale  of  gold. 

There  has  also  been  established  a  committee  to  study  and  review  Treasury's 
gold  and  foreign  exchange  operations.  This  committee  will  be  chaired  by  Mr. 
Daane. 

Robert  V.  Roosa, 
Under  Secretary  of  the  Treasury  for  Monetary  Affairs. 


Advisory  Committees 

Exhibit  52. — Advisory  committees  utilized  by  the  Treasury  Department  under 

Executive  Order  11007 

Prior  to  the  end  of  fiscal  year  1962,  the  Secretary  of  the  Treasury  found  the 
formation  or  use  by  the  Department  of  the  following  advisory  committees  to 
be  in  the  public  interest  in  accordance  with  the  requirements  of  Executive  Order 
11007,  dated  February  26,  1962.  The  information  concerning  these  committees 
is  being  published  in  the  annual  report  in  compliance  with  section  10  of  the 
order. 

Office  of  the  Secretary 

DEBT  MANAGEMENT  COMMITTEES 

The  Treasury  Department,  in  connection  with  debt  management  duties,  uses 
in  an  advisory  capacity  the  services  of  a  number  of  committees  representing  or- 
ganizations which  form  a  cross  section  of  the  American  financial  community. 
The  committees  meet  periodically,  at  the  invitation  of  the  Treasury,  to  discuss 
and  advise  upon  current  and  future  Federal  financings.  The  Treasury  finds  dis- 
cussions with  these  advisory  groups  to  be  of  great  value,  primarily  in  assessing 
the  general  market  sentiment  prior  to  a  major  refinancing  of  maturing  obligations. 
Their  recommendations  are  carefully  considered  by  Treasury  officials  and  serve 
as  a  part  of  the  background  environment  for  the  final  financing  decisions.  These 
committees  are  as  follows: 

American  Bankers  Association,  Committee  on  Government  Borrowing 

Investment  Bankers  Association  of  America,  Governmental  Securities 
Committee 

National  Association  of  Mutual  Savings  Banks,  Committee  on  Govern- 
ment Securities  and  the  Public  Debt 

Life  Insurance  Association  of  America  and  American  Life  Convention, 
Joint  Committee  on  Economic  Pohcy 

U.S.  Savings  and  Loan  League,  National  League  of  Insured  Savings 
Associations,  Treasury  Advisory  Committee 

Independent  Bankers  Association,  Government  Fiscal  Policy  Committee 

Subsequent  to  the  issuance  of  Executive  Order  11007  on  February  26,  1962, 
the  Treasury  held  meetings  with  two  of  its  debt  management  advisory  committees 
during  the  fiscal  year  1962.  At  the  request  of  the  Treasury,  the  Committee  on 
Government  Borrowing  of  the  American  Bankers  Association  and  the  Govern- 
mental Securities  Committee  of  the  Investment  Bankers  Association  met  with 
Treasury  officials  on  April  24  and  25,  1962,  to  present  their  recommendations 
on  the  refinancing  of  securities  coming  due  on  May  15,  1962. 


494   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Members  of  the  Committee  on 
Association  present  at  the  April 

David  M.  Kennedy  (Chairman) 

Kenton  R.  Cravens 
Robert  V.  Fleming 
Charles  J.  Gable,  Jr. 

John  M.  Griffith 

Frank  L.  King 

John  A.  Mayer 

Reno  Odlin 

James  S.  Rockefeller 

Earl  B.  Schwulst 

Joseph  C.  Welman 
Paul  I.  Wren 

Char  Is  E.  Walker 

Leslie  C.  Peacock 

WilHam  T.  Heffelfinger 
Charles  R.  McNeill 

Member?  of  the  Governmental 
Association  present  at  the  April 

George  B.  Knease  (Chairman) 

Robert  B.  Blyth 

Milton  S.  Bosley 

F.  Newell  Childs 

James  F.  Cranford 

Stewart  A.  Dvmn 

Lester  H.  Empey 

W.  Wayne  Glover 
H.  Lyman  Greer 
Hardin  Hawes 
Russell  A.  Kent 
Frederick  G.  Larkin,  Jr. 


Government  Borrowing  of  the  American  Bankers 
1962  meetings  with  Treasury  officials  were: 

Chairman,   Continental  Illinois  National  Bank 

and  Trust  Company  of  Chicago,  Chicago  90, 

111. 
President,  Mercantile  Trust  Companv,  St.  Louis 

66,  Mo. 
Chairman,  The  Riggs  National  Bank  of  Wash- 
ington, D.C.,  Washington  13,  D.C. 
Senior  Vice  President,  The  First  Pennsylvania 

Banking  and  Trust  Company,  Philadelphia  1, 

Pa. 
President,  The  City  National  Bank  of  Taylor, 

Taylor,  Tex. 
Chairman,  United  Cahfornia  Bank,  Los  Angeles 

54,  Calif. 
President,    Mellon    National    Bank   and    Trust 

Company,  Pittsburgh  30,  Pa. 
President,    The    Puget   Sound    National   Bank, 

Tacoma  1,  Wash. 
Chau-man,    First    National    City    Bank,    New 

York  22,  N.Y. 
President,    The    Bowery    Savings    Bank,    New 

York  17,  N.Y. 
President,  Bank  of  Kennett,  Kennett,  Mo. 
Executive    Vice    President,    Old    Colony    Trust 

Company,  Boston  6,  Mass. 
Executive  Vice  President  and  Executive  Man- 
ager,   The    American    Bankers    Association, 

New  York  16,  N.Y. 
Secretary,    Committee    for    Economic    Growth 

Without    Inflation,    The    American    Bankers 

Association,  New  York  16,  N.Y. 
Federal  Administrative  Adviser,  The  American 

Bankers  Association,   Washington  5,   D.C. 
Director  of  the  Washington  Office,  The  American 

Bankers  Association,   Washington,   D.C. 

Securities  Committee  of  the  Investment  Bankers 
1962  meetings  with  Treasury  officials  were: 

Senior    Vice    President,    The    Philadelphia    Na- 
tional Bank,  Philadelphia,  Pa. 
First  Vice  President,  The  National  City  Bank  of 

Cleveland,  Cleveland,  Ohio. 
Senior     Vice     President,      National     Bank     of 

Detroit,  Detroit,  Mich. 
President,    C.    F.    Childs   and    Company,    Inc., 

Board  of  Trade  Building,  Chicago  4,  111. 
Vice  President,  The  Atlantic  National  Bank  of 

Jacksonville,  Jacksonville,  Fla. 
C.   J.    Devine   and   Compan}^   48  Wall  Street, 

New  York  5,  N.Y. 
Senior     Vice     President,     Wells     Fargo     Bank 

American  Trust  Company,  San  Francisco  20, 

Calif. 
Senior    Vice    President,    California    Bank,    Los 

Angeles  14,  Calif. 
Vice  President,  The  Fifth  Third  Union  Trust 

Company,  Cincinnati,  Ohio. 
Vice  President,  Harris  Trust  and  Savings  Bank, 

Chicago,  111. 
Vice  President,  Bank  of  America  National  Trust 

and  Savings  Association,  San  Francisco,  Calif. 
Senior    Vice    President,    Security    1st    National 

Bank,  Los  Angeles,  Calif, 


I 


ADVISORY    COMMITTEES 


495 


Vice  President  and  Treasurer,  Morgan  Guaranty 

Trust  Company  of  New  York,  New  York  15, 

N.Y. 
Vice  President,  The  Northern  Trust  Company, 

Chicago  90,  111. 
Vice  President,  Bankers  Trust  Company,  New 

York   15,   N.Y. 
Chairman,    Executive    Committee,    The    First 

Boston  Corporation,   New  York,  N.Y. 
Vice    President,    Continental   Illinois    National 

Bank  and  Trust  Company,  Chicago  90,  111. 
Senior    Vice    President,    First    National    City 

Bank,  New  York,   N.Y. 
President,  Discount  Corporation  of  New  York, 

58  Pine  Street,  New  York  5,  N.Y. 
Vice  President,  Chase  Manhattan  Bank,  New 

York,  N.Y. 
Vice    President,    Republic    National    Bank    of 

Dallas,    Dallas   22,    Tex. 
Salomon  Brothers  and  Hutzler,  60  Wall  Street, 

New  York  5,  N.Y. 
Vice    President,    Mellon    National    Bank    and 

Trust   Company,    Pittsburgh   30,    Pa. 

THE  SECRETARY  OF  THE  TREASURY'S  COMMITTEE  ON  TANKER  HAZARDS 

This  Committee  was  established  by  letters  of  the  Secretary  of  the  Treasury 
dated  April  10,  1962,  addressed  to  the  Commandant  of  the  U.S.  Coast  Guard 
and  to  certain  persons  requested  to  serve  as  members  of  the  Committee. 

The  chairman  is  Professor  H.  L.  Seward,  who  serves  as  a  Treasury  consultant 
on  the  days  when  he  acts  as  chairman,  and  the  other  members  include  repre- 
sentatives of  the  Coast  Guard,  and  of  the  Navy,  Interior,  and  Commerce  depart- 
ments, the  American  Bureau  of  Shipping,  and  the  National  Fire  Protection  Asso- 
ciation. The  Coast  Guard  representative  acts  as  secretary  and  prepares  the 
agenda  and  calls  the  meetings. 

The  function  of  the  Committee  is  to  collect,  study,  and  make  recommendations 
with  respect  to  the  operation  and  navigation  of  tank  vessels  with  one  or  more  of 
their  cargo  tanks  in  empty  condition.  The  study  is  to  encompass  every  aspect 
of  gas  freeing  or  inerting  of  empty  cargo  tanks,  to  evaluate  proposals  for  assuring 
safety  on  such  vessels,  and  to  recommend  a  national  policy  with  respect  to  these 
objectives. 

Three  meetings  were  held  by  the  Committee  in  fiscal  1962,  on  May  15,  June  11, 
and  June  26. 

Membership  of  the  Committee  was  as  follows: 


Ralph  L.  Leach 

Pat  G.  Morris 
Robert  C.  Morris 
Emil  J.  Pattberg,  Jr. 
John  H.  Perkins 
Delmont  K.  Pfeffer 
Herbert  N.  Repp 
Robert  B.  Rivel 
Lockett  Shelton 
Girard  L.  Spencer 
William  J.  Wallace 


Prof.  H.  L.  Seward  (Chairman) 

Capt.  Benjamin  D.  Shoemaker, 
Jr.,  U.S.C.G.  (Secretary) 

Arthur  R.  Gatewood 

Dr.  Glen  H.  Damon 

L.  C.  Hoffman 

E.  Carroll  Creitz 

Charles  Morgan 
Dr.  Homer  Carhart 


Professor  Emeritus,  Department  of  Maritime 
Economics,  Yale  University,  Old  Saybrook, 
Conn. 

Executive  Secretary,  Merchant  Marine  Council, 
U.S.  Coast  Guard  Headquarters,  Wash- 
ington, D.C. 

Vice  President,  American  Bureau  of  Shipping, 
New   York,   N.Y. 

Staff  Research  Coordinator,  Bureau  of  Mines, 
Department  of  Interior,   Washington,   D.C. 

Chief,  Office  of  Ship  Construction,  Maritime 
Administration,  Department  of  Commerce, 
Washington,  D.C. 

Fire  Research  Section,  National  Bureau  of 
Standards,  Department  of  Commerce,  Wash- 
ington, D.C. 

Assistant  General  Manager,  National  Fire 
Protection  Association,  Boston  10,  Mass. 

Naval  Research  Laboratory,  Department  of  the 
Navy,  Washington,  D.C. 


496   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Richard  Parkhurst 


Capt.     William 
U.S.C.G. 


S.     Vaughn, 


Retired    Transportation    Officer,    Oak    Knoll, 

Winchester,  Mass. 
Chief,     Testing     and     Development     Division, 

Office    of    Engineering,    U.S.    Coast    Guard 

Headquarters,  Washington,  D.C. 


Comptroller  of  the  Currency 

THE  ADVISORY  COMMITTEE  ON  BANKING  TO  THE  COMPTROLLER  OF  THE 

CURRENCY 

The  Comptroller  of  the  Currency  established  an  Advisory  Committee  to  con- 
duct "a  comprehensive  study  of  the  functioning  of  our  National  Banking  System." 
The  inquiry  was  to  "be  centered  on  those  laws,  policies,  practices  and  procedures 
which  no  longer  serve,  and  indeed  may  obstruct,  attainment  of  the  requirements 
of  today  and  of  the  future"  to  insure  that  our  commercial  banking  system  responds 
promptly  and  sensitively  to  the  growing  and  changing  needs  of  our  industry  and 
commerce,  and  of  our  Government. 

The  Committee  consisted  of  24  members,  including  2  State  bank  officers,  3 
attorneys  with  specialized  experience  in  banking  law,  and  a  selection  of  National 
Bank  officers  from  all  regions  of  the  United  States,  representing  large,  medium, 
and  small  banks.  The  Comptroller  of  the  Currency,  the  Chief  Counsel  of  his 
office,  and  the  Economist  to  the  Comptroller,  served  as  ex  officio  members  of  the 
Committee.  The  Chief  of  Staff  of  the  Senate  Banking  and  Currency  Committee 
and  the  Clerk  and  Chief  Counsel  of  the  House  Banking  and  Currency  Committee 
were  invited  to  participate  as  observers  at  sessions  of  the  Advisory  Committee. 
The  Committee  served  as  an  independent  advisory  body  to  the  Comptroller  of 
the  Currency,  and  each  nongovernmental  member  acted  in  his  personal  capacity 
without  regard  to  his  affiliation  with  any  association  or  organization. 

The  Advisory  Committee  on  Banking  met  on  April  18,  1962. 

Membership  of  the  Committee  in  the  fiscal  year  1962  was  as  follows: 

Frank    E.    McKinney,    Chair- 
man. 
Reed  H.  Albig 


S.  Clarke  Beise 
W.  C.  Blewster 
H.  W.  Bourgeois 
Frank  M.  Browning 
Goodwin  Chase 
John  D.  Chisholm 
Frank  R.  Denton 
Manuel  Gale 
Donald  M.  Graham 

Sherman  Hazeltine 
Joseph  F.  Hogan 
H.  J.  Humpert 
Jay.  G.  Larson 
Robert  E.  McKean 
Tom  Miller,  Jr. 


Chairman  of  the  Board,  American  Fletcher  Na- 
tional Bank  and  Trust  Co.,  Indianapolis,  Ind. 

President,  The  National  Bank  of  McKeesport, 
McKeesport,  Pa. 

President,  Bank  of  America,  National  Trust  and 
Savings  Association,  San  Francisco,  Calif. 

President,  First  National  Bank  of  Magnolia, 
Magnolia,  Ark. 

President,  Union  National  Bank  of  Lowell, 
Lowell,  Mass. 

President,  Bank  of  Utah,  and  Chairman,  Bank 
of    Ben    Lomond,    Ogden,    Utah. 

Chairman  and  President,  National  Bank  of 
Washington,  Tacoma,  Wash. 

President,  Olmsted  County  Bank  and  Trust  Co., 
Rochester,  Minn. 

Vice  Chairman,  Mellon  National  Bank  &  Trust 
Company,  Pittsburgh,  Pa. 

President,  The  Peoples  National  Bank  of  Key- 
port,  Keyport,  N.J. 

Vice  Chairman,  Board  of  Directors,  Continental 
Illinois  National  Bank  and  Trust  Co.,  Chi- 
cago, 111. 

Chairman,  First  National  Bank  of  Arizona, 
Phoenix,  Ariz. 

First  Vice  President,  Crocker-Anglo  National 
Bank,  San  Francisco,  Calif. 

President,  First  National  Bank  &  Trust  Co.  of 
Covington,  Covington,  Ky. 

Executive  Vice  President  (Re'tired),  Seattle 
First   National   Bank,    Seattle,    Wash. 

Dickinson,  Wright  McKean,  &  Cudlip,  Detroit, 
Mich. 

Vice  President,  American  National  Bank  of 
Austin,  Austin,  Tex, 


» 


ADVISORY    COMMITTEES 


497 


George  S.  Moore 
Robert  Neill 
E.  H.  Ould 
Edward  J.  Ruetz 
John  A.  Seliskar 
Frank  Smathers,  Jr 
Carroll  R.  Wetzel 


President,    First    National    City    Bank,    New 

York,  N.Y. 
Thompson,    Mitchell,    Douglas,    &    Neill,    St. 

Louis,  Mo. 
President,  The  First  National  Exchange  Bank 

of  Roanoke,  Roanoke,  Va. 
Chairman    and    President,    Kenosha    National 

Bank,  Kenosha,  Wis. 
Vice    President,     Central     National    Bank    of 

Cleveland,  Cleveland,  Ohio 
President,   Miami  Beach  First  National  Bank, 

Miami  Beach,  Fla. 
Barnes,     Dechert,     ~ 


Price,     Myers,    &    Rhoads, 
Philadelphia,  Pa. 

Maurice  R.  Kirkwood,  Secretary  Assistant    Vice    President,    American    Fletcher 

National  Bank  and  Trust  Co.,  Indianapolis, 
Ind. 

Staff  assistants  to  the  committee  during  the  fiscal  year  were: 
John  J.  Downes  Assistant    to    the    Chairman    of    the     Board, 

Crocker-Anglo  National  Bank,  San  Francisco, 

Calif. 
Jac  Friedgut  First  National  City  Bank,  New  York,  N.Y. 

Robert  P.  Mayo  Vice    President,    Continental    Illinois    National 

Bank  &  Trust  Co.,   Chicago,  111. 

Commissioner  of  Internal  Revenue 

ADVISORY  GROUP  TO  THE  COMMISSIONER  OF  INTERNAL  REVENUE 

This  Group  was  established  by  the  Commissioner  of  Internal  Revenue  on 
June  17,  1959. 

This  Committee  which  represents  professional  and  other  private  groups  concern- 
ed with  Federal  taxation  provides  constructive  criticism  of  Internal  Revenue  polici- 
es and  procedures  and  suggests  ways  in  which  the  Service  can  improve  its  operations. 

Meetings  of  the  Group  were  held  in  the  fiscal  year  1962  on  September  14-16, 
December  14-16,   March  15-17,  and  June  14-16. 

Membership  during  the  fiscal  year  was  as  follows: 
Hugh  F.  Culverhouse 
H.  Brian  Holland 


Philip  G.  Johnson 
Donald  H.  Larmee 
Dana  Latham 

Merle  H.  Miller 
Leslie  Mills 
Seymour  S.  Mintz 
Joseph  Pechman 
Robert  C.  Plumb 

John  Wilks  Riehm,  Jr. 
L.  Hart  Wright 


Attorney  at  Law,  Jacksonville,  Fla. 

Attorney  at  Law,  Ropes  and  Gray,  Boston, 
Mass. 

Certified  Public  Accountant,  Philip  G.  Johnson 
and  Company,  Lincoln,  Nebr. 

Assistant  Vice  President,  Taxes,  Pullman,  Inc., 
Chicago,  111. 

Attorney  at  Law,  Latham  and  Watkins,  and 
former  Commissioner  of  Internal  Revenue, 
Los  Angeles,  Calif. 

Attorney  at  Law,  Ross,  McCord,  Ice,  and 
Miller,  Indianapolis,  Ind. 

Certified  Public  Accountant,  Price  Waterhouse 
and  Company,  New  York,  N.Y. 

Attorney  at  Law,  Hogan  and  Hartson,  Wash- 
ington, D.C. 

Economist,  The  Brookings  Institution,  Wash- 
ington, D.C. 

Certified  Public  Accountant,  Manager,  Tax  De- 
partment, American  Cyanamid  Company, 
New  York,  N.Y. 

Dean,  School  of  Law,  Southern  Methodist 
University,  Dallas,  Tex. 

Professor  of  Tax  Law,  University  of  Michigan, 
Ann  Arbor,  Mich. 


661496 — 63- 


-33 


498        1962    REPORT    OF   THE    SECRETARY    OF   THE    TREASURY 


TREASURY-INTERNAL  REVENUE  SERVICE  COMMITTEE  ON  STATISTICS 

The  Commissioner  of  Internal  Revenue  established  this  Committee  on  March 
30,  1962. 

The  Committee  is  expected  to  make  suggestions  concerning  appropriate 
statistical  and  economic  information  to  be  obtained  from  income  tax  returns. 

The  Committee  consists  of  economists  and  statisticians,  representing  private 
associations  and  universities;  and  Government  representatives,  who  are  the 
Assistant  Commissioner  for  Planning  and  Research,  Internal  Revenue  Service, 
who  acts  as  chairman,  the  Director  of  the  Statistics  Division,  Internal  Revenue 
Service,  who  acts  as  executive  secretary,  two  members  of  the  Office  of  Tax  Analysis 
of  the  Office  of  the  Secretary  of  the  Treasury,  and  representatives  of  the  Com- 
merce Department  and  the  Bureau  of  the  Budget;  and  two  representatives  from 
congressional  committees,  the  Joint  Economic  Committee  and  the  Joint  Commit- 
tee on  Internal  Revenue  Taxation. 

Meetings  of  this  Committee  were  held  on  March  30-31  and  on  May  25-26. 
1962. 

Membership  in  the  fiscal  year  1962  was  as  follows: 


Harvey  E.  Brazer  (alternate — 
Douglas  H.  Eldridge) 

Warren  N.  Cordell  (alternate — 

Roye  L.  Lowry) 
Raymond  W.  Goldsmith 
Daniel  M.  Holland 


Hendrik  S.  Houthakker 
George  Jaszi 

James  W.  Knowles 
Raymond  Nassimbene 

Guy  H.  Orcutt 
Almarin  Phillips 

Chester   B.  Pond   (alternate — 
Leonard  F.  Requa,  Jr.) 

James  H.  Symons 

Norman  B.  Ture 


Deputy  Assistant  Secretary  and  Director 
Office  of  Tax  Analysis,  Treasury  Department 
Washington,  D.C. 

Federal  Statistics  Users'  Conference,  Washington, 
D.C. 

Yale  University,  New  Haven,  Conn. 

School  of  Industrial  Management,  Massa- 
chusetts Institute  of  Technology,  Cam- 
bridge, Mass. 

Harvard  University,  Cambridge,  Mass. 

Assistant  Director,  Office  of  Business  Econom- 
ics, Department  of  Commerce,  Washington, 
D.C. 

Joint  Economic  Committee,  Washington,  D.C. 

Office  of  Statistical  Standards,  Bureau  of  the 
Budget,  Washington,  D.C. 

University  of  Wisconsin,   Madison,  Wis. 

Graduate  School  of  Business  Administration, 
University  of  Virginia,  Charlottesville,  Va. 

Director,  Research  and  Statistics  Bureau,  N.Y. 
State  Department  of  Taxation  and  Finance, 
Albany,  N.Y. 

Joint  Committee  on  Internal  Revenue  Taxation, 
Washington,  D.C. 

Director  of  Tax  Studies,  National  Bureau  of 
Economic  Research,  New  York,  N.Y. 


TABLES 

Note. — In  tables  where  figures  have  been  rounded  to  a  specified  unit  and  where 
calculations  have  been  made  from  unrounded  figures,  the  details  may  not  check 
to  the  totals  shown. 


1 


Bases  of  Tables 

The  figures  in  this  report  are  shown  on  the  basis  of:  (a)  The  Daily  Statement 
of  the  United  States  Treasury,  (b)  the  Monthly  Statement  of  Receipts  and  Expendi- 
tures of  the  United  States  Government,  (c)  warrants  issued,  (d)  pubhc  debt  accounts, 
and  (e)  administrative  accounts  and  reports.  Where  no  basis  is  indicated,  the 
figures  are  derived  from  administrative  reports  prepared  according  to  various 
specifications.  Where  more  than  one  basis  is  used  in  a  single  table  that  covers 
a  period  of  years,  the  dates  of  the  changes  in  bases  are  stated. 

Data  on  the  first  two  bases  are  derived  from  the  publications  indicated  by  their 
titles.  The  monthly  statement  was  first  published  in  February  1954,  and  reports 
budget  results  which  previously  had  been  shown  in  the  daily  statement.  At 
the  same  time,  the  latter  became  a  statement  of  cash  deposits  and  withdrawals 
affecting  the  account  of  the  Treasurer  of  the  United  States.  (See  exhibits  69,  70, 
and  71  in  the  1954  Annual  Report.)  The  sources  of  data  used  in  these  two  publi- 
cations and  the  bases  of  tables  in  this  report  are  hereinafter  described. 

Daily  Statement  of  the  United  States  Treasury 

Until  February  1954  the  daily  Treasury  statement  (publication  of  which 
started  on  January  2,  1895)  covered  transactions  cleared  through  the  Treasurer's 
account,  certain  transactions  by  Government  agencies  which  were  handled 
through  commercial  bank  accounts,  and  noncash  and  interfund  transactions. 
It  carried  information  on  the  status  of  the  Treasurer's  account  and  public  debt 
issues,  retirements,  and  amounts  outstanding.  Before  October  1,  1915,  receipts 
and  expenditures  were  reported  in  the  statement  on  the  basis  of  warrants  issued 
and,  beginning  with  that  date,  the  reporting  was  changed  to  a  clearance  basis, 
that  is,  on  the  basis  of  information  shown  on  bank  transcripts  received  and 
cleared  by  the  Treasurer's  Office.  Receipts  and  expenditures  were  classified 
beginning  with  July  1,  1930,  to  show  the  budget  results  for  a  given  period. 
Effective  July  1,  1946,  and  through  February  16,  1954,  expenditures  were  on 
the  basis  of  checks  issued  through  the  facilities  of  the  Treasury  Department's 
Division  of  Disbursement  while  certain  others,  principally  those  of  the  Depart- 
ment of  Defense  and  its  predecessor  organizations,  were  on  the  basis  of  checks 
paid  or  clearance  basis. 

Since  February  1954  the  Daily  Statement  of  the  United  States  Treasury  has 
covered  only  transactions  which  clear  through  the  Treasurer's  account.  For 
each  business  day  it  reflects  cash  deposits  and  withdrawals  in  that  account  and 
the  status  of  the  account. 

No  distinction  is  made  as  to  type  of  account  (budget,  trust,  etc.)  in  reporting 
deposits  and  withdrawals,  which  are  divided  into  a  limited  number  of  classifica- 
tions. The  deposits  are  on  the  basis  of  certificates  of  deposit  cleared  through  the 
accounts  of  the  Treasurer  of  the  United  States.  Total  withdrawals  are  on  the 
basis  of  checks  paid  or  cash  disbursements  made  out  of  the  Treasurer's  account. 
Some  of  the  withdrawal  classifications  shown  are  reported  on  the  basis  of  mailed 
reports  of  checks  issued,  adjusted  by  means  of  clearing  accounts  to  the  total 
checks  paid.  Except  for  relatively  minor  amounts,  interfund  and  intragovern- 
mental  transactions  are  excluded.  In  order  to  facilitate  current  reporting  and 
classification,  Federal  Reserve  Banks  at  the  close  of  each  day  report  by  telegraph 
the  balances  they  carry  in  the  Treasurer's  account  and  certain  other  information. 
The  public  debt  figures  in  the  daily  Treasury  statement  are  also  on  the  clearance 
basis,  as  developed  for  classification  purposes  by  the  Bureau  of  the  Pubhc  Debt. 
During  periods  when  new  marketable  public  debt  issues  are  being  sold  or  when 
issues  mature,  reports  of  transactions  are  based  upon  telegrams  received  from 
the  Federal  Reserve  Banks.  (See  the  1953  Annual  Report  of  the  Secretary  of 
the  Treasury,  pages  108  and  321,  for  more  detailed  information  on  the  daily 
Treasury  statement.) 

Monthly  Statement  of  Receipts  and  Expenditures  of  the  United  States  Govern- 
ment 

In  February  1954  this  monthly  statement  replaced  the  daily  statement  as  the 
primary  source  of  budget  results  (budget  surplus  or  deficit)  and  other  receipt 
and  expenditure  data  classified  by  type  of  account.  (See  "Description  of  Accounts 
Relating  to  Cash  Operations"  on  p.  504).  This  statement  shows  all  receipts  and 
expenditures  of  the  Government,  including  those  made  from  cash  accounts  held 

501 


502   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

outside  the  United  States  Treasury.  The  information  in  the  monthly  statement 
is  compiled  from  reports  of  the  Treasurer  of  the  United  States  and  of  other  col- 
lecting, disbursing,  and  administrative  agencies,  including  those  agencies  which 
maintain  checking  accounts  in  commercial  banks.  These  reports  cover  trans- 
actions recorded  in  the  accounts  of  collecting,  disbursing,  and  administrative 
agencies  during  the  reporting  period.  The  net  of  transactions  as  compiled  from 
these  reports  is  reconciled  in  the  monthly  statement  to  changes  in  the  cash 
balances  in  the  Treasurer's  account,  cash  held  outside  the  Treasurer's  account, 
and  changes  in  the  public  debt  outstanding. 

The  budget  receipts  and  expenditures  as  reported  in  this  statement  are  on  the 
following  bases. 

Receipts. — Receipts  of  taxes  and  customs  duties  are  reported  on  a  collection 
basis,  which  means  that  they  are  reported  as  of  the  time  that  the  cash  received  is 
placed  under  accounting  control.  The  various  other  receipts  are  reported  par- 
tially on  a  collection  basis  and  partially  on  a  deposits  confirmed  basis,  that  is, 
when  the  deposits  are  acknowledged  by  the  depositary  banks. 

Expenditures. — Expenditures,  except  those  for  interest  on  the  public  debt, 
are  reported  on  the  basis  of  checks  issued  by  disbursing  officers.  Certain  modifi- 
cations of  this  basis  are  described  in  the  following  paragraphs: 

(a)  Where  payment  is  made  in  cash  rather  than  by  check,  the  cash  payment 
also  is  considered  as  an  expenditure;  (b)  transactions  of  an  interfund  or  intra- 
governmental  nature  are  included  even  though  actual  issuance  of  checks  or  actual 
receipt  of  cash  may  not  be  involved.  Examples  of  these  transactions  are:  (1) 
Charges  made  against  budget  appropriations  representing  a  part  of  employees' 
salaries  which  are  withheld  for  individual  income  taxes  and  for  savings  bond 
allotments;  (2)  public  debt  securities  which  are  acquired  in  lieu  of  other  prop- 
erties, or  donated,  are  considered  as  a  constructive  receipt  of  cash  and  there- 
fore the  par  amounts  of  such  securities  are  included  as  budget  receipts  of  the 
acquiring  agency;  (3)  where  a  debt  instrument  is  issued  by  a  wholly  owned 
Government  enterprise  to  either  the  public  or  another  wholly  owned  enterprise, 
in  lieu  of  a  check  in  payment  of  a  liability,  the  issuance  of  the  debt  instrument 
is  considered  to  be  a  budget  expenditure,  and  a  corresponding  budget  receipt 
of  the  receiving  agency.  On  the  other  hand,  payments  to  the  Treasury,  prin- 
cipally by  wholly  owned  Government  corporations,  for  retirement  of  capital 
stock  and  for  disposition  of  earnings  are  excluded  in  reporting  both  budget 
receipts  and  expenditures  as  these  transactions  do  not  affect  the  budget  surplus 
or  deficit.  For  the  same  reason,  financing  transactions  such  as  borrowings 
from  or  repayments  to  the  United  States  Treasury  are  excluded. 

Certain  other  transactions  are  excluded  from  budget  expenditures  even  though 
the  issuance  of  checks  is  involved.  Examples  of  these  transactions  are:  (a) 
Checks  issued  for  cash  advances  to  imprest  funds,  agent  cashiers,  and  others. 
These  are  charged  as  expenditures  when  payments  are  made  from  such  advances 
(travel  advances,  however,  are  treated  as  expenditures  when  advanced) ;  (b) 
checks  issued  representing  transfers  between  disbursing  officers  or  between 
checking  accounts;  (c)  transactions  representing  investments  in  or  sales  of  public 
debt  securities  by  Government  agencies;  and  (d)  sales  or  redemptions  of  obliga- 
tions of  Government  agencies  in  the  market. 

From  February  1954  through  May  1955  the  public  debt  interest  expenditure 
figures  represented  the  amount  of  interest  which  became  due  and  payable;  since 
June  1955,  interest  on  the  public  debt  has  been  reported  on  an  accrual  basis. 

Beginning  with  the  final  statement  for  June  30,  1960,  totals  shown  for  net 
budget  receipts  and  budget  expenditures  exclude  certain  interfund  transactions 
which  are  included  in  the  detail  of  both  budget  receipts  and  budget  expenditures. 
The  transactions  deducted  consist  of  interest  payments  and  minor  amounts  of 
certain  other  payments  made  by  Government  agencies  to  the  Treasury.  They 
do  not  affect  the  budget  surplus  or  deficit.  The  interfund  transactions  deducted 
under  this  procedure  do  not  include  the  payments  to  the  Treasury  by  wholly 
owned  Government  corporations  for  retirement  of  their  capital  stock  and  for 
disposition  of  earnings.  These  capital  transfers  have  been  excluded  from  budget 
receipts  and  expenditures  since  July  1,  1948. 

Warrants  issued 

Until  1950  the  use  of  warrants  was  an  integral  part  of  the  accounting  for  re- 
ceipts and  expenditures  and  the  basis  for  many  earlier  financial  statements. 


TABLES  503 

The  Budget  and  Accounting  Procedures  Act  of  1950  permitted  the  Secretary  of 
the  Treasury  and  the  Comptroller  General  of  the  United  States  jointly  to  waive 
the  legal  requirements  with  respect  to  the  use  of  warrants.  Under  the  authority 
of  this  act,  the  following  joint  regulations  were  issued:  No.  1,  effective  November 
1,  1950,  eliminated  the  necessity  for  issuance  of  covering  warrants,  the  requisi- 
tioning of  funds,  and  the  use  of  accountable  warrants  in  connection  with  repay- 
ments to  appropriations;  No.  2,  effective  May  1,  1951,  provided  that  appropriated 
funds  be  made  immediately  available  in  the  accounts  of  disbursing  officers;  No. 
3,  effective  July  1,  1951,  provided  that  certain  special  fund  and  trust  fund  receipts 
be  credited  directly  to  the  accounts  of  disbursing  officers;  and  No.  4,  effective 
July  1,  1955,  waived  the  requirements  with  regard  to  the  requisitioning  and 
advancing  of  funds  to  accountable  officers  and  the  issuance  and  counter-signature 
of  warrants  acknowledging  receipt  of  money  to  be  covered  into  the  Treasury. 
An  explanation  of  the  warrant  basis  for  receipts  and  expenditures  follows. 

Receipts. — Section  305  of  the  Revised  Statutes  as  amended  (31  U.S.C.  147) 
provides  that  the  receipts  for  all  moneys  received  by  the  Treasurer  of  the  United 
States  "shall  be  indorsed  upon  warrants  signed  by  the  Secretary  of  the  Treasury, 
without  which  warrant,  so  signed,  no  acknowledgment  for  money  received  into 
the  Public  Treasury  shall  be  valid."  Covering  warrants  were  prepared  from 
certificates  of  deposit  mailed  to  the  Treasury,  principally  by  Government  de- 
positaries, showing  deposits  received.  The  figures  thus  compiled  were  on  a 
"warrants-issued"  basis.  Table  2  for  the  years  prior  to  1916  shows  receipts  on 
this  basis.  Since  these  certificates  did  not  reach  the  Treasury  simultaneously, 
all  receipts  for  a  fiscal  year  could  not  be  covered  into  the  Treasury  by  warrant  of 
the  Secretary  immediately  upon  the  close  of  the  fiscal  year.  Therefore,  certain 
certificates  of  deposit  representing  amounts  deposited  during  one  fiscal  year  were 
reported  as  the  next  year's  receipts. 

Prior  to  the  fiscal  year  1954,  all  collections  of  internal  revenue,  customs,  and 
miscellaneous  receipts,  except  repayments  to  appropriations  and  certain  special 
and  trust  fund  receipts  as  provided  by  the  joint  regulations  previously  described, 
were  covered  into  the  Treasury  by  warrants  signed  by  the  Secretary  of  the 
Treasury.  Beginning  with  the  fiscal  year  1954,  the  recording  of  receipts  by 
Treasury  offices  designated  for  that  purpose  by  the  Secretary  of  the  Treasury,  in 
receipt  accounts,  or  appropriation  and  fund  accounts,  pursuant  to  the  act  of  July 
31,  1894,  as  amended  (5  U.S.C.  255),  and  section  114(b)  of  the  Budget  and 
Accounting  Procedures  Act  of  1950  (31  U.S.C.  66b(b)),  has  constituted  the  official 
acknowledgment  of  moneys  received  and  covered  into  the  Treasury. 

Expenditures. — The  Constitution  of  the  United  States  provides  that  "No 
money  shall  be  drawn  from  the  Treasury,  but  in  consequence  of  appropriations 
made  by  law  *  *  *."  Section  305  of  the  Revised  Statutes,  as  amended  (31 
U.S.C.  147)  requires  that  the  Treasurer  of  the  United  States  shall  disburse  the 
moneys  of  the  United  States  upon  warrants  drawn  by  the  Secretary  of  the  Treas- 
ury. Prior  to  1916,  reports  of  expenditures  were  based  on  the  amount  of  ac- 
countable and  settlement  warrants  issued  and  charged  to  the  appropriation 
accounts.  Since  accountable  warrants  covered  advances  to  disbursing  officers, 
such  expenditure  reports  necessarily  included  the  balances  of  funds  remaining 
unexpended  to  the  credit  of  the  disbursing  officers  at  the  close  of  the  fiscal  year. 
Efi"ective  July  1,  1955,  Joint  Regulation  No.  4  waived  the  requirements  with 
regard  to  the  requisitioning  and  advancing  of  funds  to  accountable  officers  by 
warrant. 

Public  Debt  accounts 

The  figures  reported  on  this  basis  represent  transactions  which  have  been 
audited  by  the  Bureau  of  the  Public  Debt.  It  is  sometimes  several  months  after 
a  financing  operation  before  all  the  transactions  have  been  reported  and  audited. 
Therefore,  the  public  debt  figures  on  this  basis  differ  from  those  reported  in  the 
daily  Treasury  statement  since  the  latter  consist  of  transactions  cleared  through 
the  Treasurer's  account  during  the  reporting  period  (see  explanation  under 
"Daily  Statement  of  the  United  States  Treasury,"  on  p.  501).  A  reconciliation 
of  figures  on  the  two  bases  is  given  in  table  32. 

Administrative  accounts  and  reports 

Certain  tables  in  this  report  are  developed  from  the  accounts,  records,  and 
reports  of  the  administrative  agencies  concerned,  which  may  be  on  various  bases. 
These  tables  include  internal  revenue  collections,  customs,  postal  receipts,  sales 
of  savings  bonds  by  States,  prices  and  yields  of  securities,  customs  statistics, 


504   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

foreign  currency  transactions  in  the  accounts  of  the  Secretary  of  the  Treasury, 
and  balance  sheets,  statements  of  income  and  expense,  and  source  and  application 
of  funds  of  public  enterprise  funds. 

Internal  revenue  collections  (tables  19  and  20)  are  stated  partly  on  the  basis  of 
reports  of  directors  of  internal  revenue  representing  collections  made  by  these 
officers  and  partly  on  the  basis  of  reports  of  deposits  made  directly  to  the  Federal 
Reserve  Banks  under  the  depositary  receipt  procedure. 

Customs  collections  (table  22)  are  based  upon  reports  of  collectors  of  customs 
representing  collections  made  during  the  period. 

Postal  revenues  (table  24)  are  based  upon  reports  of  the  Post  Office  Department 
prepared  on  a  modified  accrual  basis  (revenues  earned  less  deferred  box  rentals, 
etc.). 

Description  of  Accounts  Relating  to  Cash  Operations 

The  classes  of  accounts  maintained  in  connection  with  the  cash  operations  of 
the  Federal  Government,  exclusive  of  public  debt  operations,  include:  (1)  the 
accoimts  of  fiscal  officers  or  agents,  collectively,  who  receive  money  for  deposit  in 
the  U.S.  Treasury  or  for  other  authorized  disposition  or  who  make  expenditures 
by  drawing  checks  on  the  Treasurer  of  the  United  States  or  by  effecting  payments 
in  some  other  manner;  (2)  the  accounts  of  administrative  agencies  which  classify 
receipt  and  expenditure  transactions  according  to  the  individual  receipt,  appro- 
priation, or  fund  account;  and  (3)  the  accoimts  of  the  Treasurer  of  the  United 
States  whose  office,  generally  speaking,  is  responsible  for  the  receipt  and  custody 
of  money  deposited  by  fiscal  officers  or  agents,  for  the  payment  of  checks  drawn 
on  the  Treasurer,  and  the  payment  of  public  debt  securities  redeemed.  A  set  of 
central  accounts  is  maintained  in  the  Treasury  Department  for  the  purpose  of 
consolidating  financial  data  reported  periodically  from  these  three  sources  in 
order  to  present  the  results  of  cash  operations  in  central  financial  reports  on  a 
unified  basis  for  the  Government  as  a  whole,  and  as  a  means  of  internal  control. 

The  central  accounts  relating  to  cash  operations  disclose  monthly  and  fiscal 
year  information  on:  (1)  The  Government's  receipts  by  principal  sources,  and 
its  expenditures  according  to  the  different  appropriations  and  other  funds  in- 
volved; and  (2)  the  cash  transactions,  classified  by  types,  together  with  certain 
directly  related  assets  and  liabilities  which  underlie  such  receipts  and  expendi- 
tures. The  accounting  for  receipts  is  substantially  on  the  basis  of  collections, 
and  that  for  expenditures  is  on  the  basis  of  checks  issued  and  cash  payments 
made  except  that  interest  on  the  public  debt  is  on  an  accrual  basis.  The  struc- 
ture of  the  accounts  provides  for  a  reconciliation,  on  a  firm  accounting  basis, 
between  the  published  reports  of  receipts  and  expenditures  and  budget  results 
for  the  Government  as  a  whole  and  changes  in  the  Treasurer's  cash  balance  by 
means  of  such  factors  as  checks  outstanding,  deposits  in  transit,  and  cash  held 
outside  the  Treasury.  Within  the  central  accounts,  receipt  and  expenditure 
accounts  are  classified  as  described  in  the  following  paragraphs. 

Budget  accounts 

Included  in  the  Budget  accounts  are  only  those  accounts  that  determine  the 
budget  surplus  or  deficit  of  the  United  States  Government  as  follows: 

General  fund  receipt  accounts. — The  general  fund  receipt  accounts  are  credited 
with  all  receipts  which  are  not  earmarked  by  law  for  a  specific  purpose.  General 
fund  receipts  consist  principally  of  internal  revenue  collections,  which  include 
income  taxes,  excise  taxes,  estate,  gift,  and  employment  taxes.  The  remainder 
consist  of  customs  duties  and  a  large  number  of  miscellaneous  receipts,  including 
fees  for  permits  and  licenses;  fines,  penalties,  and  forfeitures;  interest  and 
dividends;  rentals;  royalties;  sale  of  Government  property;  and  seigniorage. 

Special  fund  receipt  accounts. — Special  fund  receipt  accounts  are  credited 
with  receipts  from  specific  sources,  as  authorized  by  law,  but  which  are  not 
generated  from  a  cycle  of  operations.  Such  receipts  may  be  expended  only  for 
the  particular  purposes  specified  by  law.  The  Congress  may  appropriate  these 
receipts  for  special  purposes  on  an  annual  basis  or  for  an  indefinite  period  of 
time.  Although  such  receipts  are  not  available  for  general  purposes,  they  are 
included  in  the  totals  of  budget  receipts.  Examples  of  special  fund  receipts 
are  those  arising  from  rents  and  royalties  under  the  Mineral  Leasing  Act,  the 
revenue  from  visitors  to  Yellowstone  National  Park,  the  proceeds  of  the  sale 
of  certain  timber  and  reserve  lands,  and  other  receipts  authorized  to  be  credited 
to  the  reclamation  fund. 

General  fund  expenditure  accounts. — General  fund  expenditure  accounts  are 
established  to  record  amounts  appropriated  by  the  Congress  to  be  expended 


TABLES  505 

for  the  general  support  of  the  Government.  Such  accounts  are  classified  accord- 
ing to  the  limitations  that  are  established  by  the  Congress  with  respect  to  the 
period  of  availability  for  obligation  of  the  appropriation,  as  1-year,  multiple- 
year,  or  "no-year"  (without  a  time  limit),  and  with  respect  to  the  agency  author- 
ized to  enter  into  obligations  and  approve  expenditures. 

Special  fund  expenditure  accounts. — Special  fund  expenditure  accounts  are 
established  to  record  appropriated  amounts  of  receipts  from  specific  sources  to 
be  expended  only  for  the  specific  purpose  authorized  by  law.  These  accounts 
are  generally  available  without  time  limit,  but  may  also  be  subject  to  fiscal 
limitations  as  in  the  case  of  general  fund  accounts. 

Revolving  fund  accounts. — These  are  funds  authorized  by  specific  provisions 
of  law  to  finance  a  continuing  cj'cle  of  operations  through:  (a)  public  enterprise 
funds  in  which  expenditures  generate  receipts  coming  primarily  from  sources 
outside  the  Government  and  available  without  further  action  by  Congress;  and 
(b)  intragovernmental  fund  operations,  with  receipts  derived  primarily  from 
other  api^ropriations  or  funds.  Treasury  reports  generally  show  the  net  effect 
of  operations  in  the  accounts  (excess  of  disbursements  or  collections  and  reimburse- 
ments for  the  period)  which  affect  the  budget  surplus  or  deficit.  These  accounts 
are  usually  designated  as  "no-year"  accounts  and  are  without  limitation  as  to 
period  of  availability  for  expenditures.  Examples  of  public  enterprise  revolving 
funds  are  those  under  the  Export-Import  Bank  of  Washington  and  the  Com- 
modity Credit  Corporation.  Examples  of  intragovernmental  revolving  funds 
are  the  General  Supply  Fund  administered  by  the  General  Services  Administra- 
tion and  the  buildings  management  fund  of  the  Public  Buildings  Service. 

Management  fund  accounts. — These  are  working  fund  accounts  authorized  by  law 
to  facilitate  accounting  for  and  administration  of  intraagency  activities  (other 
than  a  continuing  cycle  of  operations)  which  are  financed  by  two  or  more  appro- 
priations. This  classification  is  also  often  applied  to  the  consolidated  working 
funds  for  interagency  activities  described  in  the  following  paragraph. 

Consolidated  working  fund  accounts. — These  are  accounts  established  to  receive 
and  disburse  advance  payments  by  an  agency  from  other  agencies  or  bureaus 
pursuant  to  section  601  of  the  Economy  Act  (31  U.S.C.  686)  or  other  provi- 
sions of  law  to  be  expended  for  purposes  authorized  by  law.  Consolidated 
working  funds  may  be  credited  with  advances  from  two  or  more  appropriations 
for  the  procurement  of  goods  or  services  to  be  furnished  by  the  performing 
agency,  with  the  use  of  its  own  facilities  within  the  same  fiscal  year.  Expendi- 
ture transactions  recorded  in  these  accounts  are  stated  net  of  advances  credited 
and  are  classified  under  the  agencies  administering  the  accounts.  The  accounts 
are  subject  to  the  fiscal  year  limitations  of  the  parent  appropriations  or  other 
accounts  from  which  advanced. 

Nonbudget  accounts 

Trust  accounts. — These  are  accounts  maintained  to  record  the  receipt  and 
expenditure  of  moneys  held  in  trust  by  the  Government  for  use  in  carrying  out 
the  specific  purposes  or  programs  in  accordance  with  the  terms  of  a  trust  agree- 
ment or  statute.  The  receipts  of  many  trust  funds,  especially  the  major  ones, 
not  needed  for  current  benefits  and  other  payments,  are  invested  in  United 
States  securities.  Generally,  trust  fund  accounts  consist  of  separate  receipt  and 
expenditure  accounts,  but  when  the  trust  corpus  is  established  to  perform  a 
business-type  operation,  the  fund  entity  is  called  a  "trust  revolving  fund"  and 
a  combined  receipt  and  expenditure  account  is  used.  Unlike  the  funds  in  gen- 
eral and  special  accounts,  the  trust  funds  are  not  available  for  general  or  special 
purposes  and  do  not  enter  into  the  budget  surplus  or  deficit.  Some  of  the  major 
trust  accounts  are  the  Federal  old-age  and  survivors  insurance  trust  fund, 
unemployment  trust  fund,  civil  service  retirement  fund,  the  national  service 
life  insurance  fund,  and  the  highway  trust  fund. 

Deposit  fund  accounts. — Deposit  funds  are  combined  receipt  and  expenditure 
accounts  established  to  account  for  receipts  that  are  either  (a)  held  in  suspense 
temporarily  and  later  refunded  or  paid  into  some  other  fund  of  the  Government 
upon  administrative  or  legal  determination  as  to  the  proper  disposition  thereof, 
or  (b)  held  by  the  Government  as  banker  or  agent  for  others  and  paid  out  at 
the  direction  of  the  depositor.  Such  funds  are  not  available  for  paying  salaries, 
expenses,  grants,  or  other  expenditures  of  the  Government.  As  in  the  case  of 
the  trust  funds,  the  transactions  in  these  accounts  are  not  included  in  the  budget 
totals. 


506   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Summary  of 

Table  1. — Summary  of  fiscal  operations, 
[On  basis  of  dally  Treasury  statements  tlirough  1952;'  thereafter  on  basis  of  "Monthly  Statement 


Fiscal  year  or  month 


Budget  receipts  and  expenditures 


Net  receipts  i 


Expenditures ' 


Surplus,  or 
deficit  (-) 


Trust  account 

and  other 
transactions, 
net  receipts, 
or  expendi- 
tures (-)« 


Clearing 
account » 


1932 

1933 

1934 

1935 

1936 

1937 

1938 , 

1939 

1940 

1941 

1942 

1943 

1944 

1945 , 

1946 , 

1947 

1948  8 

1949  8 

1950 

1951 

1952 

1953 

1954 

1955 

1956 

1957 

1958 

1959 

1960 

1961 

1962 

1961— July 

August 

September 

October 

November 

December 

1962— January 

February 

March 

April 

May 

June 


$1, 923, 

1. 996, 
3,014, 
3. 705, 

3. 997, 
4.955, 
5, 588, 
4,979, 
5, 137, 
7,095, 

12, 546, 

21,947, 

43, 562, 

44,362, 

39, 649, 

39, 677, 

41,374, 

37, 662, 

36, 421, 

47, 480, 

61,286, 

64, 670, 

64,420, 

60, 208, 

67, 849, 

70, 561, 

68, 549, 

67, 915, 

77, 763, 

'  77, 659, 

81,409, 

2. 982, 

6, 366, 

8, 945, 

3, 140, 

6, 424, 

7, 967, 

5,357, 

6,728, 

9. 104, 

5,754, 

7, 023, 

11,614, 


891,824 
843, 833 
969. 799 
955, 600 
058, 975 
612,  556 
011,873 
065. 958 
249, 771 
676, 052 
618, 755 
283, 157 
609,  460 
020,944 
870  986 
167, 024 
701, 989 
972, 939 
934, 577 
067. 075 
560, 916 
584. 424 
034, 061 
508. 692 
951, 339 
886, 113 
720, 044 
348, 624 
460, 221 
424, 906 
092, 073 
460, 758 
596, 327 
216. 651 
692, 334 
372, 945 
087, 264 
315, 202 
570, 184 
409, 769 
086, 287 
677, 574 
606, 779 


$4, 659, 

4, 598, 

6,644, 

6, 497, 

8,421, 

7, 733, 

6,764. 

8, 841. 

9, 055. 

13, 254, 

34. 036, 

79, 367, 

94. 986. 

98. 302, 
60. 326, 
38, 923. 
32, 955, 
39, 474 
39,  544, 
43, 970. 

65. 303, 
74, 119, 
67, 537 
64, 388. 
66. 224 
68, 966, 
71,369, 
80,342, 
76,  539, 

'81.515, 
87, 786, 
6. 322, 
7, 631, 
6,771, 
7, 795, 
7, 484, 
7, 160, 
7, 395, 
6. 857, 
7, 748, 
7,289, 
7, 228, 
8. 101. 


181, 532 
495. 918 
601, 741 
007. 700 
608,  205 
033, 270 
628,471 
223, 998 
268, 931 
948. 411 
861, 487 
713, 522 
002,002 
937, 069 
041,  595 
379, 364 
232, 145 
412. 987 
036, 935 
284. 450 
201, 294 
797, 882 
000. 317 
737, 614 
397, 935 
314,562 
174, 086 
335, 375 
412.  799 
167,454 
766,  581 
007, 069 
408, 123 
151,352 
853, 71 
544  875 
180, 685 
389, 621 
575. 044 
676, 839 
433, 121 
698, 753 
847. 379 


-$2,735, 

-2,  601, 

-3, 629, 

-2,791, 

-4,424, 

-2,777, 

-1,176, 

-3, 862, 

-3.918, 

-6, 159, 

-21  490, 

-57,420, 

-51.423, 

-53, 940, 

-20, 676, 

753, 

8,419, 

-1,811, 

-3, 122, 

3, 509, 

-4,016, 

-9, 449, 

-3,116, 

-4, 180, 

1, 625 

1,  595, 

-2,819, 

-12,426, 

1,224, 

-3.855, 

-6,377, 

-3, 339, 

-1,264, 

2, 174, 

-4, 655, 

-1,060, 

806, 

-2,038. 

-129, 

1,355, 

-1,535, 

-205, 

3, 512, 


289, 708 
652,  085 
631, 943 
052, 100 
549, 230 
420, 714 
616,  598 

158. 040 
019, 161 
272, 358 
242, 732 
430, 365 
392,  541 
916,126 
170, 609 
787, 660 
469, 844 
440, 048 
102, 357 
782, 624 
640, 378 
213, 457 
966,  256 
228, 921 
553, 403 
571, 550 

454. 041 
986, 751 
047, 422 
742, 548 
674, 508 
546. 312 
811,796 
065,  299 
161,384 
171,930 
906, 579 
074, 419 
004. 860 
732,929 
346,834 
021, 179 
759, 400 


-$5, 

-5, 

834, 

402, 

187, 

3, 

98, 

1, 209. 

442. 

907, 

-1,612, 

-337. 

-2, 221. 

791, 

-523, 

-1,102, 

-294, 

-494, 

99, 

679, 

147. 

434, 

327 

231 

-193, 

194, 

632. 

-328, 

-49, 

-602, 

435, 

-66. 

-120, 

43, 

-154. 

316, 

258, 

-152, 

381, 

-144, 

131, 

258, 

-316, 


178, 050 
009, 989 
880, 108 
724, 190 
063, 025 
314, 169 
934, 030 
673, 564 
538, 143 
790, 781 
785,  695 
796, 138 
918, 654 
293, 666 
587,210 
524, 942 
342.  662 
733, 365 
137, 360 
223, 478 
077, 201 
671,979 
762. 083 
296, 942 
580,  583 
731, 536 
513, 036 
663. 331 
526, 275 
403. 079 
641,  .579 
112,742 
416,698 
727,013 
133, 393 
501. 881 
159. 997 
422. 006 
322, 542 
597, 668 
884,921 
316.823 
589, 091 


$554, 706, 981 

-507, 106, 039 

366, 441, 900 

482, 656, 886 

-214,140,135 

-401,389,312 

-249, 920, 729 

-303, 126, 484 

283, 518, 269 

521,955,153 

-522,892,840 

530, 045, 771 

-5.750,464 

-145,025,682 

.507,346,821 

448, 422, 413 

-128,809,382 

-497,617,851 

682. 478, 054 

139, 864, 699 

-543,038,788 

10.461,585 

332, 993. 335 

-77, 974,  540 

977, 596, 264 

-384, 354. 994 

-129,973,694 

66, 797, 725 


'  Revised  for  reclassification. 

>  With  the  exceptions  that  pubUe  debt  figures  are  on  the  basis  of  daily  Treasury  statements  for  all  years 
showTQ  and  guaranteed  obligations  for  1934-39  are  on  the  basis  of  public  debt  accounts  and  thereafter  on  the 
basis  of  daily  Treasury  statements.  Public  debt  includes  debt  incurred  to  finance  expenditures  of  certain 
wholly  owned  Government  corporations  and  other  business-type  activities  in  exchange  for  which  obligations 
of  the  corporations  and  activities  were  issued  to  the  Treasury.    (Sec  table  122.) 

»  Total  receipts  le.ss  refunds  of  receipts  and  starting  witli  fiscal  1937,  less  transfers  of  tax  receipts  to  certain 
major  trust  accounts  (as  shown  in  table  3);  beginning  with  1932  exclusive  of  certain  interfund  transactions 
(also  excluded  from  expenditures).    See  footnote  3. 

'  Expenditures  are  "net"  after  allowance  for  reimbursements  to  appropriations,  receipts  of  revolving 
fund  accounts,  and  receipts  credited  to  disbursing  accounts  of  corporations  and  agencies  having  authority 
to  use  collections  without  formal  covering  into  the  Treasury.  Tlie  figures  include  transfers  to  trust  accounts. 
Begimiing  with  1951,  the  net  investments  by  wholly  owned  Government  corporations  and  agencies  In 
pubhc  debt  securities  are  excluded  from  budget  expenditures  and  are  included  in  trust  account  and  other 
transactions.  The  expenditure  figures  also  exclude  public  debt  retirements  chargeable  to  the  sinking  fund, 
etc.,  under  special  provisions  of  law.  Ellective  July  1,  1948,  payments  to  the  Treasury,  principally  by 
wholly  owned  Government  corporations,  for  retirement  of  capital  stock  and  disposition  of  earnings  are 
excluded  from  both  receipts  and  expenditures.  Prior  year  adjustments  of  such  payments  are  showTi  in 
the  1958  annual  report,  p.  396,  table  2,  footnote  3.  Beginning  with  fiscal  1932,  certain  interfund  transactions 
are  excluded,  as  from  net  receipts.  For  interfund  transactions  excluded  from  both  net  budget  receipts 
and  expenditures  beginning  with  1932,  see  1961  annual  report  pp.  450-457,  and  table  6,  this  report. 


TABLES 


507 


Fiscal  Operations 

fiscal  years  1932-62  and  monthly  1962 

of  Receipts  and  Expenditures  of  the  United  States  Government,"  see  "Bases  of  Tables"] 


Public  debt, 

net  increase, 

or  decrease 

(-) 


$2, 685, 
3,051, 
4,514 

1,  647, 
5, 077, 
2, 646, 

740, 

3, 274, 

2, 527, 

5, 993, 

23, 461, 

64, 273, 

64, 307, 

57,  678, 

10, 739 

-11,135 

-5, 994, 

478, 

4, 586, 

-2, 135, 

3. 883, 

6, 965, 

5, 188, 

3,114 

-1,623, 

-2,  223 

5,  816, 

8, 362, 

1, 624, 

2.  640, 
9, 229, 
3, 433, 
1, 310, 

35, 

1,910, 

1.350, 

-841, 

344 

469 

-895 

864, 

2, 222, 

-973, 


720, 952 
670, 116 
468. 854 
751, 210 
650, 869 
070,  239 
126, 583 
792, 096 
998, 627 
912. 498 
001,  581 
645, 214 
296, 891 
800, 189 
911,763 
,716,065 
136, 596 
113,347 
992, 491 
375, 536 
201. 970 
882, 853 
537, 469 
623, 694 
409, 153 
641, 752 
045, 849 
689, 332 
853, 770 
177, 762 
884,111 
154, 681 
361, 124 
406, 563 
510, 987 
136, 384 
747, 134 
715, 104 
745, 029 
596, 885 
234, 434 
081,  262 
117, 438 


Balance 

in  account  of 

the  Treasurer 

of  the  U.S., 

net  increase, 

or  decrease 

(-) 


-$54, 

445, 

1,719, 

-740, 

840, 

-128, 

-337, 

622. 

-947, 

742, 

357, 

6, 515, 

10, 661, 

4, 529. 

-10,459 

-10,929, 

1,623, 

-1,461, 

2, 046, 

1, 839, 

-387, 

-2,  298, 

2, 096, 

-550, 

330, 

-956, 

4, 159, 

-4, 398, 

2, 654, 

-1.310, 

3, 736, 

-101, 

-572, 

2, 935, 

-2, 758, 

63. 

233, 

-1,512, 

644, 

1, 293, 

-923, 

2, 145, 

2,289, 


746, 805 
008, 042 
717, 020 
576. 701 
164, 664 
036, 307 
555, 984 
307,  620 
482, 391 
430, 921 
973, 154 
418,710 
985. 696 
177, 729 
846,056 
,746,366 
884, 548 
618, 165 
684, 380 
490, 432 
750.  519 
579, 356 
206, 813 
790. 014 
518. 820 
231,505 
150  615 
711,214 
349, 235 
621,045 
273, 595 
313, 754 
485, 222 
676, 928 
919, 090 
427, 547 
781, 027 
787, 986 
088,172 
134, 639 
582. 473 
403, 211 
850,  596 


Amount,  end  of  period 


Balance 

in  account  of- 

the  Treasurer 

of  the  U.S. 


$417, 197, 
862,  205, 
2, 581, 922, 
1, 841, 345, 
2, 681.  510. 
2, 553, 473, 
2,215.917, 
2. 838, 225, 
1, 890, 743, 
2, 633, 174, 
2,991,147, 
9, 506, 565, 
20, 168, 551, 
24. 697. 729, 
14,  237. 883, 
3. 308, 136, 
4,932,021, 
3, 470, 403, 
5,517,087, 
7, 356,  578, 
6, 968. 827, 
4. 670,  248, 
6, 760, 455, 
9  6,215, 665, 
6, 546, 183, 
5, 589, 952, 
9, 749. 102. 
5.  350, 391, 
8, 004,  740, 
6, 694, 119, 
10, 430, 393. 
6, 592, 806, 
6, 020, 320, 
8, 955, 997, 
6, 197, 078, 
6, 260, 506. 
6, 494. 287, 
4, 981, 499, 
5, 625,  587, 
6, 918, 722, 
5. 995. 139, 
8, 140,  542, 
10. 430, 393, 


178 
221 
240 
539 
204 
897 
913 
533 
141 
062 
216 
926 
622 
352 
295 
929 
477 
312 
692 
123 
604 
248 
061 
047 
868 
362 
977 
763 
998 
954 
549 
199 
978 
906 
815 
362 
389 
403 
575 
215 
741 
952 
549 


Debt  outstanding  i 


PubUc  debt 


$19, 

22, 

27! 

28; 

33, 

36, 

37, 

40, 

42, 

48, 

72, 

136, 

201. 

258, 

269, 

258, 

252, 

252, 

257, 

255, 

259, 

266, 

271, 

274, 

272, 

270, 

276, 

284, 

286, 

288, 

298, 

292, 

293, 

293, 

295 

297 

296 

296 

296 

296, 

296, 

299, 

298, 


487, 002, 444 
538, 672,  560 
053. 141, 414 
700, 892,  625 
778, 543, 494 
424, 613, 732 
164,740,315 
439,  .532, 411 
967, 531,  038 
961, 443, 536 
422,445,116 
696, 090, 330 
003, 387,  221 
682, 187, 410 
422, 099, 173 
286, 383, 109 
292, 246, 513 
770, 359, 860 
357, 352, 351 
221, 976, 815 
105, 178, 785 
071,061,639 
259,  599, 108 
374,222,802 
750, 813, 649 

527. 171. 896 
343, 217, 745 
705, 907, 078 
330, 760, 848 
970, 938. 610 
200. 822, 721 
404, 093,  291 
714,454,415 
749, 860, 978 
660, 371, 965 
010, 508, 349 
168,  761, 215 
513, 476, 319 
983, 221, 348 
087,  624, 463 

951. 858. 897 
173, 940, 159 
200, 822, 721 


Guaranteed 

obligations 

held  outside 

the  Treasury 


767, 817 

122,  684,  692 

718.033,242 

664, 604, 533 

852. 791, 651 

450. 834, 099 

529, 070, 655 

370, 252, 580 

568, 259, 630 

099, 943, 046 

623. 069. 301 

433, 158, 392 

476,384,859 

89, 520. 185 

73,460,818 

27, 275, 408 

19. 503, 034 

29,  227, 169 

45.  565, 346 

52. 072, 761 

81. 441, 386 

44, 142, 961 

73, 888, 475 

107, 137. 950 

101, 220. 600 

111,019.150 

139, 841, 775 

240, 215, 450 

444, 218, 925 

238,  628, 475 

249, 228, 950 

270, 628, 025 

298, 864, 150 

314. 519, 875 

330, 159, 525 

346, 538, 600 

371,130,400 

401, 843, 300 

405, 424. 475 

430. 077, 450 

444, 218, 925 


Total ' 


$19. 487, 
22, 538, 
27. 733, 
32, 823, 
38. 496, 
41, 089, 
42, 017, 
45. 890. 
48, 496, 
55, 331, 
76,990, 

140. 796. 
202, 626, 
259, 115, 
269. 898, 

258. 375, 
252, 365, 

252. 797, 

257. 376, 
255, 251, 
259, 150. 
266, 123. 
271,341, 
274, 418, 
272, 824, 
270, 634, 
276, 444, 
284, 816. 
286, 470, 
289,211, 
298, 645, 
292, 642, 
293, 963, 
294, 020, 
295, 959, 
297, 325, 
296, 498, 
296, 860, 
297, 354, 
296. 489, 
297, 357, 
299, 604. 
298, 645, 


002, 444 
672, 560 
909, 231 
577, 316 
576, 735 
218, 265 
531, 967 
366, 510 
601, 693 
696, 116 
704, 746 
033, 376 
456, 522 
345, 802 
484, 033 
903, 294 
707, 331 
635, 268 
855. 385 
203, 984 
744, 131 
134, 400 
040, 494 
365. 703 
702, 124 
309, 846 
438, 345 
926, 228 
602,  623 
154, 060 
041, 646 
721,766 
683,365 
489, 003 
236, 115 
028, 224 
920, 740 
014,919 
351, 748 
467. 763 
283, 372 
017, 609 
041. 646 


Subject  to 
limitation « 


(') 

(') 

(') 

(') 

(') 

(') 

$36, 881, 899, 956 
40, 371, 110,  606 
43,  219, 123, 375 
49, 493, 588, 731 
74,154,457,607 
140,469,083,742 
208, 077, 255, 051 
268, 670, 763, 468 
268,932,355,302 
257,491,416,060 
251,541,571,385 
252, 027, 712, 585 
256, 652, 133, 429 
254, 566, 629, 670 
258, 506, 598, 138 
26,5,521,736,381 
270, 790, 304. 616 
273, 914, 849, 696 
272.361,216,449 
270,188,322,086 
276. 013, 439. 621 
284, 398, 474, 090 
286, 064, 964, 324 
288,861.862,530 
298,211,767,263 
292, 198,  629, 821 
293, 521, 239, 380 
293.  578, 500, 472 
295, 519,  568, 623 
296,886,066.193 
296, 060, 517, 478 
296, 422, 425, 182 
296, 917, 313, 846 
296,053,758.410 
296, 922, 290, 725 
299, 169. 989, 571 
298, 211, 767, 263 


<  Consists  of  transactions  of  trust  and  deposit  fund  accounts,  netJinvestmentsIbylGovernment  agencies 
in  public  debt  securities,  and  net  redemptions  or  sales  of  obligations  of  Government  agencies  in  the  market. 
(See  tables  7-9.)  Investments  by  wholly  owned  Government  corporations  in  public  debt  securities  are  in- 
cluded in  budget  expenditures  before  1951.  Retirements  of  national  bank  notes  chargeable  against  the 
increment  on  gold  (fiscal  years  1935-39)  are  excluded. 

5  For  checks  outstanding  and  telegraphic  reports  from  Federal  Reserve  Banks;  public  debt  interest  accrued 
and  unpaid  beginning  with  June  and  the  fiscal  year  1955  (previously  included  from  November  1949  as  interest 
checks  and  coupons  outstanding);  also  deposits  in  transit  and  changes  in  cash  held  outside  the  Treasury  and 
in  certain  other  accounts  beginning  with  the  fiscal  year  1954.  For  1955,  includes  adjustment  of  —$207,183,858 
for  effect  on  balance  in  Treasurer's  account  of  Post  Ofllce  disbursing  accounts  reclassified  in  November  1954. 

8  A  summary  of  legislation  on  debt  limitation  under  the  Second  Liberty  Bond  Act  from  Sept.  24, 1917, 
through  June  30,  1962,  is  shown  in  table  37.  Guaranteed  securities  held  outside  the  Treasury  are  included 
in  the  limitation  beginning  Apr.  3, 1945.  In  computing  statutory  debt  limitation,  savings  bonds  are  carried 
at  maturity  value  from  their  origin  in  1935  until  June  26,  1946;  from  that  date,  as  in  the  pubUc  debt  out- 
standing, they  are  carried  at  current  redemption  value. 

'  Prior  to  May  26, 1938,  the  limitation  applied  to  particular  segments  of  the  debt,  not  to  the  total. 

s  Excludes  transfer  of  $3,000,000,000  in  1948  and  includes  transfer  of  a  like  amount  in  1949  to  the  Foreign 
Economic  Cooperation  Trust  Fund.    (See  table  2,  footnote  9.) 

» Includes  adjustment  of  —$207,183,858  for  reclassification  in  November  1954  of  Post  Office  Department 
and  postmaster's  disbursing  accounts  (formerly  treated  as  liability  accounts  of  the  Treasurer  of  the  United 
States)  to  net  expenditures  on  the  basis  of  cash  receipts  and  expenditures  as  reported  by  the  Post  OflBce 
Department. 


508        196  2    REPORT    OF    THE    SECRETARY    OP   THE    TREASURY 


Receipts  and 

Table  2. — Receipts  and  expendi- 

On  bajls  of  warrants  issued  from  1789  to  1916  and  on  basis  of  daily  Treasury  statements  for  1916  through 
of  the  United  States  Government."  General,  special,  emergency,  and  trust  accounts  combined  from 
see  "Bases  of  Tables"] 


Receipts 

Year  ' 

Customs 

(including 

tonnage  tax) 

Internal  revenue 

Other  re- 
ceipts ' 

Total 
receipts « 

Net  re- 
ceipts 

Income  and 
profits  taxes 

Other 

1789-91 

$4.  399.  473 
3.  443, 071 
4, 255,  307 
4,801,065 
6,  688, 461 

6,  567, 988 

7,  549,  650 
7, 106, 062 
6, 610, 449 

9, 080, 933 
10,  750.  779 

12,  438.  236 
10.479.418 
11,098,566 
12, 936. 487 
14,  667,  698 
15,845,522 
16,  363,  561 

7, 296,  021 

8,  583. 309 
13.313.223 

8.  958.  778 

13.  224. 623 

$19,440 

17.946 

59.  910 

356.  750 

188,318 

1, 334. 252 

563. 640 

150, 076 

157,228 

958, 420 
1. 136.  519 
1, 935. 659 
369.  600 
676. 801 
602.  459 
872. 132 
539.  446 
688. 900 
473, 408 

793, 475 
1,108,010 

837,  4.52 
1,111,0.32 
3.  519.  868 
3, 768, 023 
6, 246, 088 
4,137,601 
3,453.516 
4. 090, 172 

2,  768, 797 

1,  499,  905 

2,  575, 000 
1,417,991 
1,  468,  224 
1,716.374 
1,  897, 612 

3,  234. 196 

1,  540.  654 
2,131,158 

2,  909,  664 
4, 296. 446 
3. 388,  693 
4,913.159 
5,  572,  783 

16,028,317 
27,416,486 
13, 779.  369 
10.141.295 
8,  342,  271 

5,  978.  931 
2. 369.  682 
1,787.794 
1, 2.55. 755 
3.136.026 
2,  438, 476 
2, 984,  402 
2, 747, 629 
3, 978, 333 
2,861,404 

3, 934,  753 
3,541,736 
2, 607, 489 
2, 655. 188 
9, 576, 161 
12, 324. 781 
10,033,836 

$4, 418, 913 
3.  669, 960 
4, 652,  923 
6, 431.  906 
6,114.534 
8, 377.  530 
8. 688,  781 
7.  900,  496 
7,  546, 813 

10,  848,  749 
12,  935,  331 
14.995.794 
11.064.098 
11.826.307 
13.560,693 

15,  569.  931 

16.  398. 019 
17, 060.  662 

7,  773, 473 

9, 384,  215 
14,  423,  529 

9,801,133 
14, 340, 410 
11,181,625 
15,729,024 
47,  677,  671 
33.  099.  050 
21,585.171 
24,  603, 375 

17,880,670 
14,  573. 380 
20.  232.  428 
20.  540, 666 
19,381,213 
21, 840, 858 
26,  260, 434 
22,  966, 364 
24.  763. 630 
24. 827.  627 

24.844,116 

28,  526, 821 
31,865,561 
33,  948,  427 
21, 791,  936 
36. 430. 087 
50.  826. 796 
24,954,153 
26. 302,  562 
31, 482, 749 

19.480,116 
16,860,160 
19,  976, 198 
8, 302,  702 
29,321.374 
29,970,106 

29.  699, 967 
26.  495.  769 
35.  735,  779 
31. 208, 143 

43,  603, 439 
52,559,304 
49,846,816 
61,587.064 
73, 800. 341 
65, 350,  676 
74, 068, 699 

1792 -- 

.$208.  943 
337,  706 
274. 090 
337, 765 
475,  290 
575, 491 
644,  358 
779, 136 

809,  396 

1,048,033 

621,899 

215, 180 

60.  941 

21,747 

20. 101 

13,061 

8,211 

4,044 

7,431 
2,296 
4,903 

4,756 
1,662.985 
4.  678, 059 
5.124.708 
2.  678. 101 
955,  270 
229,  594 

106, 261 
69.  028 
67.  666 
34.  242 
34.  663 
25,  771 
21.590 
19. 886 
17.  4.52 
14,  503 

12, 161 
6,934 

11,631 
2,759 
4,196 

10, 469 

370 

5,494 

2,467 

2,563 

1,682 

3,261 

495 

103 

1,777 

3,617 

2,897 

375 

375 

1793 - 

1794                   .  . 

1795 

1796 

1797      

1798 - 

1799          

1800            .     - 

1801 -.- 

1802 

1803 

1804 

1806             .     — 

1806 

1807 

1808      . 

1809 

1810 

1811 

1812 

1813 

1814 

5. 998.  772 
7,  282, 942 
36, 306. 875 
26.  283. 348 
17,176.385 
20,  283,  609 

15.005.612 
13,  004.  447 
17,  589,  762 
19, 088,  433 
17,  878, 326 
20, 098.  713 
23, 341, 332 
19,712,283 

23,  206,  524 

22,  681, 966 

21,922.391 

24.  224.  442 
28,  466,  237 
29, 032,  609 
16,  214,  957 
19,391,311 

23,  409.  941 
11,169,290 
16,158,800 
23, 137,  926 

13,499,602 
14,487,217 
18, 187, 909 
7, 046. 844 
26, 183.  671 
27,528,113 
26,712,668 
23,  747, 866 
31, 767, 071 
28, 346,  739 

39, 668, 686 
49,017,568 
47, 339, 327 
58,931,866 
64,224,190 
53. 026,  794 
64, 022, 863 

1815 

1816 

1817 

1818 

1819. 

1820 

1821 

1822 

1823 

1824 

1825 

1826 

1827 

1828 

1829 

1830. 

1831 

1832 

1833 

1834 

1835 

1836 

1837 

1838 

1839 

1840 

1841 

1842 

1343' 

1344 

1845 

1846 

1847 

1848 

1849 

1860 

1851 

1852 

1863 

1854 

1855 

1856 

Footnotes  at  end  of  table. 


TABLES 


509 


Expenditures 

tures,  fiscal  years  1789-1962 

1952.    Beginning  with  fiscal  year  1953  on  basis  of  the  "Monthly  Statement  of  Receipts  and  Expenditures 
1789  through  1930.    Trust  accounts  excluded  for  1931  and  subsequent  years.    For  explanation  of  accounts 


Expenditures 

Department  of 

Surplus,  or 

the  Army 

Department  of 

Interest  on  the 

Total  expendi- 

deficit (-) 

(formerly  War 

the  Navy  « 

public  debt 

Other  > 

tures  • 

Department)  « 



$632,  804 

$570 

$2, 349,  437 

$1,286,216 

$4,  269,  027 

$149,  886 

1, 100,  702 

53 

3,  201,  628 

777,  149 

5,  079,  532 

-1,409,672 

1, 130,  249 

2,  772,  242 

579,  822 

4,  482,  313 
6,  990,  839 

170,  610 

2,  639, 098 

'^{,'m 

3,  490,  293 

800,  039 

-1,  558!  934 

2, 480,  910 

410,  562 

3, 189, 151 

1,  459, 186 

7,  539,  809 

-1,425,275 

1,  260,  264 

274,  784 

3,  195,  055 

996,  883 

5,  726,  986 

2,  650.  544 

1, 039,  403 

382,  632 

3.  300,  043 

1,411,556 

6,  133.  634 

2,  555,  147 

2,  009,  522 

1,381,348 

3,  053.  281 

1,  232.  353 

7,  676,  504 

223,  992 

2,  466,  947 

2,  858, 082 

3,  186,  288 

1,  155,  138 

9,  666,  455 

-2,  119,642 

2,  560,  879 

3,  448,  716 

3,  374,  705 

1,  401,  775 

10.  786,  075 

62,  674 

1,  672,  944 

2,111,424 

4,  412.  913 

1,  197,  301 

9,  394,  582 

3,  540,  749 

1, 179, 148 

915,  562 

4. 125,  039 

1,  642,  369 

7,862,  118 

7,  133,  676 

822,  056 

1.215,231 

3,  848.  828 

1, 965.  538 

7,  851,  653 

3,212,445 

875,  424 

1, 189,  833 

4,  266,  583 

2.  387,  602 

8,  719,  442 

3,  106.  865 

712,  781 

1,  597,  500 

4,  148,  999 

4,  046,  954 

10,  506.  234 

3,  054,  459 

1,  224.  355 

1,  649,  641 

3,  723.  408 

3,  206,  213 

9.  803,  617 

5,  756,  314 

1,  288,  686 

1,  722,  064 

3,  369.  578 

1,  973.  823 

8,  354,  151 

8.  043.  868 

2, 900,  834 

1,884,068 

3,  428,  153 

1,  719,  437 

9.  932,  492 

7,  128,  170 

3, 345,  772 

2,  427,  759 

2,  866,  075 

1,641,142 

10,  280,  748 

-2,  507,  275 

2,  294,  324 

1,  654,  244 

2,  84,5,  428 

1,362,514 

8, 156,  510 

1,  227,  705 

2,  032.  828 

1.  965,  566 

2,  465.  733 

1,  .594.  210 

8,  058,  337 

6.  365.  192 

11,  817,  798 

3,  959,  365 

2,  451,  273 

2,  052,  335 

20,  280,  771 

-10.479,638 

19,  652,  013 

6,  446,  600 

3,  599,  455 

1,  983,  784 

31,681,852 

-17,341,442 

20, 350,  807 

7,311,291 

4,  593,  239 

2,  465,  589 

34,  720,  926 

-23,  539,  301 

14,  794,  294 

8,  660,  000 

5,  754,  569 

3,  499,  276 

32,  708,  139 

-16.979,115 

16,  012,  097 

3,  908,  278 

7,  213,  259 

3,  453,  057 

30,  586,  691 

17,090,980 

8,  004,  237 

3,  314,  598 

6.  389,  210 

4,  135.  775 

21,  843,  820 

11,255,230 

5,  622,  715 

2,  953,  695 

6,  016,  447 

5,  232,  264 

19,825,121 

1,  760,  050 

6,  506,  300 

3,  847,  640 

5,  163,  538 

5,  946,  332 

21,  463,  810 

3,  139,  565 

2,  630,  392 

4,  387,  990 

5.  126,  097 

6,  116,  148 

18.  260,  627 

-379,  957 

4,  461,  292 

3,  319.  243 

5,  087,  274 

2,  942,  944 

15.  810,  753 

-1,237.373 

3,111,981 

2,  224,  459 

5,  172,  578 

4,  491,  202 

15,  000,  220 

5,  232,  208 

3,  096,  924 

2,  503,  766 

4,  922,  685 

4,  183,  465 

14,  706,  840 

5,  833.  826 

3,  340,  940 

2,  904.  582 

4,  996,  562 

9,  084,  624 

20,  326,  708 

-945,495 

3,659,914 

3,  049,  084 

4,  366,  769 

4,  781,  462 

15,  857,  229 

5,  983,  629 

3,  943, 194 

4,  218,  902 

3,  973,  481 

4,  900,  220 

17,  035,  797 

8.  224,  637 

3,  938,  978 

4,  263,  877 

3,  486,  072 

4,  450,  241 

16, 139, 168 

6,  827.  196 

4, 145,  545 

3,  918,  786 

3,  098,  801 

5,  231,  711 

16,  394,  843 

8,  368,  787 

4,  724, 291 

3.  308.  745 

2,  542,  843 

4,  627,  454 

15,  203.  333 

9,  624.  294 

4,  767, 129 

3,  239,  429 

1,  913,  533 

5,  222,  975 

15, 143,  066 

9,  701,  050 

4,  841,  836 

3,  856. 183 

1, 383,  583 

5,  166.  049 

15,  247.  651 

13,  279,  170 

5.  446,  035 

3,  956.  370 

772,  562 

7,  113,983 

17,  288.  950 

li  576,  611 

6,  704,  019 

3,  901,  357 

303.  797 

12,  108,  379 

23,  017,  552 

10,  930,  875 

5,  696,  189 

3,  956,  260 

202, 153 

8,  772.  967 

18.  627,  569 

3, 164,  367 

5,  759, 157 

3,  864,  939 

57,  863 

7,  890,  854 

17,  572,  813 

17,  857,  274 

12,  169,  227 

5,  807,  718 

12,  891,  219 

30,  868,  164 

19.  958,  632 

13,  682,  734 

8,  646,  915 

16,  913,  847 

37,  243,  496 

-12.289,343 

12,  897,  224 

6, 131,  596 

.__^._ 

14,  821,  242 

33,  865,  059 

-7,  562,  497 

8,  916, 996 

6,  182,  294 

399,  834 

11,  400,  004 

26,  899, 128 

4,  583,  621 

7, 097,  070 

6,  113,  897 

174,  598 

10,  932,  014 

24,317,579 

-4,  837,  464 

8,  805,  565 

6,  001,  077 

284.  978 

11,474,253 

26,  565,  873 

-9,  705,  713 

6,  611,  887 

8,  397,  243 

773,  550 

9,  423,  081 

25,  205,  761 

-5,  229,  563 

2,  957,  300 

3,  727,  711 

523,  595 

4,  649,  469 

11,858,075 

-3,  555,  373 

5, 179,  220 

6.  498.  199 

1,  833,  807 

8,  826,  285 

22,  337,  571 

6,  983,  803 

5,  752.  644 

6,  297,  245 

1,  040,  032 

9,  847,  487 

22,  937,  408 

7, 032,  698 

10,  792,  867 

6,  454,  947 

842,  723 

9,  676,  388 

27,  766,  925 

1,  933,  042 

38,  305,  520 

7,  900,  636 

1,  119.215 

9,  956,  041 

57,  281,  412 

-30,  785,  643 

25,  501,  963 

9,  408,  476 

2,  390,  825 

8,  075,  962 

45,  377,  226 

-9,  641,  447 

14, 852,  966 

9,  786,  706 

3,  565,  578 

16,  846,  407 

45,  051,  657 

-13,843,514 

9,  400,  239 

7.  904,  709 

3,  782,  331 

18,  456,  213 

39,  543,  492 

4,  059,  947 

11,811,793 

9.  005,  931 

3,  696,  721 

23.  194,  572 

47,709,017 

4,  850,  287 

8,  225,  247 

8,  952,  801 

4,  000,  298 

23,  016,  573 

44,  194,  919 

5,  651,  897 

9,  947,  291 

10,  918,  781 

3,  665,  833 

23,  652,  206 

48,  184.  Ill 

13,  402,  943 

11,  733,  629 

10,  798,  586 

3,071.017 

32,  441,  630 

58,  044,  862 

15,  755,  479 

14,  773,  826 

13,  312,  024 

2, 314,  375 

29,  342,  443 

59,  742,  668 

5,  607,  907 

16,  948, 197 

14, 091,  781 

1,  953,  822 

36,  577, 226 

69,  671, 026 

4,485,672 

i 


510   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  2. — Receipts  and  expenditures, 


Receipts 

Year' 

Customs 

(inpluding 

tonnago  tax) 

Internal 

revenue 

Other  re- 
ceipts » 

Total 
receipts ' 

Net  re- 
ceipts 

Income  and 
profits  ta.\es 

Other 

1857    

$03, 875, 905 
41.  789.  621 
49,  565, 824 

53.187,512 

39.  ,582. 120 

49. 050, 398 

69, 059. 642 

102.316.153 

84.  928.  261 

179.  046.  652 

176.417,811 

164.464.000 

180, 048, 427 

194,538.374 
206,  270.  408 
216, 370.  287 
188,089.523 
163,103.834 
157,107,722 
148,071,985 
130,9.56.493 
130, 170.  080 
137,250,048 

186,522,064 
198,159,676 
220,410,730 
214,  700, 497 
195,067,490 
181,471,939 
192, 905, 023 
217, 280, 893 
219,091,174 
223, 832,  742 

229, 668,  585 
219,  522,  205 
177, 462,  964 
203, 355, 017 
131,818,531 
162, 158, 617 
160,  021,  752 
176,554,127 
149,575,002 
206, 128, 482 

233, 164, 871 
238,  585, 466 
264, 444,  708 
284, 479,  582 
261, 274,  565 
261, 798, 867 
300,251,878 
332, 233, 303 
286,113,130 
300,  711, 934 

333,  683, 445 
314,497,071 
311,321,672 
318,891,390 
292, 320, 014 
209,  786,  672 
213, 185,  846 
225, 902, 393 

179. 998. 386 
184,457,867 

322, 902, 050 
308,  504, 391 

356. 443. 387 
661, 928, 807 
646, 637,  604 

$5, 089,  408 
4,  865,  745 
3, 920, 641 

2, 877, 096 

1,  927, 805 

2.931,058 

6.  990,  801 

52,  509.  484 

39.322.129 

69,  759, 155 

48,188,662 

50.  085,  894 

32,  538, 859 

31,817,347 

33.  955,  383 
27, 094, 403 
31,919,308 
39, 405, 137 
20,  824.  835 
29, 323, 148 
31,  819,  618 
17,011,674 
23,  015,  520 

22, 995, 173 
27, 358,  231 
36.616,924 
38,  860,  716 
31,  866, 307 

29,  720, 041 
20,  728,  767 
35.  292, 993 
35,  878,  029 
32, 335, 803 

30,  805, 693 
27,  403,  992 

23,  513,  748 
21, 436,  988 
27,  425,  552 
29, 149, 130 
31, 357.  830 

24,  479,  004 
84.  845,  631 
36, 394, 977 

38,  748,  054 
41,919,218 
30,153,403 
40,  .591,  010 
40,  908,  401 
48.  3S0.  087 
45.  582,  355 
63, 960, 250 
64,  037, 650 
57, 395,  920 

51, 894,  751 
64,  806,  639 
69,  675. 332 
60. 802.  868 
62.312,145 
72,  454,  509 
66.  040,  673 
88.  990, 194 
298,  650, 168 
652, 514,  290 

966,631,164 
719.  942.  589 
639,  407,  607 
820,  733, 853 
671, 250, 162 

$68,  965.  313 
46,  655, 366 
53, 486, 465 

66, 004, 608 
41,509.931 
61, 987, 456 
112,697,291 
264, 626,  771 
333,  714,  605 
558, 032. 620 
490.  634. 010 
405.  638.  083 
370, 943,  747 

411,255,477 
383.  323,  945 
374, 106, 868 
333,  738,  205 
304. 978.  7.50 
288.  000,  051 
294, 095, 865 
281,406,419 
257,  763,  879 
273, 827, 185 

333,520,611 
300.  782.  293 
403,  525, 250 

18.58 

1859  . 

1800 

1801        

1802 

1863 

$2,741,858 
20,  294,  732 
60, 979, 329 
72,982,1.59 
66, 014, 429 
41,455.598 
34,791,850 

37,  775.  874 

19,  102.  051 

14,  430,  862 

6, 002, 312 

139,  472 

233 

588 

98 

$34,  898. 930 
89.  446,  402 
148,484,886 
230,  244,  054 
200. 013, 108 
149,631,991 
123,  564, 605 

147,123,882 

123.  935,  .503 
110,205.310 
108,  007.  002 
102.270,313 
110.007,201 
116,700,144 
118,630,310 
110,581,625 
113,661,611 

124, 009, 374 
135,  261,  364 
140, 497,  590 
144,  720, 369 
121,530,445 
112,498,720 
116,805.936 
118,823.391 

124,  296, 872 
130, 881,  514 

142,  606,  706 
145,080,250 
153,971,072 
161,027,624 
147,111,233 
143.344,541 
146,  762, 865 
146,688,574 
170,900,642 
273,  437, 162 

295,  327, 927 
307, 180, 664 
271, 880, 122 
230, 810, 124 
232,904,119 
234,095,741 
249,150,213 
269,  660,  773 
251,711,127 
246, 212,  644 

268, 981, 738 
289,  012,  224 
293,  028,  896 
309,410,660 
308, 659,  733 
335, 407, 887 
387,  704,  776 
449, 684,  980 
872, 028, 020 
1, 296, 501,  292 

1,460,082,287 

1, 390, 379, 823 

1,145,125,064 

945,  805, 333 

953, 012,  618 

1854            

1855 

1860 

1857    

1868 

1869 

1870 

1871            

1872    

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

3,022 

1882 

1883 

398,  287,  582 
348,619,870 

323.  690,  706 
336,  439,  726 
371,  403,  277 
379.  266, 075 
387, 050, 059 

403,  080,  984 
392,  012.  447 
354, 937,  784 
385,  819,  629 
300, 355, 316 

324,  729, 419 
338. 142,  447 
347,721,705 
405. 321. 335 
615,960,621 

667,  240,  852 
687,  686,  338 
562, 478, 233 
661,  880.  722 
641, 087, 085 
544,  274,  685 
694,  984,  446 
605, 800, 380 
601,801,907 
004, 320, 498 

676,511,715 
701.832.911 
092.  009.  204 
724,111,230 
734,673.107 
697.910.827 
782.  534.  .548 
1  124. 324.  795 

1884    .  - 

55, 628 

1885 

1886 

1887 

1888 

1889 

1890    . 

1891 .  . 

1892 

1893    - 

1894 

1895 

77, 131 

1896    . 

1897 

1898 

1899    - 

1900    - 

1901 

1902 

1903 

1904 

1905 

1006 

1907 

1908.- 

1909—      

1910 

20,  961, 781 

33,  516, 977 

28,  583, 304 

35,  006, 300 

71,381,275 

80,  201,  759 

124, 937,  253 

369, 681, 228 

2, 314, 006,  292 

3, 018,  783, 687 

3, 944, 949, 288 
3,206,046,158 
2, 068, 128, 193 
1,678,607,428 
1, 842, 144,  418 

1911 

1912— 

1913- 

1914 

1915 

1916 

1917 

1918 

3,  664,  582, 865 
5, 152, 267, 130 

6, 694,  565.  389 
6, 624,  932,  901 
4,109,104,151 
4, 007, 135,  481 
4,012,044,702 

1919— 

1920 

1921 

i»a 

1933 

1934 

Footnotes  at  end  of  table. 


TABLES 


511 


fiscal  years  1789-1962 — Continued 


Expenditures 

Department  of 

Surplus,  or 

the  Army 

Department  of 

Interest  on  the 

Total  expendi- 

deficit (-) » 

(formerly  War 

the  Navy  * 

public  debt 

Other's 

tures  • 

Department)* 

$19,  261,  774 

$12,  747,  977 

$1,678,265 

$34, 107.  692 

$67,  795,  708 

$1, 169,  605 

25,  485,  383 

13, 984,  551 

1,567,056 

33, 148,  280 

74, 185,  270 

—27, 629, 904 

23, 243, 823 

14, 642,  990 

2,  638, 464 

28,  545,  700 

69, 070, 977 

—15,  584, 512 

16, 409,  767 

11,514,965 

3,177,315 

32,  028,  551 

63,130,598 

—7, 065,  990 

22,  981, 150 

12, 420, 888 

4,000,174 

27, 144, 433 

66,  546, 645 

—25,036,714 

394,  368,  407 

42,  668,  277 

13, 190,  325 

24,534,810 

474,761,819 

—422,  774,  363 

599,  298,  601 

63,221,964 

24,  729, 847 

27, 490,  313 

714,  740,  725 

—602, 043, 434 

690,791,843 

85,  725,  995 

53,  685,  422 

35,119,382 

865,  322,  642 

—600,  695, 871 

1, 031, 323,  361 

122,612,945 

77,  397,  712 

66,  221,  206 

1,  297,  655,  224 

—963,  840,  619 

284, 449,  702 

43,  324, 118 

133. 067,  742 

59,  967, 855 

520,  809,  417 

37, 223, 203 

95,  224, 415 

31,034,011 

143,  781,  592 

87,  502, 657 

357,  542,  675 

133,091,335 

123,246,648 

25,  775,  503 

140,  424, 046 

87,894,088 

377,  340, 285 

28, 297,  798 

78, 501,  991 

20,000,758 

130, 694, 243 

93, 668, 286 

322, 865, 278 

48,078,469 

57, 655, 676 

21,  780,  230 

129,235,498 

100,982,157 

309, 653,  561 

101,  601, 916 

35,  799,  992 

19,431,027 

125,  576,  566 

111,369,603 

292, 177, 188 

91, 146,  757 

35, 372, 157 

21, 249,  810 

117,357,840 

103,  538, 156 

277,  517,  963 

96, 588, 905 

46,  323, 138 

23,  526,  257 

104,  750, 688 

115,745,162 

290,  345,  245 

43, 392, 960 

42,  313, 927 

30, 932,  587 

107,119,815 

122,  267,  544 

302,  633, 873 

2, 344, 883 

41,120,646 

21, 497, 626 

103, 093,  545 

108,911,576 

274,  623,  393 

13,  376, 658 

38, 070,  889 

18,  963, 310 

100, 243,  271 

107,823,615 

265,101,085 

28,  994, 780 

37,082,736 

14,  959,  935 

97, 124,  512 

92, 167,  292 

241,  334, 475 

40,071,944 

32, 154, 148 

17, 365, 301 

102,500,875 

84, 944, 003 

236, 964, 327 

20, 799, 552 

40, 425,  661 

15, 125, 127 

105, 327,  949 

106,069,147 

266, 947, 884 

6, 879,  301 

38,116,916 

13,  536,  985 

95,  757,  575 

120, 231, 482 

267, 642, 958 

65, 883, 653 

40, 466,  461 

15,  686,  672 

82, 508,  741 

122,051,014 

260,  712, 888 

100,069,405 

43,  570,  494 

15, 032, 046 

71,077,207 

128,  301,  693 

257, 981,  440 

145,  543,  810 

48,  911,  383 

15,283,437 

59, 160, 131 

142, 053, 187 

265,  408, 138 

132,  879, 444 

39,  429,  603 

17,  292,  601 

54, 578,  379 

132,  825,  661 

244, 126, 244 

104,  393,  626 

42,  670,  578 

16,021,080 

51,  386,  256 

150,149,021 

260,  226, 935 

63, 463,  771 

34,  324, 153 

13,907,888 

50,  580, 146 

143,  670,  952 

242, 483, 139 

93, 966,  587 

38,561,026 

15,141,127 

47,  741,  577 

166, 488,  451 

267,  932, 181 

103,471,096 

38, 522,  436 

16, 926,  438 

44,  715, 007 

167.  760, 920 

267,  924, 801 

111,341,274 

44, 435,  271 

21, 378, 809 

41,001,484 

192, 473,  414 

299, 288, 978 

87,761,081 

44,  582, 838 

22, 006,  206 

36, 099, 284 

215, 352,  383 

318, 040,  711 

85,040,273 

48,  720, 065 

26,113,896 

37,  547, 135 

253, 392,  808 

365,  773,  904 

26,  838, 543 

46, 895, 456 

29, 174, 139 

23, 378, 116 

245, 575, 620 

345,  023,  331 

9,  914, 463 

49,  641,  773 

30, 136, 084 

27, 264, 392 

276, 435,  704 

383,  477,  953 

2, 341, 676 

54,  567, 930 

31,  701,  294 

27, 841,  406 

253,414,651 

367,  625,  281 

—61, 169. 965 

51, 804,  759 

28,  797,  796 

30, 978, 030 

244,  614,  713 

356, 195,  298 

—31,465,879 

50, 830,  921 

27, 147,  732 

35,  385, 029 

238, 815,  764 

352, 179, 446 

—14,036,999 

48, 950,  268 

34,  561,  546 

37,791,110 

244, 471, 235 

365,  774, 159 

—18. 062, 454 

91,  992, 000 

58,  823,  S85 

37,  585, 056 

254, 967,  542 

443,  368,  583 

—38, 047, 248 

229, 841, 254 

63, 942, 104 

39, 896,  925 

271, 391, 896 

605, 072, 179 

—89,  111,  558 

134,  774,  768 

55.  953, 078 

40, 160,  333 

289,  972, 668 

620, 860,  847 

46,380,005 

144,615,697 

60,  506,  978 

32,  342, 979 

287, 151,  271 

524, 616, 925 

63, 068, 413 

112,272,216 

67, 803, 128 

29, 108, 045 

276, 050, 860 

485, 234,  249 

77,  243, 984 

118,  629,  505 

82,  618, 034 

28,  556,  349 

287,  202,  239 

517,006,127 

44, 874,  595 

165,199,911 

102,  956, 102 

24,  646, 490 

290, 857, 397 

583,  659, 900 

—42,  672, 815 

126, 093,  894 

117,550.308 

24,  590,  944 

299, 043,  768 

567,  278,  914 

—23, 004,  229 

137,  326, 066 

110,  474,  264 

24,  308,  576 

298,  093,  372 

570, 202,  278 

24,  782, 168 

149,  775, 084 

97, 128, 469 

24,481,158 

307,  744, 131 

579,128,842 

86,  731,  544 

175, 840, 453 

118,037,097 

21, 426, 138 

343, 892,  632 

659, 196,  320 

—57, 334,  413 

192, 486,  904 

115,546,011 

21, 803, 836 

363, 907, 134 

693, 743, 885 

—89, 423, 387 

189, 823, 379 

123, 173,  717 

21, 342, 979 

359, 276,  990 

693,617,065 

—18, 105, 350 

197, 199,  491 

119,937,644 

21,311,334 

352,  753, 043 

691,201,512 

10,  631, 399 

184, 122,  793 

135,591,956 

22, 616,  300 

347,  550,  285 

689,881,334 

2,  727, 870 

202,128,711 

133,  262, 862 

22, 899, 108 

366,  221,  282 

724,  611,  963 

—400,  733 

208,  349,  746 

139, 682, 186 

22.  863,  957 

364, 185,  542 

735, 081, 431 

—408, 264 

202, 160, 134 

141, 835,  6.14 

22,  902,  897 

393,688,117 

760,  586,  802 

—62, 675,  975 

183,176,439 

153, 853,  567 

22, 900,  869 

374, 125,  327 

734,056,202 

48, 478, 346 

377, 940, 870 

239.  632,  757 

24,  742,  702 

1, 335,  365,  422 

1, 977,  681,  761 

—853,  356,  966 

4, 869, 955,  286 

1, 278,  840, 487 

189,  743,  277 

6, 358, 163, 421 

12,  696,  702, 471 

—9,032,119,606 

9, 009, 075, 789 

2, 002, 310,  785 

619,  215,  569 

6, 884,  277, 812 

18,  514, 879, 955 

—13, 362,  622, 819 

1, 621,  953, 095 

736,021,456 

1, 020, 251, 622 

3,025,117,668 

6,  403, 343, 841 

291, 221, 548 

1,118, 076,  423 

650,  373,  836 

999, 144,  731 

2,  348,  332,  700 

5, 115, 927, 690 

509, 005,  271 

457,  756, 139 

476,  775, 194 

991, 000,  759 

1, 447, 075,  808 

3,  372, 607, 900 

736, 496,  251 

397, 050,  596 

333,  201, 362 

1,055,923,690 

1,508,451,881 

3,  294, 627,  529 

712. 507,  952 

357,016,878 

332, 249, 137 

940, 602, 913 

1. 418, 809, 037 

3.048,677,965 

963,366,737 

512   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


T3 

a> 

3 

a 

a 
o 
O 


e 
"3 

Co" 
H 


•-3 
-< 

H 


00  tC  -^  CC  o 
T?-  lO  Ol  ^t"  lO 

.— .  r-  coco  (N 


WCQ'^COOS 
O  C^  CI  CO  cs 

r-  OJ  tx  oc  r- 

rr  iC  Oi  — "  O 
CR  LO  00  OO  Oi 


o»oeoeo  00 

O  t—  »0  !--  lO 

CC  O  »C  OC  CI 

id  00  cf  .-^  uo" 

I,-  lO  ,_  __.  (10 

o  o  o  o  o 


t-^  lO  U3  IC  CO 

t-  o  r-  f-H  Tp 

Oi  O  CO  CO  o 

-^  r^  -^cc  o 
WcO  O  (M  cc 


^  CO  ^  Ol  05 
■^  00C4O0CO 

Oi  Oi  O  Oi  Ol 

O  o  r- r-^'cj" 
(>)  t^  CO  o  r^ 

o  00  --I  r^  aj 


t^  t-r- NeO 

»0  O  C3i  -^  O 

CO  O  CO  00  CO 

o  o  »o  o  o 


O  CJ  Ci  C^l  CO 

00  y:::  cs  -f  CO 
r-  ai  ^  c;  o 


h-  to  CO  cr:  -^ 

t-  — '  C^J  Cl  — ' 

^  — '  Ol  Ci  o 


lO  t'~  lO  00  o 
C  CI  'C  'JD  I- 

t-  3i  c;  1-'?  o 


r-  to  CO  r-  oi 

CO  Oi  -^  -^  :0 
-— '  O  lO  C5  to 


CI  Oi  r-  'rt*  C^ 

CO  ^  t--  r^  cc 

CO  CO  O  CO  o 


•-"O  coo  "O 

c^  CO  cc  r-  c^ 

Tf  ""^  <M  CO  -rj* 


-^CO  ^i-HCO 


CO  :o  Tj*  to  -r;« 


rt 


•-  Ht) 
aj  c3  2 


o)  d 

— '    03   OT 

a.a  3 

u  2  ^ 


n 

rfl 

'- 

rn 

-D 

m 

a 

3 

C 

<T» 

—^  ■«-3  .^1,  OT 

o  g  a  b 


r  -o 

^    CO 


■v  oco 
C-.  ^  -H 
C-)  —  ^ 

^'Ciod 
CI  coo 
«f  CO  CJ 


to  '■r  Ot  c:  C^ 

-r  ^  CO  00  r-- 

*M  i^  ,—  CI  to 

00  t  -  00  Cft  CO 


CO  r-lCl  OCC 
h-  CO  C»  CO  OS 
C4  CO  CO  CO  00 

CO  to  t^  l^tO 

CC  to  -H  ,—  o 
t^  C^  CO  -^  Ix 


^  ^  cj  coo 

C^  C^  — '  to  — ' 

r^  r-  o  CO  to 

C^  Ci  '«?''  tC  CO 

cc  c:i  —  t^  1^ 

CJ  to  o  ■^  »o 


C  CJiCO  C^OC 

cc  ocoocq 

C^  TT  CC  CO  Oi 

CO  CO  cooicT 

CO  Tt^  OC  to  tO 
O:  »0  CO  -^  CO 


C^  1-^  '^  "rf<  to 

r^ooo  to  CO 

.-H.-I   C< 


too— "coto  c^cof^wc^  tooitoc^o  ■^cO'^r^co  ioococ^a>  t^-^c^cooi 

OOC;Tj'tO(N  OC5— ''^'-'  ''fOGOlCDCO  TfCOOOOOtO  CC-HCO'^'f  COOCtoC^OO 

COcOTt^-— 'CI  I-OSi— 'OiC5  COCOCO»-'tO  ccoot^co  coi^-coo-^  OO-^tOOOS 

ooio'-^coo  ^cococfr-T  cotoo'i-^oT  cO'-*"cooto  coeO'-^'ooor  oeo-^-rt-'cD 

■T'tOOi'^tO  TflOi— "I— '<0  t—COOCiCS  -— 'COCOOi— t  OOOCf^-^  O'-'-^'TfOO 

<— it-cocoC-l  0:tr;OsC^e^  OiC:cOC)C^  CO-^t-^CO  CO'^»— r-*iO  CiOOiOCO 

o  c^  cT  ci  C'5'  r-Tto  CO  ■-*  "^  Oi  oo  oc  to"  o  -^"c^io  co  to  to  r-7to  oc  to  ■^r-TcT'o  to 

occoci^co  r^^cic^o  oi<cr^  —  os  -^Otoocco  i^i^coccoi  oiccc:c^»o 

t^OJ»— 'OO  .— <— lOiOO  I^OCICOOI  1— (t-h»oo:cO  ■^t^t-'^O  -^tocoooco 

eoco"^"*^"^  -^'cOf-^^c^co  co-^rf'ti-^Tj*"  tofCc^^co  --fcrrcs— J"i^  cot>r.-rrp-^ 

6^  — iCJ-iJ'  '<?' CO  CO 'tf  CO  COTt^cOcOCD 


iCiOOioo  t^coc^toco  lor^coo^co  coo«— 'C^i— <  too'^cO'— 'CO 

lOciosco  toci-^cooi  ojcir-o-rr  ooot-i'-r^  r-tocc^Tj< 

it^COh--— '  COOitOOO  OOi— «COCOO  I^tOtOTfO  O'VOCOt- 

t  i-T  c^  CO  co'  CO  ci"  oT  o"  -"r^"  "Tt^  o  -rr  --*  --r  c4"  -^  t-T  cc'  co  r^  or  to  o*"  otj 

ioo<— '0000  tfif-ccTj-c^  tooo-rrc-ico  ocooc^to  ciionoi-^ 

looorrcj  toooi-vto  coocicor^  or^ocooi  r-o^oto 

I'^i-HOO'-^  or^"^co'— ^  Oicr-4"ioio  lococfo't^T  lOt-icoTj*"!^ 

ih-oototo  t^-^  —  cit^  -^cici— *o  t-ccc^.—  r-^  i-toocj'— * 

I  «©■  CO  O  CO  h*OC— »TfCO  CJ-^r^too  COOCCOOOto 

I  ^^^  f^^^^'j^  Tj-"tO<Ot^00 


to  O  --I  CO  to 
OO  Oi  '^  >o  CJ 
CO  CO  -^  ■— '  C^ 

00  to  -^  00  o 
-f  lO  O  "V  >o 

w  h-  coco  o 


wc^i^  wo 

OCO  CO'^  to 
t^  CO  ''t'  h-  O 

r-Toc'to'cTi*" 

■^  CO  C^  Oi  to 

Oi  CO  r-  CO  to 


C^  to  t-  h-  CO 

O  wCOC^  CI 
<MCC  Ci  CI  CO 

r^  CO  o  — <"  CO 

CO  to  OS  CO  c^ 
■^  O  tO'  CO  CO 


O  O  O  CO  C*1 

CO  00-  CO  05  o 
OS  to  'J'  CO  tJ< 

CO  ^  00  CI  rf< 

CO  CO  CO  COO 


1-H  O  l^-'*'  O 

r*  C50  ^  oi 

CO  C<l  CD  CO  to 

CO  to  00  r^  to 

O  CO  C*'J  o  o 
CO  -^  t-H  oc  to 


W  C»  QC'  t^  00 

to  Ol  to  ■*t'  CO 

cc  oc  to  cot^ 
r-T  .-T  oT  TT  to 

CJ  t-  CO  CO  CJ 

CO  CO  CO  •-«  Oi 


o  c«<  o;  CJ  CO 

00  CO  C^  "^  CO 

r^  oi  T^o  o 


1^  Oi  to  d  to 
h-  OOO  l^  ^ 

P-H  r-l  O  O  '— 


o  to  CO  -— t  r- 

o  •-'  C5  -r  CD 

CO  •— <  C^  C^  CO 


CO  to  CC  CI  .-H 

en  o  t-  o  ■* 

CO  Ol  CO  ^  rf< 


O  GT'  00  00  CO 

to  CO  o  c:  r- 
b-  <N  to  O  I-- 


O  oo  a;  Oi  CI 
1-J  CO  oi  -n*  h- 
CO  CO  cr-  CO  ^ 


coco'^-*}*'^      T^coC4Weo      co'^tocDio 


®    Q. 

£"5 


r^OCCtOt-^  iO»— 'rp-^O  1— 'COtOi— too  tOtOtOOSeO  «— tOC^COO  TfiO-— <»OC^ 

COCN  —  'ffCO  OO^COCO^  -^r— CO-TPCO  — 'CCt^.--<Q  OC^tocOt/J  ^-rrCIOOi-H 

lOCJ— «r-0  h»CO>— 'lOOi  1-H-rtOtO'*  COtOi-HCOOS  OOICOOOO  ^J-CO  0'-'-<CD 

^coo'oco  »ocoTrc4to  -n- co' CO  to' to'  CO  cc" '^"  c^f  oi"  coco'— oto  oco'oct-^co 

i—ocoooico  "^ococii-<  c^oiOitocr  TTcoJcoo  c^ciocTico  t^cor--rcD 

Tj^co-^cooa  cctootoio  Trcio»-«i-  coocoooc  tocor-tor-  cotor->r^oi 

coto-^occJ"  f-Tr-rcO'^t-*"  oico'ocoi^  T-^  oS  -r!^  -^ -v  coci""»rcO'-^  oTarco-j-''-^ 

Tp-^tor^oi  locoi— '(Nco  r>-— '-hooo  -^"^ococi  osc.  eoc^oo  coco— -co— < 

COtOCOcO-rJ*  lOCOi-'CIf-'  .-hO<CIC4>-<  CICICIO5C0  '^■^OOCO  tTCOOOOOCO 

CO  coco'^eoc^  .-* T-. .— I  ,-H  cj 


CI 


OOOiC^COCl  CD— «— 'CII->.  OtJ^cCCOOO  COCOiOOOOO  tOC^i-(C7SCO  ClCOCICOt^ 

COuC-^  ^O-rt^  COC^OO— ''f**  cr.  t^X-Clto  lOCO-^— -I^  tO00'«rrf— ■  — .ociccco 

OMtocoio  or-ftoco  coi-HC^r^-to  co— 'oci^  tocJciX'.-f  ocotooto 

coci— *"coiV  ccco'oi^ci  — I"cococfco  oi"tCcToto  or-Tocct-T  co— <"cocoo 

cooiO— to  ocor'.— (■^  r-r-ciccco  ocotooco  toco^r— to  co-^coooo 

cOiO-1-0-'3  COCOtOClCC  tOClI-O-*  COO«:CO—  COtOOOtoO  OitOCOCO 

ootoTtT^iV  oooTcoodcf  odcdco-^ci'  iCcfcTocT  oc'to'coci'to  tocoodoo-**^ 

CiiOrftC^O  CScCOtOC^  I^OCCOCOr*  h-OCOiOCO  ClClt-COCl  OOtOCC'OOi 

COOOCOCOCO  CCtOtocrcO  f-tO-5"OC5  i-hgOOOO  t-'^OCOCC  1— iCOCIXCO 

rH  c<r(NC4cocf  cocotocotC  oooTooo""  i-TcOTrtOCO 


FT-*   00 

OCC 
o  o 


00  to  CO  to  —4 
f^  Ci  »o  -f  OO 

01  C^  GO  ■<3'  Tt* 


oo-*j<  r^  — «  Oi 
coco  ^  -<  00 
CO  Tf  X  h*  CI 


tOOi  CO  —t  M 

CO  TT  r^  oC'  to 
CO  CO  OS  r-  CO 


CO  CO  -^  CO  Oi 
r-  -^  too  to 

coo  -^  "«*'  t* 


h*  O  CI  CI  1-1 

CO  -f  C5  to  --H 

to  O  c:  cr.  i^ 
O  CI -^coo 

CO  Ot  CI  t-  CO 
l>*  Oi  CI  — t  CO 


CO  M^  'O  CD  — ' 

CO  CI  CO  o  o 

Cr.  CO  CO  CI  05 

o  o"  r-T  CO  r^ 

— t  c;  to  M*  —• 
•^r  ooo  t^co 


oo  to  CO  -^  r- 

— I  t^  ^  OC  to 

»-H  to  TT  c^  r- 

cTco'co'o'oo 
o;  CI  CO  -^  00 

O  -^  »-•  CD  —I 


5SS 


I  t--  -•-  CO  "- 

.  I  CO  CO  o  to 

CO  CO  '<**  coco 

to  CJO^CO-^ 

CI  CO  CO  Oi  to 

1-H  Tl"  CI  O  CO 


.-t  CO  00  CO  CO 
to  CI  CO  CO  00 
O  I"-  lO  Oi  CI 

CO 'rf  too" of 
r-  00  o  r-  CO 

1— '  00  CO  — 1  Tt* 


1-t  CO  to  r^o 
r^  to  CI  CO  r- 

CD  to  to  O  to 

ci  CI  coci"  to 

CO  to  -^  CO  o 

CI  r- COCOOi 


*-*  — t  dcic^ 


a 

o 

o 


a 
^ 


CO  CO  CO  CO  CO 
C^  O  iC  00  GO 
d  O  Oi  —  l^ 


co  to 

oo 

OlC 


0.-tCI 
CO  to  o 
O  CI  CO 


'<f  '^  OJ  CI  w 
CO  C-  Oi  '^  ^ 
O  to  to  d  CO 


CO  CO  t-  CO  oo 
CO  —  CI  r- CO 
CO  O'^f  r^  1-t 


CI  CI  O  CC  CO 

•^  r-  tc  CI  OS 

to  O  CI  O  I-* 


03  CI  Oi  CI  00 

CI  to  r^  00  —t 

CCO  COtOCO 


—  OOCOCI 
CO  CO  c:  00  CD 
to  -rr  "TT  C5  CI 


o  to 

oco 


"^  O  ^*" 

lo  toco 

r-  t-  -rjt 


CO  ■-•  CD  t^  r^ 

to  -H  to  OC  CO 
CO  30  oo  — '  GC 


OOCOO  CI 
Oi  1^  "^  C35  to 
to  00  OS  CI  CI 


to  to  CO  CO  -^ 

h-  h-  r~  CI  or 
t'-'*  o  r-  rj* 


o  CC  CD  o;  o 
to  O  c:  —  CI 
coo  CO  '^O 


t'-  Ci  to  X  CI 

"^  r~.  o  CD  o 

to  to  CO  to  CO 


r-  OC 
CO  h' 

to  CO 


r-  o  CO 

Tl  to  ^H 

OD  CI  CO 


CO  CD  CO  O  GO 
■-"  00  ao  to  — t 
CO  CO  TJ*  CO  CO 


OC  — 4  CO  '?;•  — 

-^  ct  oo  CI  CO 
CO  CO  CO  CO  ^ 


■^  to  -^  >—  M< 
to  CO  Oi  CI  oo 

CO  'T  ■^  -^  CO 


CI  fO  COCI 

CI  CI  to  -^  CD 

•^  CO  to  CO  to 


tocdr-oboi      o  —  cicoM"      locor-ooos      o^cico'^      tooh»ooo3      o^cico*** 

CICICICICI         COCOCOCOCO        COCOCOCOCO        ■^■^'*"^-^         -r"*'«r-^f         totOtOtoto 
a)0>0k0i03        0>0)0>OE>0>        OOOsOSOs        OdOiOOO        Oi  ^  Oi  Oi  0>        oaOiOiOsO) 


TABLES 


513 


3r 

ha 

_-?  to 


cc  r--  CD  •-<  d 

lO  tlO  CO  oco 
CO  00  h*  CO  r^ 


00  OOOiOCO 

.-«  QOOOO-<S* 
GO  O  t"-  O  Oi 


0  0^*000 
O  CO  t-H  Oi  -^ 
,-1  (M  t-*  lO  O 


i-H  00<M»Ot-W 

to  ic  ec  cc  -^ 

i-H  CO  t-~  CO  lO 


eOOs  O-"^  QO 
(M  O  O  ■^  -^ 

i-H  O  CD  00  O 


h-  -^  00  t--  CD 
»o  C-)  t-  »0  lO 

CO  CC  CO  -^  c^ 


coco^coo 

"^  "*  CD  00  Oi 

o--^  CO  oco 


t—  t-  00  lOCO 

CDOO(M  coco 


(M  Oi  OCD  OO 
lO-"^  (M  ^  O 

O  O  '^  CD  .-( 


O  (M  (M  O  C^i 
i-H  t~>.  '^  CO  OS 
O  CM  CI  '«r  CO 


CD  O  h-O  O 
1— I  r-.  00  CD  rt< 


CM  CI  O  CO  CD 
OOO^  --t  CD 
rH  t^CD  CMOi 


h-  lO  iC  c^  -^ 

^  CD  »OCOCO 
h-  00  F-l  OS  t^ 


t^^   UOi-HOl 

CO  CD  CO  0(N 
t^  "^  r-  CD  CD 


T-H  -^  t^  CD  (M 

05  c^  r>- 1—  CD 

I--'*'  t>-  woo 


H  IC05  (N  C 

5  i-H  Tt^  -^  -^ 


OCD  CO  OS  w 

■-^  r--  lo  .— I  ,-H 

O  CD  t^rt^  00 


(M  Ci  CO  OS  O 


CM-^CMfHCO 

Mill 


III     II 


CO  CO  "^  Ol  CO 

I     III 


a 


W 


•T3 
o 


■d  O" 


S  fl   w 

CQ  w  b 


in  -^ 


■ess 


n  >> 

<D   > 

S5 

^2^ 

C3   CD 

9:-^ 

0-3 

Saisg 

y^^a 

&5aa 

fi-3aS 

CI  CO  ■*  lO  CD 
CO  CM  t^  »0  00 

CO  00  CO  00-^ 


Tt<CO  (N  00-H 

CO  OCO  -H  Tji 
OO  O  »0  05  t^ 


O^  O  w  00 

o  O  r^  r^  Oi 


CO  w  OOtM  O 

Oi   TJ*   Tj*   lO    O 


Oi  »0  Tf  lO  l>- 

CD  OS  CD  "tP  00 
O  lO  CO  1— «  Oi 


CO  »OOS  00  <— < 
Oi  '^  CM  OOCO 


lO  .— (  05  "^  o> 
O  1-H  C-l  CD  >0 
i-H  CD  O  (N  OO 


00"^  1— >  »0  T-H 
CD  CO  OOOi  O 
(N '<*'  .-H  Tf  CD 


h-  00  CO  00  CO 
O  O  CO  (M  CI 
OCD  oco  (M 


00  00  T-(  CO  C-1 
CD  -^  CD  »-H  O 

CMcrs  00  t^  o 


r-  w  Oi  (M  (N 
CO  ■^  I^  CO  f-H 
Oi  oco  CS  '^ 


coTt*  w  r-  O 
COOO  OOi  o 
O  (N  <M  t^  O 


CO  t--  -n^  CO  OO 

CO  CI  t^  O  Ci 
O  OOi  ■-'  C^ 


Ob-Oi  OOtt* 

"^  r-  lo  Oi  -^ 

■**•  lO  CO  lO  CO 


b-  -H  CO  Tf  W 

Oi  (N  CO  CO  '^ 
•rp  M'  t^  t--  C» 


»0  Tf  CO  t--  CD 
»iO  >C  CO  CO  00 
O  M  oco  Oi 


(M  CD  CO  lO  -^ 

o  c^  (M  lo  r- 

CO  CO  Ci  Oi  -^ 


''f  oco  Oi  t^ 
■^  t^  O  <—<  CO 
lO  Oi  CO  »-<  to 


COCCt^'^cD        CDOOt^CDOO 


■^ooo 

Oi  •—  r-l 


*0  Tt*  Oi  Oi  C<l 
•<**.-*  CO  oc  r'- 


CO'-H  Oi  oco 

t^CO  CM  COOi 

(M  CO  coco  00 


w*<<MC0O 
CM  CJ  — '  lO  .-( 
t~-  c--  OOO  lO 


O  C^  CO  CI  00 
CO  OCOOtM 
C^  Tji  CD  CO  Oi 


.-H  Oi  00 
<MCDOi 
«©CO(M 


00  r^ooci  CO 

lO  h-  00  O  CO 

Oi  OOOi  (MCI 


CO  ^  t^  b-  lO 

<£J  lO  .-H   .-.  O 

f--  (N  00  Tp  t^ 


C^  C^  ■«**  CO  CO 

00  CO  — <  t--  r- 

CM  lO  O  -^  lO 


COOCOOs  CM 
CD  M*  00  lO  >0 
Oi  lO  CO  TT  CO 


c^  r-  rt*  -^  to 
r-  00  O»o  CO 

1-1  i-H  CM 


CM  CO  "^  "O  CD 

CO  d  r-  to  00 

CO  00  CO  oo-<** 


■<*' CO  lO  OO -^t* 
OC  O  C^l  d  »o 

00  ooooco 


»OOi  Oi  O  O 
-*  w  OCD  r^ 

OS  Oi  Tt<  t--.  lO 


'^  CM  CD  CM  00 

OTf  p-H  lO  Oi 

CM  r^  00  i-H  00 


OOi  CD  00  t^ 
Oi  ^H  !■-»  Oi  Oi 
t^COCOOi  Tji 


»OOi  O  ■***  lO 
Oi  toco  OOTt* 
i-i  OOOi  -^  CM 


lO  .-«  Oi'*  Oi 
O  '-I  CM  CD  O 
i-<  CD  OCM  00 


OO  ■^  CM  to  03 
coco  OCD  Oi 
CM  '<*«  C^  00  00 


to  to  T-H  r-  b- 

CD  00  C^»  CO  to 
Oi  ■*  OCiO-^ 


CM  CO  00  »-H  t-- 

CO  o  t-^co  o 

OCM  CD  i-H  t^ 


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"*  "*  o  o  to 


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co  o  ■^  C<1  t^ 


COCOt^-^CO        CDOOt^COOO 


woooo-^00  r^ooit^-*  .-Hoootooo  cococot^r^  ocor^too  c^socdoo 

CD  CO  h- O -^  1—1  CD  "*  CD  to  ■*  Oi  CM  CD  Oi  CO  CM  O  O  tO  t- i— '  OO  O  CM  Os  CM  CO  00  CM 

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toocc^too  c^i"'*r  CO  ccTod  oc5"oi"o(5"co  cjo  .-TcfTcocft '<^  oT  to  orji-ToT  ''S*'TP"t-^io  ^" 

b-.-!t^00r-C-I  OCDOOCD  1--1— ItOCDCO  toOCTitOCO  r-COC'lCOCM  M*00C^00O 

f-iOOOii— <0  OiOirHiOI--  r-COOOi-tOi  "*tOTj*Ob-  C^'^r-i-^O  M*Ob-C^lC-l 

■^'od oo'cjTo  i-T to cD'oTr-T  locD -Tj^tooT  c<rai''o »o  co  cm  ■^'to-^'o  r^oo cm  co co 

COOOOSCOCO  -^^^CMCI-^CO  l>.CJlO(N'<*<  CMCJiOOOOl^  COt^Or-00  CMOO^tOi-i 

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</^  1-lr-i  .-I  ,-<  f-l  i-(  CM  CMi-li-lCMCM 


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CO-^i-IC 

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COCMi-HTt*-^ 
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COOOCOb-b- 


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OCD  ^00  CO 


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CD  r--  Oi  •*  o 
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t-Oi  CO 
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to  t^ 

CO  1-1 

coco 


CO  O-*  OOi 
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to 00 •*  oco 

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CO  00  CO  CO  CM 
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cO'*CMoi"  csr^oTt^rC  looor^t^co 

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to  CD  b-  00  Oi 
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OS  Oi  Oi  C^  Oi        Oi  Oi  Oi  Os  Oi 


661496 — 63- 


-34 


514       1962 


REPORT   OF   THE    SECRETARY   OF   THE    TREASURY 


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or:.-! 

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516   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  3.— Refunds  of  receipts  and  transfers 
[On  basis  of  daily  Treasury  statements  through  1952;  thereafter  on  basis  of  "Monthly  Statement  of 


Refunds  of  receipts  i  ^ 

Fiscal  year 

Internal  revenue  applicable  to — ' 

Customs 

Other 

Total  refunds 
of  receipts 

Budget  accounts 

Trust  accounts 

1931 

$,'i2,  561, 657 

64,  528,  539 

45, 814,  734 

37,195,935 

49. 747, 858 

32,914,628 

33, 405,  891 

76, 842.  701 

44, 684,  686 

61,154,655 

52,  802,  242 

65, 192, 248 

53, 834, 008 

242, 856,  877 

1,664.545,567 

2,957,114,348 

2, 982, 487, 490 

2,250,391.383 

2,817,005.313 

2, 135, 455, 950 

2,082,431,536 

2, 275, 188,  203 

3, 094. 798, 198 

3, 345, 495,  593 

3. 399, 978, 359 

3,652,611,883 

3,894,119,614 

4, 412, 603,  597 

4,907,159,180 

.5, 024, 470, 807 

5, 724,  571, 444 

5,957,115,953 

$21,369,007 
17,  202, 969 
12, 576, 842 
14, 046, 350 
20, 715, 688 
14, 085, 195 

16,  549, 408 
16,156,340 
16, 678, 803 

17,  .500, 945 
27,331,472 
19, 495, 861 
16, 404,  512 
14, 200, 774 
13,  843, 208 
11,224,891 
17, 480, 263 
19,050,115 
17, 173, 186 
16, 091, 134 
15,324,391 
17,  520, 381 
16,949,065 
20,481,971 
21,619,848 
23, 176,  262 
19, 907, 757 
17, 837, 948 
23,  220, 638 
18,483,391 
25,  439,  532 
29, 319,  402 

$151,045 

80,  813 

92,  224 

43, 853 

89,811 

20, 103 

34, 242 

38,  437 

63, 194 

49, 295 

55.  755 

87,  429 

86, 888 

196,617 

389,150 

4, 688.  639 

6, 122, 643 

2,  433,  279 

3, 363,  506 

7, 959, 405 

8,  774,  689 

9, 497,  810 

6,091,123 

11,259,809 

4.389.417 

8.241.988 

3,315,117 

2,191.001 

3, 043, 107 

1,897,066 

2,  260,  573 

1, 225, 761 

$74,081,709 

81,812,320 

58, 483, 799 

51, 286, 138 

70,  553. 357 

47, 019, 926 

49, 989.  542 

93, 037, 478 

61, 426, 683 

78, 704, 894 

80, 189, 469 

84, 775,  537 

70, 325, 408 

257, 254, 269 

1, 678,  777, 924 

2, 973, 027, 879 

3, 006, 090, 396 

2, 271,  874, 777 

2,837,542,006 

2, 159,  506, 489 

2, 106,  530, 616 

2, 302, 206, 394 

'3,150,838.386 

'3,417,737,374 

'  3, 476, 987, 625 

'  3, 750, 030, 132 

'3,975,549,317 

'  4,  598, 010,  555 

'5,113,752,669 

'  5, 237,  513, 807 

'  5, 976, 009, 231 

6, 265, 669, 311 

1932 

1933 

1934 

1935 

1936_.    . 

1937 

1938 

1939..  

1940 

1941  . 

1942 

1943 

1944 

1945 

1946 

1947 

1948 

1949 .- 

1950.. 

1951.... 

1952 

1953 

$33,000,000 

40,500,000 

51,000,000 

66.  000, 000 

58, 206  830 

165, 378, 009 

180, 329,  743 

192, 662,  543 

223, 737, 682 

278,008,196 

1954 

1955 

1956 

1957.. 

1958 

1959 .. 

1960 

1961 

1962 

'  Revised  for  reclassification. 

1  Refunds  of  principal  only;  interest  is  included  in  expenditures. 

'  Internal  revenue  refunds  by  States  for  fiscal  1962  are  shown  in  table  20. 

3  Beginning  fiscal  1953,  the  principal  amounts  for  refunds  of  employment  taxes  and  certain  excise  taxes 


TABLES 


517 


to  trust  funds,  fiscal  years  1931-62 

Keceipts  and  Expenditures  of  the  United  States  Government,"  see  "Bases  of  Tables"] 


Transfers  to  trust  funds  3 1 

Federal  old-age 

and  survivors 

insurance 

trust  fund 

Federal 
disability- 
insurance 
trust  fund 

Highway 
trust  fund 

Railroad 

retirement 

account 

Unemploy- 
ment trust 
fund 

Total  trans- 
fers to  trust 
accounts 

Total  refunds 
and  transfers 

$74,081,709 

81, 812, 320 

58, 483, 799 

51, 286, 138 

70, 553, 357 



47, 019, 926 

$265, 000, 000 

387, 000, 000 

503, 000, 000 

550, 000, 000 

688, 140, 728 

895, 618, 839 

1, 130, 495, 201 

1, 292, 122, 434 

1, 309, 919, 400 

1. 238, 218, 447 

1. 459, 491, 921 

1,616,162,044 

1,690,295,705 

2, 106, 387, 806 

3. 119, 536, 744 

3, 568, 556, 584 

4, 053, 293, 392 

4,  496, 769, 800 

4,  988, 572. 594 

6.270,804,603 

6, 243, 000, 673 

6,  794, 896. 660 

7,083.993,756 

9, 192, 428, 378 

10, 537, 230, 762 

10, 600, 021, 548 

$265,000,000 

533, 402, 587 

610,097,413 

670,650,000 

812, 490, 728 

1,036,468,839 

1,345,296,201 

1, 548, 479, 777 

1,  596, 224, 782 

1, 493, 703, 701 

1,715,917,175 

2. 338. 753, 695 

2. 240. 414, 065 

2, 656, 220, 526 

3, 694, 527,  792 

4, 306,  218, 612 

'  4, 673, 252, 235 

■■5,099,811,375 

■  5, 587, 464, 120 

'  6, 905. 066. 460 

r  8. 671, 105, 345 

■10. 258. 772. 443 

'lO,  520. 260, 677 

■■13, 267, 251, 392 

■15, 201, 954, 501 

15, 510, 156, 198 

314, 989, 542 

$146, 402. 687 
107, 097, 413 
120, 650, 000 
124, 350, 000 
140, 850, 000 
214,801,000 
256, 357, 343 
286, 305, 382 
255, 485, 254 
256, 425, 254 
722,  591, 651 
550,118,361 
549, 832, 720 
574, 991, 049 
737, 662, 028 
619. 958. 843 
603, 041, 575 
598, 891, 526 
634,  261, 857 
615,  919,  876 
574, 898, 971 
525, 219,  764 
606, 864, 657 

'  570,  712, 994 
564, 264,  483 

626, 440, 065 

671, 524, 096 

749, 354, 895 

892,  680, 197 

1,121,244,376 

1,415,621,609 

1, 805,  734, 046 

3, 275, 002, 706 

4, 466,  731,  580 

4.722.007,571 

4. 610,  628, 472 

5,077,956,071 

4,815,727,015 

5,801.058,408 

6, 608, 425. 006 

7, 824, 090,  622 

8, 517, 548, 749 

9, 064, 451, 745 

10,  655, 096, 592 

$333, 276, 575 
862.861.610 
836, 931, 036 
928. 931.  781 
953, 312,  408 
944, 542, 132 

$1. 478. 908,  221 
2,026,115,202 
2.074.116,121 
2, 539, 026, 576 
2,  797, 537,  781 
2, 948. 690, 128 

12. 646. 654, 662 

14, 856,  782, 998 

15, 634, 013, 346 

18, 504, 765, 198 

$343, 160,  557 
452, 637, 906 

'  21, 177, 963, 7.32 
21,  775, 825, 509 

(highway)  are  excluded  from  the  transfers  and  are  included  with  refunds  of  internal  revenue  receipts,  ap- 
plicable to  trust  accounts. 

*  Tax  receipts  transferred  and  appropriated  to  the  respective  trust  accounts.    Details  of  these  trust  funds 
may  be  found  in  the  table  for  each  fund,  beginning  with  table  68  of  this  annual  report. 


518       1962    REPORT    OF   THE    SECRETARY    OF   THE    TREASURY 


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554   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  5. — Interfund  transactions  excluded  from  both  net  budget 

[In  thousands 


Fiscal  year 

1952 

1953 

1954 

1955 

Interest  paid  Treasury  bv  revolving  funds: ' 

2,092 
31.494 

R,954 
46,  478 

8,033 
90,846 

15,490 
59,  788 

Funds  appropriated  to  the  President,  expansion 
of  defense  oroduction  2 

Department  of  Agriculture: 

Commodity  Credit  Corporation 

Farmers  Home  Administration: 

Agricultural  credit  insurance  fund  ' 

Direct  loan  account-- 

Department  of  Commerce,  Federal  ship  mortgage 
insurance  fund 

Department  of  Defense-Civil  functions,  Panama 
Canal  Company  fund 

6,363 

6,649 
6 

3,330 

87 

17 
4,168 

325 

252 
470 

10,  945 
7 

2,  850 
140 

41 
102 

1,085 

19 

662 

Department  of  Health,  Education,  and  Welfare, 
Bureau  of  Federal  Credit  Unions 

Department  of  the  Interior; 

Colorado  River  Dam  fund,  Boulder  Canyon 
project 

3,498 

3,415 
66 

Virgin  Islands  Corporation 

Treasury  Department: 

Civil  defense  program  fund 

Reconstruction  Finance  Corporation 

4,677 

(•) 
476 
41 

3,716 

34 
377 
171 

Housing  and  Home  Finance  Agency: 
Office  of  the  Administrator: 

College  housing  loans    

Prefabricated  housing  loans  program 

Urban  renewal  fund 

Public  facility  loans 

Federal  National  Mortgage  Association 

Federal  Housing  Administration 

30, 010 

39, 672 

50,  864 

20, 386 

9,498 

4,275 
28, 144 

47,  934 

Public  Housing  Administration 

11, 860 

951 
17, 256 

14,294 

2,617 
22,  975 

1,  305 

6,403 
25,943 

Veterans'  Administration,  direct  loans  to  veterans 
and  reserves 

Export-Import  Bank  * 

St  Lawrence  Seawav  Development  Corporation.. 

Small  Business  Administration 

15 
682 

136 
538 

Tennessee  Valley  Authority 

778 

694 

U.S.   Information  Agency,  informational  media 
guaranty  fund 

Total  interest  payments 

103, 135 

146,816 

228, 046 

173, 390 

Other  payments: 

Department  of  Defense,  civil  functions: 
Reimbursements: 

Panama  Canal  Company: 

Net  cost  of  Canal  Zone  Oovemment  '.- 

6,195 
430 
734 

285 

5,762 
430 
728 
387 

6,477 
430 
706 
232 

Part  of  treaty  payment  to  Panama  for 
use  of  Canal  Zone..  

Fees  and  other  charges  for  accounting  and  auditing 
services  (various  agencies)                .  .  

949 
300 

Franchise   taxes,    Farm    Credit   Administration, 

Total  other  payments 

1,249 

7,644 

7,306 

7,845 

Total  interfund  transactions 

104,384 

154, 460 

235, 353 

181,235 

*Less  than  $500. 

•  On  loans  and  other  interest-bearing  U.S.  investments. 
'  By  various  agencies  for  programs  under  the  Defense  Production  Act. 

3  Name  changed  from  farm  tenant  mortgage  insurance  fund  by  an  act  approved  Aug.  8,  1961  (7  U.S.C. 
1929(a)). 


TABLES 


555 


receipts  and  budget  expenditures,  fiscal  years  1952-62 
of  dollars] 


Fiscal  year 


1956 

1957 

1958 

1959 

1960 

1961 

1962 

20, 115 
174, 943 
(*) 

24, 431 

339,  735 

81 

29,  507 

420,  889 

299 

42, 150 

181,409 

401 

34, 778 

464, 786 

1,308 

6,141 

409,  575 

1,196 

7,860 

329, 584 

923 
9,000 

74 
9,423 
{*) 

3,072 
(*) 

24 

54 
8,781 

9 

17, 403 
6 

3,182 
59 

52 
224 

1,848 

6,213 
5 

3,226 
127 

40 
183 

2,787 

10, 758 
4 

3.197 
149 

24 
135 

5,220 

8,892 
2 

3,115 
168 

20 

9,364 

3,114 
398 

25 

3,081 
346 

19 

9,372 

14, 405 

20. 017 

25,314 

714 

855 

3 

41,  549 

1,444 

48 

36, 131 

1,919 

390 

26,  775 

2,514 

967 

70,  750 

2,914 

1,594 

91, 915 

3,227 

2,006 

43, 843 

114, 096 

1,435 

8,167 
24,648 

1,763 

10, 209 
23, 808 

1,839 

13,  768 
30, 660 

920 

18,  596 
40, 897 

1,332 

23,028 

45, 722 

2,505 

6,657 

1,102 

31,990 

42.877 

2,000 

15, 238 

1,128 

40, 050 

56,757 

2,165 

280 
169 

1,177 

2,996 

6,649 

14, 249 

768 

414 

1,065 

610 

297, 086 

456, 192 

557, 066 

342, 443 

681, 759 

639, 997 

619,  789 

16, 379 
824 
628 

461 

9,075 

430 

974 

92 

8,679 
430 
822 

11,113 
430 
918 

10, 968 
450 
796 

12, 781 
430 
745 

11, 829 
410 
628 

18, 292 

10,  571 

9,931 

12, 461 

12, 214 

13,  956 

12,  868 

315,378 

466, 764 

566,  997 

354, 904 

693,  973 

653,  953 

632, 656 

*  Excludes  transactions  under  Defense  Production  Act. 

'  Less  tolls  paid  for  U.S.  Government  vessels. 

'  Realization  on  investment  by  the  U.S.  Government. 

Note.— For  figures  from  1932-51,  see  annual  report  for  1961,  pp.  450-455. 


556   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  6. — Public  enterprise  (revolving)  funds,  receipts  and  expenditures  for  fiscal 

year  1962  and  net  for  1961  and  1962 

[In  thousands  of  dollars.    On  basis  of  "Monthly  Statement  of  Receipts  and  Expenditures  of  the  United 

States  Government,"  see  "Bases  of  Tables"] 


Fiscal  year  1962 

Fiscal 
year  1961 

Classification 

Receipts 

Expendi- 
tures 

Net 
receipts 
(— ),  or  ex- 
penditures 

Net 
receipts 
(-),  or  ex- 
penditures 

Executive  Office  of  tlie  President: 

Office  of  Emergency  Plaiming,  civil  defense  pro- 
curement fund - --- 

2 

9 

7 

-64 

Funds  appropriated  to  the  President: 

62, 141 

9,964 
2,313 

73,  353 

431,059 
663 

11,212 

421.096 
-1.650 

-12,396 

Foreign  assistance — economic: 

Dpvelonnipnt  loan  funds              -.  

258,  414 

Foreign  investment  guarantee  fund 

-1,673 

Total  funds  appropriated  to  the  President — 

74, 417 

505, 075 

430, 658 

244, 345 

Agriculture  Department: 

Commodity  Credit  Corporation: 

Price  support,  supply,  and  related  programs 
and  special  milk  ^               

2, 697, 063 

191,  435 
15,041 

317. 695 

30.  ,506 

120.117 

4,840,196 

684. 087 
16, 155 

311,250 

65,  947 

112, 901 

2,14.3,133 

492.  652 
1.114 

-6,  445 

35. 441 

-7,216 

1,417,529 

Special    activities    financed    by    Commodity 
Credit  Corporation  ^      

1,989,081 

Federal  Cron  Insurance  Corooration  

-6,  801 

Farmers  Home  Administration: 

1,475 

Agricultural  credit  insurance  fund  * 

-6, 144 

Total  Agriculture  Department 

3, 371,  858 

6, 030,  535 

2, 658, 677 

3, 395, 141 

Commerce  Department: 

fipneral  administration                           -- 

1 

1 

854 

8, 374 

-6 
(*) 

1 
5,674 

-7 

-1 

-853 

-2,  700 

-7 

Arpa  rpHpvplonmpnt                                                   --- 

Inland  Waterwavs  Corporation    

(*) 

Maritime  Administration - 

-2. 260 

Total  Commerce  Department - -- 

9,230 

5,668 

-3,  561 

-2, 268 

Defense  Department: 
Military  functions: 

66, 987 

229 
214 

2.767 

1,227 

9,  723 

116 

95. 365 

204 
81 

5,795 

1,140 

5,968 

133 

108. 687 

28, 378 

-25 
-133 

3,028 

-87 

-3,  754 

17 

38,738 

Army: 

Defense,  housing                    -  

-25 

Dpfpnsp  nrodnotion  guarantees          

-243 

Navy: 

Dpfpnsp  nrodiietion  sniarantees         -  - --- 

-480 

other                           

-137 

Air  Force,  defense  production  guarantees 

Civil  defense  procurement  fund 

-544 

Total  military  functions 

81.263 

27. 423 

37,30 

Civil  functions,  Army,  Panama  Canal  Company... 

114,240 

115,964 

1,724 

5,902 

Total  Defense  Department 

195,  503 

224, 650 

29.147 

43. 212 

Health,  Education,  and  Welfare  Department: 

Public  Health  Service,  operation  of  commissaries, 
narcotic  hospitals      .  

247 
3,987 

248 
3,825 

2 

-162 

-9 

Social  Security  Administration,  operating  funds, 
Bureau  of  Federal  Credit  Unions 

-139 

Total  Health,  Education,  and  Welfare  Depart- 
ment  -.- - - 

4,233 

4,073 

-160 

-148 

Interior  Department: 

Bureau  of  Indian  Affairs: 

Revolving  fund  for  loans                       . 

2,603 
5 

44 
17, 520 

16, 258 

2,046 

3,428 

2,226 

4. 524 

48,654 

4,389 
3 

50 
16,037 

17, 213 

3,002 

943 

94, 697 

6.140 

1,786 
-3 

6 
-1,483 

955 

956 

-2,485 

92.471 

1,617 

266 

1 

Office  of  Territories,  loans  to  private  trading  enter- 
prises. Trust  Territory  of  t  le  Pacific  Islands 

Alaska  Railroad  revolvine  fund  

-34 

-109 

Bureau  of  Mines,  development  and  operation  of 
helium  proper!  ies 

941 

Fish  and  Wildlife  Service,  Bureau  of  Commercial 
Fisheries         

1,172 

Bureau  of  Reclamation: 

Fort  Peck  nroiect.  Montana    -    

-1,547 

Upper  Colorado  River  Basin  fund 

56, 979 

Virgin  Islands  Corporation 

3,484 

Total  Interior  Department 

142, 474 

93,820 

61, 152 

Labor  Department: 

Advances  to  employment  security  administration 
account,  unemolovment  trust  fund      

31,440 
2,709 

31,440 
-366 

48, 590 

Farm  labor  supply  revolving  fund 

3,076 

-788 

Total  Labor  Department 

3.076 

34,149 

31, 074 

47,801 

Post  Olfice  Department,  postal  fund 

3, 609, 260 

4,343,436 

734,176 

864, 985 

Footnotes  at  end  of  table. 


TABLES 


557 


Table  6.- 


-Public  enterprise  (revolving)  funds,  receipts  and  expenditures  for  fiscal 
year  1962  and  net  for  1961  and  1962 — Continued 
[In  thousands  of  dollars] 


Fiscal  year  1962 

Fiscal 
year  1961 

Classification 

Receipts 

Expendi- 
tures 

Net 
receipts 
(-),  or  ex- 
penditures 

Net 
receipts 
(-),  or  ex- 
penditures 

Treasury  Department: 
Office  of  the  Secretary: 

Reconstruction  Finance  Corporation  liquida- 
tion fund 

1,457 

275 
157 

77 

(*) 

19 

67 

263 

-1,380 

-274 
-138 

67 

(*) 

—3, 952 

Federal  Farm  Mortgage  Corporation  liquida- 
tion fund 

Civil  dpfenso  prop-am  fund 

—137 

Bureau  of  Accounts,  Government  losses  in  ship- 
ment fund 

86 

Office  of  the  Treasurer,  check  forgery  insurance 
fund .-. 

263 

11 

Total  Treasury  Department 

2,151 

426 

-1,725 

-3,992 

General  Services  Administration: 

Defense  materials  activities 

91 

250 

5 
54 

-86 
-195 

-653 

General  activities 

-1,864 

Total  General  Services  Administration 

341 

60 

-281 

-2.  518 

Housing  and  Home  Finance  Agency: 
Office  of  the  Administrator: 

College  housing  loans 

53,885 

5,941 

77, 197 

10, 471 

281,226 

290 

304, 146 

40, 955 

227,341 

-5, 651 

226, 949 

30,484 

198, 175 

Liquidating  programs 

-87, 622 

Urban  renewal  fund 

144, 538 

Other - 

9,955 

Federal  National  Mortgage  Association: 

Subscription  to  capital  stock,  secondary  market 

16,000 

Loans  for  secondary  market  operations 

909, 540 
264,329 
238,635 
321, 187 
175,799 

909.540 
87,415 
292, 194 
520, 406 
340,630 

Management  and  Uquidating  functions  fund... 
Special  assistance  functions  fund 

-176,914 

53, 559 

199, 218 

164, 830 

-74,448 
133. 687 

Federal  Housing  Administrfttion 

-7,230 

Pnblin  Housing  Administration 

154, 986 

Total  Housing  and  Home  Finance  Agency 

2, 056, 984 

2,776,801 

719, 817 

488, 040 

Veterans'  Administration: 

Direct  loans  to  veterans  and  reserves . 

182,767 

104.075 

77,448 

275,541 

247, 597 

91,949 

92,774 

143, 522 

14.501 

152, 373 

Loan  guaranty  revolving  fund . . 

Other 

-21, 262 

Total  Veterans'  Administration 

364,290 

615.086 

250, 796 

131,110 

Other  independent  agencies: 

Export-Import  Bank  of  Washington.. 

898,726 

999,813 

101,087 

37,390 

Farm  Credit  Administration: 

Federal  Farm  Mortgage  Corporation  fund 

Short-term  credit  investment  fund  * 

694 

365 

11,470 

1 
3,900 

-693 

3,535 

-11, 470 

-1,736 
3,910 

Banks  for  cooperatives  investment  fund 

—8, 052 

Total  Farm  Credit  Administration 

12,528 

3,901 

1,928 
11,871 

4,496 
402,043 
379, 281 

5,949 

-8,628 

-5,879 

Federal  Home  Loan  Bank  Board: 

Federal  Savings  and  Loan  Insurance  Corpora- 
tion fund  , .          ,  ,        . 

238,211 
12, 376 

3.960 
179, 267 
276, 312 

4,566 

-236, 283 

-505 

536 

222, 776 

102, 969 

1,383 

-35, 192 

Other - --. 

93 

Saint  Lawrence  Seaway  Development  Corporation. 
Small  Business  Administration 

2,477 
95,613 

Tennessee  Valley  Authority 

38, 691 

U.S.  Information  Agency 

4,487 

Total  other  Independent  agencies 

1, 625, 947 

1,809,281 

183,334 

137,680 

Total  pilbUc  enterprise  funds. 

11,365,944 

16. 491, 724 

5, 125, 780 

5,404.476 

*Less  than  $500. 

1  Residual  of  gross  receipts  and  expenditures  after  reduction  for  certain  costs  which  are  included  in  amounts 
shown  for  special  activities. 

2  Includes  certain  costs  transferred  from  price  support  operations  for  which  expenditures  may  have  been 
made  in  prior  years. 

'  Certain  loan  programs  were  transferred  to  this  fund  which  was  established  by  an  act  approved  Aug.  8, 
1961  (7  U.S.C.  1988(c)). 

*  Name  changed  from  disaster  loans,  etc.,  revolving  fund  by  an  act  approved  Aug.  8, 1961  (7  U.S.C.  1966). 

«  Name  changed  from  farm  tenant  mortgage  insurance  fund  by  an  act  approved  Aug,  8,  1961  (7  U.S.C. 
1929(a)). 

«  Formerly  Federal  intermediate  credit  banks  and  production  credit  associations  investment  funds. 

Note.— This  table  supplies  receipt  and  expenditure  data  for  pubUc  enterprise  funds  included  in  table  4 
on  alnet^basis. 


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TABLES 


577 


Table  11.- — Trust  enterprise  {revolving)  funds,  receipts  and  expenditures  for  fiscal 

year  1962  and  net  for  1961  and  1962 


[In  thousands  of  dollars. 


On  basis  of  "Monthly  Statement  of  Receipts  and  Expenditures  of  the  United 
States  Government,"  see  "Bases  of  Tables"] 


Fiscal  year  1962 

Fiscal  year 
1961 

Classification 

Receipts 

Expend- 
itures 

Net  receipts 
(— ),  or  ex- 
penditures 

Net  receipts 
(— ),  or  ex- 
penditures 

Department  of  Agriculture: 

Farmers  Home  Administration 

9,219 

119 

1,647 
2, 352 

423 

909,  540 
636,  890 

342, 565 

168,  993 

26,  499 

6,093 

254 

10, 136 

115 

7,086 
2,324 

398 

909,  540 
953, 626 

331,750 

98, 691 

26,  408 

6,205 

243 

918 

-4 

6,440 
-28 

-25 

27 

Department  of  Defense,  civil: 

United  States  Soldiers'  Home .- 

g 

Department  of  Justice: 

Alien  property  activities 

2,826 
8 

-49 

1  —16  000 

Federal  Prison  System,  commissary  funds 

General  Services  Administration: 

Records  activities;  National  Archives  trust  fund... 
Housing  and  Home  Finance  Agency: 

Federal  National  Mortgage  Association: 
Loans  for  secondary  market  operations 

Other    

316,  736 

-10,  815 
-70,303 

-91 
111 

-11 

—72  898 

Other  independent  agencies: 
Civil  Service  Commission: 

Employees  health  benefits  fund    -            .  - 

—23  263 

Employees'  life  insurance  fund 

-50,  924 
—1  623 

Retired  emplovees  health  benefits  fund 

National  Capital  Housing  Authority 

322 

Federal  P,nmmiinicat.innR  Onmmissinn 

8 

Total  trust  enterprise  fnnds 

2, 104,  593 

2, 346,  522 

241, 929 

—161,  557 

'  The  Association  exchanged  preferred  stock  in  the  amoxmt  of  $16,000,000  for  notes  in  the  same  amount 
held  by  the  Secretary  of  the  Treasury  (12  U.S.C.  1719). 

Note.— This  table  supplies  receipt  and  expenditure  data  for  trust  enterprise  funds  included  in  table  7  on  a 
net  basis. 


661496—63- 


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578   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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584   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  14. — Trust  account  receipts  and  expenditures 

[In  thousands  of  dollars.     On 


Classification 

1938 

1939 

1940 

1941 

1942 

Receipts 

Federal  old-age  and  survivors  insurance  trust 
fund      -- 

402, 412 

529,  951 

592,  489 

744, 099 

966, 625 

Federal  disability  insurance  trust  fund 

Railroad  retirement  account -  

147,813 
762, 833 

109,  299 
838, 087 

122,  933 
958,  639 

126,  884 

1,113,923 

3,513 

91,  437 

175, 209 

143,  993 

1, 243,  .587 

46, 361 

91,613 

221, 663 

Unemployment  trust  fund 

National  service  life  insurance  fund 

Government  life  insurance  fund       

93,  459 
129, 152 

95, 021 
135, 470 

92, 862 
154, 372 

Federal  employees'  retirement  funds  2  .,. 

Highway  trust  fund 

Other  trust  funds  and  accounts  '    

196, 362 

214,  534 

216, 416 

409, 621 

503, 807 

Subtotal  receipts 

1, 732, 032 

1, 922, 362 

2, 137,  710 

2, 664, 685 

3, 217, 650 

Deduct:  Certain  trust  receipts  which  are 
al.so  expenditures  * 

Net  receipts 

1,732,032 

1,922,362 

2, 137,  710 

2, 664, 685 

3,  217, 650 

Expenditures 
(Except  net  investments) 

Federal  old-age  and  survivors  insurance  trust 
funds       - 

5,404 

13,  892 

28,  093 

91, 182 

137, 046 

Federal  disability  insurance  trust  fund 

Railroad  retirement  account 

79,  819 
190,  975 

105,774 
441,  795 

113,099 
514,316 

121, 174 

555,127 

31 

62.  571 

73,  831 

126, 244 
377, 142 

864 
44,  988 
77,  934 

Unemployment  trust  fund 

National  service  life  insurance  fund 

Government  life  insurance  fund  -    

63,  955 
63, 666 

91, 002 
65, 010 

78, 122 
68,  547 

Federal  employees'  retirement  funds  2 

Hiffhwav  trust  fund                    -      - 

Other  trust  funds  and  accounts  ^ 

104,  822 

75,  239 

68,  765 

15,  080 

337, 421 

-16,412 

460, 950 
-5,376 

Deposit  fund  accounts  (net): 

Government-sponsored  enterprises: 

Redemptions,  or  sales  (— ),  of  agency 
obligations  in  the  market 

Investments  in  public  debt  securities  . 

Other 

Other  deposit  funds 

29,  593 

-129,  476 

Subtotal  expenditures 

508, 670 

792,  712 

886, 022 

1, 254,  518 

1,090,316 

Deduct:  Certain    trust    expenditures 
which  are  also  receipts  *. 

Net  expenditures 

508, 670 

792,  712 

886, 022 

1,254,518 

1,090,316 

Excess    of    receipts,     or    expendi- 
tures (—)     --  

1, 223, 362 

1,129,650 

1,251,689 

1,  410, 167 

2, 127, 334 

'  Amounts  shown  have  been  revised  where  necessary  to  make  them  as  nearly  comparable  with  current 
classifications  as  available  data  will  permit.  For  this  reason  certain  figures  differ  somewhat  from  those 
published  in  earlier  annual  reports. 

'  Consists  of  civil  service  and  foreign  service  retirement  and  disability  funds. 

« Includes  principally;  District  of  Columbia;  Indian  tribal  funds;  adjusted  service  certificate  fund; 
island  possessions;  increment  resulting  from  reduction  in  weight  of  gold  dollar;  and  seigniorage  on  silver 
through  1950. 


I 


TABLES 

by  major  classifications,  fiscal  years  193S~51  * 
basis  of  daily  Treasury  statements] 


585 


1943 

1944 

1945 

1946 

1947 

1948 

1949 

1950 

1951 

1,217,898 

1,395,300 

1, 433, 773 

1,385,984 

1,623,332 

1,807,424 

1.923,769 

2. 366, 770 

3,411,490 

220,  578 

1,398.524 

316. 148 

89, 764 

373, 602 

272,  557 

1,566.909 

904.  544 

94, 144 

500, 564 

324, 057 

1,  507, 757 

2, 127, 419 

97, 199 

557,  237 

311,794 

1,  279,  779 

2, 350, 986 

102, 974 

614, 443 

322. 650 
1.  289. 398 
1, 504, 131 

134, 028 

578, 167 

797, 364 

1, 312, 909 

739, 681 

90, 497 

593, 674 

625, 402 

1,173.176 

690, 052 

92, 149 

680,  406 

645, 034 

1,281.027 

1, 076, 357 

87,417 

808, 979 

678, 1,58 

1,541,640 

683, 741 

85, 794 

850, 192 

337, 231 

351.311 

1,038,118 

1,  666, 320 

792, 320 

1, 173,  682 

529, 474 

403. 150 

545.  256 

3, 953, 745 

5, 085,  329 

7, 085. 561 

7, 712, 281 

6,  244, 027 

6, 515, 230 
1,530 

5, 714, 427 
2.032 

6,668,734 
1, 779 

7, 796,  271 
1,907 

3, 953, 745 

5, 085, 329 

7, 085,  561 

7, 712, 281 

6, 244, 027 

6,  513, 700 

5, 712, 395 

6, 666, 955 

7, 794, 364 

176, 796 

217, 205 

266,  784 

357,937 

466, 370 

559, 133 

660,  501 

784, 108 

1, 568, 535 

130, 465 

176, 167 

6.008 

30, 060 

85, 278 

134,416 
60, 591 
31,366 
33,  593 

102,  663 

141, 445 
71,277 

128, 161 
24,510 

150, 628 

151,959 

1.145,916 

279, 767 

50, 166 

266. 508 

173, 277 
869. 474 
281, 514 
67, 484 
323, 279 

222, 306 
858, 925 
301, 949 
69. 807 
244, 494 

278,  202 

1,313,787 

34S, 132 

61,331 

221,856 

304,363 

2, 025, 548 

2, 987.  906 

113,640 

268, 453 

321,018 
900. 304 
613,  638 

77,  388 
271, 339 

259, 720 
56, 490 

233, 016 
134, 966 

427, 765 
276, 584 

1,574,301 
-65,  530 

1,073,224 
-28,114 

1,233,733 
-123,4.56 

526.074 
28, 266 

369, 683 
13, 992 

386, 819 

-374,407 
S3, 892 

75,  590 
571, 063 

7, 532 
363,978 

162, 346 
204, 292 

-7, 674 
421. 552 

-44,499 
140. 463 

310, 286 

-270, 968 

-.508, 001 

-1.669,206 

-504, 707 

650, 015 

439, 814 

-182,052 

4,407,678 

3,598,019 

3, 733, 529 
1,  530 

3, 852, 027 
2,032 

6, 963,  657 
1,779 

3,654,105 
1,907 

650, 015 

439. 814 

-182,052 

4, 407, 678 

3,  598, 019 

3,  731, 999 

3, 849, 995 

6,961.878 

3, 652, 198 

3,303,730 

4,645,515 

7, 267, 612 

3,304,604 

2,646,009 

2,781,701 

1,862,399 

-294, 922 

4, 142, 166 

<  Totals  shown  for  trust  receipts  and  trust  expenditures  exclude  certain  intertrust  fund  transactions 
which  are  included  in  the  detail  of  both  trust  receipts  and  trust  expenditures.  The  transactions  deducted 
consist  mainly  of  financial  interchanges  between  trust  funds  resulting  in  receipts  and  expenditures.  For 
details  of  these  transactions,  see  table  10. 

5  Includes  reimbursement  for  certain  administrative  expenses  met  out  of  general  fund  appropriations. 

8  Includes  principally;  Adjusted  service  certificate  fund;  District  of  Columbia;  Indian  tribal  funds; 
payment  of  melting  losses  on  gold;  and  beginning  1950,  mutual  defense  assistance  trust  fund. 

Note. — Trust  account  receipt  and  expenditure  data  for  the  fiscal  years  1952-62  are  shown  in  table  15, 


586   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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alional  service  life  insurance  fund 

overnment  life  insurance  fund 

ederal  emiiloyecs'  retirement  funds  ' 

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ederal  National  Mortgage  Association.. 

ther  trust  funds  and  accounts  ' 

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tures' 

eral  old-age  and  su 
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eral  disability  insu 
ess  refunds  of  taxes 
lroa<i  retirement  ac 
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588   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  16. — Budget  receipts  and  expenditures  based  on  existing  and  proposed  legis- 
lation, actual  for  the  fiscal  year  1962  and  estimated  for  1963  and  1964 

(In  millions  of  dollars.    On  basis  of  1964  Budget  document) 


Source 


Budget  Receipts 
Internal  revenue: 

Individual  income  taxes: 

Withheld.. 

Other 

Total  individual  income  taxes 

Corporation  income  taxes 

Excise  taxes: 

Alcohol  taxes: 

Distilled  spirits  (domestic  and  imported) 

Beer 

Rectification  tax 

Wines  (domestic  and  imported) 

Special  taxes  in  connection  witli  liquor  occupations 

Total  alcohol  taxes 

Tobacco  taxes: 

Cigarettes  (small) 

Manufactured  tobacco  (chewing,  smoking,  and  snufi).. 

Cigars  (large) 

Cigarette  papers  and  tubes 

All  other 

Total  tobacco  taxes 

Documents,  other  instruments,  and  playing  cards  taxes: 
Issues  of  securities,  stock  and  bond  transfers,  and  deeds 

of  conveyance 

Playing  cards 

Silver  bullion  sales  or  transfers 

Total  taxes  on  documents,  other  instruments,  and 
playing  cards 

Manufacturers  excise  taxes: 

Gasoline 

Lubricating  oils 

Passenger  automobiles 

Automobile  trucks,  buses,  and  trailers 

Parts  and  accessories  for  automobiles 

Tires,  inner  tubes,  and  tread  rubber 

Electric,  gas,  and  oil  appliances 

Electric  light  bulbs 

Radio    ;uid    television    receiving    sets,    phonographs, 

phonograph  records,  and  musical  instruments 

Mechanical  refrigerators,  quick  freeze  units,  and  self- 
contained  air-conditioning  units 

Business  and  store  machines 

Photographic  equipment 

Matches 

Sporting  goods,  including  fishing  rods,  creels,  etc 

Firearms,  shells,  and  cartridges 

Pistols  and  revolvers 

Fountain  and  ballpoint  pens;  mechanical  pencils 

Total  manufacturers  excise  taxes 

Retailers  excise  taxes: 

Jewelry 

Furs 

Toilet  preparations 

Luggage,  handbags,  wallets,  etc 

Total  retailers  excise  taxes 

Footnotes  at  end  of  table. 


1962 
actual 


36,  246 
14, 403 


50, 650 


21,296 


2,386 

813 

23 

98 

20 


3,341 


1,957 

17 

50 

1 

2 


2,026 


151 


(*) 


159 


2,406 

73 

1,300 

256 

197 

360 

66 

34 

215 

55 

82 

25 

5 

21 

15 

2 

8 


5,120 


174 

31 

143 

69 


416 


1963 
estimate 


38, 400 
14,200 


52,600 


22, 000 


2,500 

832 

23 

100 

22 


3,477 


2,017 

17 

50 

1 

3 


(*) 


155 
9 


164 


2,457 

75 

1,525 

293 

210 

396 

67 

35 

237 

59 

75 

26 

5 

23 

16 

2 

8 


5,509 


179 
31 

155 
71 


436 


1964 

estimate 


36.  700 
14, 400 


51,100 


24,600 


2,650 
870 

23 
104 

22 


3,669 


2,100 

17 

50 

1 

3 


2,171 


(*) 


165 
10 


175 


2,528 

80 

1,600 

305 

225 

407 

70 

38 

265 

63 

70 

28 

5 

27 

18 

2 

8 


5,739 


190 
33 

172 
74 


469 


TABLES 


589 


Table  16. — Budget  receipts  and  expenditures  based  on  existing  and  proposed  legis- 
lation, actual  for  the  fiscal  year  1962  and  estimated  for  1963  and  1964 — Continued 

[In  millions  of  dollars] 


Source 


1962 
actual 


> 


Budget  Receipts— Continued 

Internal  revenue— Continued 
Excise  taxes — Continued 

Miscellaneous  excise  taxes: 

Toll  telephone  service,  telegraph  and  teletype  service, 

wire  mileage  service,  etc 

General  telephone  service 

Transportation  of  persons 

Transportation  of  persons  by  air 

Transportation  of  freight  by  air 

Fuel  used  on  inland  waterways 

Jet  fuel 

Diesel  fuel  used  on  highways 

Use  tax  on  certain  vehicles 

Admissions,  exclusive  of  cabarets,  roof  gardens,  etc 

Cabarets,  roof  gardens,  etc 

Wagering  taxes,  including  occupational  taxes 

Club  dues  and  initiation  fees 

Lease  of  safe  deposit  boxes 

Coconut  and  other  vegetable  oils,  processed 

Sugar  tax 

Coin-operated  amusement  and  gaming  devices 

Bowling  alleys  and  billiard  and  pool  tables 

All  other  miscellaneous  excise  taxes 


345 
489 
260 


(*) 


Total  miscellaneous  excise  taxes - 


Undistributed  depositary  receipts  and  unapplied  col 
lections 


Total  excise  taxes - 


Employment  taxes: 

Federal  Insurance  Contributions  Act  and  Self-Employment 

Contributions  Act 

Railroad  Retirement  Tax  Act 

Federal  Unemployment  Tax  Act 


Total  employment  taxes - 

Estate  and  gift  taxes 

Total  internal  revenue 

Customs 


Miscellaneous  receipts: 

Miscellaneous  taxes 

Seigniorage 

Bullion  charges 

Fees  for  permits  and  licenses 

Fines,  penalties,  forfeitures 

Gifts  and  contributions - 

Interest 

Dividends  and  other  earnings 

Rents 

Royalties 

Sale  of  products 

Fees  and  other  charges  for  services  and  special  benefits. 

Sale  of  Government  property 

Realization  upon  loans  and  investments -. 

Recoveries  and  refunds 


104 
80 
38 
35 

6 
68 

7 

95 

20 

4 

2 


1,552 


137 


12,  752 


11,686 
564 
458 


12,  708 


2,035 


99, 441 


1,171 


(*) 


5 
68 

8 
62 
11 

877 
743 
89 
121 
342 
101 
263 
371 
154 


Total  miscellaneous  receipts  . 

Gross  budget  receipts. 

Footnotes  at  end  of  table. 


3,206 


103, 818 


1963 
estimate 


385 
525 
190 


112 

88 
40 
36 
6 
70 


(*) 


97 

23 

5 

2 


1,586 


81 


13, 341 


13,  413 

580 
945 


14, 938 


2,079 


104, 958 


1,307 


5 
39 

1 
68 
68 

(*) 
877 
856 
453 
130 
380 
113 
295 
1,026 
99 


4,410 


110,675 


1964 
estimate 


415 

570 

72 

33 

3 

3 

15 

123 

90 

43 

38 

6 

76 

7 


100 

26 

5 

2 


1,627 


114 


13, 964 


15,058 
620 
976 


16, 654 


2,144 


108, 462 


1,419 


(*) 


5 
49 

1 
75 
40 

918 
873 
435 
133 
407 
117 
316 
539 
128 


4,036 


113,917 


590   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  16. — Budget  receipts  and  expenditures  based  on  existing  and  proposed  legis- 
lation, actual  for  the  fiscal  year  1962  and  estimated  for  1963  and  196 Jf — Continued 

[la  millions  of  dollars] 


Source 


1962 
actual 


1963 
estimate 


1964 
estimate 


Budget  Receipts— Continued 
Deduct: 

Transfers  to: 

Federal  old-ajre  and  survivors  insurance  trust  fluid 

Federal  disability  insurance  trust  fund 

Railroad  retirement  account 

Unemployment  trust  fund 

Highway  tnist  fund 

Refunds  of  receipts: 
Internal  revenue: 

Individual  income  taxes 

Corporation  income  taxes 

Excise  taxes 

Employment  taxes 

Estate  and  gift  taxes 

Total  internal  revenue 

Customs  -- 

Miscellaneous  receipts - - 

Total  refunds  of  receipts 

Subtotal  receipts 

Deduct:  Interest  and  other  income  received  by  Treasury  from  Gov- 
ernment agencies  included  above  and  also  included  in  budget 
expenditures 

Net  budget  receipts 


Net  BuDfiET  Expenditures 


Legislative  branch 

The  judiciary 

Executive  Office  of  the  President 

Funds  appropriated  to  the  President 

Department  of  Agriculture 

Department  of  Commerce 

Department  of  Defense: 

Military  functions 

Civil  functions 

Department  of  Health,  Education,  and  Welfare.. 

Department  of  the  Interior 

Department  of  Justice 

Department  of  Labor 

Post  Office  Department 

Department  of  State.. 

Treasury  Department 

Atomic  Energy  Commission 

Federal  Aviation  Agency 

General  Services  Administration 

Housing  and  Home  Finance  Agency 

National  Aeronautics  and  Space  Administration. 

Veterans'  Administration 

Other  independent  agencies 

District  of  Columbia 

Allowances,  undistributed 


10,600 

12,289 

13, 884 

945 

991 

1,028 

564 

580 

620 

453 

937 

968 

2,949 

3,212 

3,306 

5,079 

5,300 

5, 300 

773 

800 

800 

218 

229 

228 

147 

141 

154 

19 

19 

19 

6,235 

6,489 

6,501 

29 

29 

29 

1 

2 

2 

6,266 

6,521 

6,532 

Subtotal  expenditures 

Deduct:    Interfund   transactions   (included  in  both  receipts  and 
expenditures) 


Net  budget  expenditures. 
Budget  surplus,  or  deficit  (— ).. 


82,042 


633 


81,409 


153 

57 

29 

3,443 

6,669 

594 

46, 815 
999 

4,215 
908 
294 
620 
797 
307 
10, 173 

2,806 
698 
445 
739 

1,257 

5,392 

937 

72 


88, 419 
633 


87, 787 


-6, 378 


86, 146 


646 


85, 500 


159 

65 

25 

4,359 

7,493 

745 

48,300 

1,106 

,5,048 

1,054 

317 

239 

802 

457 

10,811 

2,870 

791 

532 

1,088 

2,400 

5,532 

607 

83 

75 


94,957 
646 


94,311 


I 


87, 579 


679 


86,900 


155 

69 

31 

4, 375 

6, 565 

895 

51,000 

1,140 

5, 742 

1,165 

337 

433 

554 

361 

11,232 

2,850 

801 

594 

695 

4,200 

5,470 

355 

86 

375 


99,482 
679 


98, 802 


-8,811 


-11,903 


•Less  than  $500,000. 


TABLES 


591 


Table  17.^ — Trust  account  and  other  transactions,  actual  for  the  fiscal  year  1962  and 

estimated  for  1963  and  1964 
[In  millions  of  dollars.    On  basis  of  1904  Budget  document] 


Source 


1902 
actual 


1903 
estimate 


1904 
estimate 


TRUST  ACCOUNTS,  ETC. 
Receipts 

Federal  old-age  and  survivors  insurance  trust  fund: 

Employment  taxes 

Less:  Refunds  of  taxes_ 

Deposits  by  States 

Interest  on  investments 

Payment  for  military  service  credits. 

Other - 

Federal  disability  insurance  trust  fund: 

Employment  taxes 

Less:  Refunds  of  taxes 

Deposits  by  States 

Interest  on  investments _-_ 

Payment  for  military  service  credits 

Unemployment  trust  fund: 

Deposits  by  States ..- 

Federal  unemployment  taxes 

Less:  Refunds  of  taxes 

Railroad  unemiiloyment  insurance  account: 

Deposits  by  Railroad  Retirement  Board 

Other  receipts 

Advance  from  revohing  fund 

Interest  on  investments 

Proposed  legislation 

Advances  from  general  fund   for  temporary  unemployment 
compensation , -.. 

Railroad  retirement  account: 

Employment  taxes 

Interest  and  profits  on  investments 

Repayment  of  advances  to  railroad  unemployment  insurance 

account 

Payment  from  OASI  trust  fund 

Payment  from  Federal  disability  insurance  trust  fund 

Interest  on  loans  to  railroad  unemployment  insurance  account... 
Proposed  legislation — military  service  credits,  and  other 

Federal  employees'  retirement  funds: 

Deductions  from  employees'  salaries 

Payments  from  other  funds: 

Employing  agency  contributions 

Federal  contributions 

Voluntary  contributions,  donations,  etc. 

Interest  and  profits  on  investments 

Highway  trust  fund: 

Excise  taxes 

Less:  Refunds  of  taxes 

Interest  on  investments 

Proposed  legislation 

Veterans'  life  insurance  funds: 

Premiums  and  other  receipts 

Payments  from  general  and  special  funds 

Interest  on  investments 

Foreign  Assistance  Act,  advances 

Indian  tribal  funds 

District  of  Columbia 

All  other  trust  funds 


Subtotal 

Deduct:  Interfund  transactions. 

Net  receipts 


Expenditures 

Federal  old-age  and  survivors  insurance  trust  fund: 

Benefit  payments 

Administrative  expenses  and  construction 

Payment  to  Railroad  Retirement  Board 

Federal  disability  insurance  trust  fimd: 

Benefit  payments 

Administrative  expenses — reimbursement  to  Federal  old-age 

and  survivors  insurance  trust  fund 

Payment  to  railroad  retirement  account 

Other — 

Footnotes  at  end  of  table. 


10,730 

-130 

870 

539 


950 

-12 
77 
70 


2,729 
458 
-5 

147 
117 
35 
173 


333 

504 
107 

25 

301 

11 

12 


857 

854 
45 
12 

317 

3,080 
-131 

7 


501 
7 
210 
355 
81 
324 
165 


24, 853 
528 


24, 325 


12, 058 
252 
361 

1,011 

62 

11 

4 


12,411 

-122 

973 

516 


1,002 

-11 

81 

69 


2,775 
953 


152 

60 

-86 

196 


580 
108 

20 

385 

10 

9 


885 

885 
30 
12 

349 

3,346 

-134 

12 


516 
10 
209 
568 
57 
371 
164 


27, 354 
491 


26, 863 


13, 865 
268 
385 

1,167 

65 

10 

4 


14,018 

-134 

1,100 

519 

63 

3 

1,040 

-12 

82 

06 

1 

2,770 

1,106 

-8 

158 
43 


216 
2 


620 
112 

20 

386 

10 

9 

62 

955 

955 


12 
418 

3,452 

-133 

4 

-13 

513 
9 

207 
718 
00 
407 
178 


29, 994 
454 


29, 540 


14, 648 
297 
386 

1,231 

74 

10 

4 


592   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  17. —  Trust  account  and  other  transactions,  actual  for  the  fiscal  year  1962  and 

estimated  for  1963  and  1964 — Continued 

[In  millions  of  dollars] 


Source 


1962 
actual 


1963 

estimate 


1964 
estimate 


TRUST  ACCOUNTS,  ETC.— Continued 

Expenditures— Continued 

Unemployment  trust  fund: 

Withdrawals  by  States 

Railroad  unemployment  benefit  payments .-- 

Administrative  expenses 

Temporary  extended  unemployment  compensation: 

Benefits 

Repayment  of  general  fund  advances 

Temporary  unemployment  compensation — repayment  of  ad- 
vances to  Treasury 

Repayment  of  advances  to  railroad  retirement  trust  fund 

Proposed  legislation 

Other...- 

Railroad  retirement  account: 

Benefit  payments 

Administrative  expenses 

Advances  to  railroad  unemployment  insurance  account 

Interest  on  refund  of  taxes 

Federal  employees'  funds: 

Retirement  funds 

Employees  health  benefits  fund  (net) 

Employees'  life  insurance  fund  (net) 

Retired  employees  health  benefits  fund  (net) 

Highway  trust  fmid: 

Federal-aid  highways.. ._ 

Interest  on  advances  from  general  fund 

Improvement  of  the  Pentagon  road  network 

Veterans'  life  insurance  funds 

Federal  National  Mortgage  Association  trust  fund  (net) 

Foreign  Assistance  Act,  advances 

Indian  tribal  funds 

District  of  Columbia  funds 

Deposit  funds  and  all  other  trust  funds 


Subtotal 

Deduct:  Interfund  transactions. 


Net  expenditures 

Excess  of  receipts  (— ),  or  expenditures 

INVESTMENTS  IN  PUBLIC  DEBT  SECURITIES  ' 

Federal  disability  insurance  trust  fund 

Federal  old-age  and  survivors  insurance  trust  fund 

Federal  employees'  funds 

Railroad  retirement  account ..- 

Unemployment  trust  fund 

Veterans'  life  insurance  funds 

Highway  trust  fund 

Federal  National  Mortgage  Association  trust  fund 

District  of  Columbia  municipal  government  funds 

Other  trust  accoimts 

Wholly  owned  Government  corporations  and  agencies 


Net  investments,  or  sales  (— ). 


SALES    (-),  -\ND  REDEMPTIONS  OF    OBLIGATIONS 
OF  GOVERNMENT  AGENCIES  IN  MARKET  (NET) 

Federal  National  Mortgage  Association:  Secondary  market  opera- 
tions  - 

District  of  Columbia:  Stadium  fund 

Housing  and  Home  Finance  Agency: 

Federal  Housing  Administration 

Management  and  liquidation  functions  fund 

Teimessee  Valley  Authority 

Other.... 


Net  redemptions,  or  sales  (— ). 


2,857 
202 
508 

313 
2 


25 


1,024 

9 

101 

(•) 

1,063 
-11 
-70 
(*) 

2,784 


723 
317 
361 
64 
333 
-324 


24, 639 

528 


24,111 


-213 


21 

-1,089 

1,098 

-63 

72 

1 

202 

38 

-8 

-28 

191 


435 


-359 


-204 
(*) 

-96 
(*) 


-658 


2,700 
165 
386 


(') 


479 
"20' 


1,050 
10 
52 


1,226 
-15 
-27 
(*) 

2,999 


1 
870 
250 
435 
63 
388 
815 


27, 631 
491 


27,140 


277 


-104 

-734 

999 

-1 

293 

-136 

224 

-29 

-26 

-8 

295 


773 


(*) 


-216 
-141 


(*) 


-357 


2,550 
155 
459 


317 

98 

20 

170 


1,075 
11 
13 


(*) 


1,354 
-17 
-53 


3,389 


546 
485 
571 
74 
400 
213 


28,483 
454 


28, 029 


-1,511 


-145 

79 

1,053 

120 

519 

183 

-91 

-5 

-10 

-1 

374 


2,077 


-480 
71 


(*) 


-50 


-459 


'  Includes  investments  in  certain  guaranteed  securities. 
•Less  than  $500,000. 


I 


TABLES 


593 


Table  18. — Effect  of  financial  operations  on  the  public  debt,  actual  for  the  fiscal 
year  1962  and  estimated  for  1963  and  1964- 

[In  millions  of  dollars.    On  basis  of  1964  Budget  document] 


Source 

1962  actual 

1963 

estimate 

1964 
estimate 

Budget  receipts  and  expenditures: 

Net  receipts . 

81,409 

87, 787 

85, 500 
94,311 

86  900 

Net  expenditures 

98, 802 

Budget  deficit 

6,378 

8,811 

11,903 

Trust  fund  receipts  and  expenditures: 

Net  receipts  -  . .  _      .  -  . - 

24,325 
24,111 

26, 863 
27, 140 

29  540 

Net  expenditures 

28, 029 

Excess  of  expenditures,  or  receipts  (— ) 

-213 

277 

—1,511 

Net  investments  of  Government  agencies  in  public  debt  securities.- 

Net  sales  (— )  of  obligations  of  Government  agencies  in  market 

Increase  (— ),  or  decrease  in  checks  outstanding,  deposits  in  transit 
(net),  etc 

435 

-658 

-566 

773 
-357 

100 

2,077 
-459 

100 

Changes  in  cash  balances: 

Treasurer's  account '.— - 

3,736 
118 

-4,230 
-80 

Held  outside  Treasury 

Net  increase,  or  decrease  ( — ) 

3,854 

-4,310 

Increase  in  public  debt . 

9,230 
288, 970 

5,293 
298,201 

12,110 

Gross  debt  beginning  of  period 

303, 494 

298,201 
444 

303, 494 
600 

315, 604 

Guaranteed  obligations  of  Government  agencies,  not  owned  by- 
Treasury  - 

514 

Total  public  debt  and  guaranteed  obligations _. 

298,645 
433 

304,094 
370 

316, 118 

Deduct:  Debt  not  subject  to  statutory  limitation 

360 

Total  debt  subject  to  statutory  limitation 

298, 212 

303,724 

315, 758 

1  The  balance  in  the  Treasurer's  account  at  the  end  of  each  year  is  as  follows:  $10,430  mUlion  for  1962; 
6,200  million  for  1963;  and  $6,200  for  1964. 


661496—63- 


-39 


594   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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600   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  20. — Internal  revenue  collections  and  refunds  by  States,^  fiscal  year  1962 
[In  thousands  of  dollars.    On  basis  of  Internal  Revenue  Service  reports] 


States,  etc. 


Alabama 

Alaska 

Arizona... 

Arkansas 

California 

Colorado. 

Connecticut 

Delaware 

Florida... 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa. 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland  2 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island. 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

International ' 

Undistributed: 

Depositary  receipts  < 

Transferred  to  Govern- 
ment of  Guam 

Withheld  taxes  of  Federal 
employees  s 

Unclassified.. 


Total. 


Individual 
income  and 

employ- 
ment taxes 


482, 879 

61,815 

305, 321 

221, 538 

6,  606, 127 
970, 657 

1,171,788 
353, 783 

1, 102. 106 
771,868 
203, 329 
145,  445 

4, 970, 934 

1, 453, 105 
.584,  725 
513, 398 
482.  506 
544, 867 
187, 667 

1,742.031 

2, 039, 683 

3.197,017 

1,074,466 
219. 360 

1, 495. 735 
130,  ,104 
449. 063 
126,  220 
167, 490 

2, 109,  293 

185, 0.W 

10, 989.  236 

802. 109 

91. 369 

3. 788, 531 
550,  203 
503.  .554 

4,319.099 
292. 9.56 
306.  507 
113,600 
644,  867 

2,361.614 
213.  886 
79. 1,39 
833.  239 
911.502 
266. 320 

1, 136, 900 

73. 990 

218,  ,595 

726, 879 

-3, 698 

67,588 


6  63,357,765 


Corpora- 
tion 
income 
taxes 


137, 767 

4,982 

48, 125 

35,310 

1, 390, 195 

136, 141 

325, 943 

456,012 

238, 658 

237, 061 

53. 909 

24.  787 

1,705,370 

353,  295 

147, 796 

135, 826 

164. 980 

132, 198 

43.  ,5.54 

303. 340 

583.  357 

1,817.317 

352.  621 

31.972 

507. 036 

24. 128 

97. 860 

32.  346 

30.  964 

620.  238 

20. 093 

5, 925, 497 

421.500 

10, 936 

1, 414,  684 

169. 404 

78. 168 

1, 156. 886 

67, 330 

81.906 

17.  525 

1.59.075 

675, 035 

47,  649 

14,  240 

230. 054 

184. 431 

47. 102 

370. 933 

8,722 

21,454 


21,295,711 


Excise 
taxes 


1 


17, 374 

2,364 

7,916 

16, 847 

862, 648 

101,730 

129, 424 

2.922 

81,561 

112.  212 

9.010 

4,410 

934, 593 

346.  684 

36.  261 

28,  488 

1,019.845 

87, 133 

5.646 

257. 387 

186, 800 

731.132 

112.302 

13.871 

265. 376 

4,977 

54,  260 

11,  665 

3,211 

307.  925 

7,944 

1,  670. 177 

1,  280. 109 

3,444 

6.58, 138 

204, 486 

18.810 

790, 955 

20.311 

15.014 

5.  839 

42.  261 

444,  280 

15, 104 

5, 452 

399. 894 

82.922 

16. 000 

169, 797 

9,849 

37, 066 

98, 351 


712,752,176 


Estate  and 
gift  taxes 


11, 194 

238 
11,519 

6,824 
232, 782 
13.  241 
88,289 
22, 313 
59, 748 
21,070 

6,016 

2,448 
144, 793 
24,  726 
18, 426 
17, 969 
21,721 
19,714 

9,978 
48, 911 
58,  565 
66. 984 
27, 496 

5,  589 
45,  292 

3,283 
12,  527 

7,095 
10, 449 
77, 338 

3,165 

368, 822 

17,284 

1.944 

102, 008 

16.310 

12. 937 

166, 379 

7,348 

8,982 

2.394 

17, 305 

114,358 

4, 090 

3.633 
24.  266 
23.  285 

7,  514 
26,  508 

2.673 

7,443 


2, 035, 187 


Total 
collections 


649, 214 

69, 398 

372. 882 

280, 519 

9, 091, 751 

1,221,770 

1,715.444 

835. 030 

1, 482. 073 

1,142,211 

272,  265 

177, 090 

7,  755.  691 

2,177,810 

787.  208 

695. 681 

1,689.052 

783, 913 

246, 845 

2,351,669 

2, 868, 404 

6.812.451 

1,566,884 

270,  793 

2, 313, 439 

162, 892 

613, 709 

177, 326 

212,114 

3,114,794 

216,  260 

18, 953,  732 

2,521,001 

107.  693 

5, 963.  361 

940, 403 

613.469 

6,433.319 

387, 944 

412. 409 

139.  3,58 

863.  508 

3,  595,  287 

280, 728 

102, 464 

1, 487, 4.53 

1,  202, 140 

336. 937 

1, 704, 138 

95.  234 

284, 558 

825, 231 

-3, 698 

67, 588 


99, 440, 839 


Refunds  of 
taxes 


71,680 

8,215 

46, 535 

32, 353 

781,099 
63, 896 
92, 906 
22, 698 

160, 155 
90, 941 
24, 656 
19, 839 

384. 139 

132. 140 
75,  272 
59, 975 
63, 405 
73, 304 
25, 548 

147, 960 
201,692 
297, 479 

120,  543 
34, 159 

152, 573 
18, 110 
36, 582 
13, 480 
17, 900 

255,  204 
28,484 

825, 167 
92, 652 
15, 965 

348, 348 
65, 130 
58, 782 

389, 569 
32,297 
44,916 
15, 4.56 
76, 045 

266, 040 

32, 173 

9,086 

107, 392 

102, 053 
39, 100 

121,  272 
10,001 
29,720 


1,039 


8  6,235,124 


•  It  should  be  emphasized  that  collections  in  the  various  States  do  not  necessarily  indicate  the  Federal 
tax  burden  of  the  respective  States,  since  the  taxes  collected  in  one  State  are,  in  many  instances,  borne  by 
residents  of  otiier  States.  I.ikewi.se,  payments  of  refunds  within  a  State  may  not  be  applicable  to  the  collec- 
tions within  that  State,  since  refunds  are  payable  in  the  State  of  residence  or  principal  place  of  business  of 
the  taxpayer  which  may  not  be  the  point  at  which  collections  are  made. 

2  Includes  the  District  of  Columbia. 

3  Collections  from  and  refunds  to  U.S.  taxpayers  in  Puerto  Rico,  Canal  Zone,  etc.,  and  in  foreign  countries. 
<  Consists  of  all  those  issued  during  the  fiscal  year  minus  thosereceived  with  tax  returns  which  are  included 

in  the  State  totals. 


TABLES  601 

>  Net  transactions  in  the  clearing  account  on  the  central  books  of  the  Treasury  for  withheld  income  taxes 
from  salaries  of  Federal  employees. 

6  Includes  $12.7  billion  transferred  to  the  Federal  old-age  and  survivors  insurance  trust  fund,  the  Federal 
Oisability  msurance  trust  fund,  and  the  railroad  retirement  account  as  provided  by  the  Social  Securitv 
Act,  as  amended  (42  U.S.C.  401  (a)  (b))  and  the  Raiboad  Retirement  Act  (45  U.S.C.  228e(k))  for  benefit 
payments  withm  the  States.  v  ./y   "» 

7  Includes  $3.1  bUlion  gasoline  and  certain  other  highway  user  levies  transferred  to  the  highway  trust  fund 
^oQ  TT^Q  o^^o'i?'^l'"V''*^'°°  ^°^  ^^^  States,  in  accordance  with  the  Highway  Revenue  Act  of  1956,  as  amended 

{,2iO  U  .o.L',  120  note) . 

8  Inclusive  of  the  reimbursement  of  $178  milUon  to  the  general  fund  from  the  Federal  old-age  and  survivors 
insurance  trust  fund,  the  Federal  disability  insurance  trust  fund,  the  highway  trust  fund,  and  the  Federal 
Unemployment  Tax  Act  (42  U.S.C.  1101(b)(3))  which  is  the  estimated  aggregate  of  refunds  due  on  the 
taxes  collected  and  transferred. 

Note.— Collections  in  full  detail  by  tax  source  and  region  are  shown  in  the  Annual  Report  of  the  Com- 
mmioner  of  Internal  Revenue  and  in  lesser  detail  in  the  Combined  Statement  of  Receipts,  Expenditures  and 
Balances  of  the  United  States  Oovernment.  *-    .      j- 


602 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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604   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  22. — Summary  oj  customs  collections  and  expenditures,  fiscal   years    1961 

and  1962 

[On  basis  of  Bureau  of  Customs  accounts] 

SCHEDULE  1.— COLLECTIONS  BY  CUSTOMS 


Collections 

1961 

1962 

Percentage 

increase,  or 

decrease  (— ) 

Collections: 
Duties: 
Consumption  entries 

.$804, 997, 619 

162, 883,  285 

10.  719. 099 

2,  506, 350 

n.a. 

8,  992. 908 

152. 460 

16,181,071 

172, 358 

1,150,064 

$961.  915.  647 

164, 969, 876 

12,  303,  780 

2,  934,  887 

444,  517 

9, 338,  454 

185.  555 

17,  710.  658 

137, 0.50 

1.  265, 493 

19  5 

Warehouse  withdrawals                ..      -    .  

1  3 

Mail  entries . 

14  8 

Passenger  baggage  entries                                 

17  1 

Crewmember  baggage  entries 

Informal  entries 

3.8 

Appraisement  entries -_-  

21.7 

Supplemental  duties - 

9  5 

Withheld  duties.. 

—20.5 

Other  duties 

10.0 

Total  duties 

1, 007,  755, 214 

1,171,205,917 

16.2 

Miscellaneous:  • 
Violations  of  customs  laws 

1,  590,  364 

31,764 

514,315 

4.  529.  490 

233, 171 

51.012 

13,  332 

1,915,775 

32,  959 

1.958,013 

29. 050 

495.  Ill 

4,  771,  977 

226, 953 

64,  677 

13, 801 

23.1 

Marine  Inspection  and  navigation  services 

—8.6 

Testing,  inspecting,  and  grading .          

—3.7 

Miscellaneous  taxes 

5.4 

Fees                                   -                -  - 

—2.7 

Unclaimed  funds 

26.8 

Recoveries 

3.5 

Sale  of  Government  property 

—  100.0 

All  other  customs  receipts .        

26, 979 

-18.2 

Total  miscellaneous .        

8,  912. 182 

7,586,561 

—14.9 

Internal  revenue  taxes  . 

406, 378, 856 

444,  828,  245 

9.5 

Total  collections 

1.  423, 046, 252 

1, 623, 620,  723 

14.1 

n.a.    Not  available. 

'  Includes  miscellaneous  customs  collections  of  Puerto  Rico  and  the  Virgin  Islands  and  those  of  other 
Government  agencies. 


TABLES 


605 


Table  22, — Summary  of  customs  colleclions  and  expenditures,  fiscal  years  1961  and 

i  56^— Continued 

[On  basis  of  Bureau  of  Customs  accounts] 

SCHEDULE  2.— APPROPRIATIONS  AND  EXPENDITURES 


Appropriations  and  expenditures 

1961 

1962 

Percentage 
increase,  or 
decrease  (— ) 

Appropriations: 

For  salaries  and  expenses,  Bureau  of  Customs 

$59,  815, 000 
1, 066, 800 
1, 263,  700 

$63, 325, 000 
1, 237, 000 
1, 426,  700 

5.9 

Transferred  from  Department  of  Commerce  for  export 
control.                                 --  

15.9 

Transferred  from  Department  of  Agriculture  for  quaran- 
tine purposes                           -       

12.9 

Total            

62, 145,  500 

65,  988,  700 

6.2 

Expenditures,  obligations  incurred  by: 
Collectors  of  customs                                               -_      

41, 183, 796 

9,  765,  614 

870, 515 

6,  717, 658 

1,  236, 508 

2,  335, 471 

43, 205, 880 

10,  550, 078 

972,  424 

7, 231, 494 

1, 306, 374 

2, 651, 278 

4.9 

Appraisers  of  merchandise          -      _  

8.0 

Comptrollers  of  customs 

11.7 

Agency  Service  (investigations).        .     .  

7.6 

Chief  chemists 

5.7 

Executive  direction                       .      .  

13.5 

Total  obligations  incurred        .  

62, 109, 562 

65, 917,  528 

6.1 

Balance  of  appropriations                 

35,  938 

71, 172 

98.0 

Expenditures  (refunds) : 
Excessive  duties  and  stmUar  refunds 

13, 843, 869 
11,  595,  663 

14, 562,  972 
14,  756, 430 

5.2 

Drawbaclc  payments                             

27.3 

Total 

25, 439,  532 

29,  319, 402 

15.2 

606   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  23. — Deposits  by  the  Federal  Reserve  Banks  representing  interest  charges  on 
Federal  Reserve  notes,  fiscal  years  1947-62  ' 


Federal  Reserve 
Bank 

1947-59 

1960 

1961 

1962 

Cumulative 
through  1962 

Boston 

New  York 

Philadelphia 

Cleveland 

Richmond 

Atlanta 

$212,301,276.75 
950, 530, 647.  55 
233, 484,  673.  00 
335. 548,  644.  28 
231,339,562.88 
191,041,8,53.07 
641, 664, 325. 87 
162,  318, 102. 14 
91,341,297.12 
163,051,628.12 
136, 442, 429.  64 
376, 827, 467. 12 

$65, 177, 632.  98 

271,042,719.10 
72, 840, 095.  47 
90. 521, 189.  66 
73, 461. 162.  64 
51,754,68,5.08 

199,  656, 095.  46 
47,  750,  266.  32 
26, 147,  203.  49 
45, 065,  009.  42 
37, 930, 193. 44 

111,761,16.5.15 

$41,194,897.08 
212, 079, 944. 17 
45, 886. 308. 09 
66,597,471.42 
49.090,076.11 
39,  571.  839.  00 
139,  200,110.  ,57 
29, 706. 375.  68 
16,489,015.59 
32, 574, 465.  45 
29,  729, 590,  74 
86, 009, 391. 12 

$36,074,382.32 
188,  290,  233. 02 
41,786,811.68 
59, 065, 526.  95 
45. 516,  092.  75 
38,261.170.62 
130, 138, 661. 07 
26. 509. 199. 66 
13, 177, 153.  54 
30, 549, 419.  77 
25, 164, 979. 99 
83, 816, 857.  01 

$354, 748, 189. 13 
1,621,943,543.84 
393, 997, 888.  24 
551,732,832.31 
399. 406, 894.  38 
320  629,547  77 

Chicago  . 

1  110  659  19'  97 

St.  Louis - 

266  283  943  80 

Minneapolis 

Kansas  City 

Dallas 

147, 154,  669. 74 
271,  240,  522.  76 
229  267  193  81 

San  Francisco 

658, 414. 880.  40 

Total 

3,725,891,907.54 

1, 093, 107, 418.  21 

788,129,485.02 

718, 350, 488. 38 

6,325,479,299.15 

•  Pursuant  to  section  16  of  the  Federal  Reserve  Act,  as  amended  (12  U.S.C.  414).  Through  1959,  consisted 
of  appro.ximately  90  percent  of  earnings  of  the  Federal  Reserve  Banks  after  payment  of  necessary  expen.ses 
and  statutory  dividends,  and  after  provisions  for  restoring  the  surplus  of  each  bank  to  100  percent  of  sub- 
scribed capital  where  it  fell  below  that  amount.  Beginning  in  1960,  pursuant  to  a  decision  by  the  Board 
of  Governors  of  the  Federal  Reserve  System,  consists  of  all  net  earnings  after  dividends  and  after  provision 
for  building  up  surplus  to  100  percent  of  subscribed  capital  at  those  banks  where  surplus  is  below  that 
amount  and  also  of  the  amounts  by  which  surplus  at  the  other  banks  exceeds  subscribed  capital. 


TABLES  607 

Table  24. — Postal  receipts  and  expenditures,  fiscal  years  1916-62  ' 


Year 


1916  .. 
1917.-. 
1918... 
1919... 
1920... 

1921... 
1922... 
1923... 
1924  .. 
1925... 

1926... 
1927... 
1928... 
1929... 
1930... 

1931... 
1932... 
1933... 
1934... 
1935... 

1936... 
1937... 
1938... 
1939... 
1940.  . 

1941... 
1942  .. 
1943... 
1944... 
1945... 

1946... 
1947... 
1948... 
1949... 
1950... 

1951... 
1952... 

1953  . 

1954  '. 

1955  '. 

1956 '. 

1957  ■>. 

1958  '. 

1959  '.. 

1960  '. 

1961  7. 
1902  K 


Postal  revolvingr  fund  as  reported  to  the  Treasury  by  the 
Post  Office  Department 


Postal  rev- 
enues 


$312, 057,  689 
329.  7?6  lie 
888,  975,  962 
436, 239, 126 
437, 150,  212 

463,  491. 275 
484.  853,  541 
532, 827,  925 
572,  948,  778 
599,  591,  478 

659, 819,  801 
683. 121, 989 
693,  633, 921 
696, 947, 578 
705, 484, 098 

656, 463,  383 
588,171,923 
587,631,364 
586,  733, 166 
630. 795, 302 

665,  343,  356 
726,201,  no 
728,  634, 051 
745, 955, 075 
766, 948,  627 

812, 827,  736 

859.817.491 

966. 227. 289 

1,112.877,174 

1,314,240,132 

1, 224.  572, 173 
1,299.141,041 
1,410,971,284 
1,571,851,202 
1, 677.  486. 967 

1, 776.  816.  354 
1,947.316,280 
2.091,714.  112 
2, 263, 389,  229 
2.  336.  667,  658 

2,419,211,749 
2,  547,  589,  618 
2,  583, 459.  773 
3,061,110,753 
3, 334, 343, 038 
3, 482,  961. 182 
3. 609,  260, 097 


Postal  expenditures  2 


Extraordinary 

expenditures 

as  reported 

under  act  of 

June  9,  1930 


$39,  669,  718 

48, 047,  308 
53, 304,  423 
61.  691,  287 
66,  623, 130 
69,  537. 252 

68,  585. 283 
51,  587,  336 
42,  799,  687 
48,  540,  273 
53, 331, 172 

68, 837,  470 

73,  916, 128 

122,  .343,  916 

126,  639,  650 

116,198,782 

100, 246, 983 

92, 198.  225 

96, 222, 339 

120,118,663 

119,960,324 

104,  895, 553 
107,209,837 
103,  445, 741 

(•) 

(•) 

(») 
(') 
(») 
(«) 
(«) 
(«) 

(9) 


Other 


$306, 228, 453 
319,  889, 904 
324,  849, 188 
362, 504,  274 

«  418,  722, 295 

«  619,  634,  948 
»  545,  662,  241 
s  556.  893, 129 
»  587,412.755 
5  639,  336,  605 

»  679, 792, 180 
714,  628, 189 
725,  755, 017 
782, 408. 754 
764, 030, 368 

754,  482,  265 
740.418,  111 
638.314,969 
564, 143, 871 
627, 066, 001 

685, 074, 398 
721, 228,  506 
729,  645, 920 
736,  106,  665 
754,  401,  694 

778, 108, 078 
800,  040, 400 
830, 191,  463 
942,  345, 968 
1, 028, 902,  402 

1. 253.  408,  696 
1, 412,  600, 531 

1,  591.  583, 096 
2, 029,  203,  465 
2, 102, 988, 758 

2,  236,  503,  513 
2,  559,  650,  534 
2,  638,  680,  670 
2, 575,  386,  760 

2,  692.  966. 698 

2,882,291,063 
3, 065, 126, 065 

3,  257. 452, 203 
3, 834, 997.  671 
3,821.959.408 
4. 347,  945, 979 
4.343,436,402 


Surplus,  or 
deficit  (-) 


$5, 829,  236 
9.  836.  212 
64. 126,  774 
73.  734. 862 
18. 427, 917 

-156,143,673 
-60,  808,  700 
-24, 065,  204 
-14,463,976 
-39,  745, 027 

-19,972,379 
-31.  606,  201 
-32, 121, 096 
-85,461,176 
-98,  215,  987 

-146,066,190 

-205,650,611 

-112,374,892 

-44. 033. 835 

-65.807,951 

-88,316,324 
-46,614,732 
-43.811,556 
-38,691,863 
-40, 784, 239 

-24,117.812 

-14,139,037 

13. 691, 909 

43, 891,  556 

189. 138,  948 

-129,081,506 
-205, 657,  715 
-276,  834, 152 
-577,  470, 926 
-645,462,114 

-564,  682,  711 
-719,  544. 090 
-650.412.299 
-311.997,531 
-356. 299,  040 

-463,079,314 
-517.536.447 
-673.  992, 431 
-773. 886. 918 
-487, 616, 370 
-864,  984.  797 
-734.176.305 


Surplus  rev- 
enue paid 
into  the 
Treasury  ' 


$5. 200,  000 

48,  630.  701 

89. 906. 000 

5.  213, 000 


81. 494 


1,000,000 
188. 102. 679 


12. 000, 000 


Advances 

from  the 

Treasury  to 

cover  postal 

deficiencies  * 


$5. 500. 000 


2, 221, 095 

343,611 

•114,854 

« 130, 128,  458 
»  64.  346, 235 
'32.526,915 
5  12,  638,  850 
»  23,  216, 784 

»  39,  606.  490 
27,  263, 191 
32.  080,  202 
94,  699, 744 
91,  714,  451 

146,643,613 

202,876,341 

117,  380, 192 

62, 003,  296 

63, 970,  405 

86, 038.  862 
41,  896, 945 
44, 268,  861 
41, 237. 263 
40. 870.  336 

30, 064, 048 

18, 308,  869 

14,  620, 875 

«  -28,999.995 

649, 769 

160, 672, 098 
241,  787, 174 
310,213,451 
524,  297, 262 
592,  514, 046 

624, 169,  406 
740, 000, 000 
660,121,483 
521.999.804 
285, 261, 181 

382,311,040 
516,  502, 460 
921, 750, 883 
605. 184. 335 
569.229,167 
824,  989,  797 
773, 739, 374 


'  For  figures  from  1789  through  1915  see  annual  report  for  1946,  p.  419. 

'  Includes  adjusted  losses,  etc.,  postal  funds  and  expenditures  from  postal  balances,  but  excludes  depart- 
mental expenditures  in  Washington,  D.  C,  through  1922,  and  amounts  transferred  to  the  civil  service  retire- 
ment and  di.sability  fund,  1921  through  1926.  From  1927  to  date  includes  salary  deductions  paid  to  and  de- 
posited for  credit  to  the  retirement  fund. 

'  On  basis  of  warrants-issued  adjusted  to  basis  of  daily  Treasury  statements  through  1947. 

•  Advances  to  the  Postmaster  General  to  meet  estimated  deficiencies  ta  postal  revenues,  reduced  by  repay- 
ments from  prior  year  advances.  Excludes  allowances  for  offsets  of  extraordinary  expenditures  or  the  cost 
of  free  mailings.  Figures  are  on  basis  of  warrants-issued  adjusted  to  basis  of  daily  Treasury  statements 
through  1953,  and  thereafter  on  basis  of  the  central  accounts  of  the  U.  S.  Government  maintained  by  the 
Treasury  Department. 

»  Excludes  payments  from  general  fund  appropriation  "Additional  Compensation,  Postal  Service," 
pursuant  to  act  of  November  8,  1919,  as  follows:  1920,  $35,698,400;  1921,  $1,374,015;  and  1922,  .$6,700.  Also 
excludes  transfers  to  the  civil  service  retirement  and  disability  fund  on  account  of  salary  deductions,  as 
follows:  1921.  $6,519,683;  1922,  $7,899,006;  1923,  $8,284,081;  1924,  $8,679,658;  1925,  $10,266,977;  and  1926, 
$10,472,289  (see  note  2). 

•  Repayment  of  unexpended  portion  of  prior  years'  advances. 

'  Transactions  for  1954  through  1962  are  on  the  basis  of  cash  receipts  and  expenditures  as  reported  by  the 
Post  Office  Department.    Reports  of  the  Postmaster  General  are  on  a  modified  accrual  basis. 
'  See  letter  of  the  Postmaster  General  In  exhibits  in  annual  reports  prior  to  1958. 

•  Under  the  act  of  May  27, 1958  (72  Stat.  143),  the  Postmaster  General  is  no  longer  required  to  certify  the 
estimated  amounts  of  postage  that  would  have  been  collected  on  certain  free  or  reduced-rate  maillDgs. 


608   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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616   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Public  Debt,  Guaranteed  Obligations,  Etc. 

I. — Outstanding 

Table  26. — Principal  of  the  -public  debt,  1790-1962 

[On  basis  of  Public  Debt  accounts  from  1790  through  1915,  and  on  basis  of  daily  Treasury  statements  from 

1910  to  ilate,  see  "Bases  of  Tables"  and  Note] 


Date 


December  31— 

1790 

1791 

1792 

1793 

1794 

1795 

1796 

1797 

1798 

1799 

1800 

1801 

1802 

1803 

1804 

1805 

1806 

1807 

1808- 

1809 

1810 

1811- 


Total  gross 
debt 


$75, 463, 477 
77, 227, 925 
80, 358, 634 
78,  427, 405 
80,  747,  587 
83, 762, 172 
82, 064,  479 
79, 228,  529 
78, 408, 670 
82, 976, 294 
83, 038, 051 
80, 712, 632 
77, 054,  686 
86, 427, 121 
82,312,151 
75, 723, 271 
69, 218, 399 
65, 196, 318 
57, 023, 192 
53, 173, 218 
48, 005,  688 
45,209.738 


Date 


December  31 

1812 

1813 

1814 

1S15 

1816 

1817 

1818 

1819 

1820 

1821 

1822 

1823 

1824 

1825 

1826 

1827 

1828 

1829 

1830 

1831 

1832 


Total  gross 
debt 


$55, 962, 828 
81,  487, 846 
99, 833,  660 
127, 334, 934 
123,  491, 965 
103. 466, 634 
95,  529,  648 
91,015,566 
89,  987, 428 
93, 546, 677 
90, 875,  877 
90, 269, 778 
83,  788,  433 
81,054,060 
73, 987, 357 
67, 475, 044 
68, 421,  414 
48,  565,  407 
39. 123, 192 
24, 322, 235 
7,011,699 


Date 


December  31- 

1833 

ia34 

1835 

1836 

1837 

1838 

1839 

1840 

1841 

1842 

June  30— 

1843 

1844 

1845 

1846 

1847 

1848 

1849 

1850 

1851 

1852 , 


Total  gross 
debt 


$4,760,082 

37, 733 

37,  513 

336, 958 

3, 308, 124 

10, 434, 221 

3,  573, 344 

5, 250, 876 

13, 594,  481 

20, 201, 226 

32, 742, 922 
23, 461,  653 
15, 925, 303 
15,  550, 203 
38. 826,  535 
47, 044, 862 
63. 061,  859 
63,  452, 774 
68,  304,  796 
66, 199, 342 


June  30 


Interest-bearing  i 


Matured  debt 
on  which  inter- 
est has  ceased 


1853 $59,642,412 

1854 42,044,517 

1855 35,418,001 

1856 - 31,805,180 

1857 28,503,377 

1858 - 44,743,256 

1859 58, 333, 156 

1860 64,683,256 

1861 90,423,292 

1862 365,  .356, 045 

1863 707,834,255 

1864 1,360,026,914 

1865..- - 2,217,709.407 

1866 2,322,116,330 

1867 2,238,954,794 

1868 2,191,326,130 

1869 2,151,495,065 

1870 2,035,881.095 

1871 1.920,696.750 

1872 1,  800, 794, 100 

1873 1,696,483,950 

1874  1,724,930,760 

1875 1,708,676,300 

1870 1,696,685,450 

1877 1,697,888,500 

1878 -  1,780,735,650 

1879 1,887,716,110 

1880 1,709,993, 100 

18S1 1.625,  .567. 750 

1882 1,449,810.400 

1883 1,324,229,150 

1884 1.212,563.850 

1885 1,182,150,950 

1886 1. 132,014, 100 

1887 1. 007, 692, 350 

1888 936,522,500 

1889 815,853,990 

1890 711.313, 110 

1891   610,529,120 

1892     585,029,330 

1893 585,037.100 

1894   635,041,890 

1895 716,202,060 

1896 847,363.890 

1897  847,365,130 

1898 847, 367,  470 

1899 1,046,048,750 

1900 1,023,478,860 

Footnotes  at  end  of  table. 


$162, 249 

199, 248 

170, 498 

168, 901 

197.998 

170.168 

165,225 

160,575 

159, 125 

230, 520 

171.970 

366, 629 

2, 129,  425 

4. 435, 865 

1, 739, 108 

1,  246, 334 

5,112,034 

3, 569,  664 

1, 948, 902 

7.926,547 

51, 929,  460 

3, 216, 340 

11, 425, 570 

3. 902, 170 

16,  648,  610 

5, 594, 070 

37. 015, 380 

7,  621, 205 

6,723,615 

16,260,555 

7,831,165 

19, 655, 955 

4, 100, 745 

9,  704, 195 

6,114,915 

2, 495, 845 

1.911,235 

1.  815, 55.5 

1.614,705 

2, 785. 875 

2, 094, 060 

1,  851. 240 

1. 721,  590 

1.636,8t0 

1, 346,  880 

1, 262, 680 

1. 218, 300 

1, 176, 320 


Debt  bearing 
no  interest 


$158,  .591, 390 
411,767,4,"i6 
455,  437, 271 
458, 090, 180 
429,211,734 
409,  474, 321 
390, 873, 992 

388,  503. 491 
397,002,510 
399, 406,  489 
401, 270, 191 
402, 796, 935 
431, 785, 640 
436, 174, 779 
430,258,158 
393, 222, 793 
373, 088. 595 
374. 181. 153 
373, 294,  567 
386,  994, 363 
390, 844.  689 

389,  898,  603 
393. 087, 639 
392, 299, 474 
413,941,255 
451,678.029 
44.5. 613, 311 
431, 705, 286 
409,267.919 
.393, 662. 736 
380, 403,  636 
374. 300. 606 
380, 004.  687 
378,  989,  470 
373, 728. 570 
378, 081, 703 
384,112,913 
389. 433, 654 
238.761.733 


Total  gross  debt 


.$59, 804, 661 

42,213.765 

35, 588,  499 

31,974,081 

28, 701, 375 

44, 913, 424 

58,  498,  381 

64. 843, 831 

90, 582, 417 

524, 177, 955 

1,119,773,681 

1,815,830,814 

2,677,929,012 

2, 75.5, 763, 929 

2.650.168.223 

2, 583,  446,  456 

2,54,5,110,590 

2. 436. 453, 269 

2, 322, 052, 141 

2, 209, 990, 838 

2, 151, 210, 345 

2, 159, 932, 730 

2, 156, 276. 649 

2, 130, 845, 778 

2,107,759,903 

2,159,418,315 

2, 298. 912, 643 

2,090,908,872 

2, 019, 285, 728 

1,  856, 915, 644 

1,721,958.918 

1.  625, 307, 444 

1,578,651.169 

1.  556,  659,  650 

1. 465, 485, 294 

1, 384, 631. 656 

1,249,470,5)1 

1, 122,  396,  584 

1, 005, 806, 561 

968,  218,  841 

961. 431,  766 

1.016.897,817 

1, 096, 913, 120 

1,222,729,350 

1,226.793,713 

1,232,743,063 

1, 436,  700.  704 

1,263,416,913 


Gross  debt 
per  capita ' 


$2.32 
1.59 
1.30 
1.13 

.99 
1.50 

1.91 
2.06 
2.80 
15.79 
32.91 
52.08 
75.01 
75.42 
70.91 
67.61 
65.17 
61.06 
66.72 
52.65 
60. 02 
49.05 
47.84 
46.22 
44.71 
44.82 
46.72 
41.60 
39.18 
35.16 
31.83 
29.35 
27.86 
26.85 
24.75 
22.89 
20.23 
17.80 
15.63 
14.74 
14.36 
14.89 
15.76 
17.25 
16.99 
16.77 
19.21 
16.60 


TABLES 


617 


Table  26. — Principal  of  the  public  debt,  1790-1962 — Continued 


June  30 


1901.. 
1902.. 
1903.. 
1904.. 
1905.. 
1906.. 
1907.. 
1908.. 
1909.. 
1910.. 
1911.. 
1912.. 
1913.. 
1914.- 
1915.. 
1916.. 
1917.. 
1918.. 
1919.. 
1920.. 
1921.. 
1922.. 
1923.. 
1924.. 
1925.. 
1926.. 
1927.. 
1928  . 
1929.. 
1930.. 
1931.. 
1932.. 
1933.. 
1934.. 
1935.. 
1936.. 
1937.. 
1938.. 
1939.. 
1940- . 
1941.. 
1942  . 
1943.. 
1944.. 
1945.. 
1946.. 
1947.. 
1948.- 
1949.. 
1950.. 
1951.. 
1952.- 
1953.. 
1954.. 
1955.. 
1956.. 
1957. - 
1958.. 
1959.. 
I960.. 
1961.. 
1962.. 


Interest-bearing  i 


$987, 

931, 

914, 

895, 

895, 

895, 

894, 

897, 

913. 

913, 

915, 

963, 

965, 

967, 

969, 

971, 

2,  712. 

12, 197, 

25, 236, 

24, 062, 

23,  738, 

22,  710, 

22, 007, 

20, 981. 

20, 210, 

19, 383. 

18,  252, 

17,317, 

16,  638, 

15,921, 

16,519, 

19,161, 

22, 157, 

26,  480, 

27, 645, 

32,  988, 

35, 800, 

36, 575, 

39,  885, 

42, 376, 

48, 387, 

71, 968, 

135, 380, 

199,543, 

256, 356, 

268, 110, 

255, 113, 

250, 063, 

250,  761, 

255, 209, 

252,  851, 

256,  862, 

263, 946, 

268,  909, 

271,741, 

269, 883, 

268,  485, 

274,  697, 

281, 833, 

283,241, 

285,671, 

294, 442, 


141. 040 
070,  340 
541,410 
157, 440 
158, 340 
159, 140 
834,  280 
503.  990 
317,490 
317, 490 
353, 190 
776,  770 
706,  610 
953, 310 
759, 090 
662,  590 
549. 477 
507,642 
947, 172 
500, 285 
900, 085 
338, 105 
043,  612 
242, 042 
906, 915 
770, 860 
664,  666 
694, 182 
941,379 
892, 350 
588,  640 
273, 540 
643, 120 
487,  870 
241, 089 
790, 135 
109,  418 
925,  880 
969, 732 
495, 928 
399. 539 
418,098 
305, 795 
355, 301 
615,818 
872.  218 
412,039 
348, 379 
636,  723 
353, 372 

765,  497 
861,128 
017,  740 

766,  654 
267,  507 

068. 041 
562,  677 
560.  009 
362, 429 
182,  755 
608,619 
000,  790 


Matured  debt 
on  which  inter- 
est has  ceased 


$1,  415,  620 
1, 280,  860 
1,205,090 

1,  970, 920 
1, 370,  245 
1, 128, 135 
1, 086,  815 
4, 130, 015 

2,  883,  855 
2,124,895 
1,  879, 830 
1,  760,  450 
1,  659,  550 
1, 552, 560 
1, 507,  260 
1, 473, 100 

14, 232, 230 

20,  242,  550 

11,176,250 

6,  745,  237 

10,688,160 

25,  250, 880 

98,  738, 910 

30,  278, 200 

30,  258,  980 

13, 359, 900 

14,718,585 

45,  335, 060 

50,  749, 199 

31,716,870 

51,819,095 

60, 079,  385 

65,911,170 

54,  266, 830 

230,662,155 

169,  363,  395 

118,529,815 

141,362,460 

142,  283, 140 

204,591,190 

204,  999,  860 

98, 299,  730 

140,500,090 

200,851,160 

268, 667, 135 

376,  406, 860 

230, 913,  536 

279,  751,  730 

244, 757,  458 

264, 770,  705 

512, 046, 600 

418,692,165 

298,  420,  570 

437, 184,  655 

588,601,480 

666,051,697 

529,241,585 

597,  324.  889 

476, 455, 003 

444,  608,  630 

349, 355, 209 

437, 627,  514 


Debt  bearing 
no  Interest 


$233, 015.  585 
245,  680, 157 

243,  6.59,  413 
239, 130, 656 
235,  828,  510 
246, 235,  695 
251,  257, 098 
276,  056,  398 
232,114,027 
231, 497. 584 
236,751,917 
228,301,285 
225,  681,  585 
218,  729, 530 
219,997,718 
252, 109,  877 
248, 836,  878 
237,475,173 
236. 3S2,  738 
230, 075, 945 
227,  862, 308 
227,  792.  723 
243, 924, 844 
239,  292,  747 
275, 027, 993 
246, 085,  555 

244,  523,  681 
241, 263, 959 
241,397,905 
231,700,611 
229, 873,  756 
265, 649, 519 
315,118,270 
518,386,714 
824, 989, 381 
620, 389, 964 
505, 974, 499 
447,451,975 
411,279,539 
386,443,919 
369,044,137 
355, 727, 288 

1,175,284,445 
1,259,180,760 
2, 056, 904, 457 
934,  820, 095 
2, 942, 057, 534 
1, 949, 146, 403 
1,763,965,680 
1,  883,  228,  274 

1,  858, 164,  718 
1,823,625,492 
1,826,623,328 
1,912,647,799 
2,044,3.53,816 
2,201,693,911 
1,512.  367, 635 
1,048,  ,332,  847 
2, 396,  089, 647 

2,  644,  969,  463 
2, 949, 974, 782 
3, 321. 194,  417 


Total  gross  debt  3 


$1,221, 
1, 178, 
1, 159, 
1, 136, 
1, 132, 
1, 142, 

1. 147, 
1, 177, 

1. 148, 
1,146, 
1, 163, 
1, 193, 
1, 193, 
1, 188, 
1,191, 
1, 225, 
2,  975, 

12, 455, 
25,  484, 
24, 299, 
23, 977, 
22, 963, 
22,  349, 
21,2.50, 
20,  516, 
19, 643, 
18,511, 
17,604, 
16,931, 
16, 185, 
16,  801, 
19, 487, 
22, 538, 
27, 053, 
28, 700, 
33,  778, 
36, 424, 
37, 164, 
40, 439, 
42, 967, 
48,961, 
72, 422, 
136,  696, 
201,003, 
258, 682, 

269,  422, 
258,  286, 
252,  292. 
252,  770, 
257, 357, 
255,221, 
259, 105, 
266,071, 
271,259, 
274, 374, 
272, 7,'iO, 

270,  527, 
276,  343, 
284,  705, 
286, 330, 
288, 970, 
298, 200, 


672,  245 
031, 357 
405, 913 
259, 016 
357, 095 
522, 970 
178, 193 
690, 403 
316, 372 
939, 969 
984, 937 
838,  505 
047,  745 
235, 400 
264, 068 
145, 568 
618,585 
225,  365 
506, 160 
321, 467 
460,  553 
381,  708 
707,  305 
812,989 
193,888 
216,315 
906, 932 
293,  201 
088,  484 
309,  831 
281,492 
002, 444 
672,  560 
141,414 
892, 625 
543,  494 
613, 732 
740, 315 
532,411 
531,038 
443, 536 
445, 116 
090, 330 
387,  221 
187,410 
099, 173 
383, 109 
246,  513 
359,  860 
352,  351 
976,815 
178,785 
061,639 
599, 108 
222,  803 
813, 649 
171,  896 
217,746 
907,  078 
760,  848 
938, 610 
822, 721 


Gross  debt 
per  capita  2 


$16. 74 

14.88 

14.38 

13.83 

13.61 

13.37 

13.19 

13.28 

12.  69 

12.41 

12.29 

12.52 

12,27 

11.99 

11.85 

12.02 

28.77 

119.13 

242.  56 

228. 23 

220.91 

208.  65 

199.64 

186.  23 

177. 12 

167.32 

155  51 

146.09 

139.04 

131.61 

13.5.45 

156. 10 

179.  48 

214.07 

225.  65 

263.  79 

282.  75 

286.  27 

308. 98 

325.  23 

367. 09 

537.13 

999.  83 

,  452.  44 

1,848.60 

1,905.42 

1,  792. 06 

1,720.71 

1,694.75 

••1,696.61 

'  1, 654.  25 

■■  1, 650. 91 

■■  1, 667.  54 

'  1,  670. 44 

■■  1,  660. 10 

■■  1,  621. 36 

"•1,579.46 

'  1, 586. 78 

'  1, 606. 10 

■•  1,  584. 77 

"■  1, 572.  70 

<  1, 698. 15 


1. 


'  Revised. 

'  Exclusive  of  bonds  issued  to  the  Pacific  railroads  (acts  of  1862,  1864,  and  1878),  since  statutory  provision 
was  made  to  secure  the  Treasury  against  both  principal  and  interest,  and  the  Navy  pension  fund,  which 
was  not  a  debt  as  principal  and  Interest  were  the  property  of  the  United  States,  The  Statement  of  the 
Public  Debt  included  the  railroad  bonds  from  issuance  and  the  Navy  fund  from  September  1, 1866,  through 
June  30,  1890. 

'  See  table  27,  footnote  4. 

'  Includes  certain  obligations  not  subject  to  statutory  limitation;  see  table  1,  notes  6  and  7.  Public  debt 
includes  debt  incurred  to  finance  expenditures  of  certain  wholly  owned  Government  corporations  and  other 
business-type  activities  in  exchange  for  which  obligations  of  the  corporations  and  activities  were  issued 
to  the  Treasury  (see  table  122). 

<  Subject  to  revision. 

Note.— From  1789-1842,  the  fiscal  year  ended  December  31;  from  1843,  on  June  30.  Detailed  figures  for 
1790-1852  are  not  available  on  a  basis  comparable  with  those  of  later  years.  The  amounts  for  1790-1852, 
except  for  1835,  are  from  the  1900  annual  report  of  the  Secretary  of  the  Treasury;  for  1835,  from  the  1834-35 
annual  reports,  pp.  604  and  629;  for  1853-85,  from  the  "Statement  of  Receipts  and  Expenditures  of  the  Gov- 
ernment from  1855  to  1886  and  Principal  of  Public  Debt  from  1791  to  1885"  compiled  from  the  Register's 
oflBcial  records;  from  1886-1915,  from  the  monthly  debt  statements  and  revised  figures  in  annual  reports; 
^nd  since  1916,  from  the  "Statement  of  the  Public  Debt"  in  the  daily  Treasury  statements. 


618   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  27. — Public  debt  and  guaranteed  obligations  outstanding  June  SO,  1934-62 

[Gross  public  debt  on  basis  of  daily  Treasury  statements.  Guaranteed  obligations  from  1934  through 
1939  on  basis  of  Public  Debt  accounts,  and  for  1940  and  subsequent  years  on  basis  of  daily  Treasury  state- 
ments) 


Guaranteed  obligations  held  outside  the 

Total  gross  public  debt  and 

June  30 

Gross  public 
debt  ' 

Treasury » 

guaranteed  obligations  ' 

Interest-bearing 

Matured  3 

Total 

Total 

Per  capita  * 

1934 

$27,053,141,414 

$680,767,817 

$680,767,817 

$27.  733.  909,  231 

$219. 4fi 

1935 

28,  700. 892.  625 

4,122,684,692 

4. 122.  684, 692 

32.823,577.316 

257.95 

1936 

33.  778.  543.  494 

4.  718, 033,  242 

4,  718, 033.  242 

38.  496.  576.  735 

300. 63 

1937 

36, 424. 613.  732 

4,  664,  594.  5.33 

$10, 665 

4. 664.  604,  533 

41.089.218.265 

318.95 

1938 

37.164.740,315 

4,  852,  .559, 151 

232,  500 

4,  852,  791, 651 

42,017.531.967 

323. 65 

1939 

40.439.5.32.411 

5,450,012,899 

821,200 

5,  450,  834, 099 

45,890.366,510 

350  63 

1940 

42. 967.  .531, 0.38 

5, 497,  556,  555 

31,514,100 

5,  529, 070,  655 

48,496.601,693 

367.  OK 

1941 

48.961,44.3,  .5.36 

6, 359,  619,  105 

10.  633.  475 

6,  370, 252,  .580 

55,331,696,  116 

414.85 

1942 

72,422.445.  116 

4,  548,  529,  255 

19.  7.30,  .375 

4,  568,  259,  630 

76,  990,  704,  740 

571.02 

1943 

1.36. 696. 090.  .3.30 

4,091,686,621 

8,  256,  425 

4, 099,  943,  046 

140,  796.  033, 376 

1,029.82 

1944 

201.003.387.221 

1,515,6.38,626 

107,  430,  675 

1,623,069,301 

202,  626.  456,  522 

1,464.  17 

1945 

258.682.187,410 

409.091,867 

24. 066,  525 

433,  158, 392 

259,115,345,802 

I.85I.70 

1946.... 

269.422,099,  173 

466,  671, 984 

9,712,875 

476,  384. 859 

269,  898.  484.  033 

l.OOS.  79 

1947.... 

2.58,286,38.3,109 

8.3.212,285 

6,  307,  900 

89.  520.  185 

258,  375,  903,  294 

1.792.67 

1948 

252,292,246,513 

68,  768, 043 

4,  092,  775 

73.460,818 

252.  ,365.  707.331 

1,721.21 

1949 

252,  770,  359, 860 

23, 862,  383 

3,413.025 

27,  275,  408 

2.52,  797,  635,  268 

1.694.93 

1950 

257,  357,  352,  351 

17,077,809 

2,  425,  225 

19,  503, 034 

257, 376,  8.55.  385 

-■  1, 696.  74 

1951.... 

255,221,976.815 

27, 364, 069 

1,863,100 

29,  227, 169 

2.5.5.251.203,984 

-•  1, 654. 44 

19.52 

2.59.10.5,178,785 

44. 092,  646 

1.472,700 

45,  565. 346 

259,150,744,131 

M,  651.  20 

1953 

266,071,061,639 

50,881,686 

1,191.075 

52. 072,  761 

266,123,134.400 

-■1,667.87 

1954 

271,259,599,108 

80,415,386 

1.  026.  000 

81.441.386 

271.341,040,495 

-■  1,  670.  94 

1955 

274, 374,  222, 803 

43.  257,  786 

885. 175 

44. 142. 961 

274,418,365,764 

'1,660.36 

1956 

272.750,813.649 

73. 100,  900 

787.  575 

73. 888, 475 

272.824,702.124 

>•  1,  621.  78 

1957 

270,527.171.896 

106,  434,  1.50 

703, 800 

107.137.950 

270. 634,  309,  846 

-■  1,  580. 83 

1958 

276.  343.  217,  746 

100,  565,  250 

655, 350 

101.  220,  600 

276.  444,  438,  346 

'  1,  587. 36 

1959 

284.  705, 907, 078 

110.429.100 

590,050 

111.019,1.50 

284,  816. 926.  228 

'  1, 606. 73 

1960 

286,  330,  760,  848 

139, 305.  000 

536, 775 

139,841,775 

286.  47U.  602.  623 

•■  1,  585.  55 

1961 

288,970,938,610 

239, 694. 000 

.521.450 

240,215,4.50 

289. 2M.  1.54. 060 

■■  1,  574.  01 

1962 

298.  200, 822,  721 

443,  688.  500 

530.  425 

444.  218.  925 

298.645.041.646 

5  1,  600. 53 

I 


'  Revi.sed. 

'  Includes  certain  obligations  not  subject  to  statutory  limitation.  For  anionnts  subject  to  limitation, 
see  table  1.  Public  debt  iiicUidosdebt  incurred  to  finance  expenditures  of  certain  wholly  owned  Government 
corporations  and  otlicr  biisiiies.';-type  activities  in  exchange  for  which  obligations  of  the  corporations  and 
activities  were  issued  to  the  Treasury  (see  table  122). 

s  Consists  of  obligations  iss'ied  by  certain  Government  corporations  and  credit  agencies,  obligations 
which  are  guaranteed  by  the  United  States  as  to  both  principal  and  interest.  They  were  first  authorized 
in  1932,  but  none  were  outstanding  June  30.  1932  and  1933. 

'  Amounts  shown  represent  outstanding  principal  on  which  interest  has  ceased.  The  amount  of  accrued 
interest  as  of  June  30,  1962,  was  .$134,455. 

<  Based  on  the  Bureau  of  the  Census  estimated  population.  Through  1958  the  estimated  population  Is  for 
the  "conterminous"  United  States  (that  is.  exclusive  of  Alaska.  Hawaii,  and  the  outlying  areas,  such  as 
Puerto  Rico.  Guam,  and  the  Virgin  Islands).  Beginning  with  1959  the  estimates  Include  Alaska,  and  with 
1960,  Hawaii. 

'  Subject  to  revision. 


TABLES 


619 


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TABLES 


623 


Table  30. — Interest-hearing  securities  outstanding  issued  by  Federal  agencies  but 
not  guaranteed  by  the  United  States  Government,  fiscal  years  1953-62 

[In  millions  of  dollars] 


Banks  for 
coopera- 
tives 

Federal 
home 
loan 

banks ' 

Federal 
interme- 
diate 
credit 
banks 

Federal 

land 
banks  2 

Federal  National 
Mortgage  Associa- 
tion 

Tennes- 
see Valley 
Author- 
ity 

Fiscal  year  or  month 

Manage- 
ment and 
liquida- 
tion pro- 
gram 

Second- 
ary mar- 
ket pro- 
gram 

Total 

1953          -      

110 
120 
110 
133 
179 
199 
284 
330 
382 
430 
380 
384 
384 
445 
439 
434 
434 
452 
452 
441 
441 
430 

251 

115 

341 

929 

738 

456 

992 

1,259 

1,055 

1,797 

1,054 

1,093 

1,335 

1,334 

1,573 

1,571 

1,683 

1,443 

1,602 

1,501 

1,566 

1,797 

781 
725 
793 
834 
924 
1,159 
1,456 
1,600 
1,723 
1, 8.55 
1,767 
1,795 
1,782 
1,715 
1,623 
1,585 
1,569 
1,602 
1,644 
1,718 
1,781 
1,855 

861 
1,007 
1,061 
1,322 
1,  5.52 
1,646 
1,888 
2,137 
2,357 
2,550 
2,357 
2.357 
2.431 
2,431 
2,431 
2,431 
2,431 
2,495 
2,495 
2,495 
2,550 
2,550 

2,003 

1954 

1,967 

1955  -.             -     

570 
570 
570 
797 
797 
797 

2,876 

1956 

100 
1,050 
1,165 
1,290 
2,284 
2,198 
2,556 
2,179 
2,197 
2,281 
2,287 
2,300 
2,453 
2,602 
2,633 
2,658 
2,612 
2,566 
2,556 

3,889 

1957-   .                

5,013 

1958 

5,423 

1959  --                   .  — 

6,708 

1960 

8,407 

1961---            -       .  . 

50 
145 
100 
100 
100 
100 
100 
100 
100 
145 
,        145 
145 
145 
145 

7,765 

1962 

9,332 

1961— July      .      .  - 

7,837 

August 

7,925 

September 

8,312 

October-   

8,311 

November 

8,466 

December 

8,574 

1962— January 

8,819 

February    -  . 

8,770 

March 

8,995 

April.          -  - 

8,911 

May  . 

9,049 

June    . 

9,332 

1  The  proprietary  interest  of  the  United  States  in  these  banks  ended  in  July  1951. 

~  The  proprietary  interest  of  the  United  States  in  these  banks  ended  in  June  1947.    Excludes  securities 
which  are  issued  for  use  as  collateral  for  commercial  bank  borrowing  and  not  as  a  part  of  public  offerings. 


Note. — The  securities  shown  in  the  table  are  public  offerings. 


624   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


I 


Table  31. — Maturity  distribution  of  marketable  interest-hearing  public  debt  and 
guaranteed  obligations,^  June  SO,  1946-62 

[In  millions  of  dollars.    On  basis  of  daily  Treasury  statements] 


Fiscal  year 


1946 
1947 
1948 
1949 
19.50 
1951 
1952 
1953 
1954 
1955 
1956 
1957 
1958 
1959 
1960 
1961 
1962. 


1946 
1947 
1948 
1949 
1950 
1951 
1952 
1953 
1954 
19.55 
1956 
1957 
1958 
1959 
1960 
1961 
1962. 


Within 
1  year 

1  to  5 
years 

5  to  10 
years 

10  to  15 
years 

15  to  20 
years 

20  years 
and  over 

Various  2 

61, 974 
51,211 

48,  742 
48, 130 
42, 338 
43, 908 
46, 367 
65, 270 
62,  734 

49,  703 
58,  714 
71,952 
67,  782 
72, 958 
70, 467 
81. 120 
88, 442 


By  call  classes  (due  or  first  becoming  callable) 


62,091 

35, 057 

52, 442 

42,  522 

49, 870 

46, 124 

52,  302 

39, 175 

42,  448 

51,802 

60,  860 

31,022 

70, 944 

29. 434 

76,017 

30, 162 

63, 291 

38, 407 

51, 1.52 

46, 399 

64,910 

36, 942 

76, 697 

41,497 

73. 0,50 

39,401 

81,678 

58, 256 

79, 182 

81, 295 

84,  855 

70,  760 

89,905 

67,759 

32, 847 
18,  932 
10, 464 
15,067 
15,926 
16,012 
13,321 
13,018 
27,113 
42,  755 
40.  363 
26. 673 
45,  705 
28,075 
14. 173 
18,411 
18, 675 


16, 
13. 
12, 
13, 
19. 
21, 
20, 
26. 
19, 
11. 

8. 

6, 

1, 
1, 
1, 
1, 


012 
326 
407 
715 
281 
226 
114 
546 
937 
371 
387 
488 
657 
276 
123 
123 
641 


21,227 
27.076 
41,481 
34, 888 
25, 853 
8,797 
6,594 


2,258 
2,256 
2,484 
3,125 
4,956 


22, 372 
14,405 


1.592 
1.606 
3.530 
4, 351 
4,349 
5,604 
6,485 
5,588 
8,893 
13, 167 


By  maturity  classes ' 


24, 763 
21,851 
21,630 
32,  562 
51,292 
46,  .526 
47,814 
36, 161 
29, 866 
39, 107 
34,401 
40,  669 
42,  557 
58, 304 
72,844 
58. 400 
57, 041 


41,807 
35,  562 
32, 264 
16,  746 
7,792 
8,707 
13, 933 
15.651 
27,  515 
34, 253 
28, 908 
12, 328 
21,476 
17,052 
20, 246 
26,  435 
26, 049 


8.707 

8,  7.54 

43,  599 

43 

13. 009 

5,688 

41,481 

38 

14,111 

2,118 

41,481 

27 

14,111 

8.710 

34, 888 

13 

10. 289 

17,  746 

25, 853 

16 

8.754 

21,226 

8,797 

27 

5,586 

20, 114 

6.  594 

44 

2,117 

26,546 

1,592 

51 

8.696 

19,  937 

1.606 

80 

17,242 

11,371 

3,  530 

43 

20, 192 

8,387 

4,  351 

73 

19,919 

6,488 

4,349 

106 

26. 999 

654 

7,208 

101 

20, 971 

654 

8,088 

110 

11,746 

884 

7,658 

139 

8.706 

1,.547 

10,960 

220 

5,957 

3,381 

15,221 

424 

Total 


43 

189,649 

38 

168,  740 

27 

160, 373 

13 

155, 160 

16 

155.325 

27 

137, 944 

44 

140,451 

51 

147, 386 

80 

150, 435 

43 

155. 250 

73 

155, 026 

106 

155,811 

101 

166.  776 

110 

178, 138 

139 

183.  985 

220 

187,388 

424 

196.  516 

189,  649 
168,  740 
160, 373 
155, 160 
155, 325 
137, 944 
140,451 
147. 386 
150,435 
1.55, 250 
155,026 
155,811 
166,  776 
178, 138 
183, 985 
187,388 
196,  516 


'  Includes  public  debt  incurred  to  finance  expenditures  of  certain  wliolly  owned  Government  corporations 
and  other  business-type  activities  in  exchange  for  which  obligations  of  the  corporations  and  activities  were 
issued  to  the  Treasury;  guaranteed  securities  are  those  held  outside  the  Treasury. 

2  Consists  of  Federal  Housing  Administration  guaranteed  obligations  with  various  maturity  or  call  dates. 

'  All  issues  classified  to  final  maturity  except  partially  tax-exempt  bonds  whinh  are  cla.ssified  to  earliest 
call  date. 


TABLES 


625 


Table  S2—Summaru  of  public  debt  and  guaranteed  obligations  by  security  classes, 

June  SO,  1962 


Class  of  security 

Com- 
puted 
rate  of 
interest ' 

Amount  outstand- 
ing on  basis  of 
Public  Debt 
accounts 

Net  adjustment 
to  basis  of  daily 
Treasury  state- 
ment 2 

Amount  outstand- 
ing on  basis  of 
daily  Treasury 
statement 

Public  Debt 
interest-bearinr,  debt 

Public  issues: 

Marketable  obligations: 
Treasury  bills: 

Regular  weekly 

Tax  anticipation 

5  2.  860 
3  2. 980 
3  3.188 

3.377 
3.680 
3.122 

3.285 

$32,225,157,000 
1,801,986,000 
8, 008, 988, 000 

13,  ,547, 047, 000 
65,465,380,000 
75,024,077,650 

$32,22.5,157,000 

1,801,986,000 

8,008,988,000 

Certificates    of    indebted- 

13,547,047,000 

Trpasiirv  notes        

-$1,709,000 
-fl,  203, 000 

65,463,671,000 

Treasury  bonds 

75, 025, 280, 6.50 

Subtotal — - 

196, 072, 635, 650 

-506,000 

196,072,129,650 

Nonmarketable  obligations: 
Certificates    of    indebted- 
ness: 

2.488 
2.717 
3.449 
2.000 

2.000 

2.726 

3.364 

860,000,000 

74, 942, 500 

47,553,158.392 

117, 836, 500 

24,281,000 

4,725,288,000 

860,000,000 

74, 942, 500 

TT  S   saviiies  bonds      

+53, 555, 748 
-fl9,998,000 

+410,000 

+  1,709,000 

47,606,714,140 

T)pnn«;ifa.rv  bonds             __-_ 

137, 834, 500 

Treasury    bonds,    R.E.A. 

series                

24,691,000 

Treasury    bonds,    invest- 
ment series 

4,726,997,000 

Subtotal 

53, 355,  506, 392 

+75, 672, 748 

53, 431, 179, 140 

Total  public  issues 

3.302 

249,428,142,042 

+75, 166. 748 

249, 503, 308, 790 

Special  issues: 

Civil  service  retirement  fund— - 
Federal     Deposit     Insurance 

2.810 

2.000 

2.895 
2.206 

2.000 

2.772 

2.000 

3.958 

3.520 
3.250 

3.088 
2.000 
3.000 
3.125 

3.125 

2.891 

11,345,705,000 

500,200,000 

2,304,492,000 
74,000,000 

68,523,000 

15,073,637,000 

181,500,000 

36,710,000 

1,027,809,000 
435, 935, 000 

5,803,529,000 

26, 000, 000 

3. 315, 785, 000 

4,656,911,000 

87,956,000 

11,345,705,000 

500,200,000 

Federal    disability    insurance 

2,304,492,000 

Federal  home  loan  banks 

Federal     Housing     Adminis- 

74,000,000 

68,523,000 

Federal  old-age  and  survivors 

15,073,637,000 

Federal    Savings    and    Loan 

181,500,000 

Foreign     service     retirement 

36,710,000 

Government     life     insurance 

1,027,809,000 

435,935,000 

National  service  life  insurance 

5,803,529,000 

26,000,000 

Railroad  retirement  account... 

Unemployment  trust  fund 

Veterans'  special  term  insur- 
ance fund 

3, 315, 785, 000 

4,656,911,000 

87,956,000 

Subtotal 

44,938,692,000 

44, 938, 692, 000 

Total  interest-bearing  debt 

3.239 

294,366,834,042 

+75, 166, 748 

294,442.000,790 

Footnotes  at  end  of  table. 


661496—63- 


-41 


626   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  32. — Summary  of  public  debt  and  guaranteed  obligations  by  security  classes, 

June  SO,  ;.9(9£— Continued 


Class  of  security 

Com- 
puted 
rate  of 
interest  ' 

Amount  outstand- 
ing on  basis  of 
Public  Debt 
accounts 

Xet  adjustment 
to  basis  of  daily 
Treasury  state- 
ment ■ 

Amount  outstand- 
ing on  basis  of 
daily  Treasury 
statement 

Public  Debt— Continued 

Matured  debt  on  which   interest 
has  ceased    

$44it,  089, 075 

2,667,000,000 

115,304,400 

55,000,000 
483,652,784 

-$11,  461,, 561 

$437, 627,  514 

DEBT  BEARIXG  XO  INTEREST 

Internationat  Monetary  Fund  . 

2, 667, 000, 000 

International  nevelopment  As- 
sociation 

11.5,304,400 

Inter-American    Development 
Bank-   -- 

55, 000, 000 

Other                                 .  - 

-t-237,233 

483,890,017 

Total  pross  public  debt... 

298, 136, 880, 301 

+63, 942, 420 

298, 200, 822, 721 

(iVAR.VXTEEn   nBI,ir,ATK)NS   NOT 
OWNED    BY   THE   TREASURY 

Interest-bearing  debt: 

P>deral  Housing  Administra- 
tion                    .      -        

3.  46S 

4.  21H) 

423,  88S.  500 
19,800,000 

530, 425 

*  423, 888,  ,500 

D.C.  Arinorv  Board  bonds 

19, 800, 000 

Matured  debt  on  which  interest  has 
ceased              .     . - 

. 

530, 425 

Subtotal            

444, 218, 925 

444, 218. 925 

Total   gross   public  debt   and 
guaranteed  obligations 

298,581,099,226 

+63, 942, 420 

298,645,041,646 

Deduct  debt  not  subject  to  statu- 
tory limitation    ..          . 

433, 322, 384 

-48,001 

433, 274, 383 

Total  debt  subject  to  limita- 
tion                         

298,147,776,842 

+63, 990,  421 

298,211,767,263 

1  On  daily  Treasury  statement  basis. 

2  Items  in  transit  on  .June  .30,  1962. 

^  Included  in  debt  outstanding  at  face  amount,  but  the  animal  interest  rate  is  computed  on  the  discount 
value. 
*  Components  sho\\7i  in  table  34. 


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TABLES 


649 


Table  34  — Descrivtion  of  guaranteed  obligations  held  outside  the  Treasury,  June  30, 

1962 
[On  basis  of  daily  Treasury  statements,  see  "Bases  of  Tables"] 


Security 


Unmatured  Obligations 

District  of  Columbia  Armory  Board  Stadium  bonds  of  1970-79  issued  under  the 
act  of  September  7,  1957,  as  amended  (2  D.C.  Code  1722-1727)  1 2.- 


Rate  of 
interest 


Federal  Housing  Administration  debentures  issued  under  the  act  of  June  27, 
1934,  as  amended  (12  U.S.C.  1701-1750g):  3  *■ 
Mutual  mortgage  insurance  fund: 

Series  A  * - 

Series  A  A. 

Series  A  A 

Series  A  A... 

Series  A  A 

Series  AA._ 

Series  AA 

Series  A  A — --- 

Series  AA 

Series  AA.. 

Series  A  A 

Series  A  A. — --- 

Series  A  A 

Gr»T"ipc     AA.  — —  —  — — —  —  — —  —  —  —  •■  —  — 

Armed  services  housing  mortgage  insurance  fund: 

Series  FF — - — 

Series  FF 

Series  FF 

Series  FF 

Series  FF 

Series  FF 

Series  FF 

Series  FF 

Housing  insurance  fund: 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

Series  BB 

National  defense  housing  insurance  fund: 

Series  GO 

Series  GO 

Series  GO 

Series  GO 

Series  GO 

Series  GG 

Series  P 

Section  220  housing  insurance  fund: 

Series  CC 

Series  CC 

Series  CC 

Series  CC -- --- 

Series  CC 

Section  221  housing  insurance  fund: 

Series  DD 

Series  DD 

Series  DD 

Series  DD 

Series  DD 

Series  DD 

Series  DD 

Servicemen's  mortgage  insurance  fund: 
Series  EE. 


Series  EE, 
Series  EE, 
Series  EE. 
Series  EE. 
Series  EE. 
Series  EE. 
Series  EE. 
Series  EE. 
Series  EE. 


Percent 
4.20 


Amount 


$19, 800, 000. 00 


3 

5, 800. 00 

2Vi 

734,  750. 00 

2H 

977,  500. 00 

2?4 

690,  550.  00 

2v* 

2,  238, 150.  00 

3 

1,848,950.00 

3W 

5,  577,  850.  00 

3V4 

1,467,800.00 

3% 

5, 805,  550. 00 

3V'. 

19,  890,  250. 00 

m 

33,  802,  500.  00 

3% 

3, 620, 850. 00 

4 

100, 100. 00 

iH 

117,955,300.00 

iVi 

2, 625, 200. 00 

2% 

11,828,550.00 

3W 

4, 057, 700. 00 

314 

11,900.00 

3% 

108, 950. 00 

3V'. 

149,  700. 00 

33/4 

19,  612, 000. 00 

414 

8, 882, 800. 00 

2Vi 

3, 009,  750. 00 

25^ 

18,  850. 00 

2% 

3, 001,  700. 00 

3 

1,043,950.00 

31^ 

3, 896, 300. 00 

3>/4 

943, 400. 00 

3?^ 

3,  233,  800. 00 

ZVi 

7, 734,  250. 00 

33/4 

2, 209,  500. 00 

3'.* 

378, 250. 00 

41.^ 

9,  828, 850. 00 

2Vi 

44, 129, 050. 00 

I^A 

1,092,450.00 

23/4 

42, 132, 900. 00 

2'.^ 

4,  394, 050. 00 

314 

300, 150. 00 

3?^ 

9, 050. 00 

2Vs 

493,750.00 

3M 

7, 600. 00 

33.^ 

14, 450. 00 

3V. 

7, 600. 00 

3?4 

8,  500. 00 

4 1.6 

28,200.00 

3W 

33, 050. 00 

31/4 

77, 400. 00 

33,^ 

971,000.00 

3V-' 

7,  446, 250. 00 

334 

2, 295,  700. 00 

37,^ 

963, 800. 00 

4V^ 

11,565,600.00 

25'^ 

36,  600. 00 

2T^ 

212, 000. 00 

3 

240,  650. 00 

3W 

864,  800.  00 

3>4 

287,  400. 00 

33,^ 

755, 100.  00 

3V4 

1, 743,  750. 00 

3% 

2,  073,  250. 00 

V,i 

279,  550. 00 

4H 

6,115,550.00 

Footnotes  at  end  of  table. 


650   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  34. — Description  of  guaranteed  obligations  held  outside  the  Treasury,  June  30, 

/5(5^— Continued 


I 


Security 

Rate  of 
interest 

Amount 

Title  I  housing  insurance  fund: 

Series  L _ 

Percent 

2H 
234 
3 

2  k' 

$60  000  00 

Series  R 

''1)8  25(1  (1(1 

Series  T 

365  150  00 

War  housing  insurance  fund: 

Series  H.. 

17  384  600  00 

Subtotal 

*  423,  888,  500.  00 

Total  unmatured  obligations 

443,  688,  500. 00 

Mati'red  Obligations  ' 
Commodity  Credit  Corporation,  interest... 

11  25 

District  of  Columbia  Armory  Board,  interest 

22,  680. 00 
170  000  00 

Federal  Farm  Mortgage  Corporation: 

Principal 

Interest 

38,  328. 94 
57, 150. 00 

Federal  Housing  Administration: 

Interest 

979.60 

Principal 

303,  275. 00 

Interest ...    . 

72  436  06 

Reconstruction  Finance  Corporation,  interest. 

19.25 

Total  matured  obligations  (principal  and  interest) 

664, 880. 10 

Total  based  on  guarantees 

444,  353, 380. 10 

'  Issued  on  June  1,  1960,  at  a  price  to  yield  4.1879  percent,  but  sale  was  not  consummated  until  .■Vug.  2, 
1960.  Interest  is  payable  semiannually  on  June  1  and  Dec.  1.  These  bonds  are  redeemable  on  and  after 
June  1,  1970,  and  mature  on  Dec.  1,  1979. 

2  The  securities  and  the  income  derived  therefrom,  and  gain  from  the  sale  or  other  disposition  thereof 
or  transfer  as  by  inheritance  or  gift,  are  subject  to  ta.\ation  by  the  United  States,  but  are  exempt  both  as 
to  principal  and  interest  from  all  taxation,  except  estate  and  inheritance  ta.xes,  imposed  by  tiie  District 
of  Columbia. 

3  Issued  and  payable  on  various  dates.  Interest  is  payable  semiannually  on  Jan.  1  and  July  IJ  All  un- 
matured debentures  are  redeemable  on  any  interest  day  or  days,  on  3  months'  notice,  except  the  Series  A 
debentures  which  are  not  redeemable  until  matm-ity. 

<  Under  the  Public  Debt  .\ct  of  1941  (!31  U.S.C.  742a),  income  or  gain  derived  from  these  securities  except 
mutual  mortgage  insurance  fund  debentures.  Series  A,  is  subject  to  all  Federal  taxes  now  or  hereafter  im- 
posed. The  securities  are  subject  to  surtaxes,  estate,  inheritance,  gift,  or  other  excise  taxes,  whether  Federal 
or  State,  but  are  exempt  from  all  taxation  now  or  hereafter  imposed  on  the  principal  or  interest  thereof  by 
any  State,  municipality,  or  local  taxing  authority.  Debentures  issued  on  contracts  entered  into  before 
Mar.  1,  1941,  are  exempt  from  all  taxation  except  surtaxes,  estate,  inheritance,  and  gift  taxes. 

*  Series  A  debentures  are  subject  only  to  such  Federal,  State,  and  local  taxes  as  the  mortgages  in  exchange 
for  which  they  are  issued  would  be  subject  to  in  the  hands  of  the  holders  of  the  debentures. 

« Includes  Series  .\  debentures  amounting  to  .$5,800,  maturing  on  July  1,  1962;  and  debentures  called  for 
redemption  on  July  1,  1962,  at  par  plus  accrued  interest,  as  follows:  Series  .\A,  $27,146,500;  Seriis 
BB,  $3,293,850;  Series  CC,  $14,450;  Series  EE,  $3,249,250;  Series  L,  $38,000;  Series  R,  $111,150;  Series  T,  $187,C00: 
and  Series  H,  .$1,104,950. 

'  Funds  are  on  deposit  with  the  Treasuier  of  the  United  States  for  puvment  of  principal  of  $530,425  and 
interest  of  $134,455.16. 

Note.— For  obligations  held  by  the  Treasury,  see  table  122. 


TABLES 


651 


Table  35. — Postal  savings  systems'  deposits  and  Federal  Reserve  notes  outstanding , 

June  SO,  1946-62 

[Face  amount  in  thousands  of  dollars.    On  basis  of  reports  received  by  the  Treasury] 


Deposits  in  postal  savings  systems  ' 

Federal 

June  30 

U.S.  Postal 
Savings 
System  2 

Canal  Zone 

Postal  Savings 

System  3 

Total 

Reserve 
notes  * 

1946.. _ 

1947 - 

1948 _ ._. 

1949 

1950- --.- -- - 

1951.. ._ 

1952             .     

3, 119,  656 
3,392,773 
3, 379, 130 
3,  277, 402 
3,097,316 
2,  788, 199 
2,  617, 564 
2, 457, 548 
2,  251,  419 
2, 007, 996 
1,  765, 470 
1, 462, 268 
1,  212, 672 
1, 041, 792 
835, 800 
699, 528 
5  581, 177 

9,612 
9,602 
9,129 
8,943 
8,643 
7,014 
7,005 
6,848 
6,506 
6,290 
6,313 
6,139 
5,713 
5,492 
5,067 
4,695 
6  4,  275 

3, 129,  268 
3,  402, 375 
3, 388, 259 
3,  286, 346 
3, 105, 959 
2,  795,  244 
2,624,569 
2, 464, 396 
2, 257, 926 
2, 014, 286 
1,  771,  783 
1, 468, 408 
1,  218, 385 
1, 047,  284 
840, 867 
704, 223 
585, 452 

23, 434.  613 
23,  444, 193 
23, 136, 167 
22, 783,  823 
22, 398,  284 
22, 975, 292 
24, 135, 367 

1953. - - _ - 

1954 _ _ 

1955 

1956 

1957... 

1958          -              ...              .          . 

25, 040, 465 
24, 726. 731 
25, 030, 031 
25, 523,  779 
25, 836, 574 
25, 862, 932 

1959 

26, 479,  923 

1960                             ..  . 

26, 569, 479 

26, 735, 869 

'  27, 852, 820 

1961. 

1962 

1  The  faith  of  the  United  States  is  solemnly  pledged  to  the  payment  of  deposits  (plus  accrued  interest  at 
the  rate  of  2  percent)  made  in  postal  savings  depositary  offices.  Interest  is  payable  quarterly  from  the  first 
day  of  the  month  next  following  date  of  deposit,  and  on  deposits  made  after  Mar.  1. 1941  (under  the  Public 
Debt  Act  of  1941  (31  U.S.C.  742(a)),  is  subject  to  all  Federal  ta.\es. 

2  Established  by  the  act  of  June  25,  1910,  as  amended  (39  U.S.C.  751-771). 

3  Established  by  the  act  of  June  13,  1940  (2  Canal  Zone  Code  273-280). 

*  Authority  for  the  issuance  of  Federal  Reserve  notes  was  given  under  the  act  of  Dec.  23, 1913,  as  amended 
(12  U.S.C.  411-416).  The  notes  are  obligations  of  the  United  States  and  are  receivable  by  aU  national  and 
member  banks  and  Federal  Reserve  Banks  and  for  all  taxes,  customs,  and  other  public  dues.  They  are 
redeemable  in  lawful  money  on  demand  at  the  Treasury  Department,  Washington,  D.C.,  or  at  any  Federal 
Reserve  Bank. 

5  Funds  due  depositors  on  June  30,  1962,  including  interest  of  $64,803,856  totaling  $645,980,829,  are  offset 
by  cash  in  designated  depositary  banks  amounting  to  $18,620,747,  which  is  secured  by  the  pledge  of  collateral 
as  provided  in  the  regulations  of  the  Postal  Savings  System,  having  a  face  value  of  $18,728,500;  Government 
securities  with  a  face  value  of  $599,017,000;  and  cash  in  possession  of  the  System  and  other  net  assets  of 
$28,343,082. 

6  Funds  due  depositors  on  June  30,  1962.  including  interest  of  $253,749  totaling  $4,528,474,  are  offset  by 
Government  securities  having  a  face  value  of  $4,750,000  and  other  assets. 

'In  actual  circulation,  exclusive  of  $1,168,398,114  redemption  fund  deposited  in  the  Treasury  and 
$1,140,395,760  of  their  own  Federal  Reserve  notes  held  by  the  issuing  banks.  Also  excludes  $36,140,470 
held  by  the  Treasurer  of  the  United  States  for  the  redemption  of  all  series  of  Federal  Reserve  notes  before 
Series  of  1928.  See  table  63,  footnote  9.  The  collateral  security  for  Federal  Reserve  notes  issued  consists 
of  $7,745,000,000  in  gold  certificates  and  in  credits  with  the  Treasurer  of  the  United  States  payable  in  gold 
certificates,  $23,410,000,000  face  amount  of  U.S.  Government  securities,  and  $7,900,000  face  amount  of  com- 
mercial paper.    Notes  issued  by  a  Federal  Reserve  Bank  are  a  first  lien  against  the  assets  of  such  Bank. 


652   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  36. — Statutory   limitation   on   the   public   debt   and  guaranteed  obligations, 

June  30,  1962 

[In  millions  of  dollars] 

Part  I.— STATUS  UNDER  LIMITATION,  JUNE  30,  1962 


Maximum  amount  of  securities  whieli  may  be  outstanding  at  any  one  time  under  limitations 
imposed  by  section  21  of  the  Second  Liberty  Bond  Act,  as  amended  by  the  acts  of  June  30, 
1959,  June  30,  1961  and  March  13, 1962  (31  U.S.C.  757b).  (The  following  table  lists  the  amend- 
ments)  

Amount  of  securities  outstanding  subject  to  such  statutory  debt  limitation: 

U.S.  Government  securities  issued  under  the  Second  Liberty  Bond  Act,  as  amended 

Guaranteed  obligations  held  outside  the  Treasury 

Total  amount  of  securities  outstanding  subject  to  statutory  debt  limitation 

Balance  issuable  under  limitation 


1  300, 000 


297,  768 
444 


298, 212 


1,788 


Part  II. 


-APPLICATION  OF  LIMITATION  TO  PUBLIC  DEBT  AND  GUARANTEED  OBLI- 
GATIONS OUTSTANDING  JUNE  30,  1962 


Class  of  Security 

Subject  to 
statutory 
debt  limi- 
tation 

Not  subject 
to  statutory 
debt  limi- 
tation 

Total  out- 
standing 

Public  debt: 

Interest-bearing  securities: 
Marlcctable: 

Treasury  bills 

42. 036 
13,547 
65, 464 
76, 025 

42, 036 
13,547 
65, 464 
75, 025 

Certificates  of  indebtedness 

Treasury  notes 

Treasury  bonds 

Total  marketable 

196, 072 

196,072 

Nonmarketable: 

Certificates  of  indebtedness,  foreign  series... 

860 

75 

47, 607 

138 

25 

4,727 

860 

Certificates  of  indebtedness,  foreign  currency  series. 

75 

U.S.  savings  bonds  (current  redemption  value) 

47,  607 

Depositary  bonds. 

Treasury  bonds,  R.E.A.,  series 

Treasury  bonds,  investment  series 

138 

25 

4,727 

Total  nonmarketable 

53, 431 

53,  431 

Special  issues  to  Government  agencies  and  trust  funds. . 

44, 939 

44, 939 

Total  interest-bearing  securities 

294, 442 

294  442 

Matured  debt  on  which  interest  has  ceased 

435 

3 

438 

Debt  bearing  no  interest: 

U.S.  savings  stamfis     ...          

53 

1 

2,  667 

115 

55 

53 

E  xcess  profits  ta.\  refund  bonds 

1 

Special  notes  of  the  United  States: 
International  Monetary  Fund  Series    

2,667 
115 

International  Development  Association  Series 

Inter-American  Development  Bank  Series 

55 

I'.S.  notes  (less  gold  reserve) 

191 

139 
101 

191 

Deposits  for  retirement  of  national  bank  and  Fed- 
eral Reserve  Bank  notes     .  

139 

Other  debt  bearing  no  interest 

101 

Total  debt  bearing  no  interest 

2,891 

431 

3,321 

Total  public  debt  2 

297, 768 

433 

298, 201 

Guaranteed  obligations  held  outside  the  Treasury: 

Interest-bearing 

444 
1 

444 

Matured .. 

1 

Total  guaranteed  obligations 

444 

444 

Total  public  debt  and  guaranteed  obligations 

298,212 

433 

298,  645 

1  For  debt  limit  (effective  July  1,  1962.  see  following  table. 

-Includes  public  debt  incurred  to  finance  cxpeiulitures  of  certain  wholly  owned  Government  corpora- 
tions and  other  busine.ss-type  activities  hi  exchange  for  which  obligations  of  the  corporations  and  activities 
were  issued  to  the  Treasury.    See  table  122. 


TABLES  653 

Table  37. — Debt  limitation  under  the  Second  Liberty  Bond  Act,  as  amended,  1917-62 


Enactment  date  and  statute 


Provisions  of  legislation 


Amount  and  kind 
of  limitation 


Sept.  24, 1917: 

(40  Stat.  288) 

(40  Stat.  290) 

Apr.  4, 1918: 

(40  Stat.  502) 

(40  Stat.  504) 

July9,  1918  (40  Stat.  844).. 

Mar.  3, 1919: 

(40  Stat.  1311) 

(40  Stat.  1309).- 

Nov.  23,  1921  (42  Stat.  321) 

June  17,  1929  (46  Stat.  19).. 


Mar.  3,  1931  (46  Stat.  1506).. 

Jan.  30, 1934  (48  Stat.  343)... 

Feb.  4, 1935: 

(49  Stat.  20) 

(49  Stat.  21) 

Do 

May  26, 1938  (52  Stat.  447).. 

June  20, 1939  (53  Stat.  1071). 
June  25, 1940  (54  Stat.  526).. 


Feb.  19, 1941  (55  Stat.  7). 


Sec.  1  authorized  bonds  in  the  amount  of 

Sec.  5  authorized  certificates  of  indebtedness  out- 
standing at  any  one  time  (revolving  authority) 

Sec.  1  amended  to  increase  authorized  amount  of 
bonds  to 

Sec.  5  amended  to  increase  authorized  amount  of 
certificates  outstanding  to. 

See.  1  amended  to  increase  authorized  amount  of 
bonds  to 

Sec.  5  amended  to  increase  authorized  amount  of 
certificates  outstanding  to. 

Sec.  18  (new)  autiiorized  notes  in  the  amount  of 

Sec.  18  amended  to  establish  revolving  authority  for 
the  issuance  of  notes  and  limited  amount  outstand- 
ing at  any  one  time  to 

Sec.  5  amended  to  authorize  issuance  of  Treasury 
bills,  as  vs'ell  as  certificates  of  indebtedness,  and 
limited  amount  of  both  outstanding  at  any  one 
time  to 

Sec.  1  amended  to  increase  authorized  amount  of 
bonds  to 

Sec.  18  amended  to  increase  authorized  amount  of 
notes  outstanding  to. 

Sec.  1  amended  to  establish  revolving  authority  for 
the  issuance  of  bonds  and  limited  the  amount  out- 
standing at  any  one  time  to 

Sec.  21  (nevir)  consolidated  limitation  on  issuance  of 
bills  and  certificates  (see.  5)  and  limitation  on 
issuance  of  notes  (sec.  18).  Aggregate  amount 
outstanding  of  securities  under  both  sections 

Sec.  22  (new)  authorized  issuance  of  U.S.  savings 
bonds,  the  amount  issued  to  be  included  in  the 
limitation  in  sec.  1. 

Sees.  1  and  21  amended  to  consolidate  in  sec.  21  all 
limitations  on  bills,  certificates,  notes,  and  bonds; 
limited  bonds  outstanding  to  $30  biUion,  and 
aggregate  total  to 

Sec.  21  amended  to  remove  limitation  on  bonds  with- 
out changing  limitation  on  aggregate  total  of 

Sec.  21  amended  to  insert  "(a)"  after  21,  and  to  add 
at  end  of  sec.  21(a):  "(b)  In  addition  to  the  amount 
authorized  by  the  preceding  paragraph  of  this 
section,  any  obligations  authorized  by  sections  5 
and  18  of  this  act,  as  amended,  not  to  exceed  in 
the  aggregate  $4,000,000,000  outstanding  at  any 
one  time,  less  any  retirements  made  from  the 
special  fund  made  available  under  section  301  of 
the  Revenue  Act  of  1940,  may  be  issued  under  said 
sections  to  provide  the  Treasury  with  funds  to 
meet  any  expenditin-es  made,  after  June  30,  1940, 
for  the  national  defense,  or  to  reimburse  the  gen- 
eral fund  of  the  Treasury  therefor.  Any  such 
obligations  so  issued  shall  be  designated  'National 
Defense  Series'." 

Sec.  21  amended  to  eliminate  separate  authority  for 
$4  billion  of  National  Defense  Series  obligations 
and  provided  that  the  face  amount  of  obligations 
issued  under  this  act  outstanding  at  any  one  time 
shall  not  exceed  in  the  aggregate 


>  $7, 538,  945, 460 
2  4, 000, 000, 000 

112,000,000,000 
2  8, 000, 000, 000 

1  20, 000, OOC, 000 

8  10, 000, 000, 000 
I  7, 000, 000, 000 

s  7, 500, 000, 000 

2  10,000,000,000 

1  28, 000, 000, 000 

2  10, 000, 000, 000 

2  25, 000, 000, 000 
2  20,000,000,000 


2  45,000,000,000 
245,000,000,000 


4,000,000,000 


2  65,000,000,000 


Footnotes  at  end  of  table. 


654   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  37. — Debt   limitation  under   the   Second   Liberty  Bond  Act,   as    amended, 

1917-62— Contmned 


1 


Enactment  date  and  statute 


Provisions  of  legislation 


Amount  and  kind 
of  limitation 


Mar.  28, 1942  (56  Stat.  189)... 

Apr.  11,  1943  (57  Stat.  63) 

June  9, 1944  (58  Stat.  272) 

Apr.  3,  1945  (59  Stat.  47) 


June  26, 1946  (60  Stat.  316)... 


Aug.  28, 1954  (68  Stat.  895). 


June  30, 1955  (69  Stat.  241). 
July  9, 1956  (70  Stat.  519)-. 


Feb.  26, 1958  (72  Stat.  27) 

Sept.  2,  1958  (72  Stat.  1758).... 

June  30, 1959  (73  Stat.  156-7)... 


June  30, 1960  (74  Stat.  290). 


Sec.  21  amended  to  increase  limitation  on  aggregate 
outstanding  at  any  one  time  to... 

Sec.  21  amended  to  increase  limitation  on  aggregate 
outstanding  at  any  one  time  to 

See.  21  amended  to  increase  limitation  on  aggregate 
outstanding  at  any  one  time  to 

Sec.  21  amended  to  provide  that  the  face  amount  of 
obligations  issued  under  this  act  and  the  face 
amount  of  obligations  guaranteed  as  to  principal 
and  interest  (except  such  guaranteed  obligations 
as  may  be  held  by  the  Secretary  of  the  Treasury) 
outstanding  at  any  one  time  shall  not  exceed  in 
the  aggregate 

Sec.  21  amended  to  add:  "The  current  redemption 
value  of  any  obligation  issued  on  a  discount  basis 
which  is  redeemable  prior  to  maturity  at  the 
option  of  the  holder  thereof  shall  be  considered, 
for  the  purposes  of  this  section,  to  be  the  face 
amount  of  such  obligation."  Amendment  de- 
creased the  limitation  to. 

Sec.  21  amended,  effective  Aug.  28,  1954,  and  ending 
June  30,  1955,  to  increase  the  limitation  tempo- 
rarily by  $6  billion  to 

Sec.  21  act  of  Aug.  28, 1954,  amended  to  extend  until 
June  30,  1956,  the  increase  in  limitation  to 

Sec.  21  act  of  Aug.  28, 1954,  amended  to  increase  the 
limitation  temporarily,  beginning  July  1,  1956, 
and  ending  June  30,  1957,  by  $3  billion  to 

Temporary  increase  terminated  June  30,  1957;  and 
the  limitation  on  the  aggregate  outstanding  at  any 
one  time  reverted  to  that  under  the  act  of  June  26, 
1946  (60  Stat.  316) 

Sec.  21  amended  to  increase  the  limitation  tempo- 
rarily, beginning  Feb.  26,  1958,  and  ending  June 
30,  1959,  by  $5  billion  to... 

Sec.  21  amended,  effective  Sept.  2,  1958,  to  increase 
the  limitation  on  the  aggregate  amount  outstand- 
ing at  any  one  time  to... 

The  increase  in  the  limitation  on  the  aggregate  out- 
standing, together  with  the  temporary  increase  of 
$5  billion  beginning  Feb.  26, 1958,  and  ending  June 
30, 1959,  provided  an  operating  limitation  of 

Sec.  21  amended,  effective  June  30,  1969,  to  increase 
the  limitation  on  the  aggregate  amount  outstand- 
ing to 

With  the  temporary  increase  of  $5  biUion,  act  of  Feb. 
26,  1958  (72  Stat.  27),  which  ended  June  30,  1959, 
the  operating  limitation  on  June  30,  1959,  was 

Sec.  21  amended  also  to  increase  the  limitation 
temporarily,  beginning  July  1,  1959,  and  ending 
Jime  30,  1960,  by  $10  billion,  providing  an  operat- 
ing limitation  of. 

Sec.  21  amended  to  increase  the  limitation  tempo- 
rarily, beginning  July  1, 1960,  and  ending  June  30, 
1961,  by  $8  biUion,  providing  an  operating  limita- 
tion of - 


'  $125, 000, 000, 000 
J  210, 000, 000, 000 
s  260, 000, 000, 000 


2  300, 000,000,000 


»  275, 000, 000, 000 

2  281,000,000,000 
« 281, 000, 000, 000 

»  278, 000, 000, 000 

2  275, 000, 000, 000 
»  280, 000, 000, 000 
»  283, 000, 000, 000 

»  288, 000, 000, 000 
J  285, 000, 000, 000 
i  290, 000, 000, 000 

s  295, 000, 000, 000 

J  293, 000, 000, 000 


Footnotes  at  end  of  table. 


TABLES 


655 


Table  37. — Debt    limitation   under  the   Second   Liberty    Bond    Act,    as   amended, 

1 91 7-62--Contmued 


Enactment  date  and  statute 

Provisions  of  legislation 

Amount  and  kind 
of  limitation 

June  30, 1961  (75  Stat.  148) 

Sec.  21  amended  to  increase  the  limitation  tempo- 
rarily, beginning  July  1, 1961,  and  ending  June  30, 
1962,  by  $13  billion,  providing  an  operating  limi- 
tation of        

2 $298, 000, 000, 000 
2  300, 000, 000, 000 

Mar.  13, 1962  (76  Stat.  23) 

Sec.  21  amended  to  increase  the  limitation  tempo- 
rarily, beginning  Mar.  13,  1962,  and  ending  June 
30,  1962,  by  $2  billion,  providing  an  operating 
limitation  of 

July  1,  1962  (76  Stat.  124) 

Sec.  21  amended  to  increase  the  limitation  tempo- 
rarily as  follows: 

Beginning  July  1,  1962,  tlirough  Mar.  31,  1963,  to 
$308  billion ._ _ 

J  308, 000, 000, 000 

Beginning  Apr.  1,  1963,  through  June  24,  1963,  to 
$305  billion 

'  305, 000, 000, 000 

Beginning  June  25,  1963,  through  June  30,  1963,  to 
$300  billion. 

3  300, 000, 000. 000 

'  Limitation  on  issue. 

2  Limitation  on  outstanding. 

3  Limitation  on  issues  less  retirements. 


65G   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table   40. — Issues,    maturities,    and   redemptions   of  interest-bearing   public   debt 
securities,  excluding  special  Issues,  July  1961-June  1962  ^ 

[On  basis  of  daily  Treasury  statements,  supplemented  by  special  statements  by  the  Bureau  of  the  Public 

Debt  on  public  debt  transactions] 


Date 

Security 

Rate  of 
interest ' 

Amount  issued ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity « 

1961 
July     6 

Treasury  bills: 

Regular  weekly: 
Issued  Jan.  5,  1961: 
Redeemed    In    exchange    for    series 
dated  July  6,  1961,  due  Oct.  5,  1961. 
Redeemed    in    exchange    for    series 
dated  July  6, 1961,  due  Jan.  4, 1962.. 

Percent 
« 2. 457 

$45,797,000.00 
27.154.000  00 

Redeemable  for  cash 

1,527,381,000.00 

6 

Maturing  Oct.  5, 1961: 
Issued  in  exchange  for  series  dated 
Jan.  5,  1961 

2.305 

$45, 797, 000. 00 
1,054,740,000.00 

27,154,000.00 
472,790,000.00 

Issued  for  cash 

6 

Maturing  Jan.  4,  1962: 
Issued  in  exchange  for  series  dated 
Jan.  5,  1961 

2.486 

Issued  for  cash 

13 

Issued  Jan.  12,  1961: 
Redeemed    in    exchange    for    series 
dated  July  13,  1961,  due  Oct.  13, 
1961. 

«  2. 436 

11,911,000.00 
2.455  000  00 

Redeemed    In    exchange    for    series 
dated  July  13,  1961,  due  Jan.  11, 
1962 

Redeemable  for  cash.. 

1,586,561,000.00 

13 

Maturing  Oct.  13,  1961: 
Issued  in  exchange  for  series  dated 
Jan.  12,  1961 

2.322 

11,911,000.00 
1,088,967,000.00 

2. 45."),  000. 00 
497,723,000.00 

Issued  for  cash 

13 

Maturing  Jan.  11,  1962: 
Issued  in  exchange  for  series  dated 
Jan.  12,  1961. 

2.512 

Issued  for  cash..  

15 

Other: 
Issued  July  15, 1960: 
Redeemed    in    exchange    for    series 
dated  July  15,  1961,  due  July  15, 
1962 

3.265 

9,569  000  00 

Redeemable  for  cash 

1,490,940,000  00 

15 

Maturing  July  15,  1962: 
Issued  in  exchange  for  series  dated 
July  15,  1960 

2.908 

9, 569, 000. 00 
1,993,947,000.00 

Issued  for  cash 

20 

Regular  weekly: 
Issued  Jan.  19,  1961: 
Redeemed    in    exchange    for    series 
dated  July  20,  1961,  due  Oct.  19, 
1961 

«  2. 355 

75,620,000.00 
32,950,000  00 

Redeemed    in    exchange    for    series 
dated  July  20,  1961,  due  Jan.  18. 
1962 

Redeemable  for  cash . 

1,391,943,000.00 

20 

Maturing  Oct.  19,  1961: 
Issued  in  exchange  for  series  dated 
Jan.  19,  1961 

2.200 

75, 620, 000. 00 
1,024,385,000.00 

32, 950, 000. 00 
466,954,000.00 

3,502,886,000.00 

Issued  for  cash 

20 

Maturing  Jan.  18,  1962: 
Issued  in  exchange  for  series  dated 
Jan.  19,  1961 

2.385 

Issued  for  cash 

26 

Tax  anticipation: 
Maturing  March  23,  1962: 
Issued  for  cash 

2.484 
»  2.  259 

27 

Regular  weekly: 
Issued  Jan.  26,  1961: 
Redeemed    in    exchange    for    series 
dated  July  26,  1961,  due  Oct.  26, 
1961 

61,284,000.00 

Redeemed    in    exchange    for    series 
dated  July  26, 1961,  due  June  25, 1962. 
Redeemable  for  cash 

41,134,000.00 

1,498,400,000.00 

Footnotes  at  end  of  table. 


TABLES 


691 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-'bearing  public  deht 
securities,  excluding  special  issues,  July  1961~June  1962  ^ — Continued 


Date 


mi 

.Tuly  27 


27 


31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
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31 
31 
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31 
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31 
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31 
31 
31 
31 
31 
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31 


31 


Security 


Treasury  bills— Continued 

Regular  weelvly— Continued 
Maturing  Oct.  26,  1961: 
Issued  in  exchange  for  series  dated 

Jan.  26,  1961.. 

Issued  for  cash 

Maturing  Jan.  25,  1962: 
Issued  in  exchange  for  series  dated 

Jan.  26,  1961... 

Issued  for  cash 

U.S.  savings  bonds: « 

Series  E-1941 

Series  E-1942. 

Series  E-1943 

Series  E-1944 

Series  E-1945 

Series  E-1946-... — .. 

Series  E-1947 

Series  E-1948 

Series  E-1949 

Series  E-1950 

Series  E-1951 

Series  E-1952  (January  to  April) 

Series  B-1952  (May  to  December) 

Series  E-1953.... 

Series  E-1954 

Series  E-1955.... 

Series  E-1956 - 

Series  E-1957  (January) 

Series  E-1957  (February  to  December)... 

Series  E-1958 

Series  E-1959  (January  to  May) 

Series  E-1959  (June  to  December) 

Series  E-1961 

Series  E-1961 

Unclassified  sales  and  redemptions 

Series  F-1949 

Series  F-1950 

Series  F-1951. 

Series  F-1952 -. 

Unclassified  redemptions 

Series  0-1949 

Series  G-1950 

Series  G-1951 

Series  G-1952 

Unclassified  redemptions 

Series  K-1952 

Series  H-1953 

Series  H-19M 

Series  H-1955 

Series  H-1956 

Series  H-1957  (January) 

Series  H-1957  (February  to  December)... 

Series  H-1958 

Scries  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  H-1960 

Series  H-1961 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  .1-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Treasury  notes.  Series  A-1963 

Adjustments  of  exchange  redemptions  '.  . 

Depositary  bonds,  First  Series 


Rate  of 
interest  2 


Percent 
2.244 


2.446 


3.223 
3.252 
3.276 
3.298 
3.316 
3.327 
3.346 
3.366 
3.344 
3.347 
3.378 
3.400 
3.451 
3.408 
3.497 
3.522 
3.546 
3.560 
3.653 
3.690 
3.730 
3.750 
3.750 
3.750 


2.53 
2.53 
2.53 
2.53 


2.50 
2.50 
2.50 
2.50 


'3.123 

'  3. 161 

73.211 

'  3. 258 

7  3.  317 

3.360 

7  3. 626 

?  3. 679 

3.720 

3.750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2H 
"2."00    . 


Amount  issued ' 


$61,284,000.00 
1,038,602,000.00 


41,134,000.00 
458,946,000.00 

1,056,696.40 

7, 100, 891. 46 

5, 863, 532. 26 

10, 648, 846. 82 

5, 492, 344. 82 

6, 604, 252.  81 

4, 934, 794. 84 

5, 403, 425. 89 

6, 009, 908. 32 

6, 189, 790. 11 

6,046,846.20 

4, 224, 455.  24 

2, 663, 072. 30 

7, 259, 034.  79 

6, 674, 800.  50 

7, 259, 878. 36 

7, 246, 307.  71 

3, 207, 031. 00 

3, 389, 020. 08 

7, 643, 000.  90 

3,999,068.14 

3, 484, 815.  77 

7, 186, 819. 67 

271,906,976.38 

6, 134, 713.  55 

160, 265. 35 

445, 623. 65 

266, 964.  51 

133, 322. 35 


77, 499,  500.  00 
5,  713, 000. 00 
80,  915. 10 
231, 420.  00 
429,  575.  84 
424, 361. 83 
359,  630.  68 
103, 057. 35 


25,  272,  500. 00 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


$3, 409, 

8,209, 

13, 179, 

16, 337, 

14,621, 

7, 248, 

7, 870, 

8,911, 

10,312, 

11,684, 

14, 066, 

1, 909, 

4,381, 

7, 549, 

7, 986, 

9. 373, 

9, 438, 

803, 

10, 656, 

14, 658, 

7, 096, 

12, 163, 

41,380, 

66, 184, 

44, 236, 

4, 346, 

332, 

149, 

96, 

3, 073, 

29, 059, 

2, 157, 

1,573, 

373, 

8, 955, 

441, 

1, 162, 

2, 112, 

2, 862, 

2,491, 

118, 

1, 860, 

2, 826, 

1, 105, 

1,359, 

2,  662, 

38, 

1, 458, 

273, 

413, 

543, 

854, 

345, 

118, 

8  -515, 

462, 

850, 

1, 858, 

1, 408, 

1, 148, 

HI, 

1,320, 


141.91 
326.40 
313.  70 
204.63 
342.  38 
538.  55 
174. 06 
721.  86 
233. 14 

936.  78 

937.  54 
208.  65 
190.  27 
851.  32 
338. 00 
675.  53 
871.35 
505. 46 
720. 17 
597.  21 
805.  42 
397.  27 
277.  57 
218.  75 
176.  83 
554. 00 
814.  26 
417.  72 
142.  50 
732. 08 
800. 00 
600.  00 
900.00 
800. 00 
600. 00 
000. 00 
000. 00 
000. 00 
500. 00 
500. 00 
500. 00 
000. 00 
000. 00 
000. 00 
000. 00 
500.  00 
000.  00 
000.  00 
354.10 
353. 40 
389. 17 
716.  60 
502. 16 
897.  85 
015.  84 
000. 00 
500. 00 
000. 00 
500.  00 
500. 00 
500. 00 
000. 00 


20, 000. 00 
3, 942, 600. 00 


Footnotes  at  end  of  table. 


692   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-'bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 


1961 
July   31 
31 


31 
31 


Aug.     1 


8 


Security 


Treasury  bonds,  R.E.A.  Series 

Treasury  bonds.  Investment  Series  B-197 
80. 


Redeemed    in    exchange    for    Treasury 

notes,  Series  EA-1966 

Treasury  notes,  Series  EA-1966 

Miscellaneous 


Total  July. 


Treasury  notes,  Series  H-1962 

Issued  in  exchange  for: 
3!'i%     Certificates     of    indebtedness. 

Series  C-1961 

4%  Treasury  notes,  Series  A-1961 

lW7c  Treasury  notes.  Series  EO-196L.. 

2%%  Treasury  bonds  of  1961 

Treasury  notes.  Series  E-1964 

Issued  in  exchange  for: 
3}'i%     Certificates     of     indebtedness. 

Series  C-1961. ._ 

4%  Treasury  notes.  Series  A-1961 

lW7o  Treasury  notes.  Series  E 0-1961... 

2%%  Treasury  bonds  of  1961 

Treasury  bonds  of  1968  (additional  issue) 

Issued  in  exchange  for: 
3H%  Certificates  of  indebtedness,  Series 

C-1961 

4%  Treasury  notes.  Series  A-1961 

\Vi%  Treasury  notes.  Series  EO-1961.-- 

2'M%  Treasury  bonds  of  1961 

Treasury  notes.  Series  A-1961 

Redeemed  in  exchange  for: 

3!'4%  Treasury  notes.  Series  H-1962 

3%%  Treasury  notes.  Series  E-1964 

3J^%  Treasury  bonds  of  1968   (addi- 
tional issue) 

Redeemable  for  cash. 

Treasury  notes.  Series  EO-1961 

Redeemed  in  exchange  for: 

314%  Treasury  notes.  Series  H-1962 

3M%  Treasury  notes.  Series  E-1964 

V/i%  Treasury  bonds  of  1968   (addi- 
tional issue) 

Certificates  of  indebtedness.  Series  C-1961, 

regular 

Redeemed  in  exchange  for: 

3H%  Treasury  notes.  Series  H-1962 

334%  Treasury  notes,  Series  E-1964 

Zli%  Treasury  bonds  of  1968  (addi- 
tional issue) 

Redeemable  for  cash. 

Treasury  bonds  of  1961. 

Redeemed  in  exchange  for: 

3H%  Treasury  notes.  Series  H-1962 

3'>4%  Treasury  notes,  Series  E-1964 

y^%  Treasury  bonds  of  1968   (addi- 
tional issue) 

Treasury  bills: 

Regular  weekly: 
Issued  Feb.  2,  1961: 
Redeemed    in    exchange    for    series 
dated  Aug.  3, 1961,  due  Nov.  2, 1961.. 
Redeemed    in    exchange    for    series 
dated  Aug.  3, 1961,  due  Fob.  1, 1962.. 

Redeemable  for  cash 

Maturing  Nov.  2,  1961: 
Issued  in  exchange  for  series  dated 

Feb.  2,  1961 

Issued  for  cash 

Maturing  Feb.  1,  1962: 
Issued  in  exchange  for  series  dated 

Feb.  2,  1961 

Issued  for  cash 

Certificates  of  indebtedness,  foreign  series — 


Rate  of 
interest  ^ 


Percent 
2.00 

2% 


U2 


3>/4 


3?4 


3% 


4.00 


IVi 


ZM 


2% 


5  2. 358 


2.299 


2.557 
'2"  46" 


Amount  issued  ' 


$722, 000.  00 


37,  854, 000.  00 


12, 465, 140, 460. 98 


4,  560, 304, 000.  00 
657, 902, 000. 00 
183, 003, 000. 00 
680,  596, 000.  00 


3, 049,  252, 000.  00 

990,  576, 000.  00 

88,  558, 000. 00 

890,  296, 000. 00 


131,283,000.00 

289,  270, 000.  00 

8,  256, 000.  00 

317, 312, 000. 00 


117,749,000.00 
983,  514, 000. 00 


61,295,000.00 
539, 024, 000.  00 
450, 000, 000. 00 


Amoimt  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


$37, 854, 000. 00 


15,  573,  600. 00 


8,  294, 000, 362.  75 


657, 902, 000.  00 
990,  576, 000.  00 

289,  270, 000. 00 
197,  865, 000.  00 


183, 003, 000. 00 
88,  558, 000. 00 

8, 256, 000. 00 


4,  560, 304, 000.  00 
3, 049, 252, 000.  00 

131,  283, 000.  00 
87, 936, 000.  00 


680,  596, 000.  00 
890,  296, 000. 00 

317,312,000.00 


117,749,000.00 

61,  295, 000. 00 
1,  522, 100, 000. 00 


Footnotes  at  end  of  table. 


TABLES 


693 


Table  40. Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 

securities,  excluding  special  issues,  July  1961-June  1962  ^—Continued 


Date 


Security 


10 


10 


Rate  of 
interest  ^ 


Treasury  bills: 
19G1  Regular  weekly: 

\ug    10  Issued  Feb.  9,  1961: 

Redeemed    in    exchange    for    series 
dated  Aug.  10,  1961,  due  Nov.  9, 

1961 

Redeemed    in    exchange    for    series 
dated  Aug.  10,  1961,  due  Feb.  8, 

1962 

Redeemable  for  cash 

Maturing  Nov.  9,  1961: 
Issued  in  exchange  for  series  dated 

Feb.  9,  1961-- - 

Issued  for  cash 

Matui-mg  Feb.  8,  1962: 
Issued  in  exchange  for  series  dated 

Feb.  9,  1961 

Issued  for  cash 

Issued  Feb.  16,  1961: 
Redeemed    in    exchange    for    series 
dated  Aug.  17,  1961,  due  Nov.  16, 

1961 

Redeemed    ia    exchange    for    series 
dated  Aug.  17,  1961,  due  Feb.  15, 

1962 

Redeemable  for  cash 

17  Maturing  Nov.  16,  1961: 

Issued  in  exchange  for  series  dated 

Feb.  16,  1961 

Issued  for  cash 

17  Maturing  Feb.  15,  1962: 

Issued  in  exchange  for  series  dated 

Feb.  16,  1961 

Issued  for  cash 

24  Issued  Feb.  23,  1961: 

Redeemed    in    exchange    for    series 
dated  Aug.  24,  1961,  due  Nov.  24, 

1961 

Redeemed    in    exchange    for    series 
dated  Aug.  24,  1961,  due  Feb.  23, 

1962 

Redeemable  for  cash 

24  Maturing  Nov.  24,  1961: 

Issued  in  exchange  for  series  dated 

Feb.  23,  1961 

Issued  for  cash 

24  Maturing  Feb.  23,  1962: 

Issued  in  exchange  for  series  dated 

Feb.  23,  1961 

Issued  for  cash 

31  Issued  March  2,  1961: 

Redeemed    in    exchange    for    series 
dated  Aug.  31,  1961,  due  Nov.  30, 

1961 

Redeemed    in    exchange    for    series 
dated  Aug.  31,  1961,  due  March  1, 

1962 

Redeemable  for  cash 

31  Maturing  Nov.  30,  1961: 

Issued  in  exchange  for  series  dated 

March  2,  1961 

Issued  for  cash 

31  Maturing  March  1,  1962: 

Issued  in  exchange  for  series  dated 

March  2,  1961 

Issued  for  cash 

31      Treasury  bonds  of  1980 

Adjustments  of  issues  » 

31      Treasury  bonds  of  1998 

Adjustments  of  issues  » 


Percent 
5  2. 335 


Amount  issued  ■ 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


2.366 


2.617 


i  2. 381 


2.  519 


$53, 083, 000. 00 
1,047,135,000.00 


31,560,000.00 
568,  593, 000. 00 


$53, 083, 000.  00 


31,560,000.00 
1,  616,  224, 000. 00 


2.765 


5  2. 450 


2.504 


109, 429, 000. 00 
991, 404, 000. 00 


52, 197, 000. 00 
547, 830, 000. 00 


2.793 


5  2.  .536 


2.  321 


98,152.000.00 
1.002,642,000.00 


53, 293. 000. 00 
546, 799, 000. 00 


2.617 


3'i 


11,906,000.00 
1,088,410,000.00 


26,  670. 000. 00 
573, 716, 000.  00 


109,  429, 000. 00 


52, 197, 000. 00 
1,538,932,000.00 


98,152,000.00 


53, 293, 000.  00 
1,  .549, 156,000.00 


11,906,000.00 


26,  670, 000. 00 
1,562,598,000.00 


-10,000.00 
"15,"  000.' 00 


Footnotes  at  end  of  table. 


694   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  deit 
securities,  excluding  special  issues,  July  1961-June  1962^— Continued 


Date 


1961 
Aug.  31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 


31 
31 


Security 


U.S.  savings  bonds: « 


Ser: 
Ser: 
Ser 
Ser: 
Ser: 
Ser 
Ser 
Ser 
Ser 
Ser 
Ser: 
Ser: 
Ser 
Ser: 
Ser: 
Ser: 
Ser: 
Ser 
Ser 
Ser: 
Ser 
Ser 
Ser 
Ser 


es  E- 
es  E- 
es  E- 
es  E- 
:es  E- 


1941. 
■1942. 
1943. 
1944. 
1945. 


ies  E-1946. 

ies  E-1947 

ies  E-1948 

ies  E-1949.. 

ies  E-1950 

ies  E-1951 

ies  E-1952  (January  to  April) 

ies  E-1952  (May  to  Decern ber> 

ies  E-1953 

ies  E-1954... 

ies  E-1955 

ies  E-1956 

ies  E-1957  (January) 

ies  E-1957  (February  to  December). . 

ies  E-1958 

ies  E-1959  (January  to  May) 

ies  E-1959  (June  to  December) 

ies  E-1960 

ies  E-1961 

Unelassifled  sales  and  redemptions 

Series  F-1949 

Series  F-1950.. 

Series  F-1951 

Series  r-1952 

Unclassified  redemptions 

Series  Q-1949 

Series  a-1950 

Series  0-1951 

Series  G-1952 

Unclassified  redemptions 

Series  H-1952 

Series  H-1953 

Series  H-1954 

Series  H-1955 

Series  H-1 956 

Series  H-1957  (January) 

Series  H-1957  (February  to  December).. 

Series  H-1958 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  H-1960 

Series  H-1961 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1 954.. 

Series  J-1 955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Depositary  bonds,  First  Series 

Treasury  bonds,  R.E.A.  Series 

Treasury  bonds,  Investment  Series  B-1975-80. 
Redeemed    in    exchange    for    Treasury 

notes,  Series  EA-1966 _ . 

Treasury  notes,  Series  EA-1966 

Miscellaneous..- 


Rate  of 
interest  ^ 


Total  August. 


Percent 

'  3. 223 

'  3. 252 

'  3.  276 

■>  3.  298 

?3.316 

'  3. 327 

1  3. 346 

7  3.  366 

?  3. 344 

7  3.  347 

^  3.  378 

3.400 

7  3.  451 

7  3.468 

'  3.  497 

^  3.  522 

^  3.  546 

3.560 

7  3.  653 

V  3.  690 

3.730 

3.750 

3.750 

3.750 


2.53 
2.53 
2.53 
2.53 


2.50 
2.50 
2.50 
2.50 


7  3. 123 

7  3.161 

7  3.  21 1 

7  3.258 

7  3.317 

3.  360 

7  3.  626 

7  3.  679 

3.720 

3.  750 

3.750 

3.750 


Amount  issued  ' 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.00 
2.00 
2?4 


IH 


$717, 
4,124, 
4,  504, 
7,851, 
3,  912. 
3,364, 
3.471, 

3,  986, 

4,  565, 

4,  547, 
4,912, 
3, 082, 
2,  418, 
5,681, 

5.  403, 
5,  749, 
5, 886, 

5,  766, 

6, 148, 

3,171, 

2,917, 

5, 978, 

326, 356, 

4,821, 

130, 

247, 

184, 

93, 


997. 38 
240. 41 

743. 08 
855.  77 

348. 09 
355.  66 
143. 12 
852.11 
499.  77 
674.  41 
252. 27 
746.  98 
512.  76 
852.  72 

290. 04 
542. 63 
890.  75 

21.61 
890.  57 
263. 82 
159. 37 
366.  94 

060. 32 
602.  58 

364. 33 
070.  90 
743.  36 
326.11 

024. 05 


Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  * 


5, 000. 00 

83,217,000.00 

-2,  742,  500. 00 

64, 097.  60 

177,010.40 

380,  513. 31 

286, 901. 18 

318,  570. 16 

92,683.53 


1, 130, 000. 00 
504, 000.  00 


68, 109, 000. 00 


21, 382,  547, 968.  09 


$6, 323 

13, 142 

19,831, 

25, 366, 

21, 465, 

11,511, 

12, 209, 

14,265, 

15,892, 

17,227, 

23, 098, 

2, 967, 

6, 308, 

10, 967, 

12,  048, 

13,868, 

13, 950, 

1,289, 

14,  674, 

17,937, 

8, 806, 

14,  462, 

47. 032. 

87, 667, 

'  -58,469, 

9,041, 

344, 

173, 

125, 

8  -3,474, 

42, 116. 

2, 429, 

1,633, 

518. 

-11,476. 

370, 

1,211, 

2, 242, 

2,914. 

2,  549, 

154, 

1,857, 

3, 0S5, 

1.233. 

1,318. 

3, 363, 

282. 

274, 

110, 

221, 

721 ; 

582. 

329, 

142, 

1, 307, 

581, 

876, 

1, 872, 

2,  328, 

1,487, 

157, 

« -1,296, 

3, 150, 

45, 


,  423. 47 
:,  248.  58 
466.  60 
430.  61 
330.  56 
297.  95 
905.  76 
770. 63 
651. 18 
744.  54 
496.  50 
952.  43 
474.  70 
926. 94 
968.83 
019.  38 
330. 67 
628,  74 
672. 08 
300.  56 
302. 88 
754.  54 
958.  95 
538.  76 
371.  44 
045.  50 
045.  66 
586. 29 
495.  50 
585.01 
500.00 
700. 00 
700. 00 
500. 00 
000.  00 
500.  00 
500. 00 
000. 00 
500.00 
000.00 
000. 00 
000.00 
000.00 
500.00 
000. 00 
500.00 
500. 00 
000.00 
012.  40 
866.  65 
267.  70 
263. 60 
264. 86 
875.  97 
472. 14 
500.00 
500.00 
000.00 
500.00 
000.00 
500.00 
000.  00 
000.00 
000.00 


68, 109, 000. 00 
"42,'797,"966.'66 


21,096,412,135.72 


Footnotes  at  end  of  table. 


TABLES 


695 


Table  40.— Issues,  maturities,  and  redemptions  of  interest-learing  public  deU 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 


Security 


Rate  of 
interest  2 


Amount  issued ' 


1961 
Sept.    7 


14 


14 


14 


15 


15 


15 


15 


15 


21 


21 


21 


Treasury  bills: 

Regular  weekly: 
Issued  March  9,  1961: 
Redeemed  in  exchange  for  series  dated 

Sept.  7,  1961 ,  due  Dec.  7, 1961 

Redeemed  in  exchange  for  series  dated 

Sept.  7,  1961,  due  Mar.  8,  1962 

Redeemable  for  cash 

Maturing  Dec.  7, 1961: 
Issued  in  exchange  for  series  dated 

Mar.  9,    1961 

Issued  for  cash 

Maturing  March  8, 1962: 
Issued  in  exchange  for    series  dated 

Mar.  9, 1961 

Issued  for  cash 

Issued  March  16,  1961: 

Redeemed  in  exchange  for  series  dated 

Sept.  14,  1961,  due  Dec.  14,  1961.... 

Redeemed  in  exchange  for  series  dated 

Sept.  14,  1961,  due  Mar.  15, 1962.... 

Redeemable  for  cash 

Maturing  Dec.  14, 1961: 
Issued  in  exchange  for  series  dated 

March  16,  1961 

Issued  for  cash --■ 

Maturing  March  15, 1962: 
Issued  in  exchange  for  series  dated 

March  16,  1961 

Issued  for  cash 

Treasury  bonds  of  1980  (additional  issue) 

Issued  in  exchange  for: 

2!^%  Treasury  bonds  of  1965-70 - 

2).^%  Treasury  bonds  of  1966-71 

Treasury  bonds  of  1990  (additional  issue) — 
Issued  in  exchange  for: 

2!^^%  Treasury  bonds  of  1965-70 - 

2)^%  Treasury  bonds  of  1966-71 .- 

Treasury  bonds  of  1998  (additional  issue)--- 
Issued  in  exchange  for: 

2H%  Treasury  bonds  of  1965-70 

2)'i%  Treasury  bonds  of  1966-71 

Treasury  bonds  of  1965-70 

Redeemed  in  exchange  for: 
3V6%  Treasury  bonds  of  1980  (addi- 
tional issue) /v;.-- 

3^%  Treasury  bonds  of  1990  (addi- 
tional issue) -,    Vj-  " 

3^%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bonds  of  1966-71 

Redeemed  in  exchange  for: 
3}67o  Treasury  bonds  of  1980   (addi- 
tional issue) - -.  - 

3H%  Treasury  bonds  of  1990   (addi- 
tional issue) -  - 

ZH%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bills: 

Regular  weekly: 
Issued  March  23, 1961: 
Redeemed  in  exchange  for  senes  dated 

Sept.  21, 1961,  due  Dec.  21, 1961 

Redeemed  in  exchange  for  series  dated 
Sept.  21, 1961,  due  Mar.  22, 1962.... 

Redeemable  for  cash 

Maturing  Dec.  21,  1961: 
Issued  in  exchange  for  series  dated 

March  23,  1961 

Issued  for  cash 

Maturing  March  22,  1962: 
Issued  in  exchange  for  series  dated 

March  23, 1961 - 

Issued  for  cash 


Percent 
i  2. 551 


2.392 


Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  * 


2.692 


$11, 748, 000. 00 
1, 097, 317, 000. 00 


29, 050, 000.  00 
566,185,000.00 


S2.343 


2.328 


2.685 


$11,748,000.00 

29, 050, 000. 00 
1,660,223,000.00 


13, 677, 000. 00 

1,980,000.00 
1,685,055,000.00 


3H 


ZH 


3^i 


13,677,000.00 
1,087,324,000.00 


1, 980, 000.  00 
598, 628, 000. 00 


1, 035, 876, 500. 00 
238, 188,  500. 00 


720, 583, 000. 00 
575, 726,  500. 00 


2H 


2\^ 


5  2. 366 


473,  585,  500. 00 
713, 069, 500. 00 


1, 035, 876, 500. 00 
720,  583, 000.  00 
473, 585,  500. 00 


2.262 


2.681 


110,  523, 000. 00 
989,239,000.00 


62,505,000.00 
537, 708, 000. 00 


238, 188,  500. 00 
575, 726, 500. 00 
713, 059, 500. 00 

110, 523, 000. 00 

62,  505, 000. 00 
1,528,209,000.00 


Footnotes  at  end  of  table. 


696   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-ieatnng  public  deht 
securities,  excluding  special  issues,  July  1961-June  1962^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued  3 

Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  < 

1981 
Sept.  22 

Treasury  bills— Continued 
Tax  anticipation: 
Issued  April  3,  1961: 
Redeemable  for  cash 

Percent 
2.473 

2.705 
5  2.  329 

$1,502,900,000.00 

27 

Maturing  June  22,  1962: 
Issued  for  cash  ..  .  

$2,510,805,000.00 

28 

Regular  weekly: 
Issued  March  30,  1961: 
Redeemed  in  e.\change  for  series  dated 

Sept.  28, 1961,  due  Dec.  28, 1961 

Redeemed  in  exchange  for  series  dated 
Sept.  28,  1961,  due  Mar.  29,  1962 

83, 362, 000.  00 

51,  610, 000. 00 

Redeemable  for  cash     . 

1,  565, 265, 000.  00 

28 

Maturing  Dec.  28,  1961: 
Issued  in  exchange  for  series  dated 
March  30,  1961 

2.234 

83, 362, 000. 00 
1, 016, 848, 000.  00 

51. 610, 000. 00 
548, 460, 000. 00 

Issued  for  cash    _        ..  , 

28 

Maturing  March  29,  1962: 
Issued  in  exchange  for  series  dated 
March  30,  1961 

2.697 

Issued  for  cash - 

30 

Treasury  bonds  of  1967      -    .  

3H 

Adjustments  of  bonds  issued  in  exchange 
for  2}47o    Treasury  bonds  of  1959-62 
(Nov.  15,  1945,  issue)' 

-4,000.00 

30 

Treasury  bonds  of  1959-62  (Nov.  15,  1945, 
issue)                                                 

2H 

Adjustments  of  bonds  redeemed  in  ex- 
change for    35i%    Treasury   bonds  of 
1967  9                     

-4, 000. 00 

30 

U.S.  savings  bonds: ' 

Series  E-1941                 .           

■1  3. 223 

^  3.  252 

'  3. 276 

^  3. 298 

'3.316 

'  3. 327 

'  3. 346 

'  3. 366 

'  3. 344 

'  3. 347 

'  3. 378 

3.400 

'  3. 451 

'  3. 468 

'  3. 497 

'  3. 522 

'  3. 546 

3.560 

'  3.  653 

'  3. 690 

3.730 

3.750 

3.750 

3.750 

714,837.96 
4,329,072.44 
10, 550, 287. 10 
3, 679, 075. 49 
3,  588, 034. 09 
957, 661.  57 
3, 432,  703. 49 

3,  672, 634. 13 
4, 334,  771.  45 
4, 394, 939. 01 

4,  786,  225. 16 
2, 937, 533. 60 
2,  434, 398. 80 
5, 697, 344.  71 
5, 274,  732.  58 

5,  790, 534. 81 
5,  559, 848. 13 

-22, 179. 01 

5,  566, 880.  46 

6, 090, 936.  89 

2, 993, 262. 18 

3, 091, 552. 97 

5,888,946.55 

283, 890, 044. 59 

2, 479, 983.  77 

126, 611.  50 

301, 096.  52 

159, 491.  72 

75, 882. 10 

4, 818, 316.  77 

30 

Series  E-1942                

10, 623, 346. 76 

30 

Series  E-1943       -      

16.  250,  972. 02 

30 

Series  E- 1944    .     

20, 263, 688. 68 

30 

Series  E-1945    

16,  716, 065.  39 

30 

Series  E-1946                               

9.  296, 166.  61 

30 

Series  E-1947                     

9,  728, 924.  22 

30 

Series  E-1948 

11, 342.  .565. 32 

30 

Series  E-1949    

12, 857, 085. 07 

30 

Series  E-1950                             

13, 827, 148. 69 

30 

Series  E-1951                       

19,211,772.99 

30 

Series  E-1952  (.Tanuarv  to  Anril)     -  .    .. 

2, 563, 491. 98 

30 
30 

Series  E-1952  (May  to  December) 

Series  E-1953    

5, 291,  799. 39 
9, 410,  285.  54 

30 

Series  E-1954                        .      

10,  266,  577. 83 

30 

Series  E-1955                     

11,660,6,53.53 

30 

Series  E-1956       .          

11,898,508.93 

30 

Series  E-1957  (.Tanuarv)  -           

1,091,824.68 

30 

30 

Series  E-1957  (February  to  December)... 
Series  E-1958                     .     

11,836,106.43 
13,  253, 467.  99 

30 

Series  E-1959  (Januarv  to  May)  ...  _  --. 

6, 496. 103. 64 

30 
30 

Series  E-1959  (June  to  December) 

Series  E-1960                                         -     .. 

10, 640, 650. 82 
32,  278. 206.  58 

30 

Series  E-1961    .                .     .-      

75, 941, 120.  53 

30 

Unclassified  sales  and  redemptions 

8, 099. 606. 17 

30 

Series  F-1949 

2.53 
2.53 
2.53 
2.53 

6, 259. 648.  50 

30 

Series  F-1950 

672,  284. 13 

30 

Series  F-19.51                   . 

479, 619. 20 

30 

Series  F-1952    

97,  658.  35 

30 

Unclassified  redemptions 

8-957,089.52 

30 

Series  G-1949 

2.50 
2.50 
2.50 
2.50 

32, 299,  700. 00 

30 

Scries  G-1950     

2, 968,  700. 00 

30 

Series  0-1951 

1,  768, 200. 00 

30 

Series  G-1952 

481.  .500.  00 

30 

Unclassified  redemptions      ... 

8-4,955,300.00 

30 

Series  H-1952 

Series  H-1953 

'3.123 
'  3. 101 
'  3.  211 
'  3. 258 
'3.317 
3.360 
'  3.  626 
'  3. 679 

575, 000. 00 

30 

1.  236, 000. 00 

30 

Series  H-1954  ... 

2.  156. 000.  00 

30 

Series  H-1955  

2, 836, 000  00 

30 

Series  H-1956 

2, 478, 500. 00 

30 

Series  H-1957  (January) 

'    219,000.00 

30 

Series  H-1957  (February  to  December)... 
Series  H-1958 

1, 848,  .500. 00 

30 

2, 932,  500. 00 

Footnotes  at  end  of  table. 


TABLES 


697 


Table  40.— /sswes,  maturities,  and  redemptions  of  interest-hearing  puUic  debt 
securities,  excluding  special  issues,  July  1901-Jiine  iStfS  "—Continued 


Date 


1961 
Sept.  30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 


30 
30 


Oct.      1 


Security 


U.S.  savings  bonds «— Continued 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  H-1960 

Series  H-1961 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1962 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Depositary  bonds,  First  Series 

Treasury  bonds,  R.E.A.  Series 

Treasury  bonds,  Investment  Series  B-197&-80 
Redeemed    in    exchange    for    Treasury 

notes,  Series  EA-1966 - 

Treasury  notes.  Series  EA-1966 

Miscellaneous 


Rate  of 
interest  2 


Amount  issued ' 


Percent 
3.720 
3.750 
3.750 
3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


.$3, 000. 00 

,  347,  500. 00 

,  057, 000. 00 

82,  278.  70 

205, 365.  65 

360, 483. 55 

364, 405. 61 

252,  688. 33 

76, 823. 57 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


2.00 
2.00 

2H 


Total  September - 


11 


13 


13 


13 


15, 346, 000. 00 
533, 000. 00 


139, 756, 000. 00 


Treasury  bills: 

Tax  anticipation: 
Maturing  June  22,  1962: 

Adjustment  of  cash  issues 

Treasury  notes,  Series  E 0-1961: 

Redeemable  for  cash 

Certificates  of  indebtedness,  foreign  currency 

series,  maturing  Jan.  4,  1962 

Treasury  bills: 

Regular  weekly: 
Issued  Apr.  6,  1901: 
Redeemed    in    exchange    for    series 
dated  Oct.  5,  1961,  due  Jan.  4,  1962. 
Redeemed    in    exchange    for    series 
dated  Oct.  5,  1961,  due  Apr.  5,  1962_ 

Redeemable  for  cash 

Maturing  Jan.  4,  1962: 
Issued  in  exchange  for  series  dated 

Apr.  6,  1961 

Issued  for  cash -- 

Maturing  Apr.  5,  1962: 
Issued  in  exchange  for  series  dated 

Apr.  6,  1961 

Issued  for  cash -- 

Treasury  notes,  Series  D-1963   (additional 
issue): 

Issued  for  cash 

Treasury  bills: 

Regular  weekly: 

Issued  April  13,  1961: 

Redeemed    in    exchange    for    series 

dated  Oct.  13, 1961,  due  Jan.  11, 1962 

Redeemed    in    exchange    for    series 

dated  Oct.  13,1961,  due  Apr.  12, 1962 

Redeemable  for  cash 

Maturing  Jan.  11,  1962: 
Issued  in  exchange  for  series  dated 

Apr.  13, 1961 

Issued  for  cash 

Matui-ing  April  12,  1962: 
Issued  in  exchange  for  series  dated 

April  13,  1961 

Issued  for  cash 


2.705 
1.25 


5  2.  409 


2.302 


13, 684, 042, 190. 17 


$1,364, 

1,  263, 

3,  321, 

634, 

8-138, 

324, 

528, 

637, 

709, 

905, 

278, 

8-227, 

624, 

1, 063, 

1, 837, 

1, 349, 

1, 026, 

86, 

194, 

2, 192, 


000. 00 
000. 00 
500. 00 
500. 00 
500. 00 
735. 05 
761. 20 
737. 16 
991. 34 

226. 96 

346. 97 
684. 18 
500. 00 
000. 00 
500. 00 
500. 00 
000. 00 
000. 00 
000. 00 
000. 00 


50, 000. 00 


23, 145, 000. 00 


139, 756, 000. 00 
""'"23^O40^ioo"0O 
12, 652, 963,  591.  72 


52, 158, 000. 00 


68, 198, 000. 00 

51, 885, 000. 00 
1,  580, 693, 000. 00 


2.683 


3M 


s  2. 390 


2.389 


68, 198, 000. 00 
1, 032, 059, 000. 00 


51, 885, 000. 00 
648, 361, 000. 00 


2,  294, 680, 000. 00 


2.684 


120,  718,  000.  00 
979,  670,  000. 00 


2, 890, 000  00 
597,  252,  000. 00 


120, 718,  000. 00 

2,  890,  000  00 
1. 577,  749, 000  00 


Footnotes  at  end  of  table. 


698   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 
securities,  excluding  special  issues,  July  19G1-June  1962  ^ — Continued 


Date 


Security 


Eate  of 
interest  2 


Amount  issued  ^ 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


1961 
Oct.    16 


16 


19 


19 


19 


26 


26 


26 


31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 


Treasury  bills— Continued 
Other: 
Issued  Oct.  17, 1960: 
Redeemed    in    exchange    for    series 
dated  Oct.  16, 1961,  due  Oct.  15, 1962. 

Redeemable  for  cash 

Maturing  Oct.  15,  1962: 
Issued  in  exchange  for  series  dated 

Oct.  17, 19b0 

Issued  for  cash 

Regular  weekly: 
issued  Apr.  20,  1961: 
Redeemed    in    exchange    for    series 
dated  Oct.  19, 19tjl,  due  Jan.  18, 1952. 
Redeemed    in    exchange    for    series 
dated  Oct.  19, 1961,  due  Apr.  19, 1962 

Redeemable  for  cash. 

Matuimg  Jan.  18,  19C2: 
Issued  in  exchange  for  series  dated 

Apr.  20, 1961 - 

Issued  for  cash 

Matming  April  19,  1962: 
Issued  in  exchange  for  series  dated 

April  20,  1961 

Issued  for  cash 

Issued  April  27, 1961: 
Redeemed   in   exchange   for   series 
dated  Oct.  26, 1961,  due  Jan.  25, 1962. 
Redeemed    in    exchange    for    series 
dated  Oct.  26, 1961.  due  Apr.  26, 1962. 

Redeemable  for  cash 

Maturing  January  25,  1962: 
Issued  in  exchange  for  series  dated 

April  27,  1961 

Issued  for  cash -. 

Maturing  April  26,  1962: 
Issued  in  exchange  for  series  dated 

April  27,  1961 

Issued  for  cash -. 

U.S.  savings  bonds: « 

Series  E-1941 

Series  E-1942 

Series  E-1943 

Series  E-1944 

Series  E-1945 

Series  E-1946 

Series  E-1947 

Series  E-1948 - 

Series  E-1949 

Series  E-1950 -. 

Series  E-1951 

Series  E-1952  (January  to  April) 

Series  E-1952  (May  to  December) 

Series  E-1953 

Series  E-1954 

Series  E-1955 -. 

Series  E-1956 - - 

Series  E-1957  (January) 

Series  E-1957  (February  to  December)... 

Series  E-1958 

Series  E-1959  (January  to  May). 

Series  E-1959  (June  to  December) 

Series  E-1960 

Series  E-1961 

Unclassified  sales  and  redemptions 

Series  E-1949 

Series  F-1950 

Series  F-1951.- 

Series  F-1952 

Unclassified  redemptions... 

Series  Q-1949 

Series  Q-1950 

Series  Q-1951 


Percent 
3.131 


2.975 


$10,  827, 000. 00 
1, 992, 636.  000. 00 


5  2.271 


2.382 


2.734 


113,055  000.00 
987, 130. 000. 00 


2. 950,  000. 00 
597.  407, 000. 00 


«  2. 262 


2.325 


2.708 


130, 480, 000. 00 
970,  794,  000. 00 


63. 297,  000. 00 
546. 846, 000. 00 


'  3. 223 

'  3. 252 

'3.276 

'  3. 298 

?3.316 

7  3.327 

'3.346 

'3.366 

'  3. 344 

'  3. 347 

'3.378 

3.400 

'3.451 

'  3. 468 

'  3. 497 

'  3.  522 

'  3. 546 

3.560 

'  3. 653 

'  3. 690 

3.730 

3.750 

3.750 

3.750 


2.53 
2.53 
2.53 
2.53 


816, 
4.  512. 
8, 540, 
3. 363, 
4. 399, 
3,  266, 

3,  257, 
3, 567. 
4,023, 

4,  058. 
4.942, 
2,645, 
2, 538, 

5,  766. 
5,  018, 
5,584. 
5,  517, 

5.  720, 

6. 136, 

2. 905. 

3,  657, 

5. 963. 

320. 388, 

«  -16,064, 

124, 

1.294, 

192, 

60, 


734. 72 
028. 12 
822.11 
421. 32 
060. 05 
800.95 
380. 19 
557.01 
674.00 
482. 71 
374.52 
997. 52 
065. 88 
774. 77 
813. 65 
246. 71 
413.37 
-16.06 
204. 11 
196. 45 
985.90 
713.55 
837.41 
717.27 
511.70 
590. 50 
219.95 
949. 75 
158.35 


2.50 
2.60 
2.50 


$10, 827,  000. 00 
1. 491, 338,  000. 00 


113,055,000.00 

2, 950,  000. 00 
1,484,394,000.00 


130, 480,  000. 00 

53. 297. 000.  00 
1. 416, 328,  000.  00 


5, 855, 
13, 501, 
22. 555. 
26, 106, 
21. 849. 
12.  252, 
13. 380, 
15, 054, 
16,  662, 
17. 998, 
25, 939, 
3,  481, 
7. 145, 

12,  695, 

13,  286, 
15, 869, 
16,  728, 

1,413, 

16, 826. 

19, 142. 

8.  260, 

13,  766. 

39. 258, 

103, 851, 

I  -113,832, 

8,388, 

1, 087, 

766, 

218, 

«  -4.  429, 

40, 820, 

6, 254, 

3, 865. 


231. 10 
785.  56 
970. 51 
441. 30 
738. 01 
774. 89 
350. 32 
392.  60 
710.51 
054. 13 
376.  67 
472.  21 
630.61 
279.  40 
703.68 
646,23 
621.  50 
539. 74 
838.49 

290. 23 
732. 19 
523. 26 

718. 24 
901. 12 
304.37 
560.00 
228. 72 
271. 15 
869.  90 
656.  65 
500.00 
600.00 
600.00 


Footnotes  at  end  of  table. 


TABLES 


699 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-'bearing  puilic  deht 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 


Security 


Rate  of 
interest ' 


Amoiint  issued ' 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity « 


1961 
Oct.  31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 

31 

31 

31 

31 
31 
31 


31 


31 
31 
31 


Nov.  2 


U.S.  savings  bonds'— Continued 

Series  Q-1952 

Unclassified  redemptions 

Series  H-1952 - 

Series  H-1953 - — 

Series  H-1954 - - - 

Series  H-1955 - - - 

Series  H-1956 - - 

Series  H-1957  (January) - 

Series  H-1957  (February  to  December)... 

Series  H-1958 - - 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  H-1960 - 

Series  H-1961 - - 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1954 - 

Series  J-1955. 

Series  J-1956 

Series  J-1957 - 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 - 

Series  K-1954 

Series  K-1955. 

Series  K-1956 - 

Series  K-1957..- 

Unclassified  redemptions 

Certificates    of    indebtedness,    foreign    cur- 
rency series,  maturing  Jan.  31,  1962 

Treasury  bonds  of  1980  (additional  issue) 

Adjustments  of  issues ' 

Treasury  bonds  of  1980  (additional  issue) 

Adjustments  of  issues ' 

Treasury  bonds  of  1998  (additional  issue) 

Adjustments  of  issues » 

Depositary  bonds.  First  Series 

Treasury  bonds,  R.E.A.  series 

Treasury  bonds,  Investment  Series  B-1975-80: 

Redeemed  in  exchange  for  Treasury  notes. 

Series  EA-1966 

Treasury  bonds,  Investment  Series  B-1975-80: 

Redeemed  in  exchange  for  Treasury  notes, 

Series  EO-1966 

Treasury  notes.  Series  EA-1966.- 

Treasury  notes,  Series  EO-1966 

Miscellaneous 


Percent 
2.50 


'  3. 123 

'  3. 161 

'3.211 

'  3. 258 

'3.317 

3.360 

'  3. 626 

'  3. 679 

3.720 

3.750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


$2, 325,  500. 00 

71.  033,  500. 00 

12,  710,  500. 00 

94, 479. 00 

187,248.25 

356.531.29 

357, 240. 41 

187, 470. 12 

80,  732. 79 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


$1, 076, 

«  -20.  553, 

851, 

2, 201, 

4,  296, 
6,  213, 
4, 912, 

326, 
3, 499, 

5,  615, 
2, 154, 
2, 330, 
5, 895, 

2,  418. 
8  -20, 316, 

537, 

971, 

2, 058, 

1,  560, 

1, 356, 

245, 

8  -2, 923, 

1,  225, 

1,  668, 

4,754, 

3,  535, 
1,828, 

346, 
8-5, 603, 


200.00 
500.00 
500.00 
000.00 
500.00 
000.00 
500.00 
000.00 
500.00 
500.00 
000.00 
000.00 
500.00 
000.00 
500.00 

566. 45 
587.45 
196. 52 
066. 92 
705. 84 
046. 30 

959. 46 
500. 00 
000.00 
000.00 
000. 00 
500.00 
500.00 
200.00 


Total  October- 


Treasury  bills: 

Regular  weekly: 
Issued  May  4, 1961: 
Redeemed  in  exchange  for  series  dated 

Nov.  2, 1961,  due  Feb.  1, 1962 

Redeemed  in  e.^change  for  series  dated 

Nov.  2,  1961,  due  May  3,  1962 

Redeemable  for  cash 

Maturing  Feb.  1, 1962: 
Issued  in  exchange  for  series  dated 

May  4,  1961 

Issued  for  cash — 

Maturing  May  3, 1962: 
Issued  in  exchange  for  series  dated 

May  4, 1961- - 

Issued  for  cash 

Certificates  of  indebtedness,  foreign  series, 

maturing  Nov.  8,  1961 

Certificates  of  indebtedness,  foreign  series, 
maturing  Feb.  8, 1962— - 


1.25 
3H 


2.00 
2.00 
2M 


2% 


*  2. 334 


2.280 


2.613 


2.40 
2.35 


23, 140, 000. 00 

'-i,'779,'o6o.'oo 


1, 015, 500. 00 


-904,  500. 00 

10, 987, 000  00 

748, 000. 00 


50,000.00 


360,234,000.00 
16,  648, 000  00 


360,234,000.00 
16, 648, 000. 00 


17, 463,  500. 00 


12, 023, 936, 894, 94 


8,971,330,601.07 


178, 809, 000. 00 
921, 107, 000. 00 


80,  789, 000. 00 
519, 614, 000. 00 


450,000,000.00 


178,809,000.00 

80,789,000.00 
1,442,021,000.00 


450, 000, 000. 00 


Footnotes  at  end  of  table. 


700   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-'bcaring  puMic  debt 
securities,  excluding  special  issues,  July  1961~June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued  ^ 

Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  < 

196! 
Nov.  9 

Treasury  bills: 

Regular  weekly: 
Issued  May  11,  1961: 
Redeemed  in  exchange  for  series  dated 

Nov.  9,  1961.  due  Feb.  8,  1962 

Redeemed  in  exchange  for  series  dated 
Nov  9,  1961,  due  Mav  10,  1962 

Percent 
5  2. 379 

$118,744,000.00 

63,  .503, 000.  00 

Redeemable  for  cash                 

1,  518,  447,  000. 00 

9 

Maturing  Feb.  S,  1962: 
Issued  in  exchange  for  series  dated 
May  11, 1961    —                

2.349 

$118,  744, 000. 00 
1, 086, 191, 000. 00 

63,  503, 000. 00 
436, 749. 000. 00 

800, 056, 000. 00 

Issued  for  cash 

9 

Maturing  May  10,  1962: 
Issued  in  exchange  for  series  dated 
May  11,  1961        .                         

2.554 

Issued  for  cash                    

15 

Maturing  Dec.  7,  1961-.ran.  25,  1962-io 
Issued  for  cash                                  _  _- 

2.277 

2H 

15 

Treasurv  bonds  of  1961 

Redeemed  in  exchange  for: 
3H%  Treasurv  notes.  Series  E-1963 

3,  643, 177, 000. 00 

334%  Treasury  bonds  of  1966  (addition- 
al issue)                                         -  .  - 

2, 384,  532,  500. 00 

3Ji%  Treasury  bonds  of  1974  (addition- 
al i^sue) 

517,  446,  500. 00 

Redeemable  for  cash              .    

418,  321, 000.  00 

15 

Treasurv  notes,  Series  E-1963 

31.4 

Issued  in  exchange  for  21.2%  Treasury 
bonds  of  1961                    

3, 643, 177, 000. 00 

15 

Treasury  bonds  of  1966  (additional  issue) 

Issued  in  exchange  for  2^^%  Treasury 
bonds  of  1961            

334 

2,  384,  532,  500. 00 

15 

Treasury  bonds  of  1974  (additional  issue) 

Issued  in  exchange  for  2J-4%  Treasury 
bonds  of  1961 

3'A 

517, 446, 500. 00 

16 

Treasury  bills: 

Regular  weekly: 
Issued  May  18,  1961: 
Redeemed  in  exchange  for  series  dated 

Nov.  16,  1961,  due  Feb.  15,  1962 

Redeemed  in  exchange  for  series  dated 
Nov   16   1961,  due  May  17,  1962 

5  2. 482 

119,035,000.00 

63, 355, 000. 00 

Redeemable  foi  cash 

1,  519,  275, 000. 00 

16 

Maturing  Feb.  15,  1962: 
Issued  in  exchange  for  series  dated 
Mav  18, 1961         

2.516 

119, 035, 000. 00 
981,168,000.00 

63,  355,  000.  00 
536,  750, 000. 00 

Issued  for  cash 

16 

Maturing  May  17,  1962: 
Issued  in  exchange  for  series  dated 
May  18,  1961 

2.721 

Issued  for  cash  -      

24 

Issued  May  25,  1961 : 
Redeemed  in  exchange  for  series  dated 

Nov.  24,  1961,  due  Feb.  23,  1962 

Redeemed  in  exchange  for  series  dated 

Nov.  24,  1961,  due  IMay  24,  1962 

5  2.  482 

117,135,000.00 

39, 083,  000. 00 

Redeemable  for  cash  . 

1,  544, 831, 000. 00 

24 

Maturing  Feb.  23,  1962: 
Issued  in  exchange  for  series  dated 
May  25,  1961 

2.537 

117, 135, 000. 00 
983,356,000.00 

39, 083, 000. 00 
561, 613, 000. 00 

125, 000, 000. 00 

Issued  for  cash 

24 

Maturing  May  24,  1962: 
Issued  in  exchange  for  series  dated 
Mav  25,  1961          - 

2.734 

Issued  for  cash 

24 

Certificates  of  indebtedness,  foreign  series, 
maturing  Dec.  29,  1961 

2.55 
5  2.  400 

30 

Treasury  bills: 

Regular  weekly: 
Issued  June  1,  1961: 
Redeemed    in    exchange    for    series 
dated  Nov.  30,  1961,  due  Mar.  1, 
1962 - 

75, 243, 000. 00 

Redeemed    in    exchange    for    series 
dated  Nov.  30,  1961,  due  May  31, 
1962                                      

34, 477, 000.  00 

Redeemable  for  cash 

1.  590, 968, 000. 00 

Footnotes  at  end  of  table. 


TABLES 


701 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^- — Continued 


Date 


1961 
Nov.  30 


30 


30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 


Security 


Treasury  bills— Continued 
Regular  weekly— Continued 
Maturing  March  1,  1962: 
Issued  in  exchange  for  series  dated 

June  1,  1961 

Issued  for  cash 

Maturing  May  31,  1962: 
Issued  in  exchange  for  series  dated 

Junel,  1961 

Issued  for  cash 

U.S.  savings  bonds:  * 

Series  E-1941 

Series  E-1942 

Series  E-1943 

Series  E-1944 

Series  E-1945 

Series  E-1946 

Series  E-1947 

Series  E-1948 

Series  E-1949 

Series  E-1950. 

Series  E-1951 

Series  E-1952  (January  to  April 

Series  E-1952  (May  to  December) 

Series  E-1953 

Series  E-1954 

Series  E-1955 

Series  E-1956 

Series  E-1957  (January) 

Series  E-1957  (February  to  December).- 

Series  E-1958 

Series  E-1959  (January  to  May) 

Series  E-1959  (June  to  December) 

Series  E-1960 

Series  E-1961 

Unclassified  sales  and  redemptions 

Series  F-1949 

Series  F-1950 

Series  F-1951 

Series  F-1952 

Unclassified  redemptions 

Series  G-1949 

Series  G-1950 

Series  Q-1951 

Series  G-1952 

Unclassified  redemptions 

Series  H-1952 

Series  H-1953 

Series  H-1954 

Series  H-1955 

Series  H-1956 

Series  H-1957  (January) 

Series  H-1957  (February  to  December) _. 

Series  H-1958 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  H-1960 

Series  H-1961 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 

Series  K-1954.. 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Treasury  bonds  of  1968  (additional  issue)  — 
Adjustments  of  issues  ' 


Rate  of 
interest " 


Percent 
2.606 


2.807 


7  3.  223 

7  3.  252 

^  3.  276 

'  3.  298 

'  3.  316 

7  3.  327 

^  3.  346 

^  3.  366 

7  3.  344 

'  3.  347 

7  3. 378 

3.400 

7  3.  451 

7  3.  468 

7  3.  497 

7  3.  522 

7  3.546 

3.560 

7  3.  653 

7  3.  690 

3.730 

3.750 

3.750 

3.750 


Amount  issued  ' 


2.53 
2.53 
2.53 
2.53 


2.50 
2.50 
2.50 
2.50 


7  3. 123 

7  3. 161 

7  3.  211 

7  3.  258 

7  3.  317 

3.360 

7  3.  626 

7  3.  679 

3.720 

3.750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


3^ 


$75, 243, 000.  00 
1, 024, 719, 000. 00 


34, 477, 000. 00 
565,  594, 000. 00 


1,  265, 

4,  202, 
4, 434, 

5,  767. 
10,  731, 

3,  261, 
2, 981, 

3,  557, 
3, 988, 
3, 940, 

4,  636, 
-15, 

4, 671, 
5, 357, 

4,  902, 
5. 357, 
5, 352, 

5, 979, 
5, 792, 

2,  758, 
3, 360, 

5,  523, 
290,  472, 

3, 763, 
113, 
446, 
166, 


639,  52 
443.  99 
519.  61 
840.  45 
615.  03 
217.  49 
008.  93 
166.  74 
535.  51 
971.  64 
259,  28 
922. 49 
006.  28 
507.  26 
048. 03 
663.  41 
521.  86 
751.  04 
814.  50 
003.  32 
943.  69 
919.  65 
117.83 
728.  21 
800.  00 
732.  00 
095.  59 
213.  73 
-48.  65 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


-2,305,500.00 

90,  779, 000. 00 

8-6,362,500.00 

212,  800.  50 

203,  233.  45 

398, 843.  94 

307, 187.  02 

189, 178.  49 

-148.83 


3, 000, 000. 00 


$4, 010, 
9,013, 
14, 379, 
16,  402, 
13,  761, 
7. 836, 

8,  528, 

9,  588, 
10,816, 
11,212, 
17, 337, 

2,  203, 
4,  706, 

7,  882, 
8, 429, 
9, 979, 
9, 834. 

818, 
10,  585, 
13,381, 
6, 133, 
10, 465, 
28, 006, 
84, 646, 

8,  246, 
5, 139, 

805, 

309, 
60, 

211, 

26,  059, 

1, 793, 

1, 483, 

337, 
2,  226, 

336, 
1, 057, 

1,  748, 

2,  714, 
2, 145, 

149, 

1,  649, 

2,  766, 
1, 116, 

872, 

2,  853, 

1,  556, 

237, 

247, 

585, 

1,101 

629 

496, 

49 

8-107 

508 

920 

2,015, 

1,  434 

1, 039, 

95, 

8-4, 


830.  89 
957. 17 
504.  04 
739.  25 
982  02 
657.  26 

998.  50 
701.  89 
490.  41 
209. 48 
392.  54 
111.14 
549.27 
017.  25 
990.  25 
172. 11 
815.  85 
580.  80 
838.  58 
214.  63 
731. 14 
874.  91 
328.  96 
982.  05 

999.  94 
373.  00 
943.  80 
768.  72 
438.  25 
093.  62 
400. 00 
300.  00 
500.  00 
900.  00 
200. 00 
500.  00 
000.  00 
000.  00 
500.  00 
000.  00 
500.  00 
500.  00 
500.  00 
000.  00 
500.  00 
000.  00 
000.  00 
000.  00 

,  021.  56 
254. 35 

,  285.  56 
746.  06 

,  025.  46 
470.  20 

,  117.  97 
000.  00 

,  500.  00 
500.  00 
000.  00 
500. 00 

,  500.  00 

,  300. 00 


Footnotes  at  end  of  table. 


702   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  40. — Issues,  maturities,  and  redemptions  of  interest-tearing  puMic  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest ' 

Amount  issued ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  * 

1961 
Nov.  30 

Treasury  bonds  of  1980  (additional  issue) 

Adjustments  of  issues  ' . 

Percent 
3^ 

$2,825,000.00 

30 

Treasury  bonds  of  1990  (additional  issue) 

Adjustments  of  issues  '        ..  .-  

m 

1,  570,  500. 00 

30 

Treasury  bonds  of  1998  (additional  issue) 

Adjustments  of  issues  ' 

3H 

1, 152, 000. 00 

59,000.00 

347, 000.  00 

30 

Depositary  bonds,  First  Series  

2.00 
2.00 

2% 

$3,  551, 000.  00 

30 

Treasury  bonds,  R.E.A.  Series 

30 

Treasury    bonds,    Investment    Series    B- 
1975-80 

Redeemed    in    exchange    for    Treasury 
notes,  Series  EA-1966        -  .         .... 

367, 000. 00 

30 

Treasury  bonds,  Investment  Series  B-1975- 
80 --- 

2H 

Redeemed    in    exchange    for    Treasury 
notes.  Series  E  0-1966 

36,  667, 000.  00 

30 

Treasury  notes,  Series  EA-1966 — . 

m 
m 

367, 000.  00 
36, 667, 000. 00 

30 

Treasury  notes.  Series  E  0-1966    

30 

M  iscellaneous 

26, 848,  500. 00 

Total  November 

16, 949, 425, 708.  02 

16,381,474,472.94 

U.S.  savings  bonds: 
Series  F-1949: 
Redeemable  for  cash      . . 

2.53 
2.50 

«  2. 483 

Dec.    1 

32, 395, 996.  00 

1 

Series  G-1949: 
Redeemable  for  cash 

127, 033, 500. 00 

7 

Treasury  bills: 

Regular  weekly: 
Issued  June  8, 1961: 
Redeemed    in    exchange    for    series 
dated  Dec.  7, 1961,  due  Mar.  8, 1962. 
Redeemed    in    exchange    for   series 
dated  Dec.  7,  1961,  due  June  7, 1962. 
Redeemable  for  cash 

87,191,000.00 

42,  517, 000. 00 

1, 579,  718, 000. 00 

7 

Maturing  Mar.  8,  1962: 
Issued  in  exchange  for  series  dated 
June  8,  1961 

2.624 

87,191,000.00 
1,015,232,000.00 

42,517,000.00 
558,129,000.00 

Issued  for  cash 

7 

Maturing  June  7,  1962: 
Issued  in  exchange  for  series  dated 
June  8,  1961 

2.867 

Issued  for  cash 

14 

Issued  June  15,  1961: 
Redeemed    in    exchange    for    series 
dated  Dec.  14,  1961,  due  Mar.  15, 
1962 

»  2.  373 

92, 229, 000. 00 

Redeemed    in    exchange    for    series 
dated  Dec.  14,  1961,  due  June  14, 
1962 

39, 477, 000. 00 

Redeemable  for  cash 

1, 569, 670, 000. 00 

14 

Maturing  March  15,  1962: 
Issued  in  exchange  for  series  dated 
June  15,  1961 

2.579 

92,  229. 000. 00 
1, 008,  721, 000. 00 

39,477,000.00 
561,341,000.00 

Issued  for  cash  . 

14 

Maturing  June  14,  1962: 
Issued  in  exchange  for  series  dated 
June  15,  1961  .                ... 

2.874 

Issued  for  cash..    .  . 

21 

Issued  June  23, 1961: 
Redeemed    in    exchange    for    series 
dated  Dec.  21,  1961,  due  Mar.  22, 
1962 

»  2. 339 

119,205,000.00 

Redeemed    in    exchange    for   series 
dated  Dec.  21,  1961,  due  June  21, 
1962 

53,792,000.00 

Redeemable  for  cash 

1, 527, 539, 000. 00 

21 

Maturing  March  22,  1962: 
Issued  in  exchange  for  series  dated 
June  23,  1961 

2.670 

119, 205, 000. 00 
985, 471, 000. 00 

53,792,000.00 
547,803,000.00 

Issued  (or  cash                                .    . 

21 

Maturing  June  21,  1962: 
Issued  in  exchange  for  series  dated 
June  23, 1961 

2.915 

Issued  for  cash 

Footnotes  at  end  of  table. 


TABLES 


703 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-l)earlng  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  Issued ' 

Amount  ma- 
tured or  called  or 
redeemed  Drior 

to  maturity  ♦ 

1961 
Dec.  28 

Treasury  bills— Continued 

Regular  weekly— Continued 
Issued  June  29, 1961: 
Redeemed    in    exchange    for   series 
dated  Dec.  28,  1961,  due  Mar.  29, 
1962            

Percent 
s  2. 285 

$82, 203, 000. 00 

Redeemed    in    exchange    for   series 
dated  Dec.  28,  1961,  due  June  28, 
1962 

43, 485, 000. 00 

Redeemable  for  cash 

1,  574, 759, 000. 00 

28 

Maturing  March  29,  1962: 
Issued  in  exchange  for  series  dated 
June  29,  1961 

2.594 

$82,203,000.00 
1,019,565,000.00 

43,485,000.00 
557, 148, 000. 00 

Issued  for  cash 

28 

Maturing  June  28,  1962: 
Issued  in  exchange  for  series  dated 
June  29,  1961           

2.845 

Issued  for  cash 

29 

Certificates  of  indebtedness,  foreign  series, 
maturing  Dee.  29,  1961     -        -. . 

2.55 
3» 

125, 000, 000. 00 

31 

Treasury  notes.   Series  D-1963   (additional 
issue)        

Adjustments  of  issues  ^           -- 

-36, 000. 00 

31 

Treasury  notes,  Series  E-1963 

3^4 

Adjustment  of  exchange  issues  (Treasury 
bonds  of  1961)  »            

81,000.00 

31 

Treasury  bonds  of  1966  (additional  issue): 

Adjustments  of  issues  in  exchange  for 
254%  Treasury  bonds  of  1961 ' 

ZVi 

964,000.00 

31 

Treasury  bonds  of  1974  (additional  issue) 

Adjustments  of  issues  in  exchange  for 
2}'^%  Treasury  bonds  of  1961 » 

Zl^ 

4,793,500.00 

31 

Treasury  bonds  of  1980  (additional  issue) 

Adjustments  of  issues  in  exchange  for 
2i<)%  Treasury  bonds  of  1965-70  ' 

ZVi 

-11,000.00 

31 

Treasury  bonds  of  1998  (additional  issue): 

Adjustments  of  issues  in  exchange  for 
2V4%  Treasury  bonds  of  1966-71 ' 

ZVi 

-3,000.00 

300, 288, 000. 00 
243, 500. 00 

3,702,441.55 

5,370,768.10 

4, 911, 191.  46 

13, 425, 675. 41 

10,883,766.99 

4, 316, 570. 16 

3, 852, 524. 91 

4,798,281.50 

5, 436, 782. 44 

4, 642, 243. 61 

5, 728, 156.  53 

-13, 490. 15 

5,992,070.04 

6,  510, 318. 18 

6, 231, 424. 63 

6,618,018.55 

6, 155, 054. 73 

-754. 56 

7, 164, 770. 73 

6, 719, 873. 38 

-28, 932. 92 

7, 135, 645.  25 

6, 301, 251. 65 

280, 586, 061. 65 

4, 230, 142.  26 

592,  277. 14 

187,958.29 

-147.35 

31 

Treasury  bonds  of  1968  (additional  issue) 

Issued    in    exchange   for    U.S.   savings 
bond^   Series  F  and  G 

3Ji 

I<5mip,(i  for  cash                                     

31 

U.S.  savings  bonds: ' 

Series  E-1941         -.- 

7  3.  223 

'  3.  252 

'  3. 276 

'  3.  298 

'  3.  316 

'  3. 327 

'  3.  346 

'  3. 366 

'3.344 

7  3. 347 

7  3. 378 

3.400 

'  3.  451 

'  3. 468 

'  3. 497 

'  3.  522 

'  3.  546 

3.560 

'  3.  653 

1  3.  690 

3.730 

3.750 

3.750 

3.750 

3,  519, 686. 13 

31 

Series  E-1942    

7,638,970.52 

31 

Series  E-1943                 

11,927,853.06 

31 

Series  E-1944 --- 

14,099,716.24 

31 

Series  E-1945    - 

12, 679, 357. 19 

31 

Series  E-1946                 -— 

6, 662, 202. 01 

31 

Series  E-1947    -  - 

7, 078, 500. 12 

31 

Series  E-1948    

7, 979, 367. 26 

31 

Series  E-1949                     - 

8, 748, 768. 47 

31 

Series  E-1950          . 

9, 449, 466. 45 

31 

Series  E-1951    

14, 844, 033. 49 

31 

Series  E-1952  (January  to  April) 

1,793,273.09 

31 
31 

Series  E-1952  (May  to  December) 

Series  E-1953    

3,810,327.71 
6, 661, 518. 76 

31 

Series  E-1954                    

7,077,124.16 

31 

Series  E-1955       -- 

7, 935, 857. 45 

31 

Series  E-1956    . 

8,118,706.27 

31 

Series  E-1957  (January) 

681, 601. 56 

31 
31 

Series  E-1957  (February  to  December)... 

8,908,893.03 
11,976,124.41 

31 

Series  E-1959  (January  to  May) 

5,538,341.77 

31 
31 

Series  E-1959  (June  to  December) 

Series  E-1960    

9, 115, 403. 53 
24, 182, 229. 75 

31 

Series  E-1961 

89, 911,  556. 87 

31 

Unclassified  sales  and  redemptions 

49, 173, 462. 14 

31 

Series  F-1950          . 

2.53 
2.53 
2.53 

51, 010. 10 

31 

Series  F-1951 

52, 156. 12 

31 

Series  F-1952              

694. 10 

31 

51,286,554.08 

31 

Series  Q-1950 

2.50 

108, 800. 00 

Footnotes  at  end  of  table. 


704   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962^ — Continued 


Date 

Security 

Rate  of 
interest  ^ 

Amount  issued  ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 

1901 
Dec.  31 

U.S.  savings  bonds  6— Continued 
Series  G-1951 

Percent 
2.50 
2.50 

S96  800  00 

31 

Series  G-1952.  . 

6,800.00 
275, 417, 500.  00 

31 

Unclassified  redemptions 

31 

Series  H-1952     

7  3. 123 

'  3. 161 

7  3.211 

7  3.  258 

7  3.317 

3.360 

7  3,  626 

7  3,  679 

3.  720 

3.750 

3.750 

3.750 

17  500  00 

31 

Series  H-1953 

23,500  00 

31 

Series  H-1954     

44  500  00 

31 

Series  H-1955-   

76  500  00 

31 

Series  n-1956 

93,000  00 

31 

Series  H-1957  (January) 

16  000  00 

31 

Series  11-1957  (February  to  December)... 
Series  H-1958  ..   

69  500  00 

31 

81  000  00 

31 

Series  H-1959  (January  to  May) 

52  500  00 

31 

Series  H-1959  (June  to  December) 

Series  H-1960 

56,000  00 

31 

117  000  00 

31 

Series  11-1961.. 

$75, 142,  000. 00 
350, 000. 00 
207,  877. 35 
282, 191.  00 
497, 932. 95 
326, 495. 46 
232, 693.  83 
-459.  86 

126  500  00 

31 

Unclassified  sales  and  redemptions 

18,  818, 500.  00 

31 

Series  J-1952 

2.76 
2.76 
2.76 
2.76 
2,76 
2.76 

3,601.35 
27,409.50 
20  160  15 

31 

Series  .1-1953 

31 

Series  J-1954 

31 

Series  J-1955 

45  453  42 

31 

Series  J-1956  . 

44  187  50 

31 

Series  J-1957 

185  020  50 

31 

Unclassified  redemptions 

3,032.569  55 

31 

Series  K-1952       

2.76 
2.76 
2.76 
2.76 
2.76 
2.76 

53  000  00 

31 

Series  K-1953. . .   

31  000  00 

31 

Series  K-1954 

270,500  00 

31 

Series  K-1955 

181  000  00 

31 

Series  K-1956..   

65  000  00 

31 

Series  K-1957 

11  500  00 

31 

Unclassified  redemptions 

5, 495,  500.  00 

31 

Depositary  bonds,  First  Series _ 

2.00 
2.00 

03^ 

1,201.000.00 
664, 000.  00 

886  000  00 

31 
31 

Treasury  bonds,  R.E.A.  Series 

Treasury  bonds,  Investment  Series  B-1975- 
80 

25,  000,  00 

Redeemed    in    exchange    for    Treasury 
notes,  Series  EO-1966 

38,  720  000  00 

31 

Treasury  notes.  Series  EO-1966 

114 

38,  720, 000.  00 

31 

Miscellaneous 

34. 713,  600.  00 

Total  December 

7. 648, 902,  674. 89 

7,866, 149,554. 11 

Certificates   of    indebtedness,    foreign    cur- 
rency series,  maturing  Apr.  4,  1962..     .. 

1.25 
1.25 

5  2.  355 

1962 
Jan.      4 

23, 150, 000. 00 

4 

Certificates   of    indebtedness,    foreign    cur- 
rency series,  maturing  Jan.  4,  1962.      .  . 

23, 145,  000  00 

4 

Treasury  bills: 

Regular  weekly: 

Issued  July  6,  1961: 

Redeemed    in    exchange    for    series 

dated  Jan.  4,  1962  due  Apr.  5,  1962. 

Redeemed    in    exchange    for    series 

dated  Jan.  4,  1962,  due  July  5,  1962. 

Redeemable  for  cash 

79, 936,  000.  00 

46, 144, 000.  00 

1,  574, 128.  000.  00 

4 

Maturing  Apr.  5,  1962: 
Issued  in  exchange  for  series  dated 
.Tuly  6,  1961. 

2.703 

79,  930. 000.  00 
1,  020, 903, 000.  00 

46.144,000.00 
554. 320, 000. 00 

Issued  for  cash ..... 

4 

Maturing  July  5,  1962: 
Issued  in  exchange  for  series  dated 
July  6,  1961 

2.941 

Issued  for  cash. 

11 

Issued  July  13,  1961: 
Redeemed    in    exchange    for    series 
dated  Jan.  11,  1962,  due  Apr.  12, 
1962 

5  2.  418 

12,  048, 000.  00 

Redeemed    in    exchange    for    series 
dated  Jan.  11,  1962,  due  July  12, 
1962... 

2,  579, 000. 00 

Redeemable  for  cash 

1,685,946,000.00 

11 

Maturing  Apr.  12,  1962: 
Issued  in  exchange  for  series  dated 
July  13,  1961. 

2.824 

12,  048,  000.  00 
1.088.800.000.00 

Issued  for  cash 

Footnotes  at  end  of  table. 


TABLES 


705 


Table  40.— Issues,  maturities,  and  redemptions  of  interest-tearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued  3 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  < 

1963 
Jan.    11 

Treasury  bills— Continued 

Regular  weeklv— Continued 
Maturing  July  12,  1962: 
Issued  in  exchange  for  series  dated 
Julv  13  1961 

Percent 
3.073 

$2,  579,  000. 00 
597, 360, 000. 00 

Tssiiftd  for  cash 

15 

other: 
Issued  Jan.  15,  1961: 
Redeemed    in    exchange    for   series 
dated  Jan.  15,  1962,  due  Jan.  15, 
1963 

2.679 

$138,  689,  000. 00 

Redeemable  for  cash.     

1, 362, 983, 000.  00 

15 

Maturing  Jan.  15,  1963: 
Issued  in  exchange  for  series  dated 
Jan  15  1961 

3.366 

138,689,000.00 
1,862,566,000.00 

Tssnpd  for  cash 

18 

Regular  weekly: 
Issued  July  20,  1961: 
Redeemed    in    exchange    for    series 
dated  Jan.  18,  1962,  due  Apr.  19, 
1962 

6  2. 377 

121, 967, 000. 00 

Redeemed    in    exchange    for    series 
dated  Jan.  18,  1962,  due  July  19, 
1962 

53,747,000.00 

"Redeemable  for  cash 

1, 524, 382, 000. 00 

18 

Maturing  Apr.  19,  1962: 
Issued  in  exchange  for  series  dated 
Julv  20  1961 

2.770 

121, 967, 000. 00 
979, 730, 000.  00 

53,747,000.00 
546, 707, 000. 00 

Tssnpd  for  cash 

18 

Maturing  July  19,  1962: 
Issued  in  exchange  for  series  dated 
Julv  20  1961 

2.970 

Tssnpd  for  cash 

91 

Treasury  bonds  of  1969  (additional  issue) 

4.00 

1,114,332,500.00 

25 

Treasury  bills: 

Regular  weekly: 
Issued  July  27,  1961: 
Redeemed    in    exchange    for    series 
dated  Jan.  25,  1962,  due  Apr.  26, 
1962 

5  2.  358 

138, 790, 000. 00 

Redeemed    in    exchange    for    series 
dated  Jan.  25,  1962,  due  July  26, 
1962 

51.  561, 000.  00 

1,511,010,000.00 

25 

Maturing  Apr.  26,  1962: 
Issued  in  exchange  for  series  dated 
Julv  27   1961 

2.688 

138,790,000.00 
962,801,000.00 

51,561,000.00 
548,460,000.00 

24,978,250.00 

T«;<5npd  for  cash 

25 

Maturing  July  26,  1962: 
Issued  in  exchange  for  series  dated 
Tulv  27   1961 

2.875 

Ts^iipd  for  cash 

26 

Certificates    of    indebtedness,    foreign    cur- 
rency series,  maturing  Apr.  26,  1962 

Certificates    of    indebtedness,    foreign    cur- 
rency series,  maturing  Jan.  31,  1962 

Treasurv  notes   Series  E-1963 

2.70 
1.25 

31 

23,140,000.00 

31 

A  diii<;tmpnt<;  of  is^iups  ^ 

-794,000.00 

31 

Treasury  bonds  of  1966  (additional  Issue) 

33/i 

-1,132,500.00 

31 

Treasury  bonds  of  1974  (additional  issue) 

374 

-4, 818, 500. 00 

31 

Treasury  bonds  of  1980  (additional  issue) 

A  diiiQf  TTiPTits;  of  i^^miPS  9 

■iVi 

-2.563,000.00 

31 

Treasury  bonds  of  1990  (additional  issue) 

■AVi 

-1,368,500.00 

31 

Treasury  bonds  of  1998  (additional  issue) 

ZVi 

-18,500.00 

31 

Treasury  bonds  of  1968  (additional  issue) 

Issued    in    exchange    for    U.S.    savings 

Z% 

19, 838, 000. 00 
20, 500. 00 

Issued  for  cash 

Footnotes  at  end  of  table. 


661496—63- 


-46 


706   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


I 


Date 


Security 


Rate  of 
interest ' 


Amount  issued ' 


Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  * 


1962 
Jan.  31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 


31 
31 


U.S.  savings  bonds:' 

Series  E-1941 

Series  E-1942 

Series  E-1943 -- 

Series  E-1944 - 

Series  E-1945 - 

Series  E-1946- 

Series  E-1947 

Series  E-1948 

Series  E-1949 - 

Series  E-1950.... 

Series  E-1951 

Series  E-1952  (January  to  April) 

Series  E-1952  (May  to  December) 

Series  E-1953_ 

Series  E-19o4.... 

Series  E-1955 

Series  E-1956 

Series  E-1957  (January) 

Series  E-1957  (February  to  December)... 

Series  E-1958 

Series  E-1959  (January  to  May) 

Series  E-1959  (June  to  December)... 

Series  E-1960 

Series  E-1961 

Unclassified  sales  and  redemptions -. 

Series  F-1950 

Series  F-1951 

Series  F-1952 

Unclassified  redemptions 

Series  Q-1950 .- 

Series  G-1951.. 

Series  G-1952--_ 

Unclassified  redemptions 

Series  H-1952. 

Series  H-1953 

Series  H-1954 

Series  H-1955 

Series  H-1956 -- 

Series  H-1957  (January) 

Series  H-1957  (February  to  December)... 

Series  H-1958-... 

Series  H-1959  (January  to  May). 

Series  H-1959  (June  to  December) 

Series  H-1960 

Series  H-1961 -. 

Series  H-1962 

Unclassified  sales  and  redemptions 

Series  J-1952.. 

Series  J-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956. 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952. 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Depositary  bonds,  First  Series 

Treasury  bonds,  R.E.A.  Series. 

Tre;jsury  bonds.  Investment  Series  B-1975-80 

Redeemed    in    exchange    for    Treasury 

notes,  Series  EO-1966 

Treasury  notes,  Series  EO-1966. 

Miscellaneous—- 


Percent 

'  3.  223 

'  3. 252 

'3.276 

'  3. 298 

'  3. 316 

'  3. 327 

'  3. 346 

'  3. 366 

'3.344 

'  3.  347 

'  3. 378 

3.400 

'  3. 451 

'  3. 468 

'  3. 497 

'  3. 522 

'  3.  546 

3.560 

'  3. 653 

'  3.  690 

3.730 

3.750 

3.750 

3.750 


2.53 
2.53 
2.53 


2.50 
2.50 
2.50 


'  3. 123 

'  3. 161 

'3.211 

'3.258 

'3.317 

3.360 

'  3. 626 

'  3. 679 

3.720 

3.750 

3.750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.00 
2.00 

2J4 


m 


$697, 229. 19 

7, 158, 321. 27 

6, 115, 737. 98 

10, 621, 974. 67 

5, 446, 126. 38 

4, 344, 647. 37 

5, 128,  710. 45 

5, 247, 166. 42 

5, 760, 175.  50 

5,911,842.46 

4, 851, 416. 02 

4,  253, 432. 95 

2, 700, 893. 13 

7, 304, 101.  70 

7, 211, 870.  24 

7, 315,  554. 96 

7, 213, 576.  27 

3, 099,  708. 50 

3, 351, 096. 88 

7,  546, 455. 46 

4, 048, 162.  53 

3,  212,  533. 03 

7,  792, 084. 25 

314, 249, 492.  56 

71, 228,  528. 04 

473, 699.  23 

277, 238.  56 

139, 822. 88 


71,624,500.00 

25.659,500.00 

27, 725, 000. 00 

83, 609. 31 

225,  549. 10 

427, 425. 33 

419, 606.  73 

352, 231.  73 

97, 642. 80 


875, 000. 00 
971, 000. 00 


$7, 544, 842. 48 
9, 925, 441. 91 
15, 097, 758. 03 
18, 861, 442. 22 
16,  381, 799. 65 

8. 607. 764. 91 
9, 195, 259. 38 

10, 665, 414. 11 

11, 065, 492. 74 

11, 972, 905. 86 

20, 853, 568. 37 

2, 106, 585. 65 

4, 849, 116. 89 

7,  591, 295. 61 

8. 251. 862. 92 
9, 533, 265. 74 
9, 023, 100. 89 

709, 159.  76 

9, 844, 964.  50 

12, 812, 849.  79 

5, 722, 650. 01 

9, 959, 937.  20 

26, 494, 381. 19 

114, 185,  566. 66 

130, 806, 207.  50 

48,  761, 626. 30 

408,811.04 

48, 899. 00 

8-39,209,184.08 

272,191,700.00 

1, 493, 400. 00 

231,800.00 

S-211, 194, 300. 00 

420,  500. 00 

1, 103,  500. 00 

1, 950, 000. 00 

2, 822, 500. 00 

2, 170, 500. 00 

101, 000. 00 

1, 845, 500. 00 

2, 889,  500. 00 

1, 097,  500. 00 

1, 106, 500. 00 

2, 527, 000. 00 

1, 569, 500. 00 


119, 000. 00 

236, 510. 82 

750, 377. 95 

664, 767. 05 

854, 805. 34 

580, 022. 10 

168, 076. 66 

186, 166. 97 

487, 000. 00 

674,  500. 00 

2, 408, 500. 00 

1,  555, 000. 00 

923, 000. 00 

148,  500. 00 

3, 305, 500. 00 

6, 178, 000. 00 


48,792,000.00 


48,  792, 000. 00 
'28,"940,"500.'6o 


Total  January. 


10, 668, 686, 913. 88 


9, 031, 566, 113. 12 


Footnotes  at  end  of  table. 


TABLES 


707 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 
to  maturity  * 

1962 
Feb.     1 

Treasury  bills: 

Regular  weekly: 
Issued  Aug.  3,  1961: 
Redeemed    in    exchange    for   series 
dated  Feb.  1, 1962,  due  May  3, 1962.. 
Redeemed    in    exchange    for    series 
dated  Feb.  1, 1962,  due  Aug.  2, 1962.. 

Percent 
»  2. 377 

$186, 125, 000. 00 

75, 839, 000. 00 

Redeemable  for  cash 

1,438,271,000.00 

1 

Maturing  May  3,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  3,  1961 

2.706 

$186,125,000.00 
1,014,959,000.00 

75, 839, 000. 00 
524, 471, 000. 00 

Issued  for  cash        . 

1 

Maturing  Aug.  2,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  3,  1961 - 

2.939 

Issued  for  cash 

8 

Issued  Aug.  10,  1961: 
Redeemed    in    exchange    for    series 
dated  Feb.  8,  1962,  due  May  10, 
1962 

6  2.  439 

182, 160, 000. 00 

Redeemed    in    exchange    for    series 
dated  Feb.  8, 1962,  due  Aug.  9, 1962.. 

77,772,000.00 

Redeemable  for  cash 

1, 545, 156, 000. 00 

8 

Maturing  May  10, 1962: 
Issued  in  exchange  for  series  dated 
Aug.  10,  1961    . 

2.695 

182,160,000.00 
1, 018, 010, 000. 00 

77, 772, 000. 00 
522,308,000.00 

Issued  for  cash . .       . .      

8 

Maturing  Aug.  9,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  10,  1961                

2.898 

Issued  for  cash 

8 

Certificates   of  indebtedness,  foreign  series, 
maturing  Feb.  8,  1962.. 

2.35 
2.70 

450,000,000.00 

8 

Certificates  of  indebtedness,  foreign  series, 
maturing  May  8,  1962 

450,000,000.00 

15 

Certificates  of  indebtedness,  Series  A-1963 

Issued  in  exchange  for  Treasury  notes: 
Series  A-1962 

282,  236, 000. 00 

454, 003, 000. 00 

5, 759, 730, 000. 00 

370,305,000.00 

Series  D-1962 

Series  F-1962  . 

Series  EA-1962 

15 

Treasury  notes.  Series  A-1966  . 

4.00 

Issued  in  exchange  for  Treasury  notes: 
Series  A-1962    ..  ..                  

303, 222, 000. 00 

855, 343, 000. 00 

3, 195, 893, 000. 00 

94,958,000.00 

Series  D-1962 

Series  F-1962 

Series  EA-1962. 

15 

Treasury  notes.  Series  A-1962 

3^ 

Redeemed  in  exchange  for: 
Treasury  notes,  Series  A-1966 

303,222,000.00 

Certificates  of  indebtedness,  Series  A- 
1963 

282, 236, 000. 00 

Redeemable  for  cash . . 

61,599,000.00 

15 

Treasury  notes.  Series  D-1962 

4.00 

Redeemed  in  exchange  for: 
Treasury  notes,  Series  A-1966 

855,343,000.00 

Certificates  of  indebtedness,  Series  A- 
1963 

454,003,000.00 

Redeemable  for  cash     .       .. 

125,640,000.00 

Treasury  notes.  Series  F-1962 

3H 

15 

Redeemed  in  exchange  for: 
Treasury  notes,  Series  A-1966 

3,195,893,000.00 

Certificates  of  indebtedness,  Series  A- 
1963 

5, 759, 730, 000. 00 

Redeemable  for  cash     .           _ 

142,420,000.00 

15 

Trea.surv  notes.  Series  EA-1962 

IH 

Redeemed  in  exchange  for: 

Treasury  notes,  Series  A-1966 

94,958,000.00 

Certificates  of  indebtedness,    Series  A- 
1963 

370,305,000.00 

Footnotes  at  end  of  table. 


708   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 
securities,  excluding  special  issues,  July  19G1-June  1962^ — Continued 


% 


Date 

Security- 

Rate  of 

interest  2 

Amount  issued  ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  < 

196S 
Feb.  15 

Treasury  bills: 

Regular  weekly: 
Issued  Aug.  17,  1961: 
Redeemed    in    exchange    for    series 
dated  Feb.  15,  1962,  due  May  17, 
1962  .    

Percent 
6  2. 604 

$87,499,000  00 

Redeemed    in    e.xchange    for    series 
dated  Feb.  15,  1962,  due  Aug.  16, 
1962 

2, 306, 000. 00 

Redeemable  for  cash 

1,610,425,000.00 

15 

Maturing  May  17,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  17,  1961 

2.759 

$87, 499, 000. 00 
1,112,802,000.00 

2,306,000.00 
598,117,000.00 

Issued  for  cash .    ..     

15 

Maturing  Aug.  16,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  17,  1961 

2.952 

Issued  for  cash    .  _  _      

23 

Issued  Aug.  24,  1961: 
Redeemed    in    exchange    for    scries 
dated  Feb.  23,  1962,  due  May  24, 
1962                        

5  2.  627 

106,735,000.00 
43,572,000  00 

Redeemed    in    exchange    for    series 
dated  Feb.  23,  1962,  due  Aug.  23, 
1902                                               

Redeemable  for  cash     .          .     

1  550,276,000.00 

23 

Maturing  May  24,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  24,  1961 

2.849 

106,  735, 000. 00 
1, 094, 920, 000. 00 

43,572,000.00 
557,365,000.00 

Issued  for  cash 

23 

Maturing  Aug.  23,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  24,  1961 

3.031 

Issued  for  cash 

28 

Treasury  notes.  Series  H-1962 

3K4 

Adjustments  of  issues  ' 

-10,000.00 

28 

Treasury  bonds  of  1968  (additional  issue) 

Adjustments  of  issues  ' 

m 

6,000.00 

28 

Treasury  bonds  of  1969  (additional  issue) 

Adjustments  of  issues  '  -  

4.00 

3,000.00 

473, 389. 39 
4,164,307.84 
4, 715, 175. 96 
7, 848, 980. 15 
3,883,188.84 
3,335.072.66 
3,594,411.08 
3, 876,  710.  25 
4,387,790.97 
4,353,321.23 
3,838,832.24 
3, 098, 390.  34 
2,  455, 334.  74 
6,  712,  742.  37 
5,816,683.75 
5, 805, 358.  85 
5,861,317.12 
-7.44 

5,  788, 482.  38 
6, 066.  217.  65 
3, 198,  584.  61 
2, 695, 404.  28 

6,  522,  712. 12 
226, 122,  980.  46 

54,027,825.00 

27,  749,  950.  73 

916.  044.  05 

192,011.77 

97, 194.  38 

28 

U.S.  savings  bonds: ' 

Series  E-1941 

'3.223 

'  3.  252 

'  3. 276 

'  3. 298 

'3.316 

'3.327 

'  3. 346 

'3.366 

'  3. 344 

'  3. 347 

'  3. 378 

3.400 

'  3. 451 

'3.468 

'3.497 

'3.522 

'3.646 

3.660 

'  3.  653 

'  3.  690 

3.730 

3.750 

3.750 

3.750 

3.750 

8, 176, 394.  21 

28 

Series  E-1942                             

22, 690, 310. 43 

28 

Series  E-1943 

23,  522,  545. 17 

28 

Series  E-1944    

29,887,017.11 

28 

Series  E-1945 

25, 470, 446.  78 

28 

Series  E-194() 

13, 876, 479.  51 

28 

Series  E-1947    .             

15, 406, 126. 24 

28 

Series  E-1948    

17, 822, 332. 99 

28 

Series  E-1949 

18, 719, 479. 39 

28 

Series  E-19.50 

19  307,968.03 

28 

Series  E-1951      

26,  987,  389.  40 

28 

Series  E-1952  (.lanuary  to  April) 

11,086,698.51 

28 
28 

Series  E-1952  (May  to  December) 

Series  E-1953 

7,  653, 682.  21 
11, 832, 146.  51 

28 

Series  E-1954                                        

12.  520,  553.  23 

28 

Series  E-1955 

13,  814,  701.  97 

28 
28 

Series  E-1956 

Series  E-1957  (January)        . 

13, 323, 834. 83 
1,  226,  578.  61 

28 
28 
28 
28 
28 

Series  E-1957  (February  to  December).   . 

Series  E-1958 

Series  E-1959  (.January  to  May) 

Scries  E-1959  (June  to  December) 

Series  E-196().    

12, 175, 705.  52 

13,306,341.93 

5,  578,  506.  08 

8, 489, 408.  29 

21,031,727.36 

28 
28 
28 

Series  E-1961... 

Series  E-1962 

Unclassified  sales  and  redemptions 

84, 159, 060.  73 

8,  793.  75 

8-60,505,308.71 

28 

Series  F-1950 

2.53 
2.53 
2.53 

11,570,452.65 

28 
28 
28 

Series  F-1951 

Series  F-19.52.. 

Unclassified  redem ptions 

391,615.06 

42, 205.  97 

s  -8,  261, 149.  30 

28 

Series  O-1950  . 

2.50 
2.50 
2.50 

69,  614,  200.  00 

28 

Series  0-1951 

1, 968, 400.  00 

28 

Series  a-1952 

Unclassified  redemptions 

482, 000.  00 

28 

8-42,869.100.00 

Footnotes  at  end  of  table. 


TABLES 


709 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-'bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^- — Continued 


Date 


Security 


Rate  of 
interest  2 


Amount  issued  ^ 


Amount  ma- 
tm-ed  or  called  or 
redeemed  prior 

to  maturity  < 


196S 
Feb.  28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 
28 


28 
28 


Mar.    1 

1 
1 


U.S.  savines  bonds  8— Continued 

Series  H-1952 

Series  H-1953 

Series  H-1954 

Series  H-1955 

Series  H-1956 

Series  H-1957  (January) 

Series  H-1957  (February  to  December j._. 

Series  H-1958 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December). __ 

Series  H-1960 

Series  H-1961 

Series  H-1962 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Depository  bonds,  First  Series 

Treasury  bonds,  R.E.A.  Series 

Treasury  bonds,  Investment  Series  B-1975- 
80- _.. 


Percent 

7  3. 123 

^  3. 161 

^  3.  211 

^  3.  258 

7  3.317 

3.360 

^  3.  626 

^  3.  679 

3.720 

3.750 

3.750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


$10,  200, 000.  00 

93, 027,  500.  00 

«  -22,  607,  500.  00 

66, 442.  52 

175,  004.  55 

380, 886.  57 

291, 423.  73 

317,  213. 12 

89,  228.  90 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.00 
2.00 

2?i 


15, 000.  00 
408, 000.  00 


$445, 000.  00 
1, 020, 000. 00 
1, 862, 000.  00 
2,  703,  500.  00 
2,  528,  500.  00 
218,  500.  00 

1,  499, 000.  00 

2,  586,  500.  00 
1, 021,  500.  00 
1, 073,  000.  00 
2, 849,  500.  00 
1, 858, 000.  00 

3,  500.  00 

8  -731, 000.  00 

113,  539.  66 

494, 927. 10 

930, 442. 10 

772, 372. 01 

1, 141, 052.  20 

92,  272.  96 

8  -574,  802. 09 

1, 041, 000.  00 

1, 484.  500.  00 

2,611,500.00 

2, 679, 000.  00 

1,  537, 000.  00 
186, 500. 00 

-3, 655, 000.  00 

2,  557, 000.  00 

20, 000.  00 


Redeemed    in    exchange    for    Treasury 

notes,  Series  EO-1966 

Treasury  notes,  Series  EO-1966 

Miscellaneous 


Wi 


21,  714, 000.  00 


21, 714, 000. 00 


Total  February. 


19, 481, 325,  207. 16 


19, 489, 490,  648.  40 


Treasury  bonds  of  1971 

Issued   in  exchange   for: 

3%  Treasury  bonds  of  1964 

2^8%  Treasury  bonds  ofl965 

Treasury  bonds  of  1980  (additional  issue) 

Issued  in  exchange  for  2^i%  Treasury 

bonds  of  1965 

Treasury  bonds  of  1990  (additional  issue) 

Issued  in  exchange  for: 
2H%  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

2H%  Treasury  bonds  of  1967-72,  dated 

June  1,  1945 

2H%  Treasury  bonds  of  1967-72,  dated 

Nov.  15,  1945 

Treasury  bonds  of  1998  (additional  issue) 

Issued  in  exchange  for: 
2y>7o  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

2)4%  Treasury  bonds  of  1967-72,  dated 

June  1   1945- 
2H%  Treasury "bonds"oYi967-72,  dated 

Nov.  15,  1945 

Treasury  bonds  of  1964 

Redeemed  in  exchange  for  4%  Treasury 

bonds  of  1971 

Treasury  bonds  of  1965 

Redeemed  in  exchange  for: 

4%  Treasury  bonds  of  1971... 

4%  Treasury  bonds  of  1980 

Treasury  bonds  of  1967-72  (dated  June  1, 

1945): 

Redeemed  in  exchange  for: 

3H%  Treasury  bonds  of  1990 

ZYiVo  Treasury  bonds  of  1998- 


4.00 


4.00 
"zYz' 


1, 154,  237, 000.  00 
1, 651,  608.  500.  00 


562,  695,  500. 00 


344, 626, 500.  00 
233, 202,  500. 00 
323, 480,  500.  00 


SJ-i 


3.00 


419,  522,  500.  00 
180, 346,  500.  00 
332, 223, 000. 00 


2% 


1, 154, 237, 000. 00 


1, 651, 608,  500. 00 
562, 695,  500. 00 


2y2 


233,  202,  500. 00 
180, 346,  500.  00 


Footnotes  at  end  of  table. 


n 


710   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  puhlic  deht 
securities,  excluding  special  issues,  July  1961-June  1962'^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  ♦ 

1962 
Mar.    1 

Treasury  bonds  of  1967-72  (dated  Oct.  20, 
1941)  ..- - 

Percent 

2M 

Redeemed  in  exchange  for: 
3'/'%  Treasury  bonds  of  1990 

$344, 626,  500. 00 
419,  522,  500. 00 

3><i%  Treasury  bonds  of  1998      ...  . 

1 

Treasury  bonds  of  1967-72  (dated  Nov.  15, 
1945) - 

2H 

Redeemed  in  e.xchange  for: 
31^%  Treasury  bonds  of  1990 

323, 480,  500.  00 

3'/"^,  Treasury  bonds  of  1998 

332, 223,  000. 00 

1 

Certificates  of  indebtedness,  foreign  series, 
maturing  Tune  1,  1962 

2.70 
6  2.  610 

$50, 000, 000. 00 

1 

Treasury  bills: 

Reeular  weekly: 
Issued  Aug.  31,  1961: 
Redeemed    in    exchange    for    series 
dated  Mar.  1,  1962,  due  May  31, 
1962                        

96, 148, 000. 00 
52,314,000  00 

Redeemed    in    exchange    for    series 
dated  Mar.  1,  1962,  due  Aug.  30, 
1962                            

Redeemable  for  cash 

1. 551. 886. 000. 00 

1 

Maturing  May  31,  1962: 
Issued  in  exchange  for  series  dated 

2.665 

96, 148, 000. 00 
1, 104, 596, 000.  00 

52, 314, 000. 00 
547,917,000.00 

Issued  for  cash 

1 

Maturing  Aug.  30,  1962: 
Issued  in  exchange  for  series  dated 
Aug.  31,  1961 

2.847 

Issued  for  cash  _         

8 

Issued  Sept.  7,  1961: 
Redeemed    in    exchange    for    series 

dated  Mar.  8,  1962,  due  June  7,  1962. 
Redeemed    in    exchange    for    series 

dated  Mar.  8, 1962,  due  Sept.  6, 1962. 
Redeemable  for  cash 

s  2. 648 

123, 529, 000. 00 

53, 003, 000.  00 

1, 521, 126, 000. 00 

8 

Maturing  June  7,  1962: 
Issued  in  exchange  for  series  dated 
Sept.  7,  1961 

2.721 

123,  529, 000. 00 
1, 076, 306, 000. 00 

53,003,000.00 
547, 848, 00. 00 

49, 941, 000.  00 

Issued  for  cash 

8 

Maturing  Sept.  6,  1962: 
Issued  in  exchange  for  series  dated 
Sept  7,  1961                

2.883 

Issued  for  cash 

9 

Certificates    of   Indebtedness,    foreign    cur- 
rency series,  maturing  June  8,  1962 

2.75 
6  2. 616 

15 

Treasury  bills: 

Regular  weekly: 
Issued  Sept.  14,  1961: 
Redeemed    in    exchange    for    scries 
dated  Mar.  15,  1962,  due  June  14, 
1962         

119,514,000.00 

Redeemed    in    exchange    for    scries 
dated  Mar.  15,  1962,  due  Sept.  13, 
1962    

3, 187, 000. 00 

Redeemable  for  cash 

1, 578, 857, 000. 00 

15 

Maturing  June  14,  1962: 
Issued  in  exchange  for  series  dated 
Sept.  14,  1961 

2.804 

119,514,000.00 
1, 081, 473, 000.  00 

3, 187, 000. 00 
597,104,000.00 

Issued  for  cash 

15 

Maturing  Sept.  13,  1962: 
Issued  in  exchange  for  series  dated 
Sept.  14,  1961 - 

2.972 

Issued  for  cash..  

22 

Issued  Sept.  21,  1961: 
Redeemed    in    exchange    for    series 
dated  Mar.  22,  1962,  due  June  21, 
1962         

s  2,  674 

189,  680, 000. 00 

Redeemed    in    exchange    for    series 
dated  Mar.  22,  1962,  due  Sept.  20, 
1962 -. 

64, 357, 000.  00 

Redeemable  for  cash 

1, 450, 852, 000. 00 

22 

Maturing  June  21,  1962: 
Issued  in  exchange  for  series  dated 
Sept.  21,  1961 

2.689 

189,680,000.00 
1,010,971,000.00 

Issued  for  cash 

Footnotes  at  end  of  table. 


TABLES 


711 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-iearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 


1962 
Mar.  22 


23 


23 


29 


29 

29 

31 
31 
31 
31 


31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 


Security 


Treasury  bills— Continued 

Regular  weekly— Continued 
Maturing  Sept.  20,  1962: 
Issued  in  exchange  for  series  dated 

Sept.  21,  1961. — 

Issued  for  cash 

Tax  anticipation: 
Issued  July  26, 1961: 
Redeemed    in    exchange    for    series 
dated  Mar.  23,  1962,  due  Sept.  21, 

1962 - 

Redeemable  for  cash 

Maturing  Sept.  21,  1962: 
Issued  in  exchange  for  series  dated 

July  26,  1961 

Issued  for  cash 

Regular  weekly: 
Issued  Sept.  28,  1961: 
Redeemed    in    exchange    for    series 
dated  Mar.  29,  1962,  due  June  28, 

1962 - 

Redeemed    in    exchange    for    series 
dated  Mar.  29,  1962,  due  Sept.  27, 

1962 — - • 

Redeemable  for  cash 

Maturing  June  28,  1962: 
Issued  in  exchange  for  series  dated 

Sept.  28,  1961 

Issued  for  cash 

Maturing  Sept.  27,  1962: 
Issued  in  exchange  for  series  dated 

Sept.  28,  1961 

Issued  for  cash 

Certificates  of  indebtedness,  Series  A-1963— 

Adjustments  of  issues  ' 

Treasury  notes.  Series  A-1966 

Adjustments  of  issues  ' 

Treasury  bonds  of  1968  (additional  issue) 

Adjustments  of  issues  » --- 

Certificates    of   indebtedness,    foreign    cur- 
rency series,  maturing  Apr.  4,1962 

U.S.  savings  bonds: » 

Series  E-1941 

Series  E-1942.. 

Series  E-1943- - 

Series  E-1944 

Series  E-1945 - 

Series  E-1946 - 

Series  E-1947 

Series  E-1948 

Series  E-1949 

Series  E-1950 

Series  E-1951 

Series  E-1952  (January  to  April) - 

Series  E-1952  (May  to  December) 

Series  E-1953. 

Series  E-1954 

Series  E-1955- 

Series  E-1956. 

Series  E-1957  (January) --- 

Series  E-1957  (February  to  December)  _  - 

Series  E-1958 - - 

Series  E-1959  (January  to  May) 

Series  E-1959  (June  to  December) 

Series  E-1960. — 

Series  E-1961 

Series  E-1962 

Unclassified  sales  and  redemptions 

Series  F-1950 - ■ 

Series  F-1951 - 

Series  F-1952 - 

Unclassified  redemptions 

Series  G-1550 - 

Series  Q-1951 

Series  G-1952 


Rate  of 
interest  * 


Percent 
2.854 


2.484 


Amount  issued ' 


$64,357,000.00 
535, 724, 000. 00 


2.896 


« 2.  631 


2.719 


2.857 


3)^ 


4.00 


3Ji 


168, 030, 000. 00 
1,  633, 956, 000. 00 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


$168, 030, 000. 00 
3, 334, 856, 000. 00 


86,946,000.00 
1, 113, 205, 000. 00 


42, 989, 000. 00 
657. 241, 000. 00 


86, 946, 000. 00 


42, 989, 000. 00 
1, 571, 903, 000. 00 


1.25 

'3.223 

^  3. 252 

7  3. 276 

7  3. 298 

'  3. 316 

'  3. 327 

7  3. 346 

7  3. 366 

7  3. 344 

7  3. 347 

7  3. 378 

3.400 

7  3. 451 

7  3. 468 

7  3. 497 

7  3. 522 

7  3. 546 

3.560 

7  3.  653 

7  3. 690 

3.730 

3.750 

3.750 

3.750 

3.750 


-5,069,000.00 
'4i'994i'000!"05' 

'"""ioi"o65"oo' 


2.53 
2.53 
2.53 


2.50 
2.50 
2.50 


472, 

4,346, 

11,225, 

3, 667, 

3, 540, 

3, 129, 

3, 530, 

3, 555, 

4, 145, 

4, 181, 

3, 710, 

2,944, 

9, 647, 

5,720, 

5, 684, 

5, 825, 

5, 529, 

-15, 

5, 572, 

5, 999, 

3, 025, 

2, 852, 

6, 455, 

84, 857, 

275,  768, 

8-42, 920, 

230, 

161, 

79, 


209. 57 

769. 23 
091.  91 
556.  76 
063. 67 
204.  50 
810.  80 

063. 24 
236. 84 
356. 53 
097. 19 
226. 84 
755. 32 
367. 13 
268. 08 
541.  99 
938.  80 
623.93 
912. 49 
613. 29 
694. 22 
939.64 
891.  74 
112.47 
643.75 

333. 48 
881.70 
032.  55 

726. 49 


23, 150, 000. 00 

3, 706, 660.  50 

16. 085. 744. 20 
16, 644, 355. 14 
21, 428, 971.  89 
17, 121, 120. 74 

9,  551, 074. 79 

10, 303, 366. 74 

11,330,221.63 

12,  608, 076. 43 

13, 167,  618.  57 

15, 759, 205. 33 

10, 208, 137.  88 

6, 320, 597. 65 

8, 834, 081. 69 

9, 282, 301. 49 

10, 421, 617. 07 

10, 865, 098. 29 

1, 005, 033. 86 

14,739,101.21 

15,908,055.62 

7, 734, 209.  57 

12. 042. 336. 21 
27, 098, 807. 81 

116,131,978.15 

71, 212.  50 

8—10, 859, 923. 87 

5, 959, 188.  45 

118,  605. 39 

34, 914. 42 

3, 018,  595.  74 

34, 143, 000. 00 

1,  757, 000. 00 

431, 100. 00 


Footnotes  at  end  of  table 


712   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


^ 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued  ^ 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 

1962 
Mar.  31 

U.S.  savings  bonds— Continued 

Unclassified  redemptions 

Percent 

$8, 039, 000. 00 

2, 314, 000. 00 

890, 000. 00 

1,  685,  000.  00 

2  16.S  ."ion  nn 

31 

Series  H-1952 

^  3. 123 

'  3. 161 

73.211 

7  3. 258 

7  3.317 

3.360 

7  3.  626 

7  3.  679 

3.720 

3.750 

3.750 

3.750 

3.750 

31 

Series  H-1953 

31 

.Series  H-1954 

31 

Series  H-1955 

31 

Series  H-1956 

1,  989,  500. 00 
127  500  00 

31 

Series  n-19£7  (January) 

31 

Series  H-1957  (February  to  December)  _  _. 
Series  H-1958 

1,  511,  500  00 

31 

2,  255,  500.  00 
841  000  00 

31 

Series  H-1959  (January  to  May) 

31 

Series  H-1959  (June  to"  December) 

Series  H-1960 -. 

1,000.500.00 
2, 482, 000. 00 
1  801  000  00 

31 

31 

Series  H-1961 

$463, 000. 00 

92, 028,  500. 00 

8-11,968,000.00 

85. 030. 44 

194,  427. 10 

357,311.85 

365, 079.  57 

251,668.50 

73, 473.  88 

31 

Series  H-1962...    . 

68, 000. 00 
9  537,500  00 

31 

Unclassified  sales  and  redemptions.. 

31 

Series  J-1 952 

2.76 
2.76 
2.76 
2.76 
2.76 
2.76 

243  111  86 

31 

Series  J-1953 _. 

168,  243. 95 
722,032.05 
971  878  02 

31 

Scries  J-1954 

31 

Series  J-1955 

31 

Series  J-1956 

425,  254. 10 
306  062  84 

31 

Series  J-1957 

31 

Unclassified  redemptions 

947, 934. 36 
434  000  00 

31 

Series  K-1952..  . 

2.76 
2.76 
2.76 
2.76 
2.76 
2.76 

31 

Series  K:-1953 

589  000  00 

31 

Series  K-1954 

1,905  000  00 

31 

Series  K-1955 

1, 382, 000. 00 
1  055  000  00 

31 

Series  K-1956....    .. 

31 

Series  K-1957 

421, 000  00 

31 

Unclassified  redemptions.. 

5,591,500.00 

31 

Depositary  bonds,  First  Series 

2.00 
2.00 

2?4 

561, 000. 00 
300, 000. 00 

2,  635, 000. 00 

31 

Treasury  bonds,  R.E.A.  Series. 

100, 000. 00 

31 

Treasury     bonds,     Investment     Series     B- 
1975-80 

31 

Redeemed    in    exchange    for    Treasury 
notes,  Series  E  0-1966 

132,  494, 000  00 

31 

Treasmy  notes,  Series  EO-1966 

\H 

132,494,000.00 

31 

Miscellaneous 

14,352,900  00 

Total  March 

16,  745, 986, 040.  67 

17,868,690,382.27 

Treasury  notes,  Series  EA-1962: 

m 

Apr.     1 

Redeemable  for  cash 

85, 913, 000. 00 
138,701,000  00 

5 

Treasury  bills: 

Regular  weekly: 
Issued  Oct.  5,  1961: 
Redeemed    in    exchange    for    series 
dated  Apr.  5,  1962,  due  July  5,  1962. 
Redeemed    in    exchange    for    series 
dated  Apr.  5,  1962,  due  Oct.  4,  1962. 
Redeemable  for  cash. 

8  2.  696 

42,971,000  00 

1,519,413,000.00 

5 

Maturing  July  5,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  5,  1961 

2.757 

138,701,000.00 
1, 061,  937,  000. 00 

42, 971, 000.  00 
557, 596, 000. 00 

Issued  for  cash 

5 

Maturing  Oct.  4,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  5,  1961 . 

2.875 

Issued  for  cash 

12 

Issued  Oct.  13,  1961: 
Redeemed    in    exchange    for    series 
dated  Apr.  12,  1962,  due  July  12, 
1962 

'  2.  774 

&5,  610, 000. 00 

Redeemed    in    exchange    for    series 
dated  Apr.  12,  1962,  due  Oct.  11, 
1962.... 

3. 047. 000.  00 

Redeemable  for  cash 

1,632,333,000.00 

12 

Maturing  July  12,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  13,  1961 

2.720 

65,  610, 000.  00 
1,134,663,000.00 

3, 047, 000.  00 
597,155,000.001 

Issued  for  cash 

12 

Maturing  Oct.  11,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  13,  1961 

2.814 

Issued  for  cash 

Footnotes  at  end  of  table. 


TABLES 


713 


Table  40. — Issues,  maturities,  and  redemptions  of  infcrcst-dearinr/  pnMic  deM 
securities,  excluding  special  issues,  Jnly  1961-June  1962'^ — Continued 


Date 

Security- 

Rate  of 

interest  2 

Amount  issued  ^ 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity « 

1962 
Apr.    15 

Treasury  bills— Continued 
Other: 

Issued  Apr.  15,  1961: 
Kedeemed    in    exchange    for    series 
dated  Apr.  15,  1962,  due  At)r.  15, 
1963 

Percent 

2.827 

$80, 146, 000. 00 
1, 920, 316, 000. 00 

Redeemable  for  cash 

16 

Maturing  Apr.  15,  1963: 
Issued  in  exchange  for  series  dated 
Apr.  15,  1961 

2.943 

$80, 146, 000. 00 
1, 920,  608, 000. 00 

1,257,539,500.00 

Issued  for  cash _        ___     

18 

Treasury  bonds  of  1968: 

Issued  for  cash .._      .     

5  2.  757 

19 

Treasury  bills: 

Regular  weekly: 
Issued  Oct.  19,  1961: 
Redeemed    in    exchange    for    series 
dated  Apr.  19,  1962,  due  July  19, 
1962 1 

107,167,000.00 

43, 350, 000. 00 
1,551,537,000.00 

Redeemed    in    exchange    for    series 
dated  Apr.  19,  1962,  due  Oct.  18, 
1962 

Redeemable  for  cash 

19 

Maturing  July  19,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  19,  1961 

2.723 

107,167,000.00 
1,093,815,000.00 

43, 350,  000.  00 
556, 959, 000.  00 

Issued  for  cash  -  _ .  ._.  ..  __. 

19 

Maturing  Oct.  18,  1962: 
Issued  in  exchange  for  scries  dated 
Oct.  19,  1961 

2.825 

Issued  for  cash 

26 

Issued  Oct.  26,  1961: 
Redeemed    in    exchange    for    series 
dated  Apr.  26,  1962,  due  July  26, 
1962 

5  2.  695 

125,  799, 000. 00 
65,545  000  no 

Redeemed    in    exchange    for    series 
dated  Apr.  26,  1962,  due  Oct.  25, 
1962 

Redeemable  for  cash.  _     .  .  .  . 

1,  510, 390,  000.  00 

26 

Maturing  July  26,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  26,  1961 

2.740 

125, 799, 000. 00 
1,074,953,000.00 

65,  545, 000.  00 
534, 863, 000. 00 

Issued  for  cash 

26 

Maturing  Oct.  25,  1962: 
Issued  in  exchange  for  series  dated 
Oct.  26,  1961           .        .    . 

2.837 

Issued  for  cash  

26 

Certificates    of   indebtedness,    foreign    cur- 
rency series,  maturing  Apr.  26,  1962 

Certificates    of   indebtedness,    foreign    cur- 
rency series,  maturing  July  26,  1962 

Certificates  of  indebtedness,  Series  A-1963: 
Adjustments  of  issues  8 __ 

2.70 
2.75 

4.00 

24, 978, 250.  00 

26 

24,978,250.00 
350,000.00 

30 

30 

Treasury  bonds  of  1971 

Issued  in  exchange  for: 
25i%  Treasury  bonds  of  1965 

100, 000. 00 
6, 000.  00 

3%  Treasury  bonds  of  1964      --    

30 

Treasury  bonds  of  1980  (additional  issue) 

Issued  in  exchange  for  2%%  Treasury 
bonds  of  1965 "_, 

4.00 

-100,000.00 

30 

Treasury  bonds  of  1964 

3.00 

Redeemed  in  exchange  for  4%  Treasury 
bonds  of  1971 

6, 000.  00 

30 

Treasury  bonds  of  1965. 

2% 

Redeemed  in  exchange  for: 
4%  Treasury  bonds  of  1971    

100, 000.  no 

4%  Treasury  bonds  of  1980  (additional 
issue) 

-100,000.00 

Footnotes  at  end  of  table. 


714 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-iearing  piihlic  deM 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 


me 

30 


30 


30 
30 

30 

30 

30 


30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 


Security 


Treasury  bonds  of  1990  (additional  issue) 

Issued  in  exchange  for: 

2H%  Treasury  bonds  of  1966-71 

2],i7o  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

2]ri%  Treasury  bonds  of  1967-72,  dated 

June  1,  1945 

2)^%  Treasury  bonds  of  1967-72,  dated 

Nov.  15,  1945 

Treasury  bonds  of  1998  (additional  issue) 

Issued  in  exchange  for: 
2i.2%  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

2y2%  Treasury  bonds  of  1967-72,  dated 

.Tune  1,  1945-. 

2K>%  Treasury  bonds  of  1967-72,  dated 

Nov.  15,  1945 

Treasury  bonds  of  1966-71 

Redeemed  in  exchange  for  3H%  Treasury 

bonds  of  1990  (additional  issue) 

Treasury  bonds  of  1967-72  (dated  Oct.  20, 

1941) 

Redeemed  in  exchange  for: 
3y2%  Treasury  bonds  of  1990   (addi- 
tional issue) 

3i/j%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bonds  of  1967-72  (dated  June  1, 

1945)... 

Redeemed  in  exchange  for: 
3H%  Treasury  bonds  of  1990  (addi- 
tional issue) 

3>4%  Treasury  bonds  of  1998  (addi- 
tional issue) 

Treasury  bonds  of  1967-72  (dated  Nov.  15, 

1945) 

Redeemed  in  exchange  for: 
3^2%  Treasury  bonds  of  1990   (addi- 
tional issue) 

3^2%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bonds  of  1968 

Adjustments  of  issues: ' 
Issued  in  exchange  for  Series  F  and  G 

savings  bonds 

Issued  for  cash 

U.S.  savings  bonds: « 

Series  E-1941 

Series  E-1942 

Series  E-1943 

Series  E-1944 

Series  E-1945 - 

Series  E-1946 

Series  E-1947 

Series  E-1948 

Series  E-1949 

Series  E-1950 

Series  E-1951 

Series  E-1952  (Januarj'  to  April) 

Series  E-1952  (May  to  December) 

Series  E-1953 

Series  E-1954 

Series  E-1955 

Series  E-1956 

Series  E-1957  (January). 

Series  E-1957  (February  to  December)... 

Series  E-1958 , 

Series  E-1959  (January  to  May) 

Series  E-1959  (June  to  December) 

Series  E-1960 

Series  E-1961 

Series  E-1962 

Unclassified  sales  and  redemptions 

Series  F-1950 


Rate  of 
interest  ^ 


Percent 


3U 


2M 


2H 


2K2 


21-2 


3}i 


'  3.  223 

'  3.  252 
'  3.  276 
7  3.  298 
;3.316 
^  3.  327 
'  3.  346 
'  3.  366 
'  3.  344 
'  3.  347 
'  3.  378 

3.400 
■  3.  451 
'  3.  468 
'  3.  497 
7  3.  522 
'3.546 

3.560 
'3.653 
'  3.  690 

3.730 


Amount  issued ' 


750 
750 
750 
750 


2.53 


$500.  00 

7, 000.  00 

30, 000. 00 

-1,460,000.00 


10,  500.  00 

128, 000. 00 

1, 255,  000. 00 


-45, 000.  00 
45, 000. 00 


537, 

4,  506, 
8,  769, 
3, 317, 
4,319, 
3, 210, 
3,  320, 
3,  422, 
3, 824, 
3, 832, 
3,738, 
2,646, 
7,253, 

5,  773, 
5, 365, 
5,611, 
5,  470, 

5,  709, 
6, 032, 
2, 927, 
3, 376, 

6,  551, 
25,  213, 

283, 466, 

•  -12,712, 

847, 


242.64 
766.  51 
389.88 
676.  69 
521, 39 
859.  60 
031.  70 
428.38 
324.  86 
809.  83 
489.  89 
645.98 
455.  23 
056.  44 
105. 39 
333.  67 
930. 93 
9.56 
611.  69 
934.  11 
199.  25 
964.32 
574.  38 
397. 15 
906.  25 
300.50 
606.60 


tured  or  called  or 

redeemed  prior 

to  maturity  * 


$500.  00 


7, 000.  00 
10,  500. 00 


30, 000.  00 
128, 000. 00 


-1,460,000.00 
1, 255, 000.  00 


3, 112, 

15,750, 

17, 372, 

20, 810, 

16, 972, 

9, 334, 

10, 328, 

11,427, 

12,  292, 

12, 902, 

14,  272, 

10,631, 

7, 071, 

9,299, 

9,861, 

11,050, 

13, 497. 

919, 

11,795, 

13, 849, 

6,629, 

10, 012, 

22, 671, 

81,768, 

25,  267, 

16, 375, 

6,649, 


836.87 
505.  48 
594.  72 
170.  74 
371.18 
816.  73 
746. 08 
836.  88 
520. 17 
699.  37 
966.  46 
976.  35 
745, 48 
933.  89 
048.  98 
851.  73 
075.  79 
530.  35 
631.  91 
555.  66 
879.  51 
801.  80 
832. 44 
682.08 
537.50 
296.16 
429.90 


Footnotes  at  end  of  table. 


TABLES 


715 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  publio  deht 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  ^ 

Amount  issued  ^ 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 

mz 

Apr.  30 

U.S.  savings  bonds  "—Continued 
Series  F-1951.. 

Percent 
2.53 
2.53 

$198, 158.  85 
63, 462.  70 

$236,  742.  32 

148, 463.  04 

?  -1    .'i34  Sll    Q'i 

30 

Series  F-1952 

30 

Unclassified  redemptions 

30 

Series  G-1950 

2.50 
2.50 
2.50 

40. 880, 100. 00 

3,  218. 600.  00 

8Q7  inn  nn 

30 

Series  G-1951 

30 

Series  G-1952... 

30 

Unclassified  redemptions. 

'-16,546,700.00 
2,  812, 500. 00 

1,  294, 000. 00 

2,  670,  500. 00 
3, 467, 000. 00 
2, 899,  500. 00 

241  000  00 

30 

Series  H-1952 

'3.123 

'  3. 161 

1  3.  211 

'  3.  253 

'  3.  317 

3.360 

'  3.  626 

'  3.  679 

3.720 

3.750 

3.  750 

3.750 

3.750 

30 

Series  H-19.53 

30 

Series  H-1954 

30 

Series  H-1955.... 

30 

Series  H-1956 

30 

Seiies  H-1957  (January).. 

30 

Series  H-1957  (February  to  December)... 
Series  H-1958.... 

2  015  000  00 

30 

3,  445,  500.  00 
1  457  500  00 

30 

Series  H-1959  (Januar\  to  May) 

859. 000. 00 
10, 000. 00 

30 
30 

Series  H-1959  (June  to  December) 

Series  H-1960 

1,  296,  000.  00 

3, 442,  500. 00 

3,  565, 000. 00 

76  000  00 

30 

Series  H-1961 

-335, 000. 00 

71, 189,  500. 00 

3,109,000.00 

98,  561.  23 

180, 293. 05 

356. 039.  60 

357,  577.  24 

184, 968.  30 

79,182.67 

30 

Series  H-1962.... 

30 

Unclassified  sales  and  redemptions 

«  -6,114,000.00 
202,913.15 
326  127  00 

30 

Series  J-1952. 

2.76 
2.76 
2.76 
2.76 
2.76 
2.76 

30 

Series  J-1953  

30 

Series  J-1954 

1, 372, 425.  25 

852, 453. 90 

903,  270. 30 

157, 721. 86 

'  -1,210,954.43 

1,  332,  500. 00 

1  771  500  00 

30 

Series  J-1955. 

30 

Series  J-1956.. 

30 

Series  J-1957.. 

30 

Unclassified  redemptions . 

30 

Series  K-1952. 

2.76 
2.76 
2.76 
2.76 
2.76 
2.76 

30 

Series  K-1953 

30 

Series  K-1954. 

3, 964,  500. 00 
2, 969,  500. 00 
1, 349,  500. 00 

30 

Series  K-1955 

30 

Series  K-1956.... 

30 

Series  K-1957.    

265  500  00 

30 

Unclassified  redemptions 

8  -5,107,000.00 

1,066,000.00 

60,000.00 

30 

Depositary  bonds,  First  Series .. 

2.00 
2.00 

2% 

525, 000. 00 
623, 000. 00 

30 

Treasury  bonds,  R.E. A.  Series.. 

30 

Treasury  bonds,  Investment  Series  B-1975- 
80 

Redeemed    in    exchange    for    Treasury 
notes: 
Series  EO-1966 

57,495,000.00 
2,  341, 000. 00 

Series  EA-1967 

30 

Treasury  notes,  Series  EO-1966. 

IH 

IH 

57, 495, 000. 00 
2, 341, 000. 00 

30 

Treasury  notes.  Series  EA-1967 

30 

Miscellaneous 

18,292,900.00 

Total  April 

11,021,397,465.36 

9, 457. 395, 474. 65 

Treasury  bills: 

Regular  weekly: 
Issued  Nov.  2,  1961 : 
Reedeemed   in   exchange   for  series 
dated  May  3,  1962,  due  Aug.  2, 
1962... 

5  2. 675 

May    3 

183, 491, 000. 00 

72,491,000.00 
1,545,505,000.00 

Redeemed    in    exchange    for    series 
dated  May  3, 1962,  due  Nov.  1, 1962. 
Redeemable  for  cash  

3 

Maturing  Aug.  2,  1962: 
Issued  in  exchange  for  series  dated 
Nov.  2,  1961 

2.748 

183,491,000.00 
1,018,109,000.00 

72,491,000.00 
527,  557, 000. 00 

Issued  for  cash 

3 

Maturing  Nov.  1, 1962: 
Issued  in  exchange  for  series  dated 
Nov.  2,  1961- 

2.845 

Issued  for  cash 

8 

Certificates  of  indebtedness,   foreign  series, 
maturing  May  8, 1962 

2.70 
2.75 

450,000,000.00 

8 

Certificates  of  indebtedness,  foreign  series, 
maturmg  Aug.  8, 1962 

350,000,000.00 

Footnotes  at  end  of  table. 


716 


196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962'^ — Continued 


Date 

Securlty 

Rate  of 
interest  2 

Amount  issued  ^ 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 

19GB 
May  10 

Treasury  bills: 

Kegular  weekly: 
Issued  Nov.  9,  1961: 
Redeemed    in    exchange    for    series 
dated  May  10,  1962,  due  Aug.  9. 
1962 

Percent 
5  2.  654 

$147,  228, 000. 00 

Redeemed    in    exchange    for    series 
dated  May  10,  1962,  due  Nov.  8, 
1962           

63, 856, 000. 00 

Redeemable  for  cash 

1, 489, 338, 000. 00 

10 

Maturing  Aug.  9,  1962: 
Issued  in  exchange  for  series  dated 
Nov.  9,  1961 

2.719 

$147,  228, 000. 00 
1, 056, 982, 000. 00 

63,856,000.00 
537,783,000.00 

Issued  for  cash             

10 

Maturing  Nov.  8,  1962: 
Issued  in  exchange  for  series  dated 
Nov.  9,  1961 

2.816 

Issued  for  cash^  _  

15 

Treasury  bonds  of  1971  ..  

S~A 

Issued  in  exchange  for: 
3%  Certificates  of  indebtedness,  Series 
A-1962                  

465,013,000.00 
283,  664, 000. 00 

455,  415,  500. 00 

4%  Treasury  notes,  Series  E-1962 

2H%  Treasury  bonds  of  1959-62,  dated 
June  1,  1945     

15 

Treasury  notes,  Series  B-1966.— 

3% 

Issued  in  exchange  for: 
3%  Certificates  of  indebtedness,  Series 
A-1962                                            

1, 137,  775, 000. 00 
842, 230, 000. 00 

1,133,197,000.00 

4%  Treasury  notes,  Series  E-1962 

2M%  Treasury  bonds  of  1959-62,  dated 
June  1,  1945 

15 

Certificates  of  indebtedness,  Series  B-1963 

Issued  in  exchange  for: 
3%  Certificates  of  indebtedness,  Series 
A-1962      

3« 

3,  807,  398, 000. 00 
927,720,000.00 

1,950,374,000.00 

4%  Treasury  notes,  S  ries  E-1962 

21.4%  Treasury  bonds  of  1959-62,  dated 
June  1,  1945 

15 

Certificates  of  indebtedness,  Series  A-1962 

Redeemed  in  exchange  for: 
iViVo  Certificates  of  indebtedness.  Series 
B-1963 

3.00 

3, 807,  398, 000. 00 

3H%  Treasurv  notes.  Series  B-1966 

1, 137,  775, 000. 00 

3j^%  Treasury  bonds  of  1971 

465, 013, 000. 00 

Redeemable  for  cash  

99, 032, 000. 00 

Treasury  notes,  Series  E-1962 

Redeemed  in  exchange  for: 

3H7o  Certificates  of  indebtedness,  Series 
B-1963 

4.00 

927, 720, 000.  On 
842,  230, 000. 0 

3M%  Treasurv  notes,  Series  B-1966 

3%%  Treasurv  bonds  of  1971 

283, 664, 000. 00 

Redeemable  for  cash 

157,  279, 000. 00 

15 

Treasury  bonds  of  1959-62  (dated  June  1, 
1945) 

2}i 

Redeemed  in  exchange  for: 
35-4%     Certificates    of    indebtedness. 
Series  B-1963 

1,950,374,000.00 

3''^%  Treasurv  notes,  Series  B-1966 

1, 133, 197. 000. 00 

3%%Treasury  bonds  of  1971...      .  .. 

455, 415,  500. 00 

17 

Treasury  bills: 

Regular  weekly: 
Issued  Nov.  16,  1961: 
Redeemed  in  exchange  for  series  dated 

May  17,  1962,  due  Aug.  16,  1962 

Redeemed  in  exchanee  for  scries  dated 
Mav  17,  1902,  due  Nov.  15,  1962 

5  2.  740 

98, 803, 000. 00 

62, 529, 000. 00 

Redeemable  for  cash 

1,639,014,000.00 

17 

Maturing  Aug.  16,  1962: 
Issued  in  exchange  for  series  dated 
Nov.  16,  1961     

2.046 

98,863.000.00 
1, 101,  540, 000. 00 

Issued  for  cash 

t 


Footnotes  at  end  of  table. 


TABLES 


717 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-hearing  puhlic  debt 
securities,  excluding  special  issues,  Jultj  1961-June  1962  ^ — Continued 


Date 


1962 
May  17 


24 


24 


24 


31 


31 


31 


31 


Security 


31 


31 


31 

31 


31 


Treasury  bills — Continued 

Regular  weekly— Continued 
Maturing  Nov.  15,  1962: 
Issued  in  exchange  for  series  dated 

Nov.  16  1961 

Issued  for  cash 

Issued  Nov.  24,  1961: 
Redeemed  in  exchange  for  series  dated 

May  24,  1962,  due  Aug.  23,  1962 

Redeemed  in  exchange  for  series  dated 

May  24,  1962,  due  Nov.  23,  1962 

Redeemable  for  cash 

Maturing  Aug.  23,  1962: 
Issued  in  exchange  for  series  dated 

Nov.  24,  1961 

Issued  for  cash 

Maturing  Nov.  23,  1962: 
Issued  in  exchange  for  series  dated 

Nov.  24,  1961. 

Issued  for  cash 

Issued  Nov.  30,  1961: 
Redeemed  in  exchange  for  series  dated 

May  31,  1962,  due  Aug.  30,  1962 

Redeemed  in  exchange  for  series  dated 

May  31,  1962,  due  Nov.  29,  1962 

Redeemable  for  cash 

Maturing  Aug.  30,  1962: 
Issued  in  exchange  for  series  dated 

Nov.  30,  1961 

Issued  for  cash 

Maturing  Nov.  29,  1962: 
Issued  in  exchange  for  series  dated 

Nov.  30,  1961-- - -- 

Issued  for  cash 

Treasury  bonds  of  1990  (additional  issue) 

Issued  in  exchange  for: 
21^%  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

21^%  Treasury  bonds  of  1967-72,  dated 

June  1,  1945 

2H%  Treasurv  bonds  of  1967-72,  dated 

Nov.  15,  1945 

Treasury  bonds  of  1998  (additional  issue) 

Issued  in  exchange  for: 
21^%  Treasury  bonds  of  1967-72,  dated 

Oct.  20,  1941 

2H%  Treasury  bonds  of  1967-72,  dated 

June  1  1945      

2K'%  Treasurvbondsiof  1967-72,  dated 

Nov.  15,  1945.. 

Treasury  bonds  of  1971 

Issued  in  exchange  for: 

3%  Treasury  bonds  of  1964 

2%%  Treasury  bonds  of  1965 

Certificates  of  indebtedness,    foreign  series, 

maturing  Aug.  30,  1962 ..  -. 

Treasury  bonds  of  1967-72  (dated  Oct.  20, 

1941) 

Redeemed  in  exchange  for: 
3H%  Treasury  bonds  of  1990   (addi- 
tional issue) 7--,-,-"" 

Zyi%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bonds  of  1967-72  (dated  June  1, 

1945) 

Redeemed  in  exchange  for: 
3^%  Treasury  bonds  of  1990   (addi- 
tional issue) 

3V^%  Treasury  bonds  of  1998   (addi- 
tional issue) 


Rate  of 
interest ■ 


Percent 
2.744 


5  2.  810 


2.700 


2.795 


Amount  issued  ^ 


$62,  529, 000. 00 
537, 611, 000. 00 


168, 697, 000. 00 
1,131,715,000.00 


62, 728, 000. 00 
537,  588, 000. 00 


5  2.  712 


2.656 


2.743 


ZH 


3h 


4.00 


2.00 

2h 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  < 


$168, 097, 000. 00 

62,  728, 000. 00 
1,570,926,000.00 


94, 442, 000. 00 

62, 633, 000. 00 
1,643,740,000.00 


94, 442, 000. 00 
1, 206, 713, 000. 00 


62, 633, 000. 00 
538, 691, 000. 00 


4,  500. 00 

94, 000. 00 

9. 000. 00 


-15,000.00 
15, 000. 00 
24, 000. 00 


10, 000. 00 
15,000.00 

50, 000, 000. 00 


2H 


4, 500. 00 
-15,000.00 


94, 000. 00 
15, 000. 00 


Footnotes  at  end  of  table. 


718        1962    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962'^ — Continued 


Date 


May  31 


31 

31 


31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 
31 


Security 


Treasury  bonds  of  l%7-72  (dated  Nov.  15, 

1945) --- 

Redeemed  in  exchange  for: 
3^2%  Treasury  bonds  of  1990   (addi- 
tional issue) 

31/2%  Treasury  bonds  of  1998   (addi- 
tional issue) 

Treasury  bonds  of  1964 

Redeemed  in  exchange  for  4%  Treasury 
bonds  of  1971 

Treasury  bonds  of  1965 

Redeemed  in  exchange  for  i%  Treasury 
bonds  of  1971 

U.S.  savings  bonds: ' 

Series  E-1941 

Series  E-1942.. 

Series  E-1943 

Series  E-1944 

Series  E-1945 

Series  E-1946 

Series  E-1947 

Series  E-1948 

Series  E-1949-_ 

Series  E-1950... 

Series  E-1951.... 

Series  E-1952  (January  to  April) 

Series  E-1952  (Mav  to  December) 

Series  E-1953.— ---- 

Series  E-1954 

Series  E-1955 

Series  E-1956 

Series  E-1957  (January) -. 

Series  E-19.57  (February  to  December).-. 

Series  E-19.58 .- — . 

Series  E-1959  (January  to  May) 

Scries  E-1959  (June  to  December) 

Series  E-1960- - - -. 

Series  E-1961.- - 

Series  E-1962 

Unclassified  sales  and  redemptions 

Scries  F-1950 

Series  F-1951 - 

Series  F-1952 

Unclassified  redemptions 

Series  G-1950 - 

Scries  G-1951 

Series  G-1952 - 

Unclassified  redemptions 

Series  H-1952 

Series  H-1953 

Series  H-1954 - --. 

Series  H-1955 

Series  H-1956 ..- 

Series  H-1957  (January).. 

Scries  H-1957  (February  to  December).. 

Series  H-19.58 

Series  H-1959  (January  to  May) 

Series  H-1959  (June  to  December) 

Series  n-1960- 

Series  H-1961- — - 

Series  H-1962.. 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953- 

Series  J-1954-- 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  sales  and  redemptions- 

Series  K-1952. 

Series  K-1953.. 

Series  K-1954 

Series  K-1955 

Series  K-195fi 

Series  K-1957 

Unclassified  redemptions 


Rate  of 
interest ' 


Percent 


3.00 

'2H"" 


'  3.  223 

'  3.  252 

'  3.  276 

'  3.  298 

'  3.  316 

'  3.  327 

'  3.  346 

'  3. 3nfi 

^  3.  344 

1  3.  347 

1  3.  378 

3.400 

7  3.  451 

7  3.468 

1  3. 497 

'  3.  522 

'  3.  546 

3.560 

'  3,  653 

7  3.  690 

3.730 

3.750 

3.  750 

3.  750 

3.  750 


2.53 
2.53 
2.53 


2.50 
2,  ,50 
2.50 


'  3. 123 

'  3. 161 

7  3.211 

7  3.  258 

7  3.317 

3.  360 

7  3.  626 

7  3.  679 

3.  720 

3.  750 

3.  750 

3.750 

3.750 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


Amount  issued ' 


$989, 
4.  259, 
4.  595, 
5,717. 

10,  535. 
3,  216, 
3,  051, 
3, 436, 
3,  797, 
3,731, 
3,  523, 

-14. 
2,491. 
5, 370, 
5, 223, 
5, 396, 
5, 310, 

5, 991, 
5, 701, 
2, 769, 
3, 098, 
6, 051, 

11,  616, 
290, 629, 

16,  780, 
349, 
171, 


049. 39 
953.  49 
841. 05 
442.  67 

655. 14 
148.  27 
637. 33 
610. 95 
947. 46 
012.  59 
190.  50 
974.  57 
229.  57 

278. 15 
296.81 
759.  71 
474.  60 
-5.94 
428.  35 
904.  44 
847.  28 
327.  83 
217.  29 
356. 19 
212.  50 
402.  20 
267.  70 
956.  53 
152. 26 


-859, 000. 00 
-10,000.00 


15, 000. 00 

65,  363, 000. 00 

«  -10,415,500.00 

214,  334. 97 

194,  579.  70 

405, 023. 15 

308, 490.  51 

188,  565. 90 

-83. 09 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  < 


$9, 000. 00 
24, 000. 00 


10, 000. 00 


15, 000. 00 

2, 989, 334. 95 
16,  502,  421. 15 
18, 968, 127. 41 
21,224,521.49 
17, 614, 972. 68 

9, 573,  266. 60 
10, 513, 105. 39 
11,949,142.57 
12,931,184.82 
12,807,715.93 
14, 877,  746.  36 

1 1,  788, 674. 85 
7, 435, 821.  84 
9,711,959.42 

10, 505, 035. 15 

11,642,951.36 

13, 567, 340. 19 

1, 054, 684.  35 

12,  387,  476. 89 
14, 059,  363.  48 

6,  622,  689. 92 

9, 973, 349.  57 

23,  630, 187. 18 

68,  812, 032. 90 

45,  811, 181.  25 

I  -3,  845, 166.  71 

6,  742,  529. 05 

319, 933.  61 

134, 194.  29 

8  -563,703.93 
27,  724, 900. 00 

1,  349,  200. 00 
683,  700. 00 

9  -405, 100. 00 
1, 793, 500. 00 
1, 146,  500. 00 
1, 818, 000. 00 

2,  547,  000. 00 
2,  393, 500. 00 

151,000.00 
1, 663, 000. 00 
2,717,000.00 

1,  217, 500.  00 
997,  500. 00 

2, 697, 000. 00 

3, 198, 000. 00 

89,  oon.  00 

2,291,500.00 

158,  772. 82 

329, 100. 10 

877,  231. 89 

622,  286. 53 

512, 189.  60 

166, 080. 00 

197, 186.  39 

595, 000. 00 

776, 000. 00 

2,  280,  500. 00 
1,465,500.00 

970,  500. 00 

199,  500. 00 

1, 842, 000. 00 


Footnotes  at  end  of  table. 


TABLES 


719 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  1961-June  1962  ^ — Continued 


Date 

Security 

Rate  of 
interest  2 

Amount  issued ' 

Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity « 

196S 
May  31 
31 

Depositary  bonds,  First  Series 

Percent 
2.00 
2.00 

2% 

$218,000.00 
274,000.00 

$567,000.00 
578,000.00 

Treasury  bonds,  R.E.A.  Series 

31 

Treasury  bonds.  Investment  Series  B-1975- 
80 - 

Redeemed  in  exchange  for  l}i%  Treas- 
ury notes,  Series  EO-1966 

4, 000, 000. 00 

31 

Treasury  bonds.  Investment  Series  B-1975- 
80 - 

2% 

Redeemed  in  exchange  for  l}i%  Treas- 
ury notes,  Series  EA-1967-- 

16,808,000.00 

31 

Treasurv  notes,  Series  EO-1966- 

4, 000, 000. 00 
16, 808, 000. 00 

31 

Treasury  notes.  Series  EA-1967- 

31 

Miscellaneous 

15. 428. 400. 00 

Total  May                    

21,104,685,726.36 

21,116,923,021.25 

Certificates  of  indebtedness,  foreign  series, 
maturing  June  1.  1962 

2.70 
2.70 

5  2.  770 

June    1 

50,000,000.00 

1 

Certificates  of  indebtedness,  foreign  series, 
maturing  Sept.  4,  1962 

50,000,000.00 

7 

Treasury  bills: 

Regular  weekly: 
Issued  Dec.  7, 1961: 
Redeemed    in    exchange    for    series 
dated  June  7, 1962,  due  Sept.  6, 1962. 
Redeemed    in    exchange    for    series 
dated  June  7, 1962,  due  Dec.  6,  1962. 
Redeemable  for  cash 

87,339,000.00 
27, 708, 000. 00 

1,685,434,000.00 

7 

Maturing  Sept.  6,  1962: 
Issued  in  exchange  for  series  dated 
Dec.  7,  1961 

2.691 

87, 339, 000. 00 
1,213,664,000.00 

27, 708, 000. 00 
674,259,000.00 

Issued  for  cash 

7 

Maturing  Dec.  6,  1962: 
Issued  in  exchange  for  series  dated 
Dec.  7. 1961 

2.787 

Issued  for  cash 

8 

Certificates    of   indebtedness,    foreign    cur- 
rency series,  maturing  June  8,  1962. 

Certificates    of    indebtedness,    foreign    cur- 
rency series,  maturing  Sept.  7,  1962 

Certificates  of  indebtedness,  foreign  series, 
maturing  Sept.  14,  1962 

2.75 
2.70 
2.00 

i  2. 827 

49, 941, 000. 00 

8 

49,964,250.00 
10,000,000.00 

14 

14 

Treasury  bills: 

Regular  weekly: 
Issued  Dec.  14,  1961: 
Redeemed    in    exchange    for    series 
dated  June  14, 1962,  dueSept.  13, 1962. 
Redeemed    in    exchange    for    series 
dated  June  14,  1962,  due  Dec.  13, 
1962                  

112, 844, 000. 00 

18,811,000.00 

Redeemable  for  cash.  _  

1, 670, 150, 000. 00 

14 

Maturing  Sept.  13,  1962: 
Issued  in  exchange  for  series  dated 
Dec.  14,  1961 

2.671 

112. 844, 000. 00 
1, 187,  561, 000. 00 

18, 811, 000. 00 
681,307,000.00 

Issued  for  cash 

14 

Maturing  Dec.  13,  1962: 
Issued  in  exchange  for  series  dated 
Dee.  14,  1961 

2.758 

Issued  for  cash 

16 

Treasury  bonds  of  1959-62  (dated  June  1, 
1945) 

2H 

Redeemable  for  cash      . . 

424, 221, 500.  00 

20 

Certificates  of  indebtedness,  foreign  series, 
maturing  Dee.  20,  1962      

2.75 
5  2.  765 

50,  000, 000.  00 

21 

Treasury  bills: 

Regular  weekly: 
Issued  Dec.  21,1961: 
Redeemed    in    exchange    for    series 
dated  June  21,  1962,  due  Sept.  20, 
1962                             

209, 647, 000.  00 
82, 978, 000. 00 

Redeemed    in    exchange    for    series 
dated  June  21,  1962,  due  Dec.  20, 
1962    

Redeemable  for  cash 

1, 509, 621, 000.  00 

Footnotes  at  end  of  table. 


720   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


1 


Table  40. — Issues,  maturities,  and  redemptions  of  interest-bearing  public  debt 
securities,  excluding  special  issues,  July  WGl-June  1962  ^ — Continued 


Date 


1962 
June  21 


21 

22 
26 
26 
26 
27 


28 


28 

28 

30 

30 

30 
30 


Security 


Treasury  bills— Continued 

Regular  weekly^Continued 
Maturing  Sept.  20,  1962: 
Issued  in  exchange  for  series  dated 

Dec.  21,  1961 

Issued  for  cash 

Maturing  Dec.  20, 1962; 
Issued  in  exchange  for  series  dated 

Dec.  21, 1961 

Issued  for  cash 

Tax  anticipation: 
Issued  Sept.  27,  1961: 

Redeemable  for  cash 

Certificates   of  indebtedness,  foreign  series, 

maturing  Sept.  26,  1962 

Certificates   of   indebtedness,  foreign  series, 

maturing  Sept.  26,  1962 

Certificates   of  indebtedness,  foreign  series, 

maturing  Aug.  8,  1962 

Certificates   of  indebtedness,  foreign  series, 

maturing  Sept.  27, 1962 

Treasury  biUs: 

Regular  weelvly: 
Issued  Dec.  28, 1961: 
Redeemed    in    exchange    for    series 
dated  June  28,  1962,  due  Sept.  27, 

1962 - 

Redeemed    in    exchange    for    series 
dated  June  28,  1962,  due  Dec.  27, 

1962 

Redeemable  for  cash 

Maturing  Sept.  27,  1962: 
Issued  in  exchange  for  series  dated 

Dec.  28,  1961 

Issued  for  cash 

Maturing  Dec.  27,  1962: 
Issued  in  exchange  for  series  dated 

Dec.  28,  1961 

Issued  for  cash 

Treasury  bonds  of  1998 

Issued  m  exchange  for  2H%  Treasury 
bonds  of  1967-72  (dated  Nov.  1,  1945)— 

adjustment  of  issues  » 

Treasury  bonds  of  1990 --- 

Issued  in  exchange  for  2H%  Treasury 
bonds  of  1967-72  (dated  Nov.  1, 1945)— 

adjustment  of  issues  ' 

Treasury  bonds  of  1968 

Issued  in  exchange  for  Series  F  and  G  sav- 
ings bonds 

Treasury  bonds  of  1967-72  (dated  Nov.  1, 

1945) 

Redeemed  in  exchange  for  3\i>%  Treasury 

bonds  of  1990 --- 

U.S.  savings  bonds: ' 

Series  E-1941 

Series  E-1942_ 

Series  E-1943 

Series  E-1944 

Series  E-1945 

Series  E-1946 

Series  E-1947 

Series  E-1948 

Series  E-1949 ---. 

Series  E-1950 

Series  E-1951 

Series  E-1952  (lamiarv  to  April  1952) 

Series  E-1952  (May  to  December  1952)... 

Series  E-1953 

Scries  E-1954 

Series  E-1955 --- 

Series  E-1956 

Series  E-1957  (January  1957) 

Series  E-1957    (Februarv    to    December 

1957)  - 

Series  E-1958 

Series  E-1959  (January  to  May  1969).... 


Rate  of 
interest  ^ 


Percent 
2.721 


2.800 


30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 

30 
30 

Footnotes  at  end  of  table. 


2.705 

2.00 

2.80 

2.75 

2.80 


5  2.  761 


Amount  issued  ^ 


$209,  647, 000. 00 
1, 091,  096,  000. 00 


82, 978,  000.  00 
617,574,000.00 


250, 000, 000.  00 
100, 000,  000. 00 


100, 000, 000.  00 


2.792 


2.872 

"m" 


3Vi 


3Ji 


iVi 


'  3.  223 
'  3.  252 
'  3.  276 
"  3.  298 
7  3.316 
7  3.327 
'  3. 346 
7  3. 336 
^  3. 344 
'  3.  347 
'  3. 378 

3.400 
7  3.  451 
'  3.  468 
'  3.  497 
•■  A.  522 
'  3.  546 

3.560 

'  3. 653 

'3  690 

3.730 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


$2,  510, 855,  000. 00 


100,  000,  000.  00 


82,  705,  000. 00 
1, 217,  777,  000. 00 


31, 849, 000.  00 
668, 348, 000.  00 


-26,000.00 


156, 000.  00 
1, 000. 00 


2,  580, 

5, 378, 

5, 109, 

13,  401 

10,  661, 

4,  246, 
3. 982, 
4.633, 

5,  394, 
4,  480, 
4, 149, 

-13, 
6, 059, 
6, 528, 
6, 561, 

6,  406, 
6,  008. 


625.  01 
079. 86 
686. 80 
440. 35 
396.  87 
210.  59 
205. 58 
074. 05 
845.  56 
341.17 
532.  54 
735. 55 
433. 95 
150.  46 
948.  13 
657. 35 
855.  37 
-11.12 


82,  705, 000. 00 

31, 849,  000.  00 
1,  686,  230,  000.  00 


130. 000. 00 


6, 972, 469. 11 

6. 601, 903. 32 

-25,716.23 


2,  706, 
13, 903, 
15, 061, 
17,171, 
15,310, 

8,  034, 
8, 282, 

9,  273, 
10,  461, 
10,  599, 
11,434. 

6, 832, 
9,304, 

8,  2,52, 
8, 323, 

9,  473, 
10, 355. 

776, 


397. 39 
904. 83 
172.96 
426.00 
974. 51 
290.27 

425. 18 
174. 24 
120.  27 
149. 80 

783. 19 
647. 69 
816. 50 
053.65 
754. 22 
380. 90 
389. 94 
670. 53 


10, 933, 373. 39 

15,501,171.79 

6, 883, 049. 46 


TABLES 


721 


Table  40— Issues,  maturities,  and  redemptions  of  interest-hearing  puUic  deU 
securities,  excluding  special  issues,  July  19G1-June  1962  ^—Continued 


Date 


Security 


Rate  of 
interest  ^ 


30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 
30 


30 
30 


U.S.  savings  bonds— Continued 

Series  E-1959  (June  to  December  1959)  - 

Series  E-1960 

Series  E-1961 

Series  E-1962 

Unclassified  sales  and  redemptions 

Series  F-1950 

Series  F-1951 

Series  F-1952 

Unclassified  redemptions 

Series  G-1950 

Series  G-1951 

Series  G-1952 

Unclassified  redemptions 

Series  H-1952 

Series  H-1953 

Series  H-1954 

Series  H-1955 

Series  H-1956 

Series  H-1957  (January  1957) 

Series  H-1957    (February    to    December 

1957) 

Series  H-1958 

Series  H-1959  (January  to  May  1959) 

Series  H-1959  (June  to  December  1959) .  _. 

Series  H-1960. 

Series  H-1961 

Series  H-1962 

Unclassified  sales  and  redemptions 

Series  J-1952 

Series  J-1953 

Series  J-1954 

Series  J-1955 

Series  J-1956 

Series  J-1957 

Unclassified  redemptions 

Series  K-1952 

Series  K-1953 

Series  K-1954 

Series  K-1955 

Series  K-1956 

Series  K-1957 

Unclassified  redemptions 

Depositary  bonds,  First  Series 

Treasury  bonds,  R.E.A.  Series— -------- 

Treasury  bonds.  Investment  Series  B-1975- 

QQ  

Redeemed  in'exchange  for  lH%  Treasury 

notes,  Series  EA-1967 

Treasury  notes,  Series  EA-1967 

Miscellaneous..- 


Percent 
3.750 
3.750 
3.750 
3.750 


Amount  issued  ^ 


Amount  ma- 
tured or  called  or 
redeemed  prior 

to  maturity  * 


2.53 
2.53 
2.53 


2.50 
2.50 
2.50 


^  3. 123 
•  3. 161 
'3.211 
'  3.  258 
7  3.317 
3.360 

r  3.  626 
?  3. 679 
3.720 
3.750 
3.750 
3.750 
3.750 


$6, 678,  761.  24 

6, 884, 520. 55 

5, 693, 934.  62 

316, 663, 506.  25 

-10,420,943.95 

472,  701. 85 

196, 356. 53 

-130.64 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


2.76 
2.76 
2.76 
2.76 
2.76 
2.76 


35, 500.  00 

63, 185, 500.  00 

9, 841, 000. 00 

211, 408. 06 

270, 060. 00 

502, 957. 70 

331, 925.  20 

234, 006. 90 

-78. 10 


2.00 
2.00 

2% 


m 


43, 000. 00 
491, 000. 00 


29, 092, 000. 00 


Total  fiscal  year  1962, 


9,155,086,629.38 


$10,281,312.00 

24, 374,  063. 98 

60, 577,  774.  26 

68, 135,  362.  50 

44, 545,  660. 00 

5, 469, 860. 00 

249,  087. 91 

152, 123.  66 

657, 206.  56 

25,  741, 400.  00 

1,  662,  700. 00 

590,  700. 00 

1,  597, 500. 00 
1, 668, 500.  00 
1, 174, 500.  00 
2,178,500.00 
3, 336. 500. 00 
2, 547,  000.  00 

153, 500.  00 

1, 981, 000.  00 
3, 140,  500.  00 
1, 360,  000. 00 
1,053,500.00 

2,  760, 500.  00 
3, 333, 500. 00 

44, 500.  00 

8  -533, 500.  00 

431,  775. 06 

400,  735. 75 

345,  530. 85 

799,  804.  25 

498,  404.  70 

267,  660. 00 

37, 662. 57 

990, 000. 00 

934. 000. 00 

2, 461,  500. 00 

1, 901, 000. 00 

1, 330,  500. 00 

400, 000. 00 

701, 500. 00 

5, 021, 000. 00 

237, 000. 00 


29, 092, 000. 00 


15, 702, 400. 00 


i,  xu,.  w.  V.-.-.-"     10,879,124,350.79 
Total  June | 

172. 331, 163, 879. 90  1 163, 105,  520, 708. 79 
i  Interest  rates  on  Series  E  and  H  savings  bonds  were  increased  on  Sept.  22,  1959.  retroactive  to  June  1, 
"'For  Treasury  bills,  average  rates  on  bank  discount  basis  are  shown;  for  savings  bonds,  approximate 

5  Average  interest  rate  for  combined  original  and  addi<^?,^f '  Jfv.^?!- ^  ,  ,949  may  be  held  and  will  accrue 

6  At  option  of  o^vne^.  Series  E  bonds  dated  May  1, 1941  through  May  1, 1949,  may ^^e    e^     ^^^^^^  .^^^^^^  ^ 

ai^SKari^V^foSrofore?  sTr^sif  L^o^^r/at^ffieTIssl.  through  Jan.  1, 1957.  may  be 
held  and  will  accrue  interest  for  additional  10  years.  hnnds  of  various  issue  dates  within  the 

f?5r^r&f  a'SS2dr„t:SX«^'K;  .f  Si];S"iCrm?,?-Pec.i™.y, .»  details  o,  yields 
'"•  Smtftranst.rred  from  mclasslOed  sales  or  redemptions  to  sate  or  redemptions  of  designated  s.nM. 

strip  to  mature  each  week  from  Dec.  7,  1961,  to  Jan.  25,  1962. 


661496 — 63- 


-47 


722   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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1962    REPORT    OF   THE    SECRETARY    OF    THE    TREASURY 


Table  42. — Public  debt  increases  and  decreases,  and  balances  in  the  account  of 

the   Treasurer  of  the   United  States,  fiscal  years  1916-62 

[In  millions  of  dollars.    On  basis  of  daily  Treasury  statements,  see"Bases  of  Tables"] 


Fiscal  year 


1916- 
1917- 
1918- 
1919- 
1920- 
1921.. 
1922.- 
1923- 
1924.. 
1925- 
1926.. 
1927- 
1928- . 
1929.. 
1930- 
1931.. 
1932.. 
1933- 
1934.- 
1935.. 
1936- 
1937- 
1938.. 
1939.. 
1940.. 
1941.- 
1942.. 
1943.. 
1944-. 
1945- 
1946.. 
1947- 
1948- 
1949.. 
1950.. 
1951.. 
1952.. 
1953.. 
1954.. 
1955.. 
1956.. 
1957- 
1958.. 
1959.. 
I960.. 
1961- 
1962.. 


Total- 


Public  debt 

outstanding 

at  end  of 

year 


1. 

2, 

12, 

25, 

24. 

23, 

22, 

22, 

21, 

20, 

19, 

18, 

17, 

16, 

16, 

16. 

19, 

22, 

27. 

28, 

33, 

36, 

37, 

40, 

42, 

48, 

72, 

136, 

201, 

258, 

269, 

258, 

252, 

252, 

257, 

255, 

259, 

266, 

271, 

274, 

272, 

270, 

276, 

284, 

286, 

288, 

298, 


225.1 
975.6 
455.2 
484.5 
299.3 
977.5 
963. 4 
349.7 
250.8 
516.2 
643.2 
511.9 
604.3 
931.1 
185.3 
801.3 
487.0 
538.7 
053.1 
700.9 
778.5 
424.6 
164.7 
439.5 
967.5 
961.4 
422.4 
696.1 
003.4 
682.2 
422. 1 
286.4 
292.2 
770.4 
357.4 
222. 0 
105.2 
071.1 
259.6 
374.2 
750.8 
527.2 
343.2 
705.9 
330.8 
970.9 
200.8 


Increase,  or 
decrease  (— ), 
during  year 


33.8 

1,  750.  5 
9, 479.  6 

13, 029.  3 

-1,185.2 
-321.9 

-1,014.1 
-613.7 

-1,098.9 
-734.  6 
-873. 0 

-1,131.3 
-907. 6 
-673. 2 
-745. 8 
616.0 
2, 685.  7 
3, 051.  7 
4,514.5 
1, 647.  8 
5, 077.  7 
2. 646. 1 
740.1 
3, 274.  8 

2,  528. 0 
5, 993. 9 

23, 461. 0 

64, 273.  6 

64, 307. 3 

57, 678.  8 

10,  739.  9 

-11,135.7 

-5,  994. 1 

478.1 

4,  587.  0 

-2,135.4 

3,  883. 2 
6, 965.  9 
5, 188.  5 
3,114.6 

-1,623.4 

-2, 223.  6 

5, 816.  0 

8, 362. 7 

1,  624. 9 

2,  640. 2 
9, 229. 9 


Analysis  of  increase  or  decrease 


E.xceas  of 
expenditures 

(+),  or 
receipts  (— ) 


-48.5 

+853. 4 

+9, 033. 3 

+13, 370. 6 

-212.  5 

-86.7 

-313.8 

-309. 7 

-505. 4 

-250.  5 

-377.  8 

-635.  8 

-398.  8 

-184.8 

-183.8 

+902. 7 

+3, 153. 1 

+3, 068.  3 

+3,154.6 

+2,  961.  9 

+4,  640.  7 

+2,  878. 1 

+  1,143.1 

+2,  710.  7 

+3, 604.  7 

+5,315.7 

+23, 197.  8 

+57,  761.  7 

+53, 645.  3 

+53, 149. 6 

+21, 199.  8 

-206. 0 

-6,  606. 4 

+1,  947.  5 

+2,  592. 0 

-3,  973. 6 

+4,271.8 

+9, 265. 0 

+3, 092. 7 

+3,  665.  6 

-1,190.8 

-1, 267.  3 

+1,656.9 

+12, 761. 4 

-1,029.5 

+4, 950. 8 

+5,  494.  6 


297.009.5       +297,661.8         +10,272.3 


Increase  (+) 
or  decrease 
(-),  in  the 
balance  in 
Treasurer's 
account 


+82.3 

+897. 1 

+447.  5 

-333.  3 

-894.  0 

+192.  0 

-277.  6 

+98. 8 

-135.5 

-17.6 

-7.8 

+24.1 

+31.5 

+61.2 

-8.1 

+153. 3 

-.54.  7 

+445. 0 

+1,719.7 

-740.  6 

+840. 2 

-128.0 

-337. 6 

+622. 3 

-947.  5 

+742. 4 

+358. 0 

+6,515.4 

+10,  662. 0 

+4,  529. 2 

-10,459.8 

-10,929.7 

+1,623.9 

-1,461.6 

+2, 046.  7 

+1,839.5 

-387. 8 

-2, 298. 6 

+2, 096. 2 

-550.  8 

+330.  5 

-956. 2 

+4. 159. 2 

-4, 398.  7 

+2,  654.  3 

-1,310.6 

+3.  736. 3 


Decreases 

due  to 
statutory 
debt  retire- 
ments ' 


1.1 

8.0 

78.7 

427.1 

422.7 

402.9 

458.0 

466.5 

487.4 

519.6 

540.3 

549.6 

553.9 

440.1 

412.6 

461.6 

359.9 

573.6 

403.2 

104.0 

65.5 

58.2 

129. 2 

64.3 

94.7 

3.5 


(*) 
(*) 
(•) 


1,011.6 

7.8 

51.7 

1.2 

.9 

.5 

.4 

2 

1 

1 


763. 


».  1 


1, 000.  0 
1.0 


10, 924.  6 


Balance  in 
Treasurer's 
account  at 
end  of  year 


240.4 
1, 137.  5 
1,  585.  0 

1,  251.  7 
357.  7 
549.7 
272.1 
370.9 
235.4 
217.8 
210.0 
234.1 
265.5 
326.7 
318.6 
471.9 
417.2 
862.2 

2,  581.  9 
1,841.3 
2, 681.  5 
2,  553.  5 
2, 215.  9 
2, 838.  2 

1,  ,890.  7 
2, 633.  2 

2,  991.  1 
9,  506. 6 

20. 168. 6 

24. 697. 7 
14,  237.  9 

3, 308. 1 

4. 932. 0 
3, 470.  4 

5,  517. 1 
7, 356.  6 
6, 968.  8 

4,  670.  2 

6,  766.  5 
6,215.7 
6,  546. 2 

5,  590. 0 
9,  749.  1 
5, 350.  4 
8, 004.  7 

6. 694. 1 
10, 430.  4 


♦Less  than  $50,000. 

'  Effective  with  the  fiscal  year  1948,  statutory  debt  retirements  have  been  excluded  from  budget  expendi- 
tures; they  are  shown  here  for  purposes  of  comparison. 

'  Adjustment  for  overstatement  of  price  paid  for  securities  purchased  in  fiscal  1956  at  a  discount  but 
previously  stated  at  par  value. 

SUMMARY  OF  CHANGES  IN  THE  PUBLIC  DEBT,  FISCAL  YEARS  1916-62 

[In  millions  of  dollars] 
Public  debt: 

As  of  June  30,  1962 298.200.8 

As  of  June  30,  1915 1,191.4 

Net  Increase - 297,009.5 

Increase:  - 

Excess  of  expenditures  in  deficit  years - 315, 443.  4 

Net  increase  in  the  balance  in  the  account  of  Treasurer  of  the  U.S...      10.  272.  3 


Total  increase 325, 715. 6 

Decrease: 

Statutory  debt  retirements 10,924.6 

Retirements  from  receipts  in  surplus  years 17,  781. 6 


Total  decrease. 


28,  706.  2 


Net  Increase  in  debt  since  June  30,  1915 297,009.5 


TABLES 


725 


Table  43. — -Statutory  debt  retirements,  fiscal  years  1918-62 

(In  thousands  of  dollars.    On  basis  of  par  amounts  and  of  daily  Treasury  statements  through  1947,  and  on 
basis  of  Public  Debt  accounts  thereafter,  see  "Bases  of  Tables"] 


Fiscal  year 

Cumu- 
lative 
sinking 
fund 

Repay- 
ments of 
foreign 
debt 

Bonds 

and 

notes 

received 

for 
estate 
taxes 

Bonds 
received 
for  loans 
from 
Public 
Works 
Adminis- 
tration 

Fran- 
chise tax 
receipts. 
Federal 
Reserve 

Banks 

Payments 
from  net 
earnings. 
Federal 
inter- 
mediate 
credit 
banks 

Com- 
modity 
Credit 
Corpo- 
ration 
capital 
repay- 
ments 

Miscel- 
laneous 
gifts, 
forfei- 
tures, 
etc. 

Total 

1918 

1,134 

1  134 

1919 

7,922 

72,  670 

73, 939 

64,  838 

100, 893 

149,  388 

159. 179 

169, 654 

179,216 

181,  804 

176, 213 

160, 926 

48,246 

93 

3,141 

26, 349 

21, 085 

6,569 

8,897 

47 

8,015 

78,  746 

427  123 

1920 

2,922 

60,  724 

60, 333 

10,  815 

3,635 

114 

59 

818 

250 

2,667 

4,283 

18 

13 

1  5, 010 

393 

555 

93 

208 

63 

5,578 

3,090 

160 

61 

85 

53 

21 

15 

556 

1 

14 

139 

12 

16 

16 

5 

4 

3 

2 

4 

« 209,  828 

»81 

•690 

1921- 

261, 100 

276, 046 

284,019 

295, 987 

306, 309 

317, 092 

333,  528 

354,  741 

370, 277 

388, 369 

391,  660 

412.  555 

425, 660 

359, 492 

573,001 

403,238 

103, 815 

65, 116 

48,  518 

128,  349 

37,011 

75, 342 

3,460 

-1 

1922 

422  695 

1923 

402  850 

1924 

458  000 

1925.    .. 

680 
509 
414 
369 
266 
172 
74 
21 

466  638 

1926 

487  376 

1927.  

519  555 

1928... 

2 
20 
73 

540  255 

1929--    - 

549  604 

1930 

553, 884 
440, 082 
412, 630 
461  605 

1931 

1932 

1 

1933      

33,  887 
357 

2,037 

1934 

359,  864 
573  558 

1935  . 

1 

1936 

403, 240 

103,971 

65  465 

1937 

142 
210 
120 

1938 

1939. 

8,095 
134 

1,321 
668 

1,501 
685 
548 
315 

58  246 

1940 

129  184 

1941 

25,364 
18,393 

64  260 

1942...     

94, 722 

1943 

3,463 

1944  .. 

2 

1945 

2 

1946 

4 

1947 

1948 

746, 636 

7,498 

1,815 

839 

551 

241 

8,028 

1,634 
178 
261 
394 
300 
285 
387 
231 
462 
139 

45, 509 

1,011,636 

1949 

7,758 

1950       -     .. 

48, 943 

51,  709 

1951 

1,232 

1952 

851 

1953 

526 

1954 

387 

1955 

231 

1956 

762, 627 

763, 089 

1957 

139 

1958 

1959.. 

-57 

-57 

1960 

1961 

1,000,000 

1, 000, 000 

1962... 

<  1,000 

1,000 

Total 

8, 734, 833 

1,  579, 605 

66,  278 

18,  246 

149, 809 

9,825 

138, 209 

227, 769 

10, 924,  575 

1  Includes  $4,842,066.45  written  ofT  the  debt  Dec.  31, 1920,  for  fractional  currency  estimated  to  have  been 
lost  or  destroyed  in  circulation. 

2  Beginning  with  1947,  bonds  acquired  through  gifts,  forfeitures,  and  estate  taxes  are  redeemed  prior  to 
maturity  from  regular  public  debt  receipts. 

3  Represents  payments  from  net  earnings.  War  Damage  Corporation. 

*  Represents  Treasury  notes  of  1890  determined  bv  the  Secretary  of  the  Trea'^ury  on  Oct.  20, 1961 ,  pursuant 
to  the  Old  Series  Currency  Adjustment  Act  approved  June  30,  1961  (31  U.S.C.  912-916)  to  have  been  de- 
stroyed or  irretrievably  lost  and  so  will  never  be  presented  for  redemption. 


726 


196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  44. — Cumulative  sinking  fund,  fiscal  years  1921-62 
[In  millions  of  dollars.    On  basis  of  Public  Debt  accounts,  see  "Bases  of  Tables"] 


Appropria- 
tions 

Available 
for  expendi- 
ture during 
year  ' 

Debt  retired » 

Fiscal  year 

Par  amount 

Cost  (prin- 
cipal) 

1921 

256.2 
273.1 
284.1 
294.9 
306.7 
321.2 
336.9 
355.1 
370.2 
382.9 
392.2 
410.9 
425.6 
438.5 
493.8 
553.0 
572.8 
577.6 
580.9 
582.0 
585.8 
586.9 
587.8 
587.6 
587.6 
587.6 
587.6 
603.5 
619.6 
619.7 
619.8 
619.8 
619.8 
619.8 
619.8 
623.8 
633.3 
633.3 
633.3 
633.3 
657.1 
680.8 

256.2 

274.5 

284.2 

294.9 

306.7 

321.2 

336.9 

355.1 

370.2 

382.9 

392.2 

410.9 

425.6 

438.5 

573.2 

553.2 

722.7 

1, 196.  5 

1,712.2 

2. 245. 6 

2, 703.  2 

3,  253. 1 

3. 765.  6 

4,349.7 

4, 937.  4 

5,525.0 

6,112.6 

6,  716. 0 

6,  589. 0 

7,201.2 

7, 819.  2 

8, 438. 1 

9, 057. 4 

9,  676. 9 

10,  296.  7 

10, 920.  5 

10,791.2 

11.424.5 

12,057.9 

12, 691. 3 

13, 348.  4 

13,029.3 

261.3 

275.9 

284.0 

296.0 

306.3 

317.1 

333.6 

354.7 

370.3 

388.4 

391.7 

412.6 

425.7 

359.5 

573.0 

403.3 

103.7 

65.2 

48.5 

128.3 

37.0 

75.3 

3.4 

254.8 

1922 - 

274.5 

1923                     - 

284.1 

1924 

294.9 

1925                                                 

306  7 

1926          

321.2 

1927 

336.9 

1928                     .  -                     ....  

355.1 

1929 

370.2 

1930 

382.9 

1931 

392.2 

1932 

410.9 

1933 

425.6 

1934                     

359.2 

1935 

573.0 

1936                            .                  

403  3 

1937 

103.7 

1938 

65.2 

1939                        

48.5 

1940 

128.3 

1941 

37.0 

1942                 

75.3 

1943 

3.4 

1944 

1946 

1947 

1948      

746.6 

7.5 

1.8 

.8 

.6 

.2 

746.6 

1949 

7.6 

1950 

1.8 

.8 

1952 

.6 

1953                        .  .              

.2 

1954 

1956                                                     .  -              

762.6 

762.6 

1957 

1958 

1959                                   

1960 

1,000.0 

1,000.0 

1962 

Total 

21,756.3 
8, 727. 1 

8, 734. 8 

8, 727. 1 

13,029.3 

'  See  the  following  table,  footnote  1. 

2  Net  discount  on  debt  retired  through  June  30,  1962.  is  $7.7  million. 


TABLES  727 

Table  45. — Transactions  on  account  of  the  cumulative  sinking  fund,  fiscal  year  1962 
[On  basis  of  Public  Debt  accounts,  see  "Bases  of  Tables"] 

Unexpended  balance  July  1,  1961 $12,348,414,718.90 

Appropriation  for  1962: 
Initial  credit: 

(a)  Under  the  Victory  Loan  Act  {2H  percent  of  the  aggregate 

amount  of  Liberty  bonds  and  Victory  notes  outstand- 
ing on  July  1,  1920,  less  an  amount  equal  to  the  par 
amount  of  any  obligation  of  foreign  governments  held 
by  the  United  States  on  July  1,  1920) $253,404,864.87 

(b)  Under  the  Emergency  Relief  and  Construction  Act  of 

1932  (2J.4  percent  of  the  aggregate  amount  of  expenditures 

from  appropriations  made  or  authorized  under  this  act) .         7, 860, 606.  83 

(c)  Under  the  National  Industrial  Recovery  Act  (2\<i  percent 

of  the  aggregate  amount  of  expenditures  from  appropria- 
tions made  or  authorized  under  this  act) 80,164,079.53 

Total  initial  credit 341,429,551.23 

Secondary  credit  (the  interest  which  would  have  been  payable 
during  the  fiscal  year  for  which  the  appropriation  is  made  on  the 
bonds  and  notes  purchased,  redeemed,  or  paid  out  of  the  sinking 
fund  during  such  year  or  in  previous  years) 339,419,  534.24  680,849,085.  47 

Total  available  1962 13,029,263,804.37 

Unexpended  balance  June  30,  1962  i. 13,029,263,804.37 

1  Represents  appropriations  authorized  by  Congress.  There  are  no  specific  funds  set  aside  for  this  ac- 
count since  any  retirements  of  public  debt  charged  to  this  account  are  made  from  cash  balances  to  the  credit 
of  the  Treasurer  of  the  United  States. 


728   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


III. — United  States  savings  bonds 

Table  46. — Summary  of  sales  and  redemptions  of  savings  bonds  by  series,  fiscal 

years  1935-62  and  monthly  1962  i 

[In  million  of  dollars.    On  basis  of  daily  Treasury  statements,  see  "Bases  of  Tables"] 


Fiscal  year  or  month 

Series 
A-D 

Series  E 
andH 

Series 
Fand  J 

Series  Q 
and  K 

Total 

Sales  at  issue  price  plus  accrued  discoimt  2 

1935-51 . . . 

5, 003. 1 

/*\ 

/*\ 

66. 673.  4 

4,  406.  7 
5. 180.  9 

5,  778.  7 

6,  347.  6 
6. 374. 0 
5, 745.  5 
5, 830. 8 
5, 680.  4 
5, 501.  2 
5,  717.  4 
5,  752.  5 

5,  277. 3 

217.5 

237.1 

336.1 

423.4 

282.9 

175.8 

65.2 

53.6 

46.0 

32.1 

27.4 

23, 015.  4 
508.2 
372.7 
612.6 
933.2 
403. 1 
176.0 
(*) 
(*) 

99, 669. 2 

1952 

5  132  4 

1953 

5,  790.  7 

1954  3 

1955  3 

6,  727. 4 

7,  704.  2 

1956 

7, 059. 9 

1957 

1958 .       . 

6,097.4 
5, 896. 1 

1959 

5, 734. 0 

1960 

5, 547.  2 

1961... 

5,  749.  5 

1962 

(*) 

5,  779. 9 

Total  through  June  30,  1962 

5, 003. 1 

128, 989. 3 

7, 174. 3 

26,021.1 

167, 187. 8 

1961— July 

474.1 
493.2 
436.  6 
467. 9 
457.  5 
470.  5 
608.  3 
464.8 
483.3 
453.5 
451.9 
491.0 

2.6 
2.0 
2.0 
2.9 
2.0 
2.5 
2.5 
2.5 
1.8 
2.4 
1.8 
2.2 

476. 8 

Auf;ust-.  .  . 

495. 1 

September 

438.6 

October.. ...  . 

470.8 

November 

4.59. 6 

December 

473.  0 

1962— January 

610.8 

February ... 

467. 4 

March .  . 

(*) 

485. 1 

April . 

455. 9 

Mav.     ...... 

453.  7 

493  2 

Redemptions  (including  redemptions  of  matured 
bonds)  at  current  redemption  value  - 

1935-51 

4,  791.  3 

89.9 

30.8 

18.3 

14.1 

10.9 

8.6 

5.9 

5.2 

5.6 

4.1 

2.9 

32, 167.  0 
4, 007. 8 
4, 038. 1 

4. 345. 0 
4,  544. 4 
4.  730. 1 
5, 176.  2 

5. 187. 1 
5, 106. 8 
5, 502.  2 
4, 626.  7 
4. 603. 3 

1, 388. 6 
228.9 
4  257.  5 
M05.0 
553. 6 
724.9 
815. 8 
586.  2 
336.  4 
627.  7 
251. 4 
215.1 

3, 838.  6 

782.  8 

4  1.  294.  4 

<  1, 746. 6 

2, 138. 4 

2,379.9 

2,957.7 

2.  764.  2 

1.800.8 

2, 421.  7 

936.5 

894.8 

42, 185. 3 

1952 

5, 109. 3 

19.53 . 

4  5. 620.  9 

1954  3 

<  6. 514. 9 

1955  3 .      . 

7, 250. 6 

1956 

7, 845. 8 

1957 

8, 958. 2 

1958 . 

8. 543.  5 

19.59 .. 

7. 249. 2 

1060 

8,557  2 

1961 

5, 818. 7 

1962.. ..       . 

5, 716.  2 

Total  through  June  30,  1962 

4, 987.  5 

84, 034. 6 

6, 391. 3 

23, 956. 4 

119.369.7 

1961— July 

2 

357.  5 
378.1 
360. 6 
349.  7 
.330.  8 
343.  4 
483.2 
375.  9 
396.  5 
401.0 
402.4 
424.3 

12.0 
12.4 
11.5 
12.4 
10.9 
60.4 
23.5 
14.0 
17.6 
13.9 
13.6 
1.3.0 

53.3 
47.1 
43.0 
43.6 
41.7 
305.  6 
114.4 
51.7 
64.8 
42.6 
43.9 
43.3 

422  9 

August 

3 
3 

3 
2 

2 
2 
4 
3 
2 

3 
? 

437  9 

September..   

415. 3 

October 

406. 0 

November 

383  5 

December . 

709.5 

1962— January 

621  3 

February 

442  0 

March..   

479  1 

April 

457  7 

Mav 

460  2 

June 

480.7 

*Less  than  $50,000. 

'  Sales  and  redemption  figures  include  exchanges  of  minor  amounts  of  matured  Series  E  for  Series  G  and 
K  bonds  from  May  1951  through  April  ig.'w,  and  Series  F  and  J  for  Scries  H  bonds  beginning  Jsmuarv  1960; 
they  exclude  exchanges  of  Series  E  for  Series  II  bonds,  whidi  are  reported  in  table  47.  Redemption  figures 
for  fiscal  1960-62  also  include  the  maturing  Series  F  and  G  savings  bonds  exchanged  for  marketable  Treasury 
securities  during  special  exchange  offerings.  The  amounts  involved  were  $745  million  in  1960,  $147  million 
in  1961,  and  $320  million  in  1962. 

2  Series  G,  H,  and  K  arc  stated  at  par. 

'  Reductions  were  made  in  issues  and  redemptions  of  Series  E,  II,  F,  G,  J,  and  K  bonds  in  July  1954  to 
compen.sate  for  the  erroneous  inclusion  of  reissue  transactions  in  June  1954  as  reported  in  the  daily  Treasury 
statement.  The  amounts  involved  were  as  follows:  $18  million  for  issues  of  Series  E  and  II,  $17  million 
for  issues  of  Series  F,  G,  J,  and  K,  and  $35  million  for  unclassified  retirements. 

<  Includes  exchanges  of  Series  1941  F  and  G  savings  bonds  for  3!-4%  Treasury  bonds  of  1978-83. 

Note.— Series  E  and  It  are  the  only  savings  bonds  now  being  sold.  Series  A-D  were  sold  from  March  1, 
1935,  through  April  30,  1H41.  Series  F  and  G  were  sold  from  May  1,  1941,  through  April  30,  1952.  Series  J 
and  K  were  sold  from  May  1,  1952,  through  April  30,  1957.  Sales  figures  for  dLscontinucd  series  represent 
accrued  discount  on  outstanding  bonds  and  adjustments. 


TABLES 


729 


Table  47. — Sales  and  redemptions  of  Series  E  through  K  savings  bonds  by  series, 
fiscal  years  1941-62  and  monthly  1962  ^  ^ 


[In 

millions  of 

dollars] 

Sales 

Accrued 
dis- 
count 

Sales 

plus 
accrued 
discount 

Redemptions 

Amount  out- 
standing 

Fiscal  year  or  month 

Total 

Original 
pur- 
chase 
price  3 

Accrued 

dis- 
count 3 

Interest- 
beartng 

Matured 

non- 
interest- 
bearing 

Series  E  and  H 

1941-51 

61, 969. 5 
3, 296. 1 
4, 060. 6 
4, 652. 9 
5, 224. 5 
5, 259. 9 
4, 613. 0 
4,  670. 1 
4,500.0 
4,307.0 
4,  463. 7 
4, 421. 5 

4,703.9 
1, 110. 6 
1, 120. 3 
1, 125. 9 
1, 123. 1 

1. 114. 1 

1. 132. 6 
1, 160.  7 
1, 174.  5 

1. 194. 2 

1. 253. 7 
1,331.0 

66, 673. 4 
4, 406. 7 
5, 180. 9 
5, 778. 7 
6, 347. 6 
6,374.0 
5,  745.  5 
5,  830.  8 
5, 680. 4 
5,  501. 2 

5. 717. 4 

5. 752. 5 

32, 167. 0 
4, 007. 8 

4. 038. 1 

4. 345. 0 
4,  544.  4 
4,  730. 1 

5. 176. 2 

5. 187. 1 
5, 106. 8 
5, 502.  2 
4, 626. 7 

4. 603. 3 

31,161.6 

3. 581. 0 
3, 540. 5 
3,  774. 8 
3,911.4 

4. 069. 1 
4, 444. 0 

-•4,431.9 
4, 309. 8 
4, 616. 3 
3, 905. 8 
3,872.7 

1, 005. 4 
426.8 
497.6 
570.2 
633.0 
660.9 
732.2 

-■  755. 3 
797.0 
885.9 
720.8 
730.6 

34,  506. 4 

34. 905. 4 
36, 048. 2 
37,  482. 0 

39,  285. 1 

40,  929. 1 

41. 498. 5 
42, 142. 2 
42, 715. 8 
42,  714. 8 

43. 805. 6 
44, 954. 8 

1952                    

1953 

1954*              .           

1955  <            

1956                            

1957                

1958     

1959                .  .  

I960     . 

1961 

1962       

Total  through 
June  30,  1962 

HI,  444. 8 

17, 544.  5 

128, 989. 3 

84, 034. 6 

75, 619. 0 

8, 415. 6 

44, 954. 8 

1961 — July    -  -  

342.3 
393.1 
338.8 
369.7 
357.9 
342.7 
475.9 
362.4 
373.5 
349.0 
352.9 
363.2 

131.9 

100.1 

97.8 

98.1 

99.6 

127.7 

132. 3 

102.5 

109.7 

104.5 

99.0 

127.8 

474.1 
493.2 
436.6 
467.9 
457.5 
470.5 
608.3 
464.8 
483.3 
453.5 
451.9 
491.0 

357.5 
378.1 
360.6 
349.7 
330.8 
343.4 
483.2 
375. 9 
396.5 
401.0 
402.4 
424.3 

299.5 
320.5 
305.5 
295.7 
280.3 
290.9 
394.7 
314.9 
337.6 
341.6 
336.7 
354.7 

58.0 
57.5 
55.1 
54.0 
50.5 
52.5 
88.5 
61.0 
58.9 
59.4 
65.7 
69.6 

43. 922. 3 

44. 037. 4 

44. 113. 4 

44. 231. 5 
44,358.3 
44, 485. 3 
44,610.4 
44, 699. 3 
44,  786. 1 
44, 838. 5 
44, 888. 1 
44.954.8 

Auffust                 -  - 

September 

October 

November       .  .  - 

December. 

1962 — January... 

February            

March.   ..  . 

AprO                   

May             - 

June      .    

£ 

eries  F,  C 

t,  J,  and  K 

1941-51                  

27,875.9 
629.3 
501.5 
841.0 
1,248.9 
586.3 
268.4 
(*) 
(*) 
(*) 
(*) 

416.8 

96.4 

108.3 

107.7 

107.7 

99.6 

83.4 

65.2 

53.6 

46.0 

32.1 

27.4 

28,292.7 

725.6 

609.8 

948.6 

1, 356. 6 

686.0 

351.8 

65.2 

53.6 

46.0 

32.1 

27.4 

5. 227. 1 
1,011.7 
1, 552. 0 
2,151.6 
2.692.0 

3. 104. 8 
3,  773. 5 
3,350.5 

2. 137. 2 
3,049.3 
1,188.0 

1. 109. 9 

5. 162. 7 
990.2 

1,511.8 

2. 069. 1 
2, 565. 0 
2, 940. 6 
3,605.0 
3, 234. 6 
2, 063. 4 

2. 921. 2 

1. 128. 8 
1,059.0 

64.4 

21.4 

40.1 

82.6 

127.1 

164.2 

168.5 

115.9 

73.8 

128.1 

59.1 

50.9 

23, 065. 6 

22, 779. 6 

21,837.4 

20,  579. 2 

19, 080. 3 

16,  567. 6 

13, 123.  5 

9, 842.  2 

7,  786. 7 

4, 829. 0 

3, 708. 7 

2, 651. 9 

1952                   

1953 

1954  4                     

55.2 

1955  <                 

218.7 

1956  .       

312.4 

1957 

334.8 

1958              

331.0 

1959 

302.8 

I960                       

257.3 

1961                                

221.6 

1962                          

195.8 

June  30,  1962 

31,951.2 

1, 244.  2 

33, 195. 4 

30, 347.  7 

29, 251. 5 

1,096.2 

2,651.9 

195.8 

1961— July 

2.6 
2.0 
2.0 
2.9 
2.0 
2.5 
2.5 
2.5 
1.8 
2.4 
1.8 
2.2 

2.6 
2.0 
2.0 
2.9 
2.0 
2.5 
2.5 
2.5 
1.8 
2.4 
1.8 
2.2 

65.2 
59.5 
54.5 
56.0 
52.5 
366.0 
137.9 
65.7 
82.3 
56.5 
57.5 
56.3 

62.5 
56.8 
52.0 
53.4 
50.1 
350.7 
132.2 
62.4 
78.2 
53.3 
54.4 
53.2 

2.8 
2.6 
2.5 
2.6 
2.5 
15.3 
5.7 
3.3 
4.2 
3.2 
3.2 
3.1 

3,652.0 
3,603.1 
3, 556. 6 
3, 511. 5 

3. 466. 1 
2,972.5 
2, 889. 4 
2,850.1 

2. 783. 2 
2,  742. 5 

2. 697. 3 
2, 651. 9 

215.8 

August 

207.1 

September.   

201.1 

October 

193.1 

November          

188.0 

December.  . 

318.2 

1962— January 

265.9 

February            .  . 

242.0 

March.   

228.4 

April 

215.0 

May.-  

204.4 

June..  

195.8 

Footnotes  at  end  of  table. 


730   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  47. — Sales  and  redemptions  of  Series  E  through  K  savings  bonds  by  series, 
fiscal  years  19 J,  1-62  and  monthly  1962  i  2 — Continued 


[In  millions  of  dollars] 

Sales 

Accrued 
dis- 
count 

Sales 

plus 
accrued 
discount 

Redemptions 

Exchanges 

of  E 
bonds  for 
H  bonds 

Amount 
out- 

Fiscal yeai-  or  month 

Total 

Original 

purchase 

price  ^ 

Accrued 

dis- 
count 3 

standing 
(interest- 
bearing) 

Sei 

ies  E 

1941-51              

61, 969.  5 
3,  266. 1 
3,700.3 
3, 988. 0 
4, 094. 9 
4, 219. 3 
3, 919. 2 
3, 888. 6 
3,  688. 0 
3, 603.  2 
3, 689.  2 
3, 674.  3 

4,  703.  9 
1,110.6 
1,120.3 
1, 125. 9 
1, 123. 1 
1,114.1 

1. 132. 6 

1. 160. 7 
1, 174. 5 
1, 194.  2 
1,253.7 
1,331.0 

66, 673.  4 
4, 376. 7 
4,820.6 
5,113.9 
5, 218. 0 
5, 333. 4 
5,051.8 
5, 049. 3 
4, 862.  5 
4,  797. 4 
4, 942.  9 
5,005.3 

32, 167. 0 
4,007.8 
4,032.3 
4,319.4 
4,  489. 6 
4,622.0 
4, 980. 6 
4,951.0 
4, 889. 4 
5, 180. 6 
4,393.8 
4, 343. 3 

31,161.6 
3,581.0 
3, 534. 7 

3. 749. 3 

3. 856. 5 
3,961.0 
4,  248.  5 

'4,195.8 

4. 092. 4 
4,  294.  7 
3, 672.  9 

3. 612. 6 

1,005.4 
426.8 
497.6 
570.2 
633.0 
660.9 
732.2 

-■755.3 
797.0 
885. 9 
720.8 
730.6 

34  506  4 

1952 

34, 875. 4 

1953            -      

35  663  6 

1954  <      ...  .- --- 

36, 458. 0 
37, 186  4 

1955  « 

1956 --- 

37, 897. 8 

1957                

37  969  0 

1958         

38,067  2 

1959 

38,040  3 

I960                

201.3 
188.3 
218.6 

37  455  7 

1961            

37  816  6 

1962            

38,260  1 

Total  through 
June  30,  1962.. 

103, 700.  5 

17,544.5 

121,245.0 

82, 376.  7 

73, 961. 1 

8,415.6 

608.2 

38,  260. 1 

igfii—July    

275.7 
329.3 
284.4 
302.4 
292.4 
282.9 
379.5 
302.9 
312.7 
291.0 
314.3 
300.8 

131.9 

100.1 

97.8 

98.1 

99.6 

127.7 

132.3 

102.5 

109.7 

104.5 

99.0 

127.8 

407.6 
429.3 
382.1 
400.5 
392.0 
410.7 
511.8 
405.4 
422.5 
395.5 
413.3 
434.6 

337.0 
357.2 
339.9 
329.3 
311.6 
323.8 
463.  5 
357.0 
367.8 
378.5 
377.  7 
400.1 

279.0 
299.7 
284.8 
275.3 
261.1 
271.3 
375.0 
296.0 
309.0 
319.0 
311.9 
330.5 

58.0 
57.5 
55.1 
54.0 
50.5 
52.5 
88.5 
61.0 
58.9 
59.4 
65.7 
69.6 

16.7 
16.6 
15.8 
18.7 
16.6 
15.7 
28.6 
21.2 
19.7 
16.8 
15.4 
16.7 

37,870.6 
37  926  1 

Aueust         .  -  - 

September 

October 

37,  952.  5 
38  005  0 

November 

December 

1062 — January 

38, 068. 8 
38, 140. 0 
38  159  7 

February 

Marcli       -  -- 

38. 186. 9 
38  221  9 

April - 

38,  222. 1 

May       

38,242  3 

June  

38,  260. 1 

Scries  H 

1952             - 

30.0 
360.3 
664.9 
1,129.6 
1,040.6 
693.8 
781.6 
818.0 
703.9 
774.5 
747.2 

30.0 
360.3 
664.9 
1,129.6 
1, 040.  6 
693.8 
781.6 
818.0 
703.9 
774.5 
747.2 

30.0 

1953            - 

5.7 
25.5 
54.9 
108.1 
195.5 
236.1 
217.4 
321.6 
232.9 
260. 1 

5.7 
25.5 
54.9 
108.1 
195.5 
236.1 
217.4 
321.6 
232.9 
260.1 

384.6 

19544                     

1,023  9 

19554                     

2, 098. 7 

1956            

3,031.2 

1957                           

3,529  5 

1958 

4, 075. 0 

1959                   

4, 675.  5 

I960                

201.3 
188.3 
218.6 

5,  259. 1 

1961                           

5,989  0 

1962                   --- - 

6,  694. 7 

Total  through 
June  30,  1962.. 

7.744.3 

7. 744. 3 

1,657.8 

1, 657. 8 

608.2 

6, 694. 7 

1961— July 

66.5 
63.8 
54.5 
67.3 
65.5 
59.8 
96.5 
59.5 
fiO.8 
,58.0 
38.6 
56. 4 

66.5 
63.8 
54.5 
67.3 
65.5 
59.8 
96.5 
.59.  5 
00.8 
58.0 
38.6 
56.4 

20.5 
20.9 
20.7 
20.4 
19.2 
19.6 
19.7 
18.9 
28.7 
22.6 
24.7 
24.2 

20.5 
20.9 
20.7 
20.4 
19.2 
19.6 
19.7 
18.9 
28.7 
22.6 
24.7 
24.2 

16.7 
16.6 
15.8 
18.7 
16.6 
15.7 
28.6 
21.2 
19.7 
16.8 
15.4 
16.7 

6.051.7 

Aueust 

6  111  3 

September  

6,160  9 

October 

6,  226.  5 

November 

6, 289. 5 

December        .  . 

6,345  4 

1962 — January 

6,  450. 6 

Februarv 

6,  512  3 

March 

6,  564. 2 

April         

6,  616. 4 

May 

6, 645. 8 

June 

6,  694. 7 

Footnotes  at  end  of  table. 


TABLES 


T6i. 


Table  47. 


-Sales  and  redemptions  of  Series  E  through  K  savings  bonds  by  series, 
fiscal  years  1941-62  and  monthly  1962^  ■ — Continued 


[In 

millions  of  dollars] 

Sales 

Accrued 
dis- 
count 

Sales 

plus 
accrued 
discount 

Redemptions 

Amount 
outstanding 

Fiscal  year  or  month 

Total 

Original 
pur- 
chase 

price  3 

Accrued 

dis- 
count 3 

Interest- 
bearing 

Matured 

non- 
interest- 
bearing 

Series  F 

1941-51 

4,860.4 
97.1 
(*) 

2.9 
-2.8 
(*) 
(*) 
(*) 
(*) 
(*) 

416.8 

96.4 

107.6 

105.  1 

100.9 

87.7 

67.5 

47.1 

35.7 

27.8 

15.4 

10.6 

5,277.3 

193.5 

107.7 

108.0 

98.1 

87.7 

67.5 

47.1 

35.7 

27.8 

15.4 

10.6 

1, 388.  6 
228.9 
255.6 
394.4 
532.4 
665.3 
709.3 
487.9 
285.2 
483.5 
212.3 
177.9 

1,324.2 
207.4 
215.5 
312.0 
405.7 
502.3 
544.8 
377.6 
215.3 
370.3 
157.9 
132.5 

64.4 

21.4 

40.1 

82.4 

126.7 

163.0 

164.6 

110.3 

69.9 

113.1 

54.4 

45.4 

3, 888.  7 
3, 853. 3 
3, 705. 3 

3. 388. 8 

2. 876. 9 
2, 249. 9 
1, 598.  3 
1, 169. 1 

943.9 
508.2 
331.2 
182.9 

1952 

1953. 

1954  * 

30.1 
107.6 
157.1 

Ififi  8 

1955 <  

1956  .                 -. 

1957 

1958 -. 

155  3 

1959 

131  0 

1960 - 

111  1 

1961 

91  2 

1962 

72  1 

Total  through  June 
30,  1962 

4,957.7 

1,118.7 

6, 076.  3 

5, 821. 3 

4,  765.  6 

1, 055.  7 

182.9 

72  1 

1961— July 

1.0 
.7 
.7 

1.7 
.7 

1.0 
.9 

1.2 
.5 

1.1 
.5 
.7 

1.0 
.7 
.7 

1.7 
.7 

1.0 
.9 

1.2 
.5 

1.1 
.5 
.7 

9.9 

9.0 

8.3 

8.6 

7.9 

57.0 

20.0 

11.0 

13.8 

11.3 

10.8 

10.2 

7.5 

6.8 

6.3 

6.6 

5.8 

42.2 

14.9 

8.2 

10.2 

8.5 

8.0 

7.5 

2.5 
2.2 
2.1 
2.1 
2.0 
14.8 
5.2 
2.8 
3.6 
2.8 
2.7 
2.6 

324.2 
318.6 
312.8 
308.4 
302.6 
219.6 
210.5 
207.9 
199.3 
194.9 
188.8 
182.9 

89  2 

August 

86  4 

September 

84  7 

October 

82  0 

November . 

80  7 

December 

107  6 

1962 — January 

97  6 

February .- 

90  3 

March  .     ... 

85  7 

April 

79  9 

May 

75.8 

June 

72  1 

Series  G 

1941-51 

23, 015. 4 

422.3 

.1 

13.4 

-13.4 

23,015.4 

422.3 

.1 

13.4 

-13.4 

3, 838. 5 

782.8 

1, 288. 7 

1. 726. 2 

2. 107. 3 
2,300.5 
2,  719. 5 

2. 506. 5 

1. 668. 6 
2, 055. 9 

843. 9 
805.4 

3,838.5 

782.8 

1,288.7 

1, 726.  2 

2, 107.  3 

2, 300. 5 

2, 719.  5 

2, 506. 5 

1, 668.  6 

2, 055.  9 

843.9 

805.4 

19, 177. 0 

18, 816.  5 

17, 527.  9 

15, 789. 8 

13, 583. 3 

11,238.5 

8, 506. 3 

5,992.1 

4, 327.  4 

2, 297. 2 

1,469.0 

670.4 

1953 

1954  4 

25.2 

1955  < 

111.  1 

1956 

1.55.  4 

1957 

168.0 

1958 

175.7 

1959 

171.8 

1960 

146.2 

1961 

130.5 

123.7 

Total  through  June 
30,  1962 

23, 437. 9 

23,437.9 

22,  643. 8 

22, 643. 8 

670.4 

123.7 

1961— July 

46.1 
41.1 
36.8 
35.8 
35.7 
299.5 
104.9 
45.8 
53.4 
36.0 
35.8 
34.6 

46.1 
41.1 
36.8 
35.8 
35.7 
299.5 
104.9 
45.8 
53.4 
36.0 
35.8 
34.6 

1, 426.  8 

1,391.6 

1,359.1 

1,328.6 

1, 296.  7 

894.0 

831.3 

802.1 

757.7 

729.3 

699.9 

670.4 

126.5 

120.7 

September .. 

116.5 

111.1 

November  -    - 

107.3 

December 

210.5 

1962 — January    .  .-- 

168.3 

February 

151.7 

March 

142.7 

April 

135.1 

May  -. 

128.7 

.Tnnfi 

123.7 

Footnotes  at  end  of  table. 


732   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  47. — Sales  and  redemptions  of  Series  E  through  K  savings  bonds  by  series, 

fiscal  years  1941-62  and  monthly  1962  i  ^ — Continued 

[In  millions  of  dollars] 


Sales 

Accrued 
discount 

Sales 

plus 
accrued 
discount 

Redemptions 

.\momit 
outstand- 

Fiscal year  or  month 

Total 

Original 

purchase 

price  3 

Accrued 

dis- 
count 3 

ing 
(interest- 
bearing) 

Series  J 

low 

24.0 
128.8 
225.5 
318.5 
183.2 

92.4 
(*) 
(*) 

24.0 

129.4 

228.1 

325.3 

195.  2 

108. 3 

18.1 

17.8 

18.2 

16.7 

16.8 

24  0 

1953         -      

0.7 
2.5 
6.8 
11.9 
1.5.9 
18.1 
17.8 
18.2 
10.7 
16.8 

1.9 
10.6 
21.2 
59.6 

106.5 
98.4 
51.2 

144.2 
39.1 
37.2 

1.9 
10.5 
20.9 
58.4 

102.5 
92.8 
47.3 

129.2 
34.4 
31.7 

(*) 
0.1 
.3 
1.3 
3.9 
.5.0 
3.9 
15.0 
4.8 
5.5 

151.5 

1954* 

369.0 

19554                             

073. 1 

1956          

808.6 

1957      

810.4 

1958                 

730.2 

1959             

696.9 

1960 

570.8 

1961          

(*) 

548.4 

1962 

527.9 

Total  through  June  30, 
1962_. 

972.4 

125.5 

1. 097.  9 

570.0 

629.5 

40.4 

527.9 

IQfil     Tnlv 

1.6 
1.3 
1.3 
1.3 
1.3 
1.5 
1.6 
1.3 
1.3 
1.3 
1.3 
1.6 

1.6 
1.3 
1.3 
1.3 
1.3 
1.5 
1.6 
1.3 
1.3 
1.3 
1.3 
1.6 

2.0 
3.4 
3.2 
3.8 
3.0 
3.4 
3.1 
3.0 
3.8 
2.6 
2.9 
2.8 

1.8 
2.9 
2.7 
3.3 
2.6 
2.9 
2.9 
2.5 
3.2 
2.2 
2.4 
2.3 

.3 

.5 
.4 
.5 
.4 
.5 
.5 
.4 
.6 
.4 
.4 
.4 

548.0 

A  nfm«:t 

545.9 

Rpntemher 

544.1 

Ortohor 

541.5 

539.8 

538.0 

536.2 

534.5 

532.1 

530.7 

May 

529.2 

527.9 

Series  K 

85.9 
372.6 
599.2 
946.5 
403.1 
176.0 
(*) 
(*) 

85.9 
372.6 
599.2 
946.  5 
403.1 
176.0 
(*) 
(*) 

85.9 

1953                

5.7 

20.3 

31.1 

79.5 

238.2 

257.7 

132.2 

365.8 

92.7 

89.4 

5.7 

20.3 

31.1 

79.5 

238.2 

257.7 

132.2 

365.8 

92.7 

89.4 

452  7 

1,031.5 

1955^          

1, 947. 0 

2,  270. 6 

1957      

2,  208.  5 

1.  950.  7 

1959                 

1.818  6 

1, 452.  S 

1961        

1, 360. 1 

1.  270.  7 

1962 

2, 583.  3 

2,583.3 

1,312.6 

1,312.6 

1, 270.  7 

19f51 — July 

7.2 
6.0 
6.2 

7.8 
6.0 
0.1 
9.5 
5.9 
11.4 
6.5 
8.1 
8.7 

7.2 
6.0 
6.2 

7.8 
6.0 
6.1 
9.5 
5.9 
11.4 
6.5 
8.1 
8.7 

1,352.9 

August 

1,346.9 

September 

1,340.7 

October 

1,333.0 

November.. 

1.  327. 0 

December 

1, 320.  9 

1962— January 

1.311.4 

February..    . 

1,  305.  5 

March .  . 

1.  294.  1 

April... 

1,  287.  6 

May 

1,  279.  4 

June 

1, 270.  7 

*Lcss  than  $50,000. 
f  Revised. 

1  See  table  46,  note  and  footnotes  1  and  4. 

2  Sales  of  Series  E,  F,  and  J  bonds  are  included  at  issue  price,  and  their  redemptions  and  amounts  outstand- 
ing at  current  redemption  value.  Series  O,  H,  and  K  bonds  are  included  at  face  value  throughout.  Ma- 
tured F  and  Q  bonds  outstanding  are  included  in  the  interest-bearing  debt  until  all  bonds  of  the  annual 
series  have  matured,  and  arc  then  tiansferred  to  matured  debt  upon  which  interest  has  ceased. 

3  Because  there  is  a  normal  lag  in  classifying  redemptions  the  distribution  of  redemptions  between  original 
purchase  price  and  accrued  discount  has  been  estimated.  During  fiscal  1961  the  method  of  distributing 
redemptions  between  original  purcha.sc  price  and  accrued  discoimt  was  changed  to  reflect  the  distribution 
shown  in  final  reports  of  classified  redemptions.    All  periods  shown  have  been  revised  on  this  basis. 

*  See  table  46,  footnote  3. 

Note.— Details  by  months  for  Series  E.  F,  and  G  bonds  from  May  1941  will  be  found  on  p.608of  the  1943 
annual  report,  and  in  corresponding  tables  in  subsequent  reports.  Monthly  detail  for  Series  TT,  J,  and  K 
bonds  will  be  found  in  the  1952  annual  report,  pp.  629  and  630,  and  in  corresponding  tables  in  subsequent 
reports. 


TABLES 


133 


Table  48. — Sales  and  redemptions  of  Series  E  and  H  savings  bonds  by  denominations, 

fiscal  years  1941-62  and  monthly  1962^ 

[In  thousands  of  pieces.    Estimated  on  basis  of  daily  Treasury  statements  and  reports  from  Bureau  of  the 

Public  Debt] 


Fiscal  year  or 
month 

Total,  all 
denomi- 
nations 2 

$25 

$50 

$100 

3  $200 

$500 

$1,000 

$5,000 

<  5  $10,000 

Sales  6 

1941-51 

1, 371, 227 

74, 136 

80. 485 

85, 419 

85, 342 

90, 053 

90, 160 

89,  428 

85, 882 

85, 607 

86, 495 

86, 479 

6, 245 

7,209 

6,854 

7,350 

6,845 

7,009 

8,540 

6,596 

7,652 

6,901 

7,  652 

7,625 

938, 127 
.50, 701 
54. 380 
56, 903 
55, 164 
56,  719 
56, 327 
54,  908 
52,  895 

52,  972 

53,  453 
53. 010 

3.801 
4,350 
4,205 
4,531 
4,149 
4,377 
5,240 
3,997 
4,685 
4, 253 
4,690 
4,732 

208, 207 

13, 129 

14, 372 

15, 686 

16, 374 

18, 784 

20. 256 

21, 043 

20,  108 

20.  220 

20,  434 

20,  901 

1,490 

1,715 

1,666 

1,775 

1,661 

1,671 

2,023 

1,574 

1,898 

1,664 

1,915 

1,849 

155, 894 

7,559 

8,211 

8,810 

9,315 

10, 090 

9,969 

9,824 

9,477 

9,208 

9,273 

9,286 

685 

824 

738 

776 

762 

718 

908 

740 

808 

729 

803 

795 

5,545 

720 

794 

854 

884 

929 

851 

893 

798 

774 

789 

813 

61 

76 

63 

66 

68 

61 

83 

66 

69 

64 

69 

68 

21,051 

948 

1,243 

1,411 

1,578 

1,608 

1,320 

1,303 

1,212 

1,165 

1,201 

1,186 

98 

117 

90 

98 

101 

88 

131 

101 

94 

92 

86 

89 

21, 327 

1,076 

1,462 

1,708 

1,945 

1,  854 

1.396 

1,411 

1,340 

1,230 

1,299 

1,237 

105 

124 

91 

99 

101 

90 

150 

113 

95 

96 

85 

89 

1952 

1 

16 

33 

56 

48 

29 

32 

35 

27 

31 

30 

3 

3 

2 

3 

3 

2 

4 

2 

2 

2 

2 

2 

(*) 

7 

14 

26 

21 

12 

14 

16 

11 

15 

16 

1 

1 

1 

1 

1 

1 

2 

2 

1 

1 

1 

1 

1953  - 

1954' 

1955  7.. 

1956 

1957..      - 

1958 

1959 

1960 

1961 

1962 

1961— July 

August 

September.- 

October 

November.. 
December- - 

1962— January 

February... 

March 

Anril 

Alay 

June 

Redemptions  ^ 

1941-51 

890, 537 

76, 403 

81, 983 

90, 387 

89,  749 

89, 953 

93. 175 

93,  452 

88,  647 

90, 748 

85, 077 

83, 804 

6,466 

7,126 

6,788 

6,491 

6.311 

6. 603 

7.809 

6.777 

7.111 

7.359 

7,341 

7.621 

659,  947 

51,  649 

56,  734 

62,941 

61, 049 

60,  014 

60,  612 

59, 880 

56, 036 

56, 796 

54, 280 

52, 958 

4, 100 

4,560 

4,286 

4,109 

4,039 

4,278 

4,802 

4,321 

4.477 

4.  592 

4,  643 

4.751 

125,  084 
12, 662 
13, 535 
15, 084 
15, 650 
16,  593 
18, 165 
19, 467 

18,  598 

19.  507 
18, 654 
18,  746 

1,436 
1,572 
1, 5.54 
1,469 
1,412 
1,452 
1,736 
1,462 
1,585 
1,676 
1,  650 
1,743 

72,  022 

8,777 

8,840 

9,480 

9,914 

9,  925 

10,  590 

10, 433 

10, 394 

10,  634 

9,197 

9,150 

703 

756 

724 

692 

6.58 

666 

941 

739 

787 

830 

797 

856 

1.595 

371 

342 

357 

396 

537 

633 

639 

675 

725 

616 

653 

47 

52 

49 

47 

44 

44 

65 

67 

57 

60 

57 

63 

7,921 

1,211 

1,112 

1,151 

1,210 

1, 255 

1,354 

1,320 

1,301 

1,351 

1,076 

1,077 

84 

87 

84 

82 

75 

76 

119 

88 

95 

95 

92 

98 

7, 156 

1,  291 

1,106 

1,109 

1,177 

1,281 

1,485 

1,464 

1,451 

1,  567 

1,139 

1,126 

89 

90 

83 

83 

76 

81 

136 

93 

101 

98 

95 

101 

1952 

1953 - 

(*) 

1 

2 

5 

9 

11 

9 

15 

10 

10 

(*) 
1 

1954' 

1955  ?. . . 

2 

1956 

3 

1957..    - 

6 

19.5S 

6 

1959 

5 

1960 .. 

8 

1961' 

4 

1962 

5 

1961— July 

August 

Sei)tomber-- 

October 

November.. 
December.. 

1962— January 

February. -- 

March 

Anril 

May 

June 

(*) 
(*) 
(*) 
(*) 
(*) 
(*) 
1 

(*) 
1 

(*) 
(') 

1 

*Le.ss  than  500  pieces. 
'  Revi.sed. 

1  Sales  of  Series  H  began  on  June  1,  1952:  the  denominations  authorized  were  $500,  $1,000,  $5,000,  and  $10,000. 

2  Total  includes  $10  denomination  Series  E  bonds  sold  to  Armed  Forces  only  from  June  1944  through 
March  19,50.  Details  by  years  will  be  found  in  the  1952  annual  report,  pp.  631,  633.  Thereafter  monthly 
detail  for  each  fiscal  year  appears  in  a  footnote  to  the  redemptions  by  denominations  table  of  successive 
annual  reports.  Details  in  thousands  of  pieces  by  months  for  the  fiscal  year  1962  and  revised  figures  for 
1961  follow: 


Fiscal 
Year 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Jan. 

Feb. 

Mar. 

Apr. 

May 

June 

Total 

1961'- 
1962 

10 
6 

10 

8 

9 
6 

8 
6 

i 

6 

7 
5 

9 

8 

9 
6 

9 

7 

8 

7 

7 
6 

7 
6 

101 

78 

3  Sale  of  $200  denomination  Series  E  bonds  began  in  October  1945. 
^  Sale  of  $10,000  denomination  Series  E  bonds  was  authorized  on  May  1,  1952. 

5  Includes  sales  of  $100,000  denomination  Series  E  bonds  which  are  purchasable  only  by  trustees  of  em- 
ployees' savings  plans  beginning  April  1954,  and  personal  trust  accounts  beginning  January  1955. 
8  See  table  46,  footnote  1. 
'  See  table  46,  footnote  3. 


734   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  49. — Sales  of  Series  E  and  H  savings  bonds  by  States,  fiscal  years  1961, 

1962,  and  cumulative  ^ 

[In  thousands  of  dollars,  at  issue  price.    On  basis  of  reports  received  by  the  Treasury  Department,  with 

totals  adjusted  to  basis  of  daily  Treasury  statements] 


State 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut. 

Delaware 

District  of  Columbia 

Florida 

Georgia 

Hawaii. 

Idaho 

Illinois 

Indiana.. 

Iowa 

Kansas 

Kentucky.. 

Louisiana 

Maine... 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana. 

Nebraska.. 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklalioma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah V.'.V... 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Canal  Zone 

Puerto  Rico 

Virgin  Islands 

Adjustment  to  daily  Treasury  statement 

Total 


Fiscal  year 
1961 


38, 

3, 

19, 

21, 

271, 
32, 
63, 
17, 
34, 
71, 
39, 
10, 
7, 

353, 

124, 

137, 
78, 
50, 
34, 
15, 
56. 

107, 

254, 
72. 
18. 

136. 

19, 

88, 

5, 

9, 

169, 
12, 

439, 
41, 
20, 

281, 
58, 
30, 

390, 
14. 
22. 
27, 
35. 

141, 

17, 

4, 

72, 

56, 

48, 

96, 

7, 

2, 

1, 

+276, 


518 
156 
135 
774 
753 
639 
569 
157 
272 
066 
920 
093 
913 
686 
157 
912 
162 
235 
200 
674 
350 
412 
890 
277 
562 
927 
490 
625 
981 
532 
284 
148 
689 
720 
163 
297 
0,55 
965 
055 
158 
580 
871 
445 
665 
229 
624 
997 
169 
248 
365 
265 
568 
958 
97 
076 


4,  463, 728 


Fiscal  year 
1962 


38. 336 
4,153 

18,  676 

19, 280 

274,515 

32, 633 

68,642 

17.301 

37, 680 

74, 884 

40,  221 

9,986 

7.249 

332. 851 

126.  266 

118.0(19 

71, 636 

53, 253 

34, 674 

14,418 

62,314 

107,  799 

238,  795 

64, 083 

16,387 

130, 080 

17,087 

SO,  464 

5.846 

9,261 

174, 434 

12,  474 
473,  573 

44. 375 

17,  524 

271.311 

54. 922 

30. 337 
414. 749 

13,  497 
22, 045 
24, 024 
35. 288 

135.  368 

17, 129 

4,625 

74. 085 

55.  462 

48, 157 

90,447 

7,050 

2,521 

1,674 

121 

+269,  519 


4, 421, 490 


May  1941- 
June  1962 


1,085,384 

2  47, 488 

404, 006 

650, 138 

7, 629,  521 

845, 184 

1. 724, 180 

287,  582 

1,173,400 

1,418,644 

1, 209, 468 

424, 851 

276,  550 

9, 018,  202 

3,120,014 

3, 086,  298 

1, 821, 183 

1, 227, 209 

1,067,016 

421,898 

1,377,271 

3,112,  ,571 

6,111.157 

2, 120, 959 

634,155 

3, 108,  786 

554,114 

1, 766,  521 

131, 806 

258, 610 

4, 133, 440 

269. 386 

12.343.013 

1,243,140 

556, 312 

6, 924,  577 

1,370,667 

1, 069, 983 

9, 090, 392 

489.  502 

633.  588 

674, 152 

1,150,108 

3,  942,  238 

430. 234 

141,  723 

1, 819, 676 

1,822,623 

1, 120, 169 

2,  511, 102 

216,153 

66, 016 

60,579 

3,035 

i +3, 248, 831 


111,444,805 


1  Figures  include  exchanges  of  minor  amounts  of  Serie";  F  and  J  bonds  for  Series  II  bonds  beginning  Jan- 
uary 1960;  however,  they  exclude  exch.anges  of  Series  E  bonds  for  Series  II  bonds,  which  are  reported  in 
table  47. 

'  Excludes  data  for  period  April  1947  through  December  1956,  when  reports  wer^  not  available.  In  the 
annual  reports  for  1952-1958  data  for  period  May  1941  through  March  1947  were  included  with  "Other 
possessions." 

'  Includes  a  small  amount  for  other  possessions. 

Note— Sales  by  States  of  the  various  series  of  savings  bonds  were  puhlisiied  in  the  annual  report  for  1943, 
pp.  614-621,  and  in  subsequent  reports;  and  bv  months  at  intervals  in  the  Treasvri/  Bulletin,  beginning  with 
tlie  issue  of  July  1946.  Since  April  30, 1953,  figures  for  sales  of  Series  E  and  H  bonds  only  have  boeni  available 
by  States. 


TABLES 


735 


IV. — Interest 

Table  50. — Amount  of  interest-bearing  public  debt  outstanding,  the  computed  annual 
interest  charge,  and  the  computed  rate  of  interest,  June  30,  1916-62,  and  at  the  end 
of  each  month  during  1962  ' 

[On  basis  of  Public  Debt  accounts  through  June  1937,  and  subsequently  on  basis  of  daily  Treasury 

statements,  see  "Bases  of  Tables"] 


End  of  fiscal  year  or  month 

Interest-bearing 
debt' 

Computed  an- 
nual interest 
charge  ' 

Computed 

rate  of 

interest  • 

1916 - - 

$971,  562, 590 

2,712,549,476 

11, 985, 882, 436 

25,234,496,273 

24,061,095,361 

23,737,352,080 

22,711,035,587 

22,007,590,754 

20. 981, 586, 429 

20,210,906,251 

19,383,770,860 

18, 250, 943, 965 

17,317,695,096 

16,638,941,379 

15,921,892,350 

16, 519, 588, 640 

19, 161,  273,  540 

22,157,643,120 

26, 480, 487, 920 

27, 645, 229, 826 

32, 755, 631,  770 

35,802,586,915 

36, 575,  925, 880 

39, 885, 969, 732 

42,376,495,928 

48, 387, 399, 539 

71,968,418,098 

135, 380, 305, 795 

199, 543, 355, 301 

256,356,615,818 

268,110,872,218 

255,113,412,039 

250,063,348,379 

250,  761, 636, 723 

255,209,353.372 

252, 851,  765,  497 

256,862,861,128 

263, 946, 017, 740 

268,909,766,654 

271,  741, 267, 507 

269,883,068,041 

268, 485,  562, 677 

274, 697, 560, 009 

$23, 084, 635 

83, 625, 482 

468, 618, 544 

1, 054, 204, 509 

1,016,592,219 

1,029,917,903 

962, 896, 535 

927,331,341 

876, 960, 673 

829,  680, 044 

793. 423,  952 

722, 675,  553 

671,353,112 

656,654,311 

606.031,831 

588, 987, 438 

671, 604,  676 

742, 175, 955 

842,301,133 

750,  677, 802 

838,002,053 

924, 347, 089 

947,084,058 

1,036,937,397 

1,094,619,914 

1,218,238,845 

1,644,476,360 

2,678,779,036 

3, 849, 254, 656 

4,963,730,414 

5, 350,  772, 231 

5,374,409,074 

5, 455, 475, 791 

5,605,929,714 

5,612,676,516 

5,739,615,990 

5,981,357,116 

6,430,991,316 

6, 298, 069, 299 

6,387,225,600 

6,949,699,625 

7, 325, 146,  596 

7, 245, 154, 946 

Percent 
2.376 

1917              

3.120 

1918 --- -- 

3.910 

1919         

4. 178 

1920 - --- 

4.225 

1921                 

4.339 

1922 

4.240 

1923                

4.214 

1924 

4.180 

1925                - 

4.105 

1926 - 

4.093 

1927                

3.960 

1928 - -- 

3.877 

1929                      .            

3.946 

1930    

3.807 

1931                        

3.566 

1932    - 

3.505 

1933                             

3.350 

1934 

3.181 

1935 

2.716 

1936    — - 

2.559 

1937 

2.582 

1938 

2.589 

1939                    .           

2.600 

1940         --- - 

2.583 

1941 

2.518 

2.285 

1943 

1.979 

1944                  „  .        

1.929 

1945 

1.936 

1.996 

1947    --- 

2.107 

2.182 

1949     

2.236 

2.200 

1951         

2.270 

2.329 

1953 

2.438 

2.342 

1955                                  

2.351 

1956    

2.576 

1957                                         

2.730 

1958 — - - 

2.638 

Footnotes  at  end  of  table. 


736   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  50. — Amount  of  interest-bearing  public  debt  outstanding,  the  computed  annual 
interest  charge,  and  the  computed  rate  of  interest,  June  SO,  1916-62,  and  at  the  end 
of  each  month  during  1962  ' — Continued 


End  of  fiscal  year  or  month 


1959 

1960. 

1961 

1962 

1961— July -. 

August 

September 
October... 
November 
December. 

1962— January . . . 
February.. 

March 

April 

May 

June 


Interest- bearing 
debt  2 


$281, 
283, 
28.'), 
294. 
288. 
290, 
290, 
292, 
293, 
292, 
293, 
293, 
292, 
293, 
295, 
294, 


833, 
241, 
671, 
442. 
997, 
658, 
772, 
709, 
603, 
689, 
110, 
549, 
484, 
361, 
518, 
442, 


362, 429 
182,  755 
608,619 
000,  790 
837.717 
634, 550 
892, 148 
111,442 
727, 677 
094, 798 
948, 599 
445, 157 
513,816 
331, 806 
643, 512 
OUO,  790 


Computed  an- 
nual interest 
charge ' 


$8,065,917,424 
9, 316, 066, 872 
8,761,495,974 
9, 518, 857, 333 
8,841,041,977 

8,  942, 109, 523 
8, 984, 454, 165 

9,  049, 209, 314 
9,149,755,112 
9, 156, 019, 992 
9,226,333,154 
9,313,861,321 
9, 367, 808, 594 
9,413,158,546 
9, 643, 035, 467 
9,518,857,333 


Computed 

rate  of 

interest ' 


Percent 
2.867 
3.297 
3.072 
3.239 
3.065 
3.082 
3.096 
3.098 
3.123 
3.135 
3.155 
3.180 
3.209 
3.215 
3.236 
3.239 


•  Comparable  monthly  data  1929-36  appear  in  1936  annual  report,  p.  442,  and  from  1937  in  later  reports. 
Annual  interest  charge  monthly  1916-29  appears  in  1929  annual  report,  p.  509. 

2  Includes  from  June  30,  1930,  discount  on  Treasury  bills;  the  current  redemption  value  from  May  1935 
of  savings  bonds  of  Series  A-F  and  J;  and  beginning  August  1941,  the  face  amount  of  Treasury  tax  and 
savings  notes.  The  face  value  of  matured  savings  bonds  and  notes  outstanding  is  included  until  all  of  the 
annual  series  have  matured,  when  they  are  transferred  to  matured  debt  on  which  interest  has  ceased. 

Note.— The  computed  annual  interest  charge  represents  the  amount  of  interest  that  would  be  paid  if  each 
interest -bearing  issue  outstanding  at  the  end  of  the  month  or  year  should  remain  outstanding  for  a  year  at 
the  applicable  annual  rate  of  interest.  The  charge  is  computed  for  each  issue  by  applying  the  appropriate 
annual  interest  rate  to  the  amount  outstanding  on  that  date.  The  aggregate  charge  for  all  interest-bearing 
issues  constitutes  the  total  computed  annual  interest  charge. 

The  average  annual  interest  rate  is  computed  by  dividing  the  computed  annual  interest  charge  for  the 
total,  or  for  any  group  of  issues,  by  the  corresjonding  principal  amount.  Beginning  Dec.  31,  1958,  the  com- 
puted average  rate  is  based  upon  the  rate  of  effective  yield  for  issues  sold  at  premiums  or  discounts.  Before 
that  date  the  computed  average  rate  was  based  upon  the  coupon  rates  of  the  securities.  This  rate  did  not 
materially  differ  from  the  rate  on  the  basis  of  effective  yield.  The  Treasury  announced  on  Nov.  18,  1958, 
however,  that  when  appropriate  there  might  be  more  frequent  issues  of  securities  sold  with  premiums  or 
discounts.  This  "effective  yield"  method  of  computing  the  average  interest  rate  on  the  public  debt  rrore 
accurately  reflects  the  mterest  cost  to  the  Treasury,  and  is  believed  to  be  in  accord  with  the  intent  of 
Congress  where  legislation  has  required  the  use  of  the  rate  of  effective  yield  for  various  purposes. 


TABLES 


737 


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739 


Table  52. — Interest  on  the  'public  debt  by  security  classes,  fiscal  years  1958-62  * 
[In  millions  of  dollars.    On  basis  of  Public  Debt  accounts,  see  "Bases  of  Tables"] 


Class  of  security 

1958 

1959 

1960 

1961 

1962 

Public  issues: 

Marketable  obligations: 
Treasury  bills  ^    .... 

738.4 
1,143.8 

600.8 

2, 097.  4 

1.5 

734.2 

915.3 

741.0 

2, 229. 1 

1.5 

1,572.0 

783.8 

1,703.4 

2,223.2 

1.5 

1, 108.  7 

712.3 

1,951.8 

2,214.1 

1.4 

1, 149.  3 

Certificates  of  indebtedness 

282.5 

Treasury  notes      .    

2, 417. 9 

Treasury  bonds.   .  

2, 216. 8 

Other  3    _. 

(*) 

Total  marketable  obligations                .. 

4,  581. 9 

4, 621. 1 

6,283.9 

5, 988. 3 

6, 066.  5 

Nonmarketable  obligations: 
United  States  savings  bonds: 
Series  E,  F,  and  J  2 

1,218.2 

308.1 

3.3 

1,232.0 

296.1 

4.0 

1,246.0 

257.0 

3.6 

1,285.8 

261.1 

2.6 

.2 

1,358.3 

Series  G.  II,  and  K       

277.7 

Depositary  bonds 

2.9 

Treasury  bonds,  R.E.A.  series                       

.5 

Certificates  of  indebtedness: 
Foreign  series                         .                  

10.7 

Foreign  currency  series      

.9 

Treasury  bonds,  investment  series 

272.3 

242.2 
(*) 

196.0 

169.1 

(*) 

140.2 

Other  *                    .           

(*) 

Total  nonmarketable  obligations 

1,801.9 

1,774.3 

1,  702.  6 

1,718.8 

1,791.2 

Total  public  issues          .  .  .  .  

6,383.8 

6, 395.  4 

7, 986.  5 

7, 707. 1 

7,857.7 

Special  issues: 

Certificates  of  indebtedness 

778.0 

358.4 

86.6 

592.1 
431.9 
173.4 

244.8 
373.4 
574.9 

243.6 
265.  7 
740.8 

228.6 

Treasury  notes                                       

204.6 

Treasury  bonds     . 

828.9 

Total  special  issues    

1,223.0 

1,197.4 

1, 193. 1 

1, 250. 1 

1,262.1 

Total  interest  on  public  debt 

7,  606.  8 

7,  592. 8 

9, 179. 6 

8, 957.  2 

9, 119. 8 

*Less  than  $50,000. 

1  On  an  accrual  basis. 

2  Amounts  represent  discount  treated  as  interest. 

3  Includes  postal  savings  bonds,  Liberty  bonds,  Victory  notes,  and  Panama  Canal  bonds. 

*  Includes  Treasury  tax  and  savings  notes,  Armed  Forces  leave  bonds,  and  adjusted  service  bonds. 


740 


196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 


Table  53. — Interest  on  the  public  debt  and  guaranteed  obligations  by  tax  status, 

fiscal  years  1940-62  i 


[In  millions  of  dollars.    On  basis  of  Public  Debt  accounts,  spp  "  Bases  of  Tables"! 

Total 

Tax-exempt 

Taxable 

Special 
issues  to 
Govern- 

Fiscal year 

Total 

Wholly 

Partially 

ment  agen- 
cies and 
trust  funds 

Issued  by  U.  S.  Government 

1940                                                .    --- 

1,041.4 
1,110.2 

1,  260. 1 
1,813.0 

2,  610.  1 

3,  621.  9 
4,747  5 

4,  958.  0 

5,  187.  8 
5.  352.  3 
5,  496.  3 
5,  615. 1 

5,  853. 0 

6,  503.  6 
6.  382  5 
6.  370.  4 

6,  786.  6 

7,  244.  2 
7, 606. 8 

7,  592. 8 
9,179.6 

8,  957. 2 
9, 119. 8 

909.6 

950.1 

907.2 

895.  6 

852.2 

780.2 

711.9 

601.0 

574.8 

494.5 

416.7 

329.9 

226.0 

201.7 

183.9 

148.6 

94.6 

73.3 

66.6 

42.3 

42.3 

42.2 

40.8 

104.2 

79.2 

57.1 

.38.3 

27.2 

45.3 

26.0 

7.0 

5.6 

5.1 

4.3 

4.2 

4.1 

3.7 

3.1 

2.2 

1.5 

1.5 

1.5 

1.5 

1.5 

1.4 

(*) 

805.  4 

870  9 

850.1 

857.4 

825.0 

734.9 

685,9 

594.0 

569.2 

489.4 

412.4 

325.7 

221.9 

198.0 

180.8 

146.4 

93  1 

71.8 

65.1 

40.8 

40.8 

40.8 

40.8 

131  8 

1941 

1942. 

1943 - 

1944 

1945 

1946 

0.5 

153.6 

676.1 

1, 449.  8 

2,  436.  3 

3,  530. 8 

3,  755. 1 
3,884.9 
4, 040.  3 

4,  218.  8 
4,  413. 0 

4,  686  9 
5, 258.  4 
5,071.0 
6, 107. 1 
5. 553. 6 

5,  930. 2 
6,317.2 
6, 353.  1 
7,944.2 
7, 664. 9 
7, 816.  9 

159.6 
199.4 
241.3 
308.2 
405.  4 
504  8 

1947 

601  9 

1948 

728  I 

1949 

1950 - - 

1951 

1952 

1953 - 

817.5 
860  8 
872,2 
940  1 
1  043  5 

1954 

1955 

1956 

1957 

1.127  6 
1.  114  7 
1.138.4 
1  240  7 

195.<* 

1,223  P 

1959 

1,197,4 

1960 

1  193  1 

19fil            -     .                              

1  250  1 

1962 

1  262  1 

Issued  by  Federal  instnimentalities:  Guaranteed  Issues 

1940 

109.9 

110.9 

125.6 

82.0 

77.9 

18.0 

1.6 

1.6 

1.1 

.7 

.6 

1.1 

1.8 

2.4 

2.2 

2.1 

2.5 

3.8 

4  0 

4.9 

5.0 

8.3 

15.8 

109.9 

110.9 

113.0 

66.6 

65.7 

13.2 

1.6 

1,6 

1.1 

.4 

.3 

.3 

.4 

.3 

.2 

.2 

.2 

.2 

.2 

.1 

.1 

(*) 

(*) 

109.9 

110.9 

113.0 

66.6 

65  7 

13.2 

1.6 

1.6 

1.1 

.4 

.3 

.3 

.4 

.3 

.2 

.2 

.2 

.2 

.2 

.1 

.1 

(*) 

(*) 

1941 

1942 

12.6 

15.4 

12.2 

4.8 

(•) 

(•) 

(•) 

.2 

.1 

.8 

1.4 

2,1 

2.0 

1.9 

2.3 

3.6 

3.8 

4.8 

4.9 

'S.  2 

15.8 

1943 

1944 

1945 

1946 

1947 

1948 

1949 

1950 

1951 

1952 

1953 

1954.... 

1955 

1956 

1957 

1958 

1959 

1960 

1961 

1962 

'  Revised. 

•Less  than  $50,000. 

'  Figures  for  1940  to  1949,  inclusive,  represent  actual  interest  payments;  figures  for  1950  to  1954,  inclusive, 
represent  interest  which  became  due  and  payable  during  those  years  without  regard  to  actual  payments; 
figures  for  1955  to  1962,  inclusive,  are  shown  on  an  accrual  basis. 

Note.— Amount  of  interest  paid  includes  increase  in  redemption  value  of  United  States  savings  bonds 
and  discount  on  unmatured  issues  of  Tresisury  bills.  Intere.st  paid  on  guaranteed  issues  does  not  include 
amounts  paid  on  demand  obligations  of  Commodity  Credit  Corporation.  Data  for  1913-33  wiU  be  found 
in  the  1948  annual  report,  p.  539,  and  for  1934-39  in  the  1952  annual  report,  p.  645. 


TABLES 


741 


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Taxable  issues— Continued 
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TABLES 


745 


VI. — Ownership  of  governmental  securities 

Tabt-e   56. — Estimated  ownership  of  interest-bearing  governmental  securities  out- 
standing June  SO,  1952-62,  by  type  of  issuer 

IPar  value.'    In  billions  of  dollars] 


Total 

Held  by  banks 

Held  by 

U.S. 
Govern- 

Held by  private  nonbank  Investors 

June 

iiiiiounl 

ment 

State, 

30 

out- 

Com- 

Federal 

invest- 

Indi- 

Insur- 

Mutual 

local, 

Miscel 

stand- 

Total 

mer- 

Reserve 

ment 

Total 

vid- 

ance 

sav- 

Corpo- 

andTer- 

laneou^ 

ing 

cial 
banks 

Banks 

ac- 
counts 

uals' 

com- 
panies 

ings 
banks 

rations  » 

ritorial 
govern- 
ments * 

inves- 
tors* 

I.  Securities  of  U.  S.  Government  and  Federal  instrumentalities  guaranteed  by  United  States  • 

1952... 

256.9 

84.0 

61.1 

22.9 

44.3 

128.5 

63.8 

15.7 

9.6 

18.8 

10.4 

10.3 

1953... 

264.0 

83.6 

58.8 

24.7 

47.6 

132.9 

65.3 

16.0 

9.5 

18.6 

12.0 

11.5 

1954... 

269.0 

88.7 

63.6 

25.0 

49.3 

131.0 

63.7 

15.4 

9.1 

16.6 

13.9 

12.2 

1955... 

271.8 

87.1 

63.5 

2.3.6 

.50.5 

134.1 

64.0 

15.0 

8.7 

18  8 

14.7 

12.8 

1956... 

270.0 

81.0 

57.3 

23.8 

53.5 

135.4 

65.1 

13.6 

8.4 

17.7 

16.1 

14.6 

1957... 

268.6 

79.2 

56.2 

23.0 

55.6 

133.8 

64.6 

12.7 

7.9 

16.8 

16.8 

14.9 

1958... 

274.8 

90.7 

65.3 

25.4 

55.9 

128.2 

62.7 

12.2 

7.4 

14.8 

16.3 

14.7 

1959... 

281.9 

87.6 

61.5 

26.0 

54.6 

139.7 

■•64.4 

12.6 

7.3 

■■20.8 

16.9 

17.7 

1960... 

283.4 

81.8 

55.3 

26.5 

55.3 

146.2 

-•67.3 

12.0 

6.6 

'21.0 

18.8 

20.4 

1961... 

285.9 

89.8 

62.5 

27.3 

56.1 

140.0 

-•  62.  7 

11.4 

6.3 

19.7 

'19.3 

20.6 

1962... 

294.9 

94.6 

65.0 

29.7 

56.5 

143.8 

64.3 

11.3 

6.3 

19.3 

19.7 

22.9 

II.  Securities  of  Federal  instrumentalities  not  guaranteed  by  United  States  » 

1952... 

1.2 

.7 

.7 

(*) 

.5 

.3 

(*) 

(*) 

.1 

(•) 

(*) 

1953... 

1.1 

.6 

.6 

(*) 

.5 

.3 

(*) 

(*) 

.1 

(*) 

(*) 

1954... 

1.0 

.5 

.5 

(*) 

.5 

.3 

(*) 

(•) 

.1 

(•) 

(•) 

1955... 

1.8 

.9 

.9 

(*\ 

.9 

.4 

(*) 

(*; 

.4 

(•) 

(') 

1956... 

2.6 

.9 

.9 

(*) 

1.6 

.6 

.1 

.1 

.7 

(*) 

.1 

1957... 

3.5 

1.0 

1.0 

/*\ 

2.4 

.9 

.1 

.2 

1.0 

(•) 

.2 

1958... 

3.8 

1.4 

1.4 

(*) 

2.4 

.8 

.1 

.2 

1.0 

.1 

.2 

1959... 

4.8 

1.2 

1.2 

(*) 

3.6 

1.2 

.1 

.3 

1.3 

.2 

.5 

1960... 

6.3 

1.1 

1.1 

(*) 

5.2 

1.7 

.2 

.4 

1.6 

.3 

1.0 

1961... 

5.4 

1.2 

1.2 

(*\ 

4.2 

1.1 

.2 

.3 

1.5 

d 

.7 

1962... 

6.8 

1.7 

1.7 

(*) 

5.1 

1.4 

.3 

.4 

1.5 

.6 

.9 

III.  Securities  of  State  and  local  governments,  Territories,  and  possessions  • 

1952... 

29.3 

9.9 

9.9 

.7 

18.7 

10.5 

2.8 

.2 

.6 

3.9 

.6 

1953... 

32.3 

10.6 

10.6 

.7 

21.0 

11.6 

3.5 

.4 

.7 

4.2 

.6 

1954... 

37.4 

12.0 

12.0 

.3 

25.1 

13.8 

4.6 

.5 

.9 

4.5 

.7 

1955... 

42.8 

12.8 

12.8 

.3 

29.7 

16.4 

5.8 

.7 

1.1 

4.9 

.8 

1956... 

47,6 

13.0 

13.0 

.2 

34.5 

19.5 

6.6 

.7 

1.4 

5.3 

.9 

1957... 

52.1 

13.4 

13.4 

.2 

38.4 

22.0 

7.4 

.7 

1.5 

5.8 

1.0 

1958... 

56.8 

15.8 

15.8 

.3 

40.7 

22.8 

8.2 

.7 

1.5 

6.4 

1.1 

1959... 

62.0 

17.0 

17.0 

.3 

44.6 

24.6 

9.5 

.7 

1.7 

6.8 

1.3 

1960... 

66.4 

16.8 

16.8 

.3 

49.2 

27.2 

10.9 

.7 

1.9 

7.1 

1.5 

1961... 

71.7 

18.8 

18.8 

.4 

52.5 

28.3 

12.3 

.7 

2.2 

7.4 

1.6 

962... 

80.1 

23.2 

23.2 

.5 

56.4 

30.5 

13.6 

.6 

2.7 

7.2 

1.8 

•Less  than  $50  million. 
'  Revised. 

•  Except  data  including  U.S.  savings  bonds  of  Series  A-F  and  J,  which  are  on  the  basis  of  current  redemp- 
tion value. 

2  Includes  partnerships  and  personal  trust  accounts. 

*  Exclusive  of  banks  and  insurance  companies. 

«  Comprises  trust,  sinking,  and  investment  funds  of  State  and  local  governments,  Territories,  and  pos- 
sessions. 

« Includes  savings  and  loan  associations,  nonprofit  associations,  corporate  pension  trust  funds,  dealers  and 
brokers,  and  investments  of  foreign  balances  and  international  accounts  in  this  country. 

'  On  daily  Treasury  statement  basis.  Since  noninterest-bearing  debt  is  excluded  the  figures  difi'er  slightly 
from  those  in  discussion  of  debt  ownership.  Special  issues  to  Federal  agencies  and  trust  funds  are  included 
and  guaranteed  securities  held  by  the  Treasury  are  excluded. 

'  Excludes  stocks  and  interagency  loans. 

'  Excludes  obligations  of  Puerto  Rico  after  June  30,  1952. 

Note.— For  data  from  1937  through  1951,  see  the  1952 annual  report,  pp.  764  and  765. 


746   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  57. — Estimated  distribution  of  interest-bearing  governmental  securities  out- 
standing June  SO,  1952-62,  by  tax  status  and  type  of  issuer  i 


[Par  value.'    In  millions  of  dollars! 

Securities  of  U.S.  Government  and  Federal 
instrumentalities  guaranteed  by  U.S.' 

Sccuritiesof  Federal  instru- 
mentalities not  guaran- 
teed by  U.S.< 

Securities  of  State,  local, 
and  Territorial  govern- 
ments 

June  30 

Total 

Tax-exempt 

Tax- 
able' 

Special 
issues  * 

Total 

Tax-exempt 

Tax- 
able' 

Wholly  tax-exempt « 

Whollys 

Par- 
tially* 

WhoIlys 

Par- 

tiallys 

Total 

Issues 
of 

States 
and 

locali- 
ties 

Issues 
of  Ter- 
ritories 

and 
posses- 
sions • 

I.  Total  amount  outstanding 

1952 

256. 907 
263, 997 
268, 990 
271,  785 
269,956 
268,592 
274, 798 
281, 944 
283,  380 
285,911 
294, 886 

142 
124 
96 
71 
50 
50 
50 
50 
SO 

7,402 
6,678 
5.997 
3,386 
3,386 
2,404 
1,485 
1,485 
1,485 
1,485 
1,485 

211,  623 
216, 657 
220, 668 
225, 078 
221, 406 
219,311 
227,  017 
235, 653 
236.  946 
239, 383 
248, 462 

37, 739 
40, 538 

42,  229 

43,  250 
45,114 
46,827 
46,246 

44,  756 
44. 899 
45, 043 
44,939 

1,220 
1,142 

960 
1,815 
2,567 
'3.460 
3,777 
4,820 
6,270 
5,408 
6,783 

1.220 
1,142 
960 
1,815 
2.567 
'3.460 
3.777 
4,820 
6,270 
5, 408 
6,783 

29, 27^ 
32,  339 
37, 448 
42, 763 
47,586 
52, 081 
56, 790 
61, 985 
66,425 
71,730 
80, 131 

29,111 
32,200 
37,300 
42, 600 
47,400 
51, 840 
56,500 
61,  675 
66, 425 
71,  730 
80, 131 

168 

1953 

139 

1954 

148 

1955 

163 

1956 

186 

1957 

241 

1958 

290 

1959 

310 

1960 

1961 

1962 

II. 

Held  by  U.S.  Government  investment  accounts 

1962 

44, 335 
47, 560 
49, 339 
50, 540 

53,  495 
55, 551 
55, 895 

54,  616 

55,  337 
56, 088 
56, 462 

31 

23 

13 

4 

(•) 

86 

26 

12 

4 

2 

(*) 

(•) 

(•) 

(•) 

(•) 

(*) 

6,480 

6,972 

7,086 

7,282 

8,379 

8,724 

9,649 

9,861 

10, 438 

11,045 

11,523 

37, 739 

40, 538 

42,  229 

43,  250 
45, 114 
46, 827 
46, 246 
44, 756 
44, 899 
45, 043 
44, 939 

4 
20 

8 

8 
13 
18 
25 

6 
12 
13 

8 

4 

20 

8 

8 

13 

18 

25 

6 

12 

13 

8 

733 
733 
332 

255 
227 
243 
271 
310 
349 
403 
528 

730 
715 
329 
250 
220 
237 
264 
304 
349 
403 
52S 

2 

1953 

18 

1954 

3 

1955 

5 

1956 

7 

1957 

6 

1958 

7 

1959 

6 

1960 

1961 

1962 

III.  Held  by  Federal  Reserve  Banks 

1952 

22, 906 
24. 746 
25. 037 
23, 607 
23, 758 
23, 035 
25, 438 
26,044 
26,  523 
27,253 
29, 663 

22, 906 
24, 746 
25.037 
23.  607 
23. 758 
23, 035 
25, 438 
26, 044 
26.523 
27, 253 
29,663 

1953 

1954 

1955 

1956 

1957 

1958 

.. 

1959 



1960 

1901 

962 

Footnotes  at  end  of  table. 


TABLES 


747 


Table  57. — Estimated  distribution  of  interest-bearing  governmental  securities  out- 
standing June  SO,  1952-62,  by  tax  status  and  type  of  issuer  ' — Continued 

[Par  value.2    In  millions  of  dollars] 


Securities  of  U.S.  Government  nnd  Federal 
instrumentalities  guaranteed  by  U.S.' 

Securities  of  Federal  instru- 
mentalities not  guaran- 
teed by  U.S.< 

Securities  of  State,  local, 
and  Territorial  govern- 
ments 

June  30 

Total 

Tax-exempt 

Tax- 
able' 

Special 
issues  ■ 

Total 

Tax-exempt 

Tax- 
able' 

Wholly  tax-exempt  s 

Whollys 

Par- 
tially » 

Wholly  6 

Pnr- 

tialljo 

Total 

Issues 
of 

States 
and 

locali- 
ties 

Issues 
of  Ter- 
ritories 

and 
posses- 
sions » 

IV.  Held  by  State  and  local  governments,  Territories,  and  possessions 

1952 

10,  357 
12,025 
13, 930 
14,  731 
16, 130 
16, 825 
16, 285 
16, 865 
18, 832 
'  19,  318 
19,700 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

3,879 
4,190 
4.536 
4,865 
5, 322 
5,821 
6,358 
6,828 
7,100 
7,350 
7.200 

3,852 
4,176 
4,523 
4,850 
5,300 
5,800 
6,330 
6,800 
7,100 
7.350 
7.200 

27 

1953 

14 

1954 

13 

1955 

15 

1956 

n.a. 
n.a. 

n.a. 
n.a. 

19 

1957 

21 

1958 

n.a. 
n.a. 
n.a. 
n.a. 

n.a. 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

28 

1959 

28 

1960 

1961 

1962 

V.  Privately  held  securities 

1952 

179, 309 
179, 666 
180,  684 
182, 907 
176, 573 
173, 181 
177, 180 
184, 419 
182, 688 
'  183, 252 
189.061 

112 
100 
83 
67 
50 
50 
50 
50 
50 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 

24, 668 
27,416 
32, 580 
37,  643 
42, 040 
46,017 
50, 161 
54, 847 
58,  976 
63,977 
72,403 

24,  529 
27, 309 
32,  448 
37, 500 
41, 880 
45, 803 
49, 906 
54,571 
58,  976 
63,977 
72.403 

139 

1953 

107 

1954 

132 

1955 

143 

1956 

160 

1957 

n.a. 
n.a. 
n.a. 

n.a. 
n.a. 
n.a. 

214 

1958 

255 

1959 

276 

1960 

n.a. 
n.a. 

n.a. 

n.a. 
n.a. 
n.a. 

1961 

1962 

*Less  than  $500,000.        n.a.  Not  available.       '  Revised. 

'  The  total  amount  outstanding  of  securities  of  the  several  issuers  differs  from  the  gross  Indebtedness 
of  these  issuers  as  the  former  excludes  noninterest-bearing  debt.  The  total  privately  held  securities 
differs  from  the  net  indebtedness  of  the  borrowers  in  several  additional  respects.  The  former  is  derived  by 
deducting  from  the  total  amount  of  Interest-bearing  securities  outstanding  the  amount  of  such  securities 
held  by  Federal  agencies.  Federal  Reserve  Banks,  and  by  public  sinking,  trust,  and  Investment  funds. 
Net  indebtedness,  on  the  other  hand,  is  derived  by  deducting  from  the  gross  indebtedness  an  amount 
equivalent  to  the  total  volume  of  sinking  fund  assets  of  the  respective  borrowers,  but  makes  no  allowance 
for  any  other  public  assets. 

2  When  included.  U.S.  savings  bonds  Series  A-F  and  J  are  at  current  redemption  value. 

>  On  basis  of  daily  Treasury  statements.    Excludes  guaranteed  securities  held  by  the  Treasury. 

♦  Excludes  stocks  and  interagency  loans. 

'  Income  is  exempt  from  both  the  normal  rates  and  surtax  rates  of  the  Federal  income  tax. 

« Income  is  exempt  only  from  the  normal  rates  of  the  Federal  income  tax.  Interest  derived  from  $5,000 
aggregate  principal  amount  owned  by  any  one  holder  Is  exempt  from  the  surtax  rates  as  well. 

'  Income  is  subject  to  both  the  normal  and  the  surtax  rates  of  the  Federal  income  tax. 

'  Special  issues  to  Federal  agencies  and  trust  funds. 

»  Excludes  obligations  of  Puerto  Rico  after  June  30,  1952. 


NOTE.- 

report,  p 


-For  data  back  to  1913.  see  1946  annual  report,  p.  664,  1949  annual  report,  p.  591.  and  1958  annual 
574. 


748    196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  58. — Summary  of  Treasury  survey  of  ownership  of  interest- 

|Par  value.    In 


Total  amount 
outstanduig 

Held  by  investors  covered 

Commercial 
banks  2  3 

Mutual 

savings 
banks  2 

Insurance  companies 

Classification 

Life 

Fire,  casu- 
alty, and 
marine 

June  30 

June  30 

June  30 

June  30 

June  30 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

Number  of  institutions  or  funds. 

6,279 

6,200 

512 

509 

307 

302 

.521 

512 

TvpE  OF  Security 

Public  marketable: 
Treasury  bills: 

Regular  weekly 

28, 715 
1,503 
6,505 
13, 338 
56,  257 
80, 830 

240 

32, 225 
1,802 
8,009 
13,  547 
65,  464 
75,025 

444 

4,655 

291 

1,433 

3,123 

18, 373 

27, 158 

41 

5,486 

151 

1,4.53 

3,275 

23,  592 

23, 081 

49 

146 

2 

80 

102 

1.343 

4.324 

31 

199 

3 

105 

115 

1,468 

4,106 

68 

72 

18 

9 

21 

321 

4,187 

19 

172 

44 

40 

13 

418 

4,150 

45 

103 

1 

38 

80 

1,025 

2,877 

4 

157 

Tax  anticipation 

4 

Other,   ._                 

33 

Certificates  of  indebtedness. 
Treasury  notes 

153 
1,286 

Treasury  bonds . 

2,580 

Guaranteed  obligations  held 
outside  the  Treasury 

18 

Total  public  market- 
able.- 

187,388 

196,  516 

55, 073 

57,087 

6.027 

6.063 

4,647 

4,882 

4,129 

4,230 

Public  nonmarketable: 
U.S.  savings  bonds  ^.. 

47,  514 
117 

19 
5,830 

47,607 
138 

25 
4.727 

860 
75 

166 
^  117 

71 
n38 

27 

13 

(*) 

21 

12 

59 

37 

Treasury  bonds: 
R  E  A  series 

Investment  series 

Treasury  certificates: 

191 

182 

236 

186 

1,318 

941 

100 

81 

Foreign  currency  series. . 

Total  public  nonmark- 
etable . . 

53.  481 
45.043 

53.  431 
44.  939 

474 

391 

264 

199 

1,339 

953 

159 

118 

Special  issues 

Grand  total .  .  . 

285.911 

294. 886 

55,  548 

57, 478 

6.291 

6,262 

5,986 

5.835 

4.288 

4,348 

Mati'rity  Classes  * 

Public  marketable: 

Within  1  year 

81,120 

58,  400 

26,  435 

8,  706 

1,527 

10,  960 

240 

88.442 

,57.041 

26. 049 

5,  957 

3.362 

15,  221 

444 

21, 473 

24,  256 

7,386 

1,4.54 

98 

366 

41 

22, 850 

24,478 

7,870 

1,242 

149 

450 

49 

726 

1.412 

2.289 

463 

106 

1,001 

31 

824 

1.455 

1.882 

282 

223 

1,330 

68 

244 
318 

1,953 
299 
221 

1,592 
19 

307 

475 
705 
173 
586 
2,590 
45 

892 

1.526 

1.160 

285 

50 

211 

4 

913 

1  to  5  years 

1.625 

5  to  10  years 

10  to  15  years 

1.109 
251 

15  to  20  years. 

89 

20  years  and  over 

225 

Guaranteed  obligations 

18 

Total  public  marketable... 

187,388 

196,  516 

55, 073 

57,087 

6,027 

6,063 

4,647 

4,882 

4,129 

4, 230 

♦Less  than  $500,000. 

1  Banks  and  insurance  companies  covered  in  the  Treasury  survey  of  ownership  of  securities  issued  or 
guaranteed  by  the  U.S.  (iovernnient,  account  for  ap[)roximately  90  percent  of  the  amount  of  such  securities 
owned  by  allbanks  and  insurance  companies  in  the  United  States.  The  .savings  and  loan  associations  and 
corporations  which  were  added  to  the  survey  in  19ti0  account  for  about  half  of  the  Federal  securities  held  by 
these  investor  classes.  State  and  local  government  funds  which  were  added  during  fiscal  1962  account  for 
about  60  percent.  Details  as  to  the  ownership  of  each  security  arc  available  in  the  Treasury  fiiilletiii  monlhly 
for  the  above  investors  and  seraiamiually  for  conunercial  banks  classified  by  membership  in  the  Federal 
Reserve  System. 

-  Securities  held  in  trust  departments  arc  excluded. 

'  Includes  trust  companies  and  stock  .savings  banks. 

*  Included  Willi  all  other  investors  are  those  banks,  insurance  companies,  savings  and  loan  associations, 
corporations,  and  State  and  local  government  funds  not  reporting  in  the  Treasury  survey. 


TABLES 


749 


bearing  public  debt  and  cjuaranleed  obligations,  June  SO,  1961  and  1962 
millions  of  dollars] 


in  Treasury  survey  ' 

Savings 

Corporations 

State  and  local  governments 

U.S.  Gov- 
ernment 
investment 
accounts  and 
Federal  Re- 
serve Banks 

Held  by 

all  other 

investors  < 

Memoran- 
dum: Held 

by  corporate 
pension 

trust  funds  s 

and  loan 
associations 

General 
funds 

Pension  and 

retirement 

funds 

June  30 

June  30 

Jmie  30 

June  30 

June  30 

June  30 

June  30 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

1961 

1962 

489 

488 

489 

473 

307 

298 

189 

186 

12,  926 

14, 085 

74 

"""si" 

37 
613 

1,881 

9 

124 

1 

58 

51 

567 

2, 012 

29 

3,651 

598 

635 

754 

2,  227 

2,177 

3,745 
902 
566 
1,148 
2,447 
1,079 

2,119 

38 

366 

473 

1,169 

2,  584 

6 

2,516 

59 

655 

391 

1,244 

2, 343 

6 

253 

'"""22" 

14 

298 

3,744 

11 

272 

19 

7 

21 

279 

4,057 

22 

2,  716 

21 

904 

6,733 

15,  879 

9,  503 

87 

2,957 

95 

707 

5,901 

18, 495 

10,  499 

167 

14,  926 

534 

2,980 

2,001 

15,009 

22, 395 

32 

16,  598 

524 

4,  385 

2,479 

15, 669 

21, 119 

41 

287 

12 

67 

35 

453 

817 

(*) 

418 

11 

81 

55 

530 

767 

1 

2,651 

2,840 

10, 043 

9,887 

6,754 

7,214 

4, 342 

4,677 

35,  843 

38,  821 

57, 878 

60,  814 

1,672 

1,864 

53 

40 

5 

4 

89 

70 

75 

54 

10 

9 

47, 009 

47,296 

122 

110 

19 
610 

25 
575 

860 

75 

65 

61 

5 

5 

255 

80 

605 

260 

2,445 

2,356 

41 

24 

118 

102 

10 

9 

344 

150 

680 

314 

2,  455 
45, 043 

2,365 
44,  939 

47, 638 

48, 830 

163 

135 

2,  769 

2.  942 

10, 053 

9,896 

7,098 

7,364 

5,022 

4,  992 

83,340 

86, 125 

105,  516 

109,  645 

30,  999 

14,  680 

7,915 

2,742 

750 

3,689 

41 

1,835 

1.998 

371 

780 
747 
298 
40 
406 
9 

479 
704 
880 
195 

72 
483 

29 

8,384 

1,506 

114 

26 

(*) 
13 

8,332 

1,377 

138 

18 

5 

17 

3,  795 

1,076 

658 

391 

57 

771 

6 

4,464 
774 
570 
238 
144 

1,019 
6 

367 
406 
569 
450 
233 
2,306 
11 

391 

325 
496 
196 
384 
2,864 
22 

16, 348 

11,961 

4,717 

885 

276 

1,570 

87 

18,  885 

11,149 

4,485 

621 

961 

2,555 

167 

28,  520 

15, 158 

6,843 

4,155 

446 

2,724 

32 

596 
484 
276 
81 
34 
200 
(*) 

745 

500 

296 

56 

57 

209 

1 

2,651 

2,840 

10, 043 

9,887 

6,754 

7,214 

4,342 

4,677 

35,  843 

38,  821 

57, 878 

60,  814 

1,672 

1,864 

5  Consists  of  corporate  pension  trust  funds  and  profit-sharing  plans  which  involve  retirement  benefits. 
Quarterly  data  are  presented  in  the  Treasury  Bulletin  as  supplemental  information  in  a  memorandum  col- 
umn accompanying  the  Sm-vey  of  Ownership  for  each  reporting  date,  beginning  with  Dec.  31,  1953.  The 
corresponding  information  from  earlier  reports,  beginning  with  Dec.  31,  1949,  is  summarized  in  the  March 
1954  Treasury  Bulletin,  p.  30. 

8  U.S.  savings  bonds  other  than  Series  G,  H,  and  K  are  included  at  current  redemption  value.  They 
were  reported  at  matm'ity  value  by  the  investors  covered  in  the  Treasury  survey  and  have  been  adjusted 
to  current  redemption  value  for  this  table. 

'  Includes  depositary  bonds  held  by  commercial  banks  not  included  in  the  survey:  $29  million  in  1961 
and  $73  million  in  1962. 

8  AU  issues  classified  to  final  maturity  except  partially  tax-exempt  bonds  which  are  classified  to  earliest 
call  date.  Table  31  in  this  report  shows  from  1946-62  the  maturity  distribution  of  marketable,  interest- 
bearing  public  debt  and  guaranteed  obligations  liy  call  classes  and  by  maturity  classes.  The  following  differ- 
ence in  the  two  tables  should  bo  noted:  Table  31  classifies  District  of  Columbia  stadium  bonds  of  1970-79 
according  to  the  year  of  call  or  maturity  whereas  this  table  includes  these  bonds  with  guaranteed  obligations. 


I 


750   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Account  of  the  Treasurer  of  the  United  States 

Table  59. — Assets   and   liabilities  in  the  account  of  the   Treasurer  of  the   United 

States,  June  30,  1961  and  1962 

[On  basis  of  daily  Treasury  statements,  see  "Bases  of  Tables"] 


June  30,  1961 

June  30,  1962 

Increase,  or 
decrease  (— ) 

Gold 
Assets:  Gold     

$17,  550, 069, 960. 13 

$16, 435. 032, 370. 92 

-$1,115,037,589.21 

Liabilities: 
Gold  certificates,  Series  of  1934  outstand- 
ing'                                     ... 

2, 845, 870, 819. 00 

13, 396,  587, 296. 12 

1,043.034,904.26 

156. 039,  430.  93 

108,  537,  509.  82 

2, 816, 055, 600. 00 

12, 173, 587, 296. 12 

1,168,398,114.26 

156. 039, 430. 93 

120,  951, 929.  61 

-29, 815,  219. 00 

-1,223.000,000.00 
125, 363, 210. 00 

Gold  certificate  fund — Board  of  Gover- 
nors, Federal  Reserve  System 

Redemption  fund— Federal  Reserve  notes. 
Reserve  against  U.S.  notes  outstanding... 

Gold  balance  in  Treasurer's  account 

12, 414, 419.  79 

Total  

17, 550, 069, 960. 13 

16.435,032,370.92 

-1,115,037,589.21 

Silver 
Assets: 
Silver  bullion  (monetary  value)  ^ 

2,  252. 333. 684.  63 
150, 172,  946. 00 

2,  183, 103,  785. 68 
115.688,279.00 

-69,229,898.95 
— ,S4  4S4  fifi7  nn 

Silver  dollars .. . 

Total 

2, 402,  506,  630. 63 

2, 298,  792, 064.  68 

-103,714,565.95 

Liabilities: 
Silver  certificates  (issued  after  June  30, 
1929)  outstanding  '          

2, 373,  870, 395. 00 

1,141,667.00 

27, 494.  568.  63 

2, 276, 607,  555. 00 

-97,  262, 840. 00 
-1,141,667.00 
-5.310,058.95 

Treasury  notes  of  1890  outstanding  i 

Silver  balance  in  Treasurer's  account 

22. 184,  509.  68 

Total 

2. 402.  506.  630. 63 

2. 298.  792, 064.  68 

-103.714,565.95 

General  Account 
Assets: 
In  Treasury  offices: 
Gold  balance  (as  above) 

108,  537,  509.  82 

27,  494,  568.  63 
4,  706,  473. 95 

120,  951, 929.  61 

22, 184,  509.  68 
4,535,811.85 

117,168.16 

21,608,386.55 

8,  408, 418.  66 

1,033,321.86 

3,111,576.00 

85,907.220.00 

100,  230.  00 

19,  770.  00 

149,010.00 

70. 287, 079.  66 

12, 414, 419.  79 

-5,310,0.58.95 
-170,662.10 

117, 168  16 

Silver: 
At  monetary  value,  balance  (as  above). 
Subsidiary  coin               ... 

Bullion  at: 
Recolnage  value 

Cost  value 

57,111.015.93 

—35  502  629  38 

Monetary  valued 

8,408,418.66 
—  578,746  97 

Minor  coin.  

1.612.068.83 

4.  757, 478.  00 

82,514,195.00 

458, 0.57. 00 

150,  705. 00 

V  S  notes 

-1,64.5,902.00 
3, 393, 025. 00 
-357, 827.  00 
-130,935.00 
149, 010.  00 
6.  572, 193.  50 

Federal  Reserve  notes 

Federal  Reserve  Bank  notes 

National  Imnk  notes     

Gold  certificates  (prior  to  Series  of  1934). 

Unclassified — collections,  etc  .  

63,714,886.16 

Subtotal... 

351. 056, 958.  32 

3.38,  414, 432. 03 

-12,642.526.29 

Deposits  in: 
Federal  Reserve  Banks: 
Available  funds    

407,826.163.68 
222,173,188.68 

5,452.671,002.11 

312,612,177.80 

22, 340, 203.  74 

611,926,216.96 
303, 269, 291. 01 

8,  814.  673, 941. 60 
304,  901,  723.  56 
135.  755. 628.  95 

204, 100, 053. 28 

In  process  of  collection       

81, 096, 102.  33 

Special   depositaries,   Treasury  tax  and 
loan  accounts    

3, 362, 002, 939.  49 

Xational  and  other  bank  depositaries 

Foreign  depositaries.  

-7,710,454.24 
113,415.425.21 

Subtotal 

6.417.622,736.01 

10, 170,  526. 802. 08 

3,  752, 904, 066. 07 

Total  assets.  Treasurer's  account.. 

6.  768, 679, 694. 33 

10,508,941,234.11 

3, 740, 261,  539.  78 

Liabilities: 
Board  of  Trustees,  Postal  Savings  Sj'S- 
tem: 

5  percent  reserve,  lawful  money 

Other  deposits        

35,  .500, 000. 00 
21,943,831.22 
17,115.909.35 

30, 000.  000. 00 
11,686,254.87 
36,861,430.46 

-5,  ,500. 000.  00 
- 10,  257,  576.  35 

Uncollected  items,  exchanges,  etc 

19.74,5,521.11 

Total  liabilities.  Treasurer's  account 

Balance  in  Treasurer's  account 

74,  559,  740.  57 
6,694.119,953.76 

78,  547,  685.  33 
10. 430. 393.  548.  78 

3, 987, 944.  76 
3, 736, 273,  595.  02 

Total  Treasurer's  liabilities  and  balance. . 

6.  768, 679, 694.  33 

10,508,941,234.11 

3,740,261,539.78 

1  Gold  certificates  issued  before  enactment  of  the  Gold  Reserve  Act  of  1934  (31  U.S.C.  440-446)  ($29,959,809), 
silver  certificates  issued  before  July  1,  1929  ($29,958,443),  and  Treasury  notes  of  1890  ($1,141,667)  are  included 
in  the  outstanding  amounts  of  currencies  shown  for  June  30,  1961.  In  July  1961  these  amounts  were  trans- 
ferred to  and  made  a  part  of  the  public  debt  bearing  no  interest,  in  accordance  with  the  Old  Series  Currency 
Adjustment  .\ct,  approved  June  30,  1961  (31  U.S.C.  912-916). 

2  There  were  64,751,316.1  ounces  held  on  June  30,  1961  and  1962,  by  certain  Federal  agencies. 

>  Consists  of  silver  bullion  previously  revalued  and  held  to  secure  outstanding  silver  certificates,  which 
has  been  released  for  coinage,  pursuant  to  the  Fresident's  directive  dated  November  28,  1961. 


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196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  65. — Location  of  gold,  silver  bullion  at  monetary  valne,  and  coin  held  by  the 

Treasury  on  June  SO,  1962 

[In  thousands  of  dollars.  On  basis  of  reports  received  from  various  Treasury  offices  and  Federal  Reserve 
Banks  which  take  into  account  those  transactions  in  transit  to  the  Treasurer's  office  as  of  June  30,  supple- 
mented by  information  taken  from  the  Treasurer's  accounts.  Therefore,  the  figures  shown  in  this  table 
may  differ  from  similar  figures  in  other  tables  prepared  on  basis  of  daily  Treasury  statements] 


Location 

Gold 

Silver  bul- 
lion at 

monetary 
value  ' 

Standard 
silver 
dollars 

Subsidiary 
silver 
coin 

Minor 
coin 

U.S.  mints: 

Denver                                                  

2,  488,  531 
2,065 

916.  561 

298,  633 

12, 483,  415 

9 

6  246, 006 
15 

5,949 
228,  219 

1,  250,  551 
614, 666 

8,863 
32, 269 

22, 035 
1,950 

5 

7 

2  254 

Philadelphia 

U.S.  assay  offices: 

New  York '        . 

2  338 

San  Francisco  * 

1,673 

152 

Bullion  depository,  Fort  Knox 

Treasurer  of  United  States,  Washington 

50,  332 

1,179 

123 

Custody  accounts: 

Federal  Reserve  Bank  of  New  York 

Other  banks,  etc.,  various  locations 

83,  719 

38 

1,611 

96 

Total                     .                  

16,  435, 234 

2, 183, 104 

115,487 

4,475 

963 

'  Held  to  secure  silver  certificates.    E.xclu(les  certain  silver  at  monetary  value  held  for  coinage. 

2  Includes  metals  and  alloys  in  process  of  manufacture  into  minor  coins. 

'  Includes  bullion  depository  at  West  Point,  N.Y. 

*  Name  changed  from  San  Francisco  Mint  to  U.S.  assay  office  at  San  Francisco  pursuant  to  Public  Law 
87-534,  approved  July  11,  1962. 

'  Physically  located  as  follows:  At  Bank  of  Canada,  Ottawa,  $190,041,851,  at  New  York  Assay  Office, 
$34,877,386,  and  in  Federal  Reserve  Bank's  own  vaults,  $21,087,259. 


TABLES 


759 


Table  66. — Paper  currency  issued  and  redeemed  during  the  fiscal  year  1962  and 
outstanding  Jxine  SO,  1962,  by  classes  and  denominations 

[For  basis  of  data,  see  headnote  to  table  65] 


Class 

Gold  certificates— Series  of  1934.. 
Silver  certificates— Issued  after 

June  30,  1929-.- 

U.S.  notes 

Federal    Reserve    notes— 1928 

and  subser4uent  series 

In  process  of  retirement: 

Federal  Reserve  Bank  notes- . 

National  bank  notes 

Gold    certificates— Prior    to 
1934  Series 

Federal  Reserve  notes— Prior 
1928  Series 

Silver  certificates— Issued  be- 
fore July  2,  1929 

Treasury  notes  of  1890 


Total. 


Denomination 


$1. 

$2 

$5 

$10 

.$20 

.$50 _ 

$100 

$500 

$1,000 

$5,000 

$10,000-... 

$100,000 

Fractional  Parts. 

Total... 


Issued 
during  1962 


$1, 182, 304, 000 
130, 867,  203 

7,521,110,000 


8, 834, 281, 203 


1, 027, 424, 000 

16,  351, 108 

1, 382, 176, 095 

2,  554,  520, 000 

2,  768,  600, 000 

380, 650, 000 

678, 140. 000 

10,  450, 000 

11,300,000 

130,  000 

4,  540, 000 


8, 834, 281, 203 


Redeemed 
during  1962 


$1,  250, 044,  968 
130,  867, 203 

6,  283, 383,  790 

7,  397,  843 
1, 319,  558 

535,  520 

278,  580 

9,538 
'  1, 000, 133 


7, 674, 837, 133 


944, 853, 067 
9,  645,  406 

1,  295,  765,  090 
2, 370, 456, 590 

2,  262,  258, 330 
288,  529,  300 
441,  877, 600 

17,  619,  750 

38,  522,  000 

360, 000 

4,  950, 000 


7, 674, 837, 133 


Outstanding  June  30,  1962 


In 

Treasury 


$12, 876,  910 
3, 010, 049 

70, 906, 470 

100,  230 
19,  770 

154,  700 


87, 068, 129 


12, 080, 950 

506, 394 

12,  676,  625 

20, 042, 130 

25,  567,  980 

7, 046,  350 

7,  464,  700 

388, 000 

1,  280, 000 

5,000 

10, 000 


87, 068, 129 


In  Federal 

Reserve 

Banks 


$2, 816, 055, 600 

297, 725,  639 
25, 251, 170 

1,  504,  624, 735 

451,000 
68, 980 


4,  644, 177, 124 


272, 153, 459 

15, 402,  750 

228, 536, 415 

520, 413, 120 

520, 882, 080 

104, 160,  500 

124,  942,  300 

13,  708,  500 

19, 353, 000 

2,  415,  000 

11,610,000 

,  810, 600, 000 


4,  644, 177, 124 


In 
circulation 


$1,  979, 123,  966 
318, 419,  797 

28,  586, 083, 155 

84, 834, 853 
53, 066, 337 

29, 269,  589 

36, 140, 470 

29, 948, 905 
141,  534 


31, 117, 028, 606 


1,  516, 232,  773 

92, 887,  768 

2, 231, 435, 585 

6,  836, 569, 612 

10,  937,  048,  606 

2,  849, 631, 115 
6, 110, 946, 520 

239,  402,  500 

295,  001,  500 

2,  970, 000 

4,840,000 

" "62,"627 


31, 117, 028, 606 


'  Includes'$l ,000,000  determined  by  the  Secretary  of  the  Treasury  on  Oct.  20, 1961,  to  have  been  destroyed 
or  iiTetrievably  lost.and  therefore  will  never  be  presented  for  redemption.    See  table  28,  footnote  4. 


760   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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764        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 


Table  68. 


I. — Trust  funds 

-Ainsworth  Library  fund,  Walter  Reed  General  Hospital,  June  30,  1962 


[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  joint  resolution  of  Congress  ap- 
proved May  23,  1935  (49  Stat.  287).    For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  154] 


I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 

Cumulative 

through 
June  30, 1961 

Fiscal  year 
1962 

Cumulative 

through 
June  30,  1962 

Receipts: 

Bequest  of  Maj.  Gen.  Fred  C.  Ainsworth 

$10,  700.  00 
6, 827. 23 

$10,  700  00 

Interest  on  investments. 

$293.  00 

7  120  23 

Total  receipts    .  . 

17, 527.  23 
6,  640. 05 

293. 00 
19.69 

17  8''0  23 

Expenditures .  

6  659  74 

Balance ..    

10, 887. 18 

273. 31 

11  160  49 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30, 1961 

Fiscal  vear 
1962,  in- 
crease, or 
decrease  (-) 

June,  30 1962 

Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bonds,  3%  of  1995       

$9, 500. 00 

$9  500  00 

U.S.  savings  bonds.  Series  H  (3.750%) 

$1,000.00 

1,000  00 

U.S.  savings  bonds.  Series  J  (2.76%) 

300.00 

300. 00 

Total  investments 

9, 800. 00 
1,087.18 

1,000.00 
-726. 69 

10, 800.  00 
360. 49 

Undisbursed  balance 

Total  assets.-- 

10, 887. 18 

273.31 

11,160.49 

Table  69. — Civil  service  retirement  and  disability  fund,  June  30,  1962 

[On  basis  of  daily  Treasury  statements  prior  to  June  30, 1953,  thereafter  on  basis  of  the  "Monthly  Statement 
of  Receipts  and  Expenditures  of  the  United  States  Government."  This  trust  fund  was  established  in 
accordance  with  the  provisions  of  the  act  of  May  22, 1920,  as  amended  (5  U.S.C.  2267).  For  furtlier  details 
see  annual  report  of  the  Secretary  for  1941,  p.  136] 

L  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

Receipts: 

Deductions  from  salaries,  service  credit 
payments,  and  voluntary  contribu- 
tions of  employees  subject  to  retire- 
ment act ' 

$9, 315, 692, 024. 67 
4,187,715,923.21 
2,  926, 166, 693.  83 
3, 328, 648, 606. 48 

5, 050, 000. 00 

$863,  520, 717. 46 

44,637,000.00 

851,250,975.04 

315,  847,  525. 27 

$10,179,212,742.13 
4  232  352  923  21 

Federal  contributions  ^ 

Payments  by  employing  agencies  2. 

Interest  and  profits  on  investments 

Transfer  from  the  Comptroller  of  the 
Currency  retirement  fund  ^ 

3,  777, 417, 668.  87 
3,644,496,131.75 

5, 050, 000.  00 

Total  receipts 

19,763,273,248.19 

2, 075, 256, 217.  77 

21, 838,  529, 465.  96 

Expenditures: 

Annuity  payments,  refunds,  etc 

Transfers  to  policemen's  and  firemen's 
relief  fund,  D.C.,  deductions  and 
accrued  interest  thereon . 

8, 604, 101, 959. 13 
192, 904.  95 

1,057,622,989.53 
20, 771.  89 

9, 661,  724, 948. 66 
213  676  84 

Total  expenditures 

8,604,294,864.08 

1,057,643.761.42 

9,661,93<<,625.50 

Balance 

11,158,978,384.11 

1,017,612,456.35 

12,176,590,840.46 

Footnotes  at  end  of  table. 


TABLES 


765 


Table  69. — Civil  service  retirement  and  disability  fund,  June  30,  1963— Continued 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


Investments  in  public  debt  securities: 

Special  issues,  civil  service  retirement 
fund  series  maturing  June  30: 

Treasury  certificates  of  indebtedness: 

2li%  of  1962 

3?4%  of  1963 

Treasury  notes: 

2y2%  of  1962 

2H%  of  1962 

2y2%  of  1963 

2^A%  of  1963 

2%%  of  1963 

2H%  of  1964 

2H%  of  1964 

3%%  of  1964 

2%%  of  1965 

2li%  of  1905 

3H%  of  1965 

2Ji%  of  1966 

3M%  of  1966 

3^4%  of  1967 

Treasury  bonds: 

2K2%  of  1963 

2y2%  of  1964 

214%  of  1965 

2%%  of  1965 

21-^%  of  1966 

2%7c  of  1966 

214%  of  1967 

2%%  of  1967 

2Ji%  of  1967 

2^%  of  1968 

2^%  of  1968 

2li%  of  1968 

3M%  of  1968 

2?^%  of  1969 

2Ji%  of  1969 

3%%  of  1969 

2%7o  of  1970 

2^%  of  1970 

ZH%  of  1970 

2%%  of  1971 -— 

27^%  of  1971 

334%  of  1971 

2%%  of  1972 - 

2%%  of  1972 

3H%  of  1972 

2%%  of  1973 

2li%  of  1973 

3?4%  of  1973 

254%  of  1974 

2li%  of  1974 

3M%  of  1974 

2%%  of  1975 

21,i%  of  1975 

3?4%  of  1975 

2'A%  of  1976 

3?4%  of  1976 

3?4%  of  1977 — 


Total  special  issues  - 
rootnotes  at  end  of  table. 


June  30, 1961 


$169,  697, 000. 00 


385, 000, 000. 00 
230,  527, 000. 00 
200, 000, 000. 00 
230,  527, 000. 00 

69, 913, 000. 00 
230,  527, 000. 00 

69,  913, 000. 00 


51,  316, 000. 00 
69, 913,  000.  00 


69,913,000.00 


185, 000, 000. 00 
385, 000, 000. 00 
385, 000, 000. 00 
179, 211, 000. 00 
385, 000, 000. 00 
230,  527, 000. 00 
385, 000, 000. 00 
230,  527, 000. 00 

69, 913, 000. 00 
200, 000, 000. 00 
415,  527, 000. 00 

69, 913, 000. 00 


615,  527, 000. 00 
69, 913, 000. 00 


615,  527, 000. 00 
69, 913, 000. 00 


615,  527, 000. 00 
69, 913, 000. 00 


615,527,000.00 
69, 913, 000. 00 


615,  527, 000. 00 
69,913,000.00 


615,  527, 000. 00 
69, 913, 000. 00 


615,  527, 000. 00 
69, 913, 000. 00 


685, 440, 000. 00 


10, 381, 384, 000. 00 


Fiscal  year  1962, 
increase,  or 
decrease  (— ) 


-$169,697,000.00 
210, 441, 000. 00 

—385, 000, 000. 00 
-230,  527, 000. 00 


60, 976, 000. 00 


60, 976, 000. 00 


60, 976, 000. 00 
60, 976, 000. 00 


June  30, 1962 


60, 976, 000. 00 
'60,l76,'6oor5o' 
'66,'976'o6oroo" 
"6O,'976'600roo' 
'60'976'005.'00' 
"60,"976,"oOOro5' 
'60,"976,"66o.'oo' 


60, 976, 000. 00 


60, 976, 000. 00 
746, 416, 000. 00 


964,321,000.00 


$210, 441, 000. 00 


200, 000, 
230,  527, 
69, 913, 
230,  527, 
69, 913, 
60, 976, 
51,316, 
69,913, 
60, 976, 
69,913, 
60, 976, 
60, 976, 


000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000.  00 
000. 00 
000. 00 


185, 000, 000. 00 

385, 000. 000. 00 

385, 000, 000. 00 

179,  211, 000. 00 

385, 000, 000. 00 

230,  527, 000. 00 

385, 000, 000. 00 

230,  527, 000. 00 

69, 913, 000. 00 

200, 000, 000. 00 

415, 527, 000. 00 

69, 913, 000. 00 

60, 976, 000.  00 

615,  527, 000. 00 

69, 913, 000. 00 

60, 976, 000. 00 

615, 527, 000. 00 

69, 913, 000. 00 

60, 976, 000. 00 

615,  527, 000. 00 

69, 913, 000. 00 

60, 976, 000. 00 

615,527,000.00 

69, 913, 000. 00 

60, 976, 000. 00 

615,  527, 000. 00 

69, 913, 000. 00 

60, 976, 000. 00 

615,  527,  000.  00 

69, 913, 000. 00 

60, 976, 000. 00 

615,  527, 000.  00 

69, 913, 000. 00 

60, 976, 000. 00 

685, 440, 000. 00 

60, 976, 000. 00 

746, 416, 000. 00 


11,345,705,000.00 


7G6   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  69. — Civil  service  retirement  and  disability  fund,  June  30,  1962 — Continued 
II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT— Continued 


Assets 

June  30, 1961 

Fiscal  year  1962, 
increase,  or 
decrease  (— ) 

June  30, 1962 

Investments  in  public  debt  securities — Con. 
Public  issues: 
Treasury  notes: 

4%%,  Series  C-1963 

$23,  500, 000. 00 

$23,500,000.00 
25, 000, 000.  00 
10,  550, 000. 00 

3H%,  Series  D-1963 

$25,  000,  000.  00 
-2,000,000.00 

4M%,  Series  A-1964 

12,  550, 000. 00 

19, 937, 000. 00 

23, 550, 000. 00 

3, 700, 000. 00 

8,  500, 000. 00 
13, 400, 000. 00 
21, 500, 000. 00 

3, 000,  000. 00 
25, 000,  000. 00 

4,000,000.00 
48, 400, 000. 00 

4, 600, 000.  00 
22,  800, 000.  00 

9,  500, 000.  00 
11,400,000.00 

5%,  Series  B-1964 

19, 937, 000. 00 
15  050  000  00 

4^;^%,  Series  C-1964 

-8,  .500,  000.  00 

4H%,  Series  A-1965. 

3,  700, 000. 00 

10, 000, 000.  00 
16, 400, 000.  00 

Treasury  bonds: 

2Wc  Of  1964-69  (April  15,  1943).... 
2H%  Of  1964-69  (Sept.  15,  1943).... 
2%%  of  1965 

1,500.000.00 

3, 000, 000.  00 

-21,500,000.00 

-3, 000, 000. 00 

2W7o  of  1965-70.... 

3%  of  1966.. 

25  000  000  00 

2^%  of  1966-71 

-4,000,000.00 

35/i%  of  1967 

48,400,000.00 

2H%  of  1967-72  (June  1,  1945) 

-4,600.000.00 

-22,  800, 000. 00 

-9,  500, 000. 00 

2^%  of  1967-72  (Oct.  20,  1941) 

2H%  of  1967-72  (Nov.  15,  1945).... 

35^%  of  1968.... 

11  400  000  00 

3?4%  of  1968 

2,  800, 000.  00 

18,  600, 000. 00 

1,  500, 000. 00 

2,  800, 000. 00 
59  400  000  00 

4%  of  1969 

40,  800, 000. 00 
45, 150, 000. 00 
32,  500, 000. 00 
5, 100, 000.  00 
9, 000, 000. 00 
46,  744, 000. 00 
76, 400, 000. 00 
74,100,000.00 
55, 205, 000. 00 
29,  294, 000. 00 

3^%  of  1974 

46  650  000  00 

4)4%  of  1975-85 

32,  500  000  00 

3H%  of  1978-83-. 

500, 000.  00 

5,  600, 000.  00 

35/2%  of  1980 

9  000  000  00 

4%  of  1980.... 

23,  650, 000.  00 
1,  .500, 000. 00 
9,  300, 000. 00 

70,394  000.00 

31.4%  of  1985.... 

77, 900, 000. 00 

3H%  of  1990 

83,400,000.00 
55, 205, 000. 00 
83,  269, 000. 00 

3%  of  1995... 

3J^%  of  1998 

53, 975, 000. 00 

Total  public  issues. 

669,  630, 000. 00 

65,425,000.00 

735, 055, 000. 00 

Total  investments 

11,051,014,000.00 
107,964,384.11 

1, 029,  746, 000.  00 
-12,133,543.65 

12,080  760  000  00 

Undisbursed  balance.. 

95,  830,  840. 40 

Total  assets.. 

11,158,978,384.11 

1,017,612,456.35 

12,  176,  590, 840. 46 

J  Basic  compensation  deductions  were  at  the  rate  of  2K'  percent  from  Aug.  1,  1920,  to  June  30,  1926;  Zy> 
percent  from  July  1, 1920,  to  June  30, 1942;  5  percent  from  July  1,  1942,  to  the  day  before  the  first  pay  period 
which  began  after  June  30,  1948;  6  peicent  thereafter  to  the  day  before  the  first  pay  period  which  began 
after  Sept.  30,  1956;  and  6H  percent  thereafter.  Also  includes  District  of  Columbia  and  Government  cor- 
porations' contributions  through  1957.  Beginning  with  1958  they  are  included  with  contributions  from 
agency  salary  funds. 

2  Beginning  July  1,  1957,  appropriations  arc  not  made  directly  to  the  fund.  Instead,  in  accordance  with 
the  act  approved  July  31,  1956  (5  U.S.C.  2254(a)),  the  employing  agency  contributes  (from  appropriations 
or  funds  from  which  the  salaries  are  paid)  amounts  equal  to  the  deductions  from  employees'  salaries. 

»  The  act  of  June  30,  1948,  as  amended  (5  U.S.C.  739  (a)  (b)),  abolished  the  separate  retirement  fund  for 
employees  of  the  Office  of  the  Comptroller  of  the  Currency  and  directed  transfer  of  its  assets  to  the  civil 
service  retirement  and  disability  fund.    Amount  comprises  cash  derived  from  sale  of  securities. 


Y 


TABLES 


767 


Table  70. — District  of  Columbia  teachers'  retirement  and  anmiity  fund,  June  SO, 

1962 

[This  fund  was  establislied  in  accordance  with  the  provisions  of  the  act  of  Aug.  7,  1946  (31  D  C  C  702  707 
772) ,  as  successor  to  the  District  of  Columbia  teachers'  retirement  fund  established  under  the  act  of  Jan  lh\ 
1920,  as  amended,  effecting  the  consolidation  of  the  deductions  fund  and  the  Government  reserve  fund 
as  of  July  1,  1945] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Receipts: 

Deductions  from  salaries 

Voluntary  contributions 

Interest  and  profits  on  investments 

Appropriations  from  District  of  Columbia  revenues. 

Total  receipts 

Expenditures: 

Annuities,  refunds,  etc 

Balance 


Cumulative 

through  June 

30,  1961 


$23, 435,  349.  45 

183, 140.  55 

14,  797, 101.  59 

44, 966, 972. 84 


83, 382, 564. 43 
45, 886, 188.  91 


37, 496, 375. 52 


Fiscal  year 
1962 


$1,714,035.31 

2, 125. 00 

1,269,961.49 

4,  744, 500.  00 


7, 730,  621. 80 
4, 899, 053. 49 


2, 831,  568. 31 


Cumulative 

through  June 

30,  1962 


$25, 149, 384.  76 

185,  265.  55 

16, 067, 063. 08 

49,711,472.84 


91, 113, 186. 23 
50, 785, 242. 40 


40, 327, 943. 83 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


Investment  in  public  debt  securities: 
Public  issues: 

Treasury  notes; 

4%,  Series  D-1962 

4?4%,  Series  A-1964 

i.Wo.  Series  A-1965...- 

4%.  Series  A-1966 

Treasury  bonds: 

2),'^%  of  1965-70 

2)-^%  of  1966-71. 

3%%  of  1966 

2J/2%  of  1967-72  (dated  June  1.  1945). 

3^i%ofl968 

3J^%ofl974 

45-4%  of  1975-85 

3  }.i%  of  1978-83 

4%  of  1980 

3M%  of  1985. 

3^2%  of  1990 

3%  of  1995 

31.2%  of  1998 

2\Wo  Investment  Series  A-1965 

2^4%  Investment  Series  B-1975-80.. 


Total  investments. 
Undisbursed  balance 


Total  assets. 


June  30,  1961 


$475, 000. 

2,  617, 000. 

200,  000. 


257, 000. 
1, 517, 000. 

856, 500. 
1,  919, 000. 
1, 056, 500. 
2, 388, 500. 
1, 000, 000. 
1,  777,  500. 

100, 000. 

194, 500. 
2, 386, 000. 
3, 599, 500. 
2, 168, 500. 

250, 000. 
14, 325, 000. 


37, 087, 500. 00 
408, 875. 52 


37, 496, 375. 52 


Fiscal  year 
1962,  increase, 
or  decrease  (— ) 


-$475, 000. 00 


475, 000. 00 

743, 000.  00 
-517, 000. 00 


-671, 500.  00 


883,  000. 00 
614, 000. 00 


1, 831,  500. 00 


2, 883, 000. 00 
-51, 431. 69 


2,831,568.31 


June  30,  1962 


$2,  617, 000. 00 
200, 000. 00 
475, 000. 00 


1, 000, 

1,000, 

856, 

1,  247, 
1,056, 

2,  388, 
1,000, 
1,777. 

100, 
1,077, 
3, 000, 
3, 599, 
4, 000, 

250, 
14,  325, 


000.  00 
000. 00 
500. 00 
500. 00 
500. 00 
500. 00 
000.  00 
500. 00 
000.  00 
500.  00 
000.  00 
500.  00 
000. 00 
000. 00 
000. 00 


39, 970, 500. 00 
357, 443.  83 


40,  327, 943. 83 


768   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  71. — District  of  Columbia  other  funds — Investments  as  of  June  SO,   1961 

and  1962 

[These  investments  were  made  in  accordance  with  provisions  contained  in  appropriation  acts  for  the 

District  of  Columbia] 

I.  GENERAL  FUNDS 


Investments  in  public  debt  securities 

June  30,  1961 

Fiscal  year 
1962,  increase, 
or  decrease  (— ) 

June  30, 1962 

Public  issues: 

Treasury  bonds,  2H%  of  1965-70 

.$9,  213, 000.  00 

$9,213,000.00 

II.  MOTOR  VEHICLE  PARKING,  HIGHWAY  FUND 


Public  issues: 

Treasury  bills 

Treasury  certificates  of  indebtedness: 

Z%7o,  Series  C-1961. 

3H%,  Series  B-1963 

Treasury  notes: 

4%,  Series  E-1962 

3M%,  Series  G-1962 

314%,  Series  H-1962 

454%,  Series  A-1965- 

Treasury  bonds,  3fi%  of  1967 


Total. 


$691, 000. 00 
593, 000. 00 


348, 000.  00 
900, 000. 00 


743, 000.  00 
103,  500. 00 


3,  378,  500. 00 


$744, 000. 00 

-593,000.00 
348, 000.  00 

-348, 000.  GO 

'""593,"000."00 


744, 000. 00 


$1, 435, 000. 00 
348^000roO 


900, 000. 00 
593. 000.  00 
743, 000. 00 
103,  500. 00 


4, 122,  500. 00 


III.  RECREATION  DEPARTMENT  TRUST  FUND 


Public  issues: 

Treasury  bills 

$20, 000. 00 
-10.000.00 

$20, 000. 00 

Treasury  notes,  4%,  Series  D-1962 

$10, 000. 00 

Total 

10, 000. 00 

10, 000. 00 

20,000.00 

IV.  REDEVELOPMENT  PROGRAM— REDEVELOPMENT  LAND  AGENCY 


Public  issues: 

Treasury  bills. 


$409, 000. 00 


$316, 000. 00 


$725, 000. 00 


V.  METROPOLITAN  AREA  SANITARY  SEWAGE  WORKS  FUND 


Public  issues: 

Treasury  bills. 


$2, 429, 000. 00 


-$2,429,000.00 


VI.  STADIUM  FUND,  ARMORY  BOARD 

Public  issues: 

Treaisury  bills ...  

$5,158,000.00 

1, 974, 000. 00 

7, 000.  00 

3, 000,  500. 00 

-$4,  568, 000.  00 

-1,974,000.00 

-7, 000. 00 

-3, 000,  500. 00 

$590, 000. 00 

Treasiu-y  notes: 

4%,  Series  A-1961 

35^%,  Series  A-1962 

Treasury  bonds,  2!-^%  of  1961... 

Total    . 

10, 139,  500. 00 

-9,  549, 500. 00 

590, 000. 00 

TABLES 


769 


Table  71. — District  of  Columbia  other  funds — Investments  as  of  June  30,  1961  and 

iS*!?^— Continued 

VII.  WELFARE  FUNDS— DEPARTMENT  OF  CORRECTIONS 


Investments  in  public  debt  securities 

June  30,  1961 

Fiscal  year 
1962,  increase, 
or  decrease  (— ) 

June  30, 1962 

Public  issues: 

Treasury  notes,  4%,  Series  B-1963 , 

$10,000.00 

$10, 000. 00 

VIII.  MISCELLANEOUS  TRUST  FUNDS  i 

Public  issues: 

Treasury  bills 

Treasury  bonds: 

25i%  of  1965 

4%  of  1980 

3%  of  1995 

U.S.  savings  bonds: 

Series  E  (3.75%). 

Series  Q  (2.50%). 

Series  H  (3.75%). 

Series  J  (2.76%).. 

Series  K  (2.76%). 

Total. -.. 


$19, 000. 00 
15,  500. 00 
40, 500. 00 


16, 000. 00 
16, 000. 00 
10, 375. 00 
33,  500. 00 


150, 875. 00 


$61, 000. 00 

-19.000.00 
19, 000. 00 


1, 000. 00 


62, 000. 00 


$61,000.00 


34,  500. 00 
40,  500. 00 

1,000.00 
16, 000. 00 
16, 000. 00 
10,  375. 00 
33, 500. 00 


212, 875. 00 


1  Investment  of  these  funds  was  made  directlv  through  the  facilities  of  the  District  of  Columbia  with  the 
exception  of  $61,000  of  Treasury  bills,  $19,000  of  2^A  percent  Treasury  bonds  of  1965,  and  $34,500  of  4  percent 
Treasury  bonds  of  1980  which  were  handled  by  the  Treasury  Department. 


661496—63- 


-50 


770   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  72. — Em-ployees  health  benefits  fund,  Civil  Service  Commission,  June  SO,  1962 

[On  basis  of  reports  from  the  Civil  Service  Commission.    This  trust  revolving  fund  was  established  in 
accordance  with  the  provisions  of  the  act  of  September  28,  1959,  as  amended  (5  U.S.C.  3007)] 

I.  RECEIPTS    AND    EXPENDITURES    (EXCLUDING    INVESTMENT    TRANSACTIONS) 


Cumulative 

through 
June  30,  1961 


Fiscal  year 
1962 


Cumulative 

through 
June  30, 1962 


Receipts: 

Direct  appropriations  ' 

Employees'  and  annuitants'  withholdings  *_ 

Agency  contributions  s 

Interest  and  profits  on  investments 


$2,  500, 000. 00 

183, 973,  428.  58 

109,  635.  620.  71 

40,  231.  58 


$2,  877,  000. 00 

215,  533,  553. 01 

123. 344, 707. 89 

576, 672. 01 


$5,  377,  000. 00 

399,  506, 981.  59 

232,  980,  328.  60 

616,  903.  59 


Total  receipts. 


296, 149,  280. 87 


342,  331, 932. 91 


638, 481,  213.  78 


Expenditures: 

Subscription  charges  paid  to  carriers 

Return  of  contingency  reserve  by  carrier 

Administrative  expenses 

Interest  on  administrative  expenses  paid  by  em- 
ployees' life  insurance  fund  s 

Other' 


272. 076, 931. 37 


1, 478,  826.  95 

43,  625.  79 
-713,  336.  63 


330, 750,  536. 10 

-253,  285.  51 

*  1,  249,  700.  84 


-229,753.23 


602,  827, 467.  47 
-25.3,285.51 
2,  728.  527.  79 

43,  625.  79 
-943, 089. 86 


Total  expenditures. 
Balance 


272,  886,  047. 48 


331,  517, 198.  20 


604,  403,  245.  68 


23,  263,  233.  39 


10, 814,  734.  71 


34,  077, 968. 10 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30, 1961 


Fiscal  year 

1962,  Increase, 

or  decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bills 

Treasury   certificates   of   indebtedness. 
Series  C-1961-. 

Treasury  notes: 

3?^%,  Series  C-1962 

3?4%,  Series  D-1964 

4%,  Series  A-1966 

Treasury  bonds: 

2\<i%  of  1961 

2}^%  of  1964-69  (dated  April  15,  1943) 

2WVo  of  1965-70 

2W7c  of  1966-71. 

3?4%  of  1966. 


m%. 


$3,  000, 000. 00 
1, 000,  000. 00 


$3,  000,  000. 00 


1,  239,  500.  00 


2,  130,  500.  00 

3,  950,  000.  00 


3?i%  of  1967 

3Ji%  of  1968 

3?4%  of  1968 

4%  of  1969 

3Ji%  of  1971 

4%  of  1971 

3Ji%  of  1974 

ZM%  of  1978-83. 

3^%  of  1980 

3H%  of  1990 

3>^%  of  1998 


1,  004,  000.  00 


-$1, 000, 000. 00 

742, 000.  00 

1, 000,  000.  00 

599, 000.  00 

-1,2.39,500.00 

875,  000.  00 

-2,130,500.00 

-3,950,000.00 

1,  751, 000. 00 


742,  000. 00 

1,  000, 000.  00 

599, 000. 00 


875,  000. 00 


1,  000,  000. 00 

700,  000. 00 

1,  000,  000.  00 

474,  500.  00 

1,  301,  500.  00 

3.  043,  500.  00 

190,  000. 00 

738, 000. 00 

2, 130,  500.  00 

3, 950, 000.  00 


1,  751, 000. 00 
1, 004, 000. 00 

1, 000,  oon.  00 

700,  000.  00 

1,  000,  000.  00 
474,  500.  00 

1,301,500.00 

3,  043,  500.  00 

190,  000.  00 

738.  000.  00 

2,  130,  500.  00 
3, 950, 000. 00 


Total  investments. 
Undisbursed  balance 


12.  324. 000.  00 
10,  939,  233.  39 


11, 175,  000. 00 
-360,  265.  29 


23,  499, 000. 00 
10,  578,  968. 10 


Total  assets. 


23,  263.  233.  39 


10, 814,  734.  71 


34, 077, 968. 10 


'  Government  payments  from  amiual  appropriation  for  annuitants  authorized  bv  section  7(c)  of  the  act 
(5  U.S.C.  ;i006(c)). 

2  As  providefl  in  the  act  (5  U.S.C.  3006(a),  (4))  "There  shall  be  withheld  from  *  *  *  each  enrolled  em- 
ployee *  •  *  or  annuitant  so  much  as  is  necessary  after  deducting  the  contribution  of  the  Government,  to 
pay  the  total  charge  for  hLs  enrollment." 

3  As  provided  in  the  act  (5  U.S.C.  3006(a)  1-3),  "•  *  *  the  Government  contribution  for  health  benefits 
•  *  •  shall  he  50  per  centum  of  the  lowest  rates  charged  by  a  carrier  *  *  *  but  (A)  not  less  than  $1.25  or 
more  tlian  $1.75  biweekly  •  *  *  for  self  alone.  (B)  not  lesstlian  $3  or  more  than  $4.25  biweekly  •  •  *  for 
self  and  family  *  *  *  ,  and  (C)  not  less  than  $1.75  or  more  than  $2.50  biweekly  for  a  female  employee  •  •  • 
for  self  and  family  including  a  nondependent  husband."  Or  if  "the  biweekly  subscription  charge  is  less 
than  $2.50  •  »  •  for  self  alone  or  $6  *  *  *  for  self  and  family,  the  contribution  of  the  Government  shall  be 
50  per  centum  of  such  subscription  charge,  except  that  if  a  noiideprndent  husband  is  a  inciiiher  of  the  family 
of  a  female  employee  •  *  •  enrolled  for  herself  and  family  the  contribution  *  •  •  shall  be  30  per  c^-ntum 
of  such  subscription  charge."  Also  "There  shall  be  contributed  *  *  •  amounts  (in  tlic  same  ratio  '  *  *) 
which  arelneccssary  for  the  administrative  costs  and  tlie  reserves  provided  for  '  *  *." 

*ilncludes  $416,520.36  for  repavment  of  loans  to  employees'  life  insurance  fund. 
»<As  provided  in  the  act  (5  U.S.C.  3008(a)). 
•Difference  between  cost  and  face  value  of  investments. 


TABLES 


771 


Table   73. — Retired   employees   health   benefits    fund,    Civil    Service    Commission, 

June  SO,  1962 

[On  basis  of  reports  from  the  Civil  Service  Commission.    This  trust  revolving;  fund  was  pstahlished  in  ac- 
cordance with  the  provisions  of  the  act  of  September  8,  1960  (5  U.S.C.  3057)] 

I.  RECEIPTS    AND    EXPENDITURES    (EXCLUDING    INVESTMENT    TRANSACTIONS) 


Receipts: 

Direct  appropriations 

Transfers  from  diiect  appropriations. 

Annuitants  withholdings  ' 

Government  contributions  2 

Interest  and  profits  on  hivestments_. 


Total  receipts- 


Expenditures: 

Subscription  charges  paid  to  carrier 

Government  contributions  paid  to  armuitants  3. 

Administrative  expenses 

Interest  on  loans 

Other  4_ 


Total  expenditures. 
Balance 


Cumulative 

through 
June  30,  1961 


$1, 625, 000. 00 


1,  625,  000. 00 


2, 089.  52 


2, 089.  52 


1,  622,  910.  48 


Fiscal  year 
1962 


$13, 800,  noo.  00 

-13,477,818.42 

12,697,971.84 

13,477,818.42 

736.  26 


26,  498,  708. 10 


19,  663,  273.  00 

6,021,246.29 

847,  012.  36 

6,  409.  00 

-129,846.56 


26,  408,  094.  09 


90,  614.  01 


Cumulative 

through 
June  30,  1962 


$15,42.5.000.00 
-13,477,818.42 

12,  697,  971.  84 

13,  477,  818.  42 

736.  26 


28, 123,  708. 10 


19,  663,  273.  00 

6, 023,  335. 81 

847,  012. 36 

6,  409. 00 

-129,846.56 


26,  410, 183.  61 


1,  713,  524.  49 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year 

1962,  increase, 

or  decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bills                                     __        

$1,  531,  000. 00 
100,  000. 00 

$1,  531,  000.  00 

Treasury  bonds,  4%  of  1969 

100,  000.  00 

Total  investments  .    

1, 631, 000.  00 
-1,540,385.99 

1,  631, 000. 00 

Undisbursed  balance          

$1,  622,  910.  48 

82,  524. 49 

Total  assets 

1,  622,  910.  48 

90,614.01 

1,  713,  524.  49 

1  As  provided  in  the  act  ^5  U.S.C.  .30.54)  "There  shall  be  withheld  from  the  annuity  or  compensation  *  •  * 
so  much  as  is  necessary,  after  deducting  the  contribution  of  the  Government,  to  pay  the  total  charge  for 
his  enrollment." 

2  As  provided  in  the  act  (5  U.S.C.  3053)  "the  Government  shall  contribute  *  *  *  such  amounts  as  the 
Commission  by  regulation  may  *  *  *  prescribe.  The  amount  so  prescribed,  if  the  employee  is  enrolled 
for  self  only,  shall  not  be  less  than  $3.00  monthly  or  more  than  $4.00  monthly.  The  amount  to  be  prescribed 
*  *  *  for  self  and  family  shall  be  twice  the  contribution  for  one  emolled  for  self  only.  *  *  *  Li  addition, 
the  Government  shall  contribute  *  *  *  up  to  2  per  centum  of  each  contribution  authorized  *  *  *  for  pay- 
ment of  expenses  ***  in  administering  this  chapter."  ,        ,    , 

3  In  accordance  with  5  U.S.C.  3055(a),  subject  to  specified  restrictions,  a  retired  employee  who  elects 
to  obtain  or  retain  a  health  benefits  plan  other  than  the  uniform  Government-wide  health  benefits  plan 
directly  with  a  carrier,  shall  be  paid  a  Government  contribution  toward  the  cost  of  his  plan  which  shall  be 
equal  in  amount  to  the  appropriate  Government  contribution  (see  footnote  2). 

<  Difference  between  cost  and  face  value  of  investments. 


772   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  74. — Employees'  life  insurance  fund,  Civil  Service  Commission,  June  SO, 

1962 

[On  basis  of  reports  from  the  Civil  Service  Commission.    This  trust  revolving  fund  was  established  in 
accordance  with  the  provisions  of  the  act  of  August  17,  1954,  as  amended  (5  U.S.C.  2091(c))] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through   June 

30, 1961 

Fiscal  year  1962 

Cumulative 

through  June 

30, 1962 

Receipts: 

Employees'  withholdings  i...  

$502,  791, 091. 94 
251, 395,  545. 97 

13, 313,  799. 90 
10,  825,  822. 56 

$91,686,457.99 
45, 848, 294. 42 

3. 446,  626.  81 

7,  287, 033. 45 

3, 666. 09 

19,  504. 40 
142, 836.  79 

$594, 477,  549.  93 

Government  contributions  ^ 

297,  243,  840. 39 

Premiums  collected  from  beneficial  associa- 
tion members 

16, 760, 426.  71 

Interest  and  profits  on  investments            

18, 112, 856. 01 

Other 

3,  666. 09 

Assets  acquired  from  beneficial  associations: 
United  States  securities  ^  __       

13, 834, 373. 00 
7, 488,  634. 96 

13, 853,  877. 40 

Other                                     

7, 631, 471. 75 

Total  receipts - 

799,  649,  268. 33 

148,  434, 419. 95 

948, 083, 688.  28 

Expenditures: 

Premiums  paid  to  insurance  companies: 

For  Federal  emplovees  generally 

735, 543,  819. 04 

150, 887,  892. 33 

20, 612, 002.  04 

5,581,312.13 

1, 180, 842. 16 

340,  606.  77 
-5,688,483.42 

136,439,175.19 

s  58,  554, 589.  25 

5,  680, 907. 37 

1 14,  831. 85 

255,  791. 09 

-340,  606.  77 
«-5,  334, 016.  78 

871, 982, 994.  23 

Less  return  of  premiums  paid      .      

209, 442,  481.  58 

For  beneficial  association  members 

Less  return  of  premiums  paid 

26,  292, 909. 41 
5,  596, 143. 98 

Administrative  expenses.. 

1, 436,  633.  25 

Net  payments  for  employees  health  benefits 
^reimbursable)  ^ 

Other.. 

-11,022,500.20 

Total  expenditures... .  

595, 519, 582. 13 

78, 131,  829. 00 

673,  651,  411. 13 

Balance                 .                  

204, 129,  686.  20 

70, 302,  590. 95 

274, 432,  277. 15 

Footnotes  at  end  of  table. 


> 


TABLES 


773 


Table  74. — Employees'  life  insurance  fund,  Civil  Service  Commission,  June  30, 

1962— Continued 

II.    ASSETS    HELD    BY    THE    TREASURY    DEPARTMENT 


Assets 


Investments  in  public  debt  secui-ities: 
Public  issues: 

Treasury  biUs 

Treasury  notes: 

35-^%,  Series  A-1962 

3J4%,  Series  C-1962 

4%,  Series  D-1962_. 

3H%,  Series  F-W62 

4%%,  Series  C-1963 

3M%,  Series  D-1963 

4%%,  Series  A-1964 

m%,  Series  A-1965 

4%,  Series  A-1966 

Treasury  bonds: 

2H%  of  1961...- 

21/2%  of  1962-67 

2},i%  of  1963-68 

3%  of  1964 

2)^%  of  1964-69  (dated  April  15, 1943). 
21.^%  of  1964-69  (dated  Sept.  15, 1943). 

2%%  of  1965-... 

25/2%  of  1965-70 

3?4%  of  1966 

3%  of  1966 

3%%  of  1966 

2yz%  of  1966-71 

2J.i2%  of  1967-72  (dated  June  1, 1945).. 
2!^%  of  1967-72  (dated  Nov.  15,  1945). 

35^%  of  1967 

3%%  of  1968.-.. 

33/4%  of  1968 

4%  of  1969.... 

3%%  of  1971 

4%  of  1971 

3^i%  of  1974 

31.4%  of  1978-83 

3^2%  of  1980 

4%  of  1980 

3M%  of  1985 

31.^%  of  1990 

3%  of  1995 

35.4%  of  1998 

2^%  Investment  Series  B-1975-80--. 
U.S.  savings  bonds: 

Series  P  (2.53%) 

Series  G  (2.50%). 

Series  J  (2.76%) 

Series  K  (2.76%) 


June  30,  1961 


Total  investments. 
Undisbursed  balance 


Total  assets. 


$20, 000, 000. 00 


5, 000, 

5, 783, 
10, 000, 

1,  666, 
10,000, 
10, 000, 
15, 000, 

5, 086, 


000. 00 
000. 00 
000. 00 
000. 00 
000.  00 
000. 00 
000. 00 
000. 00 


10, 000, 000. 00 

15, 015. 000. 00 

3, 000, 000. 00 

5, 000, 000. 00 


15, 000, 

413, 

5, 000, 

15,  227, 

6, 783, 

231, 

367, 

341, 

5, 000. 

12, 000, 


000. 00 
000. 00 
000. 00 
500. 00 
000. 00 
000. 00 
500. 00 
500. 00 
000. 00 
000. 00 


15, 030, 000. 00 


235, 000. 00 


1,  200, 000. 00 


2, 029,  500. 00 
135, 500. 00 

1, 255, 500. 00 
179, 000. 00 

133, 195. 00 
10, 000. 00 

489, 069.  60 
15, 000. 00 


Fiscal  year  1962, 
increase,  or 
decrease  (— ) 


-$12,500,000.00 
-5,000,000.00 


-10,000,000.00 
-1,666,000.00 


17, 165, 000. 00 
-10,000,000.00 


-5,000,000.00 
5, 500, 000. 00 
5, 000, 000. 00 

-15,000,000.00 
-413,000.00 


June  30,  1962 


196,  625,  264.  60 
7,  504, 421. 60 


204, 129, 686.  20 


3, 633,  500. 00 
-367, 500. 00 
-341,  500. 00 


10, 105, 000. 00 

1,  500, 000. 00 
300, 000. 00 

2,  806,  500. 00 
15, 000, 000. 00 
10, 300, 000. 00 

1, 105, 000. 00 

1, 069,  500. 00 

7,  563, 000. 00 

436,  500. 00 

14,  731, 000. 00 


15, 103, 000. 00 


-89, 905. 00 

-10,000.00 

14, 811. 40 


50, 944, 906. 40 
19, 357,  684.  55 


70, 302,  590.  95 


$7, 500, 000. 00 


5, 783, 000. 00 


10, 000, 000. 00 
10, 000, 000. 00 
15, 000. 000. 00 
5, 086, 000. 00 
17, 165, 000. 00 


15. 015, 000. 00 
3, 000, 000. 00 


5, 500, 000. 00 
5, 000, 000. 00 


5, 000, 000. 00 

15,  227,  500. 00 

6, 783. 000. 00 

3, 864, 500. 00 


5, 000, 

22, 105, 

1, 500, 

15, 330, 

2, 806, 

15, 000, 

10, 300, 

1, 340, 

1,069, 

8, 763, 

436, 

16,  760, 

135, 

16, 358, 

179, 


000. 00 
000.  00 
000. 00 
000. 00 
500. 00 
000. 00 
000. 00 
000. 00 
500. 00 
000. 00 
500. 00 
500. 00 
500. 00 
500. 00 
000. 00 


43,  290. 00 


503,  881. 00 
15, 000. 00 


247, 570, 171. 00 
26, 862, 106. 15 


274, 432, 277. 15 


1  As  provided  in  the  act  (5  U.S.C  2094(a)),  "*  *  *  there  shall  be  withheld  from  each  salary  payment  of 
such  employee,  *  *  *  not  to  e.xceed  the  rate  of  25  cents  biweekly  for  each  $1,000  of  his  group  life  insur- 

Qnno   *   *   *"•  onH  in  >;  TT  H  c    of\QAiy,\  "*   *   *  thpTp  sViqH  hp  f>nntrihTitpri  frnm  thp  rpqnpptivfi  annrnnriation 


and  in  5  U.S.C.  2094(b) 


there  shall  be  contributed  from  the  respective  appropriation 


anee  ,----., 

or  fund  *  *  *  not  to  exceed  one-half  the  amount  withheld  from  the  employee  *  *  *." 

2  Includes  Series  F  and  J  bonds  at  current  redemption  value.  Amount  for  the  fiscal  year  1962  is  accrued 
increment. 

3  Premium  payments  In  excess  of  the  $100  million  contingency  reserve  set  by  the  Civil  Service  Com- 
mission, which  are  required  to  be  returned  to  the  fund  by  the  insuring  companies  (5  U.S.C.  2097(d)). 

^  Return  of  premium  payments  in  excess  of  annual  claims  paid,  expenses,  and  other  costs. 

5  To  pay  administrative  expenses  incurred  by  the  Commission  in  carrying  out  the  Federal  Employees' 
Health  Benefits  Act  of  1959  and  the  Retired  Federal  Employees'  Health  Benefits  Act  of  1960;  reimburse- 
ment with  interest  is  to  be  made  from  the  employees  health  benefits  fund  (5  U.S.C.  3008(a))  and  the  retired 
employees  health  benefits  fund  (5  U.S.C.  3058(e)). 

« Includes  the  difference  between  cost  and  face  value  of  investments  amounting  to  —$5,333,916.78. 


774   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  75. — Federal  disability  insurance  trust  fund,  June  30,  1962 

|Thi^  tru.st  fund  was  established  in  accordance  with  the  provisions  of  the  Social  Security  Act  amendments 

approved  August  1,  1956  (42  U.S.C.  401(b))] 

r.  RECEIPTS    AND    EXPENDITURES    (EXCLUDING    INVESTMENT    TRANSACTIONS) 


Cumulative 

through  June  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

Receipts: 

\ppropriations '           ..    

$3, 944, 313,  410. 10 

-29, 000, 000. 00 
252,365,  lis.  52 
160, 349, 940. 19 

26, 831, 000. 00 

$955, 449,  632.  27 

-11,907,500.00 
77, 323, 679. 77 
69, 956, 452. 98 

$4, 899, 763, 042.  37 

Less  refund  of  internal  revenue  collec- 
tions (42  U  S.C   401(e)(2))     

-40, 907,  500.  00 

Deposits  by  States    .          .  

329,  688,  798.  29 

Interest  and  profits  on  investments 

Payment^  from  railroad  retirement  ac- 
count (45  U.S.C.  228e(k)) 

230, 306, 393. 17 
26, 831, 000. 00 

Total  recelnts 

-■  4. 354, 859, 468. 81 

1,090.822,265.02 

5, 445, 681, 733. 83 

Expenditures: 

Benefit  payments      .    ..    

1, 739, 949,  775.  43 
5, 148,  000.  00 

14,  414, 429. 02 
90, 962,  803. 00 

1,011,375,762.35 
11, 030, 000. 00 

3,  654, 157.  42 
2  62,  477,  257. 00 

2,751,325,537.78 

To  Railroad  Retirement  Board 

16, 178, 000. 00 

Administrative    expenses    (42    U.S.C. 
401(g)(1)): 
To  general  fund 

18, 068, 586. 44 

To  Federal  old-age  and  survivors 
insurance  trust  fund  

153, 440, 060. 00 

Total  expenditures-.         

••  1, 850, 475, 007. 45 

1, 088, 537, 176.  77 

2, 939, 012, 184.  22 

Balance 

2, 504, 384,  461. 36 

2,  285, 088.  25 

2, 506,  669, 549.  61 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


Investments  in  public  debt  securities: 

Special  issues,  Federal  disability  insur- 
ance trust  fund  series  maturing  June 
30: 
Treasury  certificates  of  indebted- 
ness: 

ZV^%  of  1962. 

3347o  of  1963— - 

Treasury  notes: 

2Vi%  of  1962 

258%  of  1962 

2'/J%  of  1963 

'i.-'Wn  of  1963.— ..- --- 

3^47o  of  1963 

2H%  of  1964 -- 

334%  of  1964 

2)ft%  of  1965 

■m%  of  1965 ---- 


3%7oOf  1967- 
Treasurv  bonds: 
2Vi%  of  1963- 
2^/i%  of  1964- 
2Vi%  of  1965- 
2%%  of  1965- 
2H%  of  1966- 
2'>i%  of  1966- 
2h%  of  1967- 
2S<t%  of  1967- 
3*4%  of  1967- 
2Vi%  of  1968- 
2%%  of  1968- 
33,4%  of  1968- 
2H%  of  1969- 
3)4%  of  1969- 
2)6%  of  1970- 
3*4%  of  1970- 
2H%  of  1971.. 
3*4%  of  1971.. 
2)it%  of  1972- 


June  30,  1961 


$34, 096, 000.  00 


37, 500, 
95, 394, 
30. 000, 
95, 394, 
19, 3H9, 
95, 394, 
19, 3»9, 
32, 394, 
19,  3S9, 
19, 3S9, 


000. 00 
000. 00 
000.  00 
000. 00 
000. 00 
000.  00 
000.  00 
000.  00 
000.  00 
000. 00 


V, 
37, 
37, 
63, 
37, 
95, 
37, 
95, 
19, 
30, 

102, 
19, 

132, 
19, 

132, 
19, 

132, 
19, 

132, 


500, 
500, 
500, 
000, 
500, 
394, 
500, 
394, 
3S9, 
000, 
894, 
3S9, 
894, 
3S9, 
H94, 
3H9, 
894, 
389, 
894, 


000. 00 
1)00. 00 
000.  00 
000.  00 
000.  00 
000.  00 
000. 00 
000. 00 
000. 00 
000.  00 
000.  00 
000. 00 
000. 00 
000.  00 
000.  00 

000. 00 

000.  00 
000.  00 
000.  00 


Fiscal  year  1962, 
increase,  or 

decrease  (— ) 


-$34, 096, 000. 00 
1, 361, 000. 00 

-37, 500, 000. 00 
-95, 394, 000. 00 


1, 349, 000. 00 


1,349,000.00 
1,349,000.00 
1, 349, 000. 00 


1,349,000.00 

"i,"349,'6oo'5o" 
'i,"349,"6oor66' 

'i,'349,'000."66" 


June  30,  1962 


.$1,361,000.00 


30, 000, 
95, 394, 
19, 389, 
95, 394, 
20,  738, 
32, 394, 
20, 738, 
20, 738, 
1,349, 

7,  500, 
37, 500, 
37,  500, 
63, 000, 
37,  500, 
95, 394, 
37, 500. 
95,  394. 
19, 3S9, 
30, 000, 

102,  894, 
20,  738, 

132,  894, 
20, 738, 

132,  894, 
20,  738, 

132, 894, 
20, 738, 

132, 894, 


000. 00 
000. 00 
000. 00 
000. 00 
000.  00 
000.  00 
000.  00 
000. 00 
000. 00 

000. 00 
000. 00 
000.  00 
000.  00 
000. 00 
000.  00 
000. 00 
000.  00 
000.  00 
000.  00 
000.  00 
000.  00 
000. 01) 
000.  00 
000.  00 
000.  00 
000.  00 
000.  00 
000. 00 


Foo  tnotes  at  end  of  table. 


TABLES 


775 


Table  75. — Federal  disability  insurance  trust  fund,  June  SO,  1962 — Continued 
II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT-Continued 


Assets 

Jmie  30,  1961 

Fiscal  year  1962, 

increase,  or 

decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities— Con. 
Special  issues,  Federal  disability  insur- 
ance trust  fund  series  maturing  June 
30 — Continued 
Treasury  bonds— Continued 

334%  of  1972 

$19,389,000.00 
132, 894, 000. 00 

19, 389, 000.  00 
132,894,000.00 

19, 389, 000. 00 
132,  894, 000. 00 

19, 389, 000. 00 
152, 283, 000.  CO 

.$1,349,000.00 

$20  738  000  00 

2?^%  of  1973 

132,  894, 000.  00 
20,  738  000.  00 

3%%  of  1973 

1, 349, 000. 00 

25/i%  of  1974-  - 

132  894  000  00 

334%  of  1974 

1, 349, 000. 00 

20,  738, 000. 00 

2^i%ofl975 

132  894  000  00 

3^4%  of  1975 

1,  349, 000. 00 

1, 349, 000. 00 

153,  632, 000. 00 

20  738  000  00 

3%%  of  1976 

153,  632, 000. 00 

3M%0fl977 

153,  632, 000. 00 

Total  special  issues 

2,  298, 952, 000. 00 

5, 540, 000. 00 

2, 304, 492, 000. 00 

Public  issues: 

Treasury  notes: 

4^i%,  Sories  C-1963    

5, 000, 000. 00 
5, 000, 000. 00 

18,  2.50, 000. 00 
10, 000, 000. 00 

1,  500, 000. 00 

10,000,000.00 

3, 750, 000. 00 

5, 000, 000. 00 

5%,  Series  B-1964 

5, 000, 000. 00 

Treasury  bonds- 

2%%  of  1965 

-18,250,000.00 

3%  of  1966                           -  .    — 

10, 000, 000. 00 

2Vi.%  of  1967-72  (dated  Oct.  20, 
1941)           .                   

-1,500,000.00 

3%%  of  1967      - -  — 

10, 000, 000. 00 

3"/^%  of  1968           -              .        .. 

' '5"000r000"00' 

10,000,000.00 

3,  750, 000. 00 

3?4%ofl968    - 

5,  000.  000. 00 

4%  of  1969 - 

11,000,000.00 
5,000,000.00 
5, 000, 000. 00 
2, 000, 000. 00 
7, 500, 000. 00 
3, 500, 000. 00 

21,  000, 000.  00 

3%%  of  1974 

5,  000, 000.  00 

4W%  of  1975-85                  - 

5, 000,  000. 00 

4%  of  1980      -     

18,  250, 000. 00 

20, 250, 000. 00 

3y>%ofl990                         -     

7, 500, 000. 00 

3!^%  of  1998 

1, 500, 000. 00 

5, 000, 000. 00 

Total  Dublie  issues 

87, 500, 000. 00 

15, 000, 000. 00 

102,  500, 000. 00 

Total  investments— par  value. 
Unamortized  discount  and  premium 
on  investments  (net) 

2, 386,  452, 000. 00 

-967,221.90 
90, 422. 15 

20,  540, 000. 00 

84,  229.  67 
-62, 190. 13 

2,  406, 992, 000. 00 
-882, 992.  23 

Accrued  interest  purchased 

28,  232. 02 

Total  investments— book  value 

Undisbursed  balance 

2, 385, 575,  200.  25 
118,  809,  261. 11 

20, 562, 039.  54 
-18,276,951.29 

2,  406,  137,  239. 79 
100,532,309.82 

Total  assets  .  

2, 504, 384,  461. 36 

2,  285, 088.  25 

2,  506, 669,  549. 61 

'  Revised  for  reclassiflcation. 

1  Appropriations  are  equal  to  the  amount  of  employment  taxes  collected  as  estimated  by  the  Secretary 
of  the  Treasury  and  adjusted  in  accordance  with  wage  reports  certified  by  the  Secretary  of  Health,  Educa- 
tion, and  Welfare  for  distribution  to  this  fund  and  the  Federal  old-age  and  survivors  insurance  trust  fund. 

2  Reimbursement  covering  fiscal  year  1961  and  including  $2,204,658.00  interest. 


v 


I 


I 


776   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  76. — Federal  old-age  and  survivors  insurance  trust  fund,  June  SO,  1962 

[On  bnsis  of  daily  Treasury  statements  through  1952,  thereafter  on  basis  of  "Monthly  Statement  of  Receipts 
and  Expenditures  of  the  United  States  Government,"  see  "Ba-ses  of  Tables."  This  trust  fund,  the 
successor  to  the  old-age  reserve  account,  was  established  in  accordance  with  the  provisions  of  the  Social 
Security  Act  Amendments  (42  U.S.C.  401).  For  further  details  see  annual  reports  of  the  Secretary  for 
1940,  p.  212,  and  1950,  p.  42] 
I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Receipts: 

Appropriations  i 

Less  refund  of  internal  revenue  collec- 
tions (42  U.S.C.  401(g)  (2))2 

Deposits  by  States  (42  U.S.C.  418)3 

Interest  and  profits  on  investments 

Transfers  from  general  fund  (42  U.S.C. 

417)5 

Payments    from    railroad    retirement 

account  (45  U.S.C.  228e  (k))._ 

Others 

Total  receipts 

E.xpenditures: 

Benefit  payments 

Construction  of  building 

Railroad  Retirement  Board  (.45  U.S.C. 

228e(k))... 

Administrative    expenses    (42    U.S.C. 
401(g)(1)): 

Salaries  and  expenses  ' 

To  general  fund 

To  Department  of  Health,  Educa- 

cation,  and  Welfare 

From  Federal  disability  insurance 
trust  fund 

Total  expenditures— 

Balance 


Cumulative 

through  Jime  30, 

1961 


$82, 044, 450,  722. 38 

-563,515.000.00 
3, 088, 923,  703.  88 
6,  589, 560,  723. 04 

15, 386,  400. 00 

35,  393, 000.  00 
3,  458, 167. 32 


'  91,  213,  657,  716.  62 


67, 345,  710, 138. 55 
28, 053, 140.  64 

1, 056,  612, 000. 00 


1, 384,  840. 089.  65 
569.  752,  551.  53 

16, 973, 325. 00 

-88,  633, 383. 00 


■■  70,  313,  307,  862. 37 


20, 900, 349,  854.  25 


Fiscal  year  1962 


$10, 714, 781,  548, 49 

-129,760.000.00 

869,  621, 102.  40 

*  539, 048, 987. 03 


2,  275, 195.  22 


11,995,966,833.14 


12,  657, 835, 048. 49 
3, 081, 941. 44 

360,  788, 000. 00 


203, 499. 374. 35 
42, 483,  593.  21 

2,  768, 000. 00 

-60,272,599.00 


13, 270, 183, 358. 49 


-1,274,216,525.35 


Cumulative 

through  June  30, 

1962 


$92, 759, 232,  270. 87 

-693,  275,  000. 00 
3, 958,  544, 806.  28 
7, 128,  609, 710. 07 

15. 386, 400. 00 

35, 393, 000. 00 
5,  733, 362.  54 


103,  209,  624,  549.  76 


80,  003,  545, 187. 04 
31, 135, 082. 08 

1.417,400,000.00 


1,  648,  339, 464. 00 
612,  236, 144.  74 

19,  741, 325. 00 

-148,905,982.00 


83,583,491,220.86 


19, 626, 133, 328. 90 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30,  1961 


Fiscal  year  1962, 

increase,  or 

decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  securities: 

Special  issues,  Federal  old-age  and  sur- 
vivors insurance  trust  fund  series 
maturing  June  30: 

Treasury  certificates  of  indebted- 
ness: 

ZH%  of  1962.... 

334%  of  1963 

Treasurv  notes: 

2i/>%  of  1962 

2H%  of  1962... 

21/2%  of  1963-... 

2%%  of  1963 

2W/n  of  1964 

3>'4%  of  1964 

Treasury  bonds: 

2)/2%  of  1963 

25/2%  of  1964 

2Vi%  of  1965-. 

25/^%  of  1965.. 

2W7o  of  1966 

2W7c  of  1966 

2Vi%  of  1967 

25-^%  of  1967 

21/4%  of  1968 

2W7o  of  1968 

25/i%  of  1969 

2W?o  of  1970 

2H%  Of  1971.... 

2H%  Of  1972 

2^%  of  1973 

2^,%  of  1974-... 


$440,  698, 000. 00 


471,  319, 000.  00 
168,000,000.00 
412,011,000.00 
168,  OnO.  000.  00 
168, 000. 000.  00 


-$440,698,000.00 
1,080,011,000.00 

-471,319,000.00 
-168,000,000.00 
-412,011,000.00 
-168,000,000.00 


.$1,080,011,000.00 


500, 

912, 

912, 

168, 

912, 

168, 

912, 

168. 

412, 

GOH, 

1,080, 

1,  080, 

1,  080, 

1,  OSO, 

1,  080, 

1, 080, 


000, 000. 00 
011,000.00 
011,000.00 
000, 000.  00 
011,000.00 
000,  000.  00 
011,000.00 
000.  000.  00 
011.000.00 
000,  000.  00 
011.(H)0,  00 
011.000.00 
Oll.OlHl.  00 
011,000.00 
001.000.00 
011,000.00 


88,  696, 000  00. 

-500,000,000.00 
-135,313,000.00 


168, 000, 000. 00 
88.  796, 000. 00 


776, 698 

912,011, 

168, 000, 

912,011. 

168,  000. 

912,011, 

168, 000. 

412,011. 

668, 000, 

1,080,011, 

1,080,011, 

1,080,000, 

1,080,011, 

1,080,011, 

1,080,011, 


000.00 
000. 00 
000.  00 
000.00 
000.  00 
000.  00 
000.  00 
000.  00 
000. 00 
000. 00 
0(«).  00 
000.  00 
000.  00 
000.  00 
000. 00 


Footnotes  at  end  of  table. 


TABLES 


777 


Table  76. — Federal  old-age  and  survivors  insurance  trust  fund,  June  30,  1962 — Con. 
II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT— Continued 


Assets 


June  30,  1961 


Investments  in  public  debt  securities— Con. 
Special  issues,  Federal  old-age  and  sur- 
vivors   insurance    trust    fund    series 
maturing  June  30— Continued 
Treasury  bonds — Continued 

25^%  of  1975 

3?4%  of  1975- 

3M%  of  1976-— 


Total  special  issues. 


Public  issues  :8 

Treasury  notes: 

4^-^%,  Series  C-1963... 

5%,  Series  B-1964. 

i%%,  Series  A-1965 

Treasury  bonds: 

2?4%  of  1961 

2}^%  of  1964-69   (dated   April  15, 

1943) 

2W7o  of  1964-69  (dated  September 

15,  1943) - 

25/i%  of  1965 

2V4%  of  1965-70... 

3%%  of  1966 

3%  of  1966 

Z%%  of  1966 

31/3%  of  1966-71 

2W7o  of  1967-72  (dated  June  1,  1945). 
2yi%  of  1967-72  (dated  October  20, 

1941) .- 

ZW7o  of  1967 — . 

2)^%  of  1967-72  (dated  November 

15,1945) 

3%%  of  1968.... 

3H%  of  1968...- 

4%  of  1969... 

4%  of  1971 

37/^%  of  1974 

4^%  of  1975-85 

3).4%  of  1978-83 

4%  of  1980 

31.^%  of  1980 

31.4%  of  1985 

3V^%  of  1990... 

3%  of  1995 

31.^%  of  1998-.. 

2?i%  Investment  Series  B-1975-80- 

Total  public  issues.. 


Total  investments — par  value 

Unamortized   premium   and   discount 

(net) 

Accrued  interest  purchased 


Total  investments-book  value- 
Unexpended  balance 


$919, 934, 000. 00 

160, 077, 000. 00 

1,080,011,000.00 


16,  200, 171, 000. 00 


15, 000, 000. 00 
25, 000, 000. 00 
47,  500, 000. 00 

2, 000, 000. 00 

15, 500, 000. 00 


31,000, 
225,  400, 
463,  297, 

27,  729, 

25, 000, 

4,  500, 

315,  077, 

15,  650, 


000. 00 
000. 00 
500. 00 
000. 00 
000.00 
000.  00 
500. 00 
000. 00 


199,  643,  250. 00 
34, 205, 000. 00 

24, 285, 000. 00 


15, 450, 000. 00 
37,  500, 000. 00 


25, 000, 
25, 000, 
60,  200, 
18, 000, 
67, 450, 
25,  700, 

283, 130, 
85, 170, 

174,  454, 
1, 064,  902, 


000. 00 
000. 00 
000. 00 
000.  00 
000. 00 
000. 00 
000.00 
000. 00 
000. 00 
000. 00 


3,  352,  743,  260. 00 


19,  552, 914,  250. 00 

-30,329,924.33 
932, 355. 11 


Fiscal  year  1962, 

increase,  or 

decrease  (— ) 


-$1,126,534,000.00 


-9, 000, 000. 00 

-2,000,000.00 

6,  680, 000. 00 

2, 000, 000. 00 
-225,400,000.00 
-463, 297,  500. 00 


-315, 077,  500. 00 
-15,650,000.00 

-199,643,000.00 


-24,285,000.00 

7,000,000.00 

2, 000, 000. 00 

20,000,000.00 

100,000,000.00 

7,500,000.00 


105,  600, 000. 00 
382, 000, 000. 00 

273, 120, 000. 00 

377,  583, 000. 00 

29, 130, 000. 00 

-1,097,404,000.00 

9, 154, 999.  96 
-602,504.58 


19,  523, 516,  680. 78 
1, 376,  833, 173. 47 


Total  assets I     20,  900, 349,  854.  25      -1,  274.  216.  525. 35 


-1,088,851,504.62 
-185,365,020.73 


June  30,  1962 


$919, 934, 000. 00 

160, 077, 000. 00 

1, 080,  Oil,  000. 00 


15,073,637,000.00 


15, 000, 000. 00 
25, 000, 000.  00 
38, 500, 000. 00 


22, 180, 000. 00 
33, 000, 000. 00 


27,  729, 000. 00 

25, 000, 000. 00 

4,  500, 000. 00 


250. 00 
34,  205, 000. 00 


7, 000, 

17, 450. 

57,  500, 

100, 000, 

32, 500, 

25, 000, 

60,  200, 

123,  600, 

449, 450, 

25, 700, 

556,  250, 

85, 170, 

552, 037, 

064, 902, 


000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000.00 
000. 00 


3, 381, 873,  250. 00 


18, 455, 510,  250. 00 

-21, 174, 924. 37 
329, 850.  53 


18,  434, 665, 176. 16 
«  1, 191, 468, 152.  74 


19.  626, 133. 328. 90 


'  Revised  for  reclassification. 

1  Appropriations  are  equal  to  the  amount  of  employment  ta.xes  collected  as  estimated  by  the  Secretary 
of  the  Treasury  and  adjusted  in  accordance  with  wage  reports  certified  by  the  Secretary  of  Health,  Educa- 
tion, and  Welfare  for  distribution  to  this  fund  and  the  Federal  disability  insurance  trust  fund. 

2  Beeinning  in  1953. 

3  To  cover  employees  of  States  and  their  political  subdivisions,  Social  Security  Amendments  of  1950, 
approved  Aug.  28,  1950. 

4  Excludes  repayment  of  amortized  premium  and  discount  (net)  amounting  to  $9,154,999.96. 

« In  connection  with  payments  of  benefits  to  sui-vivors  of  certain  World  War  II  veterans  who  died  within 
three  years  after  separation  from  active  service. 

5  Incidental  recoveries,  etc.,  and,  beginning  with  the  fiscal  year  1958,  includes  reimbur.'jement  of  mterest 
in  the  amount  of  $4,246,196  transferred  from  the  Federal  disability  insurance  trust  fund  pursuant  to  section 
201  (g)  (1)  of  the  Social  Security  Act,  as  amended. 

1  Paid  directly  from  the  trust  fund  beginning  with  the  fiscal  year  1947  under  annual  appropriation  acts. 
8  Public  issues  held  by  the  fund  are  shown  at  face  value,  unamortized  premium  and  discount  (net)  are 
shown  separately  below. 
'  Includes  the  following  balances  in  accounts  as  of  June  30: 

Benefit  payments.. $1, 360, 716, 164. 82    $1, 174, 566, 198.  75 

Salaries  and  expenses 15,824.537.53  16,416,694.89 

Construction  of  building 292,  471. 12  485,  259. 10 


778   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  77. — Foreign  service  retirement  and  disability  fund,  June  30,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  May  24,  1924,  and  the  act 
of  Aug.  13,  1946  (22  U.S.C.  1062).    For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  138] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Receipts: 

Deductions  from  salaries,  service  credit  payments, 
and  voluntary  contributions  of  employees  subject 

to  retirement  act 

Appropriations  i 

Payments  by  employing  agency  ' 

Receipts  from  civil  service  retirement  and  disability 

fund 

Interest  and  profits  on  investments 


Total  receipts. -. 

Expenditures: 

Annuity  payments  and  refunds. 


Balance. 


Cumulative 

through  June 

30,  1961 


$29,808,811.67 
25, 815, 900. 00 


13,  858, 355.  95 


69, 483, 067. 62 
37, 028, 007.  70 


32, 455, 059. 92 


Fiscal  year 
1962 


$3, 212, 793.  27 


2, 852, 868.  68 

2, 835, 738.  82 
1,  368,  766. 84 


10,  270, 167.  61 
5,  524, 901. 41 


4,  745, 266.  20 


Cumulative 

through  June 

30,  1962 


.$33, 021,  604. 94 

25, 815, 900.  00 

2,  852, 868.  68 

2, 835,  738.  82 
15, 227, 122.  79 


79,  753,  235.  23 
42,552,909.11 


37,  200,  326. 12 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year 
1962,  increase, 
or  decrease  (— ) 

June  30, 1962 

Investments  in  public  debt  securities: 
Special  issues.  Treasury  certificates 
foreign  service  retirement  fund 
June  30: 
3%  of  1962 

of  indebtedness, 
series  maturing 

$1,423,000.00 
30,  757, 000. 00 

-$1,423,000.00 

-30,  757, 000. 00 

1,  544, 000. 00 

35, 166, 000. 00 

4%  of  1962 

3%  of  1963 

$1, 544, 000. 00 

4%  of  1963 

35, 166, 000. 00 

Total  investments 

32, 180, 000. 00 
275, 059. 92 

4,  530, 000. 00 
215,  266.  20 

36,  710, 000.  00 

Undisbursed  balance                                                        

490,  326. 12 

Total  assets..    .  

32,  455, 059. 92 

4, 745,  266.  20 

37, 200, 326. 12 

1  Beginning  Julv  1,  1961,  appropriations  are  not  made  directly  to  the  fund.  Instead,  in  accordance  with 
the  act  approved  Sept.  8,  1960  (22  U.S.C.  1071(a)),  the  employing  agency  contributes  (from  appropriations 
or  funds  from  which  the  salaries  are  paid)  amounts  equal  to  the  deductions  from  employees'  salaries. 


TABLES 

Table  78. —  Highway  trust  fund,  June  SO,  1962 


179 


[This  trust  fund  was  established  in  accordance  with  the  provisions  of  section  209  (a)  of  the  Highway  Rev- 
enue Act  of  1956  (23  U.S.C.  120  note)] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June 

30,  1961 

Fiscal  year 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Excise  taxes:  ' 

Gasoline*              .-.           .. 

$9, 112, 639,  559. 34 
297,  746,  282.  78 
840,  983,  385.  26 

67,  678,  687.  13 
509,  869.  803.  32 
177, 057, 856.  56 

65,  793, 145.  34 
259,  940,  445. 20 

$2, 398,  945, 348. 88 

105, 776, 246. 66 

314.  228, 193.  31 

22. 900, 805.  78 

127, 973,  553.  26 

79, 844, 386. 66 

17,546,761.71 

12,  777,  734. 13 

$11,  511,  584,  908.  22 

403,  522,  529.  44 

1    1.55  211    57H  .57 

Diesel  fuel 

Tires  * 

Tread  rubber  2.. .  .  

90,  579,  492.  91 
637,  843  356  58 

Trucks,  buses,  etc 

Truck  use       .             .           

256, 902, 243.  22 

83,339.907.05 

272,  718, 179. 33 

Inner  tubes  * 

Other  tires-- 

Total  taxes 

11, 331,  709, 164.  93 

3, 079,  993, 030. 39 

14  411  702  195  32 

Deduct:  Reimbursement     to     general 
fund-refund  of  tax  receipts: 
Gasoline  used  on  farms 

332,  324, 629. 16 

83,  508,  275. 39 
48,  283.  22 
97, 416. 90 
26, 660.  21 

107, 190, 501.  76 

24, 101, 848. 97 
10,  551. 44 

439,  515, 130.  92 
107, 010, 124. 36 

Gasoline  for  nonhighway  purposes 
or  local  transit  systems.  . 

Gasoline,  other 

Tires  and  tread  rubber 

58, 834. 66 
97,416.90 

Trucks,  buses,  etc 

26,  660.  21 

Total  refunds  of  taxes 

416, 005,  264. 88 

131, 302. 902. 17 

547, 308, 167.  05 

Total  taxes  (net).. 

10,  915,  703, 900. 05 

38,  236.  283.  82 

419, 000, 000. 00 

-419,000,000.00 

2,  948,  690, 128.  22 
6, 772, 167. 11 

13, 864, 394. 028.  27 

Interest  on  investments    - 

45, 008,  450.  93 

Advances  from  general  fund 

419, 000, 000. 00 

Less:  Return  of  advances  to  general 
fund 

-419,000,000.00 

Total  receipts  (net) 

10, 953, 940, 183. 87 

2, 955, 462,  295. 33 

13, 909, 402, 479. 20 

Expenditures: 

Highway  program: 

Reimbursement  to  general  fund 

501,018,553.13 
10, 147, 880,  568. 59 

501,  018,  553.  13 

From  trust  fund... 

2,  783, 864,  409. 00 

12, 931,  744, 977.  59 

Total  highway  program     ... 

10, 648, 899, 121.  72 

368,225.00 
5, 610, 162. 02 

2,  783, 864,  409. 00 

13, 432,  763, 530.  72 

Services  of  Department  of  Labor  (ad- 
ministration and  enforcement  of  labor 
standards) 

368,  225. 00 

Interest  on  advances  from  general  fund  . 

5,  610, 162.  02 

Total  expenditures 

10, 654, 877,  508.  74 

2,  783, 864, 409. 00 

13, 438, 741, 917.  74 

Balance 

299, 062, 675. 13 

171,  597, 886. 33 

470, 660,  561. 46 

II.  ASSETS  HELD  BY  TREASURY  DEPARTMENT 

Assets 

June  30,  1961 

Fiscal  year 
1962,  Increase, 
or  decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 

Special  issues.  Treasury  certificates  of 
indebtedness,    highway    trust    fund 

i         series,  maturing  June  30: 
3%  of  1962 

$234,034,000.00 

-$234,034,000.00 
435,  935, 000. 00 

3)4%  of  1963                                    

$435, 935, 000. 00 

Total  investments                           . 

234,034,000.00 
65, 028, 675. 13 

201,  901, 000. 00 
-30, 303, 113. 67 

435,  935, 000.  00 

Undisbursed  balances                    .  

34, 725, 561. 46 

Total  assets                             .  

299, 062, 675. 13 

171,597,886.33 

470, 660, 561.  46 

1  Amounts  ef4uivalent  to  specified  percentages  of  receipts  from  certain  taxes  on  motor  fuels,  vehicles,  tires 
and  tubes,  and  use  of  certain  vehicles  are  appropriated  and  transferred  monthly  from  general  fund  receipts 
to  the  trust  fund  on  the  basis  of  estimates  by  the  Secretary  of  the  Treasury,  with  proper  adjustments  toi  be 
made  in  subsequent  transfers  as  required  by  section  209(c)  of  the  Highway  Revenue  Act  of  1956,  as  amended 
(23  U.S.C.  120  note).  See  also  the  annual  report  to  Congress  on  the  financial  condition  and  fiscal  operations 
of  the  highway  trust  fund. 

2  Includes  floor  stocks  taxes. 


780   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  79. — Judicial  survivors   annuity  fund,   June   SO,    1962 
[This  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  Aug.  3, 1956  (28  U.S.C.  376(b))] 
I.  RECEIPTS    AND    EXPENDITURES    (EXCLUDING    INVESTMENT    TRANSACTIONS) 


Cumulative 

through  June 

30,  1961 

Fiscal    year 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Deductions  from  salaries  and  contributions 

$2,954,477.16 
145, 153.  64 

$553, 569. 29 
59, 870. 85 

$3,508,046.45 

Interest  and  profits  on  investments . . 

205, 024. 49 

Total  receipts  .      ..  

3,099,630.80 
1,515,061.54 

613, 440. 14 
392, 107. 82 

3,713,070.94 

Expenditures: 

Annuity  payments,  refunds,  etc 

1, 907, 169. 36 

Balance... 

1,  584,  569.  26 

221, 332.  32 

1, 805, 901.  58 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30,  1961 


Fiscal    year 

1962,  increase, 

or  decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bills. 

Treasury  notes: 

4%,  Series  A-1961 

Z%%,  Series  A-1962 

314%,  Series  D-1963 

5%,  Series  B-1964 _._. 

4^%,  Series  A-1965 

4%,  Series  A-1966. 

Treasury  bonds: 

3%  of  1964.. 

2%%  of  1965 

3?i%0f  1966 

3Ji%  of  1968 

4%  of  1969 

4%  of  1971 

3%%  of  1974 

3>4%  of  1978-83 

4%  of  1980 

31^%  of  1990 

3%  of  1995. 

3!^%  of  1998- 


Total  investments. 
Undisbursed  balance 


Total  assets. 


$48, 000. 00 


100, 
60, 

150, 
63, 

100, 


000. 00 
000. 00 
000. 00 
000. 00 
000. 00 


100, 

77, 

250, 

95, 

40, 


000. 00 
000.  00 
000. 00 
000. 00 
500. 00 


67, 
93, 
50, 
97, 
51, 
113, 


000.  00 
500. 00 
500. 00 
000.00 
000. 00 
500. 00 


1,  556, 000. 00 
28,  569.  26 


1,  584,  569. 26 


-$100,000.00 
-60,000.00 


60, 000. 00 

-100,000.00 
-77, 000. 00 


100, 000. 00 


240,  000. 00 
102, 000. 00 


50, 500. 00 


215,  500. 00 
5, 832. 32 


221, 332. 32 


$48, 000. 00 


150, 000. 00 
63, 000. 00 

100, 000. 00 
60, 000. 00 


250, 000. 00 
195, 000. 00 

40,  500. 00 
240, 000. 00 
169, 000. 00 

93,  500. 00 
101, 000. 00 

97, 000. 00 

51,000.00 
113,  500. 00 


1,771,500.00 
34, 401.  58 


1,805,901.58 


TABLES 


781 


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782   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  81. — Longshoremen's  and  Harbor   Workers'   Compensation  Act,  relief  and 

rehabilitation,  June  30,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  Mar.  4,  1927,  as  amended 
(33  U.S.C.  944).    For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  141] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  .Tune 

30,  1961 

Fiscal  vear 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Deposits 

$867,  258.  79 
335,  729. 81 

$7,  406.  25 
18,  436.  58 

$874.  665. 04 

Interest  and  profits  on  investments 

354, 166.  39 

Total  receipts 

1, 202, 988.  60 
611,808.07 

25,  842. 83 
26, 840.  87 

1,228,831.43 

Expenditures 

638  648.  94 

Balance _ 

591, 180.  53 

-998.  04 

590, 182. 49 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30,  1961 


Fiscal  year 
1962,  increase, 
or  decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  securities: 
Public  issues: 

Treasury  notes: 

4%%,  Series  A-1964 

5%,  Series  B-1964 

3?4%,  Series  D-1964 

Treasury  bonds: 

2^%  of  1965 

2V4%  of  1966-71 

35i%of  1968.-- 

4%  of  1969 , 

3H%  of  1978-83 

ZWVo  of  1980. 

31/2%  of  1990. 

3%  of  1995 

31.4%  of  1998 

2J:j%  Investment  Series  B-1975-80. 

U.S.  savings  bonds,  Series  K  (2.76%).. 


Total  investments. 
Undisbursed  balance 


Total  assets. 


$10, 000. 00 
20, 000. 00 
20, 000. 00 


50 

82, 
22. 
100, 
25, 
23, 


000.00 
000.  00 
500.  00 
000. 00 
000.  00 
000.  00 


101, 

11, 

lOS, 
14, 


000. 00 
500.  00 
000.  00 
500. 00 


587,  500. 00 
3, 680.  53 


591, 180.  53 


-$82,000.00 


82, 000. 00 


-998. 04 


-998. 04 


$10, 000.  00 
20, 000. 00 
20, 000. 00 

50, 000. 00 


22,  500.  00 

100,  000.  00 
25,  000.  00 

23,  000.  00 
82,  000.  00 

101,  000. 00 
11,500.00 

108,  000.  00 
14,  500.  00 


587,  500.  00 
2,  682.  49 


590, 182. 49 


Table  82. — National  Archives  gift  fund,  Jane  30,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  July  9,  1941,  as  amended 

(44  U.S.C.  300aa-300ee)] 

I.  RECEIPTS  AND  EXPENDITURES 


Cumulative 

through  June 

30,  1961 

Fiscal  vear 
1962 

Cumulative 

through  June 

30,  1962 

Receipts — donations 

$469, 036.  21 
408,  701.  74 

$914.  64 
13, 199.  75 

$469, 950.  85 

Expenditures 

421,901.49 

Balance 

60,334.47 

-12,285.11 

48, 049.  36 

IL  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year 
1962,  dccrca.sc 

June  30,  1962 

Undisbursed  balance. 

$60,  334.  47 

-$12,285.11 

$48, 049. 36 

TABLES 


783 


Table  83. — National  park  trust  fund,  June  SO,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  July  10,  1935,  as  amended 
(16  U.S.C.  19-19a).    For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  153] 


I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 

Cumulative 

through  June 

30,  1961 

Fiscal  year 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Donations 

$100, 887.  56 
11,841.84 

$4, 432. 00 
1,351.33 

$105, 319.  56 

Interest  on  investments  . 

13  193  17 

Total  receipts                          .  .. 

112,  729.  40 
39, 234.  65 

5, 783.  33 
811.13 

118  512  73 

Expenditures 

40, 045. 78 

Balance 

73,494.75 

4, 972.  20 

78,466.95 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year 
1962,  increase, 
or  decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bills 

.$48,000.00 
-1,500.00 

$48, 000. 00 

Treasury  bonds: 

2M%  of  1961 

$1,  500. 00 
1, 000. 00 

15, 000. 00 
1, 000. 00 

2H%  of  196.3-68 .- 

1, 000. 00 

2H%  of  1966-71 

-15,000.00 

-1,000.00 

1,500.00 

2H%  of  1967-72  (dated  Oct.  20,  1941) 

3"/i%  of  1968 

1,  500.  00 

4%  of  1969 

1, 000. 00 
1, 000. 00 

1, 000. 00 
1, 000.  00 

3 1-4%  of  1978-83-... 

31-2%  of  1990 

1,000.00 
15, 000. 00 

1, 000. 00 

3}^%  of  1998 

15,000.00 
25.00 

U.S.  savings  bonds.  Series  J  (2.76%) 

25.00 

Total  investments 

20,  525. 00 
52, 969.  75 

48,  000. 00 
-43,027.80 

68,  525. 00 

Undisbursed  balance 

9  941.95 

Total  assets.. 

73,  494.  75 

4,972.20 

78, 466. 95 

784   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  84. — National  service  life  insurance  fund,  June  30,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  Oct.  8, 1940  (38  U.S.C.  720). 
For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  143] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June  30, 

1961 


Fiscal  year  1962 


Cumulative 

through  June  30, 

1962 


Receipts: 

Premiums  and  other  receipts 

Interest  on  investments 

Payments  from  general  fund 

Total  receipts 

Expenditures: 

Benefit  payments,  dividends,  and  refunds 

Balance _.. 


$9, 396, 162,  567. 06 
2,  786, 362, 073.  20 
4,  733, 971, 393. 90 


$482,  780, 902. 75 

174,202,471.23 

6, 885, 153. 31 


$9, 878, 943, 469. 81 
2, 960,  564,  544. 43 
4, 740, 856,  547. 21 


16, 916, 496, 034. 16 
11, 143, 362, 060.  48 


663, 868,  527. 29 
626, 351, 067. 83 


17,  580, 364,  561. 45 
11,769,713,128.31 


5,  773, 133, 973.  68 


37,  517, 459. 46 


5, 810, 651, 433. 14 


II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


Investments  in  public  debt  securities: 

Special  issues,  national  service  life  insurance 
fund  series  maturing  June  30: 

Treasury  certificates  of  indebtedness, 
3M%  of  1963_.. 

Treasury  notes: 

3%  of  1662 

3%%  of  1962-— 

3%  of  1963 

3%%  of  1963 

3%  of  1964.... 

3?4%  Of  1964 

3?4%  of  1965 

Treasury  bonds: 

3%  of  1965.... 

3%  of  1966.. 

3%%  of  1966 

3%  of  1967 

3%%  of  1967 

3%  of  1968 

Z%%  Of  1968 

3%  of  1969-... 

3%%  of  1969 

3%  of  1970 

334%  of  1970... 

3%  of  1971 

3?4%  of  1971 

3%  of  1972 

3%%  of  1972 

3%  of  1973 

354%  of  1973 

3%  of  1974 

3%%  of  1974 

3%%  of  1975 

Z%%  of  1976 

3M%  of  1976.. 

3H7o  Of  1977... 


Total  investments. 
Undisbursed  balance... 


Total  assets. 


June  30, 1961 


$379, 000, 000. 00 
7, 873, 000. 00 

379, 000, 000. 00 
7, 873, 000. 00 

379, 000, 000. 00 
7,  873, 000. 00 
7, 873, 000. 00 

379, 000, 000. 00 
379, 000. 000.  00 

7,  873, 000.  00 
379, 000. 000.  00 

7, 873, 000.  00 
379, 000, 000. 00 

7, 873, 000. 00 
379, 000, 000. 00 

7,  873, 000. 00 
379, 000. 000. 00 

7, 873, 000. 00 
379, 000, 000. 00 

7, 873, 000.  00 
379, 000, 000. 00 

7, 873, 000. 00 
379, 000, 000. 00 

7, 873, 000. 00 
379, 000, 000. 00 

7, 873, 000. 00 
386, 873, 000. 00 
343, 149, 000. 00 


5,  759, 371, 000.  00 
13,  762, 973.  68 


5, 773, 133, 973.  68 


Fiscal  year  1962, 
increase,  or 
decrease  (—) 


$1, 000, 000. 00 

-379, 000. 000. 00 
-7,873,000.00 


43,  724, 000. 00 
386, 307, 000. 00 


44, 158, 000. 00 
-6, 640,  540.  54 


37, 517, 459. 46 


June  30,  1962 


$1,000,000.00 


379, 000, 000. 00 
7,  873, 000.  00 

379, 000, 000. 00 
7,  873, 000. 00 
7,  873, 000. 00 


379, 000. 
379, 000. 

7,  873, 
379, 000, 

7,  873, 
379, 000. 

7,  873, 
379, 000, 

7, 873, 
379, 000, 

7, 873, 
379, 000. 

7,  873. 
379, 000, 

7, 873, 
379, 000, 

7,  873, 
379, 000, 

7,  873, 

386,  873, 

343,  149, 

43,  724, 

386,  307, 


000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000.  00 
000.  00 
000. 00 
000. 00 
000. 00 
000.  00 
000.  00 
000. 00 
000.  00 
000. 00 
000.  00 
000.  00 
000.  00 
000. 00 
000. 00 


5, 803,  529, 000. 00 
7, 122,  433. 14 


5, 810, 651, 433. 14 


Note.— Policy  loans  outstanding,  on  basis  of  information  furnished  by  the  Veterans'  Administration, 
amounted  to  $4i8,162,683.44  as  of  June  30,  1962. 


TABLES 


785 


Table  S5.— Pershing  Hall  Memorial  fund,  June  30,  1962 

[This  special  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  June  28, 1935,  as  amended 
(36  U.S.C.  491).    For  further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  155] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June 

30,  1961 

Fiscal  year 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

.$482,032.92 

5, 783. 21 

12,000.35 

130, 073. 88 

$482, 032. 92 

Profits  OTi  invpstrnpnts 

5,  783. 21 

Net  increase  in  book  value  of  bonds.. 

12, 000. 35 

Interest  earned 

$7, 385. 00 

137,  458. 88 

Total  receipts..  .  . 

629, 890. 36 

7,  385. 00 

637, 275. 36 

Expenditures: 

Claims  and  expenses          .      _      

288,  629. 70 
130, 073. 88 



288,  629.  70 

National  Treasurer.  American  Leeion                   .  . 

7,  385. 00 

137, 458. 88 

Total  expenditures 

418,  703.  58 

7,  385. 00 

426, 088.  58 

Balance       .  . 

211, 186. 78 

211,186.78 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 

Assets 

June  30,  1961 

Fiscal  year 
1962 

June  30,  1962 

Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bonds,  3V<4%  of  1990 

$211,000.00 
186.  78 

$211,000.00 

Undisbursed  balance             .      

186.  78 

211, 186.  78 

211,186.78 

661496—63- 


-51 


786   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  86. — Philippine  Government  pre-19S4  bond  account,   June  30,   1962 

[This  special  trust  account  was  establistied  in  accordance  with  the  provisions  of  the  act  of  August  7,  1939 
(22  U.S.C.  1393") ,  for  the  payment  of  bonds  issued  prior  to  May  1 ,  1934,  by  provinces,  cities,  and  municipal- 
ities of  the  Philippines] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June 

30,  1961 

Fiscal  vear 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Taxes  on  exports 

$1,586,135.92 

3,  644,  303.  28 

43, 100. 00 

13,141.85 

6,269,750.00 
15,  646,  589.  37 

$1, 586, 135. 92 

Interest  and  profits  on  investments  ' 

$30, 024.  36 

3, 674, 327.  64 

Sale  of  stock  of  Bank  of  Philippine  Islands 

43, 100. 00 

Deposit  of  the  Philippine  Government 

13,141.85 

U.S.  Treasury  bonds  from  the  Philippine  Govern- 
ment      ._ 

6, 269, 750. 00 

Annual  payments  by  the  Philippine  Government- 

15, 646,  589.  37 

Total  receipts 

27,203,020.42 

30, 024.  36 

27, 233, 044.  78 

Expenditures: 

Interest  on  outstanding  PhDippine  bonds.. 

2,  355, 493. 80 
1.000,000.00 

18,  528,  500. 00 

3,  533,  585. 13 

79, 964. 34 

34, 101.  88 
600,000.00 

12,000.00 

2, 389,  595. 68 

Return  of  excess  cash  to  the  Philippine  Government 
Payment  of  matured  bonds  of  the  Philippine  Gov- 
ernment  

1, 600, 000. 00 
18,  540,  500. 00 

Cancellation  of  Philip  iine  bonds  at  cost  2 

3, 533,  585. 13 

Losses  on  securities  so  d .. 

73, 787. 69 
-5,765.04 

153,752.03 

Unamortized  discount  on  investments.. 

-5,765.04 

Total  expenditures 

25.  497,  543.  27 

714, 124.  53 

26,211,667.80 

Balance 

1, 705,  477. 15 

-684, 100. 17 

1,021,376.98 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year 
1962,  increase, 
or  decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 
Public  issues: 

Treasury  bills... 

$216, 000.  00 

$216, 000. 00 

Treasury  notes,  4J4%,  Series  A-1964 

$100, 000. 00 

600. 000. 00 

148.  300.  00 

648,000.00 

75,000.00 

100, 000. 00 

Treasury  bonds: 

21-4%  of  1959-62  (dated  Nov.  15, 1945)... 

600, 000. 00 

2H%  of  1962-67 

-148,300.00 

-648, 000. 00 

-75, 000. 00 

2H%  of  1963-68. 

U.S.  savings  bonds.  Series  G  (2.50%) 

Total  investments 

1,  571,  300. 00 
134, 177. 15 

-655,300.00 
-28,  800. 17 

916. 000. 00 

Undisbursed  balance 

105,  376. 98 

Total  assets 

1, 705, 477. 15 

-684, 100. 17 

1, 021.  376. 98 

1  Losses  are  netted  against  profits  through  fiscal  1957. 

2  The  face  value  of  the  bonds  canceled  was  $3,436,000. 

Note.— As  of  June  30, 1962,  the  total  principal  of  pre-1934  bonds  outstanding  was  $638,850  unmatured  and 
$50,000  matured.  The  amount  of  matured  interest  unpaid  was  $45,610  and  the  unmatured  interest  projected 
through  July  1,  1063,  the  date  of  final  maturity,  amounted  to  $47,913.75. 


TABLES 


787 


Table  87. — Public  Health  Service  gift  funds,  June  SO,  1962 

[This  trust  fund  was  established  in  accordance  with  the  provisions  of  the  act  of  May  26,  1930,  which  was 
repealed  by  the  act  of  July  1,  1944  (42  U.S.C.  219,  283(b),  287b,  288b),  under  which  it  now  operates] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

Receipts: 

Contributions- _ 

$942,  226.  58 
106. 877. 89 

$41, 970.  21 
4.  259.  71 

$984, 196.  79 
111,137.60 

Interest  on  investments 

Total  receipts 

1, 049, 104.  47 
836,  524. 96 

46, 229.  92 
28, 263. 82 

1,095,334.39 

864  788  78 

Expenditures 

Balance 

212,  579.  51 

17, 966. 10 

230  545  61 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 

June  30,  1961 

Fiscal  year  1962, 
increase,  or 
decrease(— ) 

June  30, 1962 

Investments  in  public  debt  securities: 
PubUc  issues: 
Treasury  bills 

$105, 000. 00 
61,000.00 

$20, 000. 00 
-10,000.00 

$125,000.00 
51  000  00 

Treasury  bonds,  2^%  of  1967-72  (dated 
June  1,  1945) 

Total  investments 

166. 000. 00 
46,  579.  51 

10, 000. 00 
7,966.10 

176  000  00 

Undisbursed  balance 

54  545  61 

Total  assets 

212,  579.  51 

17, 966. 10 

230,  545  61 

788   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  88. — Railroad  retirement  account,  June  SO,  1962 

[On  basis  of  daily  Treasury  statements  through  1952,  thereafter  on  basis  of  "Monthly  Statement  of  Receipts 
and  Expenditures  of  the  United  States  Government,"  see  "Bases  of  Tables."  This  trust  account  was 
established  in  accordance  with  the  provisions  of  the  act  of  June  24,  1937  (45  U.S.C.  228o).  For  further 
details,  see  annual  report  of  the  Secretary  for  1941,  p.  148] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Footnotes  at  end  of  table. 


II 


TABLES 


789 


Table  88. — Railroad  retirement  account,  June  SO,  1962 — Continued 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


Investments  in  public  debt  securities: 

Special  issues,  Treasury  notes,  railroad  re- 
tirement series,  maturing  June  30: 

3%  of  1962... 

3%  of  1963... 

3%  of  1964 

3%  of  1965 

3%  of  1966 

3%  of  1967 


Total  special  issues. 


Public  issues: 

Treasury  notes: 

4%,  Series  B-1963-.. 

4j:-^%,  Series  C-1963 

3}.i%,  Series  D-1963 

5%,  Series  B-1964 

4%%,  Series  C-1964 

Treasury  bonds: 

256%  of  1965 

3%  of  1966.. 

3%%  of  1966 

2^6%  of  1967-72  (dated  June  1,  1945) 
23^%  of  1967-72  (dated  Oct.  20, 1941) 
2yi%  of  1967-72  (dated  Nov.  15, 1945) 

Z%%  of  1968 

3%%  of  1968 

4%  of  1969 

Z%%  of  1971 

4%  of  1971. 

ZW^o  Of  1974 

41.4%  of  1975-85 

Zy>%  of  1980 

4%  of  1980 

3M%of  1985 

Zy>%  of  1990... 

3%  of  1995 

ZWo  of  1998 


June  30,  1901 


$189, 335, 000. 00 

751,106,000.00 

1,  411,  532, 000. 00 

1,066,645,000.00 

84, 916, 000. 00 


3,  503, 534, 000. 00 


Total  public  issues. 

Total  investments. 
Undisbursed  balance... 


Total  assets. 


20, 000, 000. 00 
13,  500, 000. 00 


20, 000, 000. 00 
7,  450, 000. 00 

11,  500, 000. 00 
8, 500, 000. 00 


10, 100, 000. 00 

2,  265, 000.  00 

13, 085, 000. 00 


Fiscal  year  1962, 
increase,  or 
decrease  (— ) 


-$189,335,000.00 
-751,106,000.00 
-321, 928, 000. 00 


613,  702, 000. 00 
460, 918, 000. 00 


-187,749,000.00 


-20,000,000.00 

"""25"6oo,'ooo"6o" 


-11,500,000.00 


5, 000, 000.  00 
35, 000, 000. 00 


25, 000, 000. 00 
20, 000, 000. 00 

6, 000, 000. 00 
11,450,000.00 

6, 900, 000. 00 
30, 925, 000. 00 

3,  200, 000. 00 

6, 100, 000. 00 


255, 975, 000. 00 


3,  759,  509, 000.  00 
83,  762,  799.  66 


3, 843,  271,  799.  66 


4, 500, 000. 00 

-10,100,000.00 

-2,265,000.00 

-13,085,000.00 

3, 000, 000. 00 

""2o^ooo"o5o"oo' 

20, 000, 000. 00 

5, 000, 000. 00 

52, 700, 000. 00 


June  30,  1962 


26, 500, 000. 00 


25, 450, 000. 00 


125,  200, 000. 00 


-62, 549, 000. 00 
4, 058, 915. 34 


-58, 490, 084.  66 


$1, 089, 604, 000. 00 

1, 066,  645, 000. 00 

698, 618, 000. 00 

460, 918, 000. 00 


3, 315, 785, 000. 00 


13,  500, 000.  00 

25, 000, 000. 00 

20, 000, 000. 00 

7, 450, 000. 00 


8, 500, 000. 00 
4,  500, 000. 00 


3, 000, 

5, 000, 
55, 000, 
20, 000, 

5, 000, 
77, 700, 
20, 000, 

6, 000, 
37, 950, 

6, 900, 
30, 925, 

3,  200, 
31,  550, 


000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 
000. 00 


381,175,000.00 


3, 696, 960, 000. 00 
87,  821,  715. 00 


3, 784, 781, 715. 00 


■•  Revised. 

1  Includes  thf  Government's  contribution  for  creditable  military  service  under  the  act  of  April  8,  1942, 
as  amended  by  the  act  of  August  1,  1956  (45  U.S.C.  228e-l(n)(p)).  Effective  July  1,  1951,  appropriations 
of  receipts  are  equal  to  the  amount  of  taxes  deposited  in  the  Treasury  (less  refunds)  under  the  Railroad 
Retirement  Tax  Act  (26  U.S.C.  3201-3233).    Amounts  shown  are  exclusive  of  unappropriated  receipts. 

2  Pursuant  to  act  of  June  24,  1937  (45  U.S.C.  228e(k)). 

3  Beginning  Aug.  1,  1949,  paid  from  the  trust  fund  under  Title  IV,  act  of  June  29, 1949  (63  Stat.  297),  and 
subsequent  annual  appropriation  acts. 


790        1962    REPORT    OF    THE    SECRETARY    OF   THE    TREASURY 
Table  89. —  Unemployment  trust  fund,  June  30,  1962 


[On  basis  of  daily  Treasury  statements  through  1952;  thereafter  on  basis  of  "Monthly  Statement  of  Receipts 
and  Expenditures  of  the  United  States  Government,"  adjusted  for  interest  accruals.  (See  "Bases  of 
Tables.")  This  trust  fund  was  estabhshed  in  accordance  with  the  provisions  of  Sec.  904(a)  of  the  Social 
Security  Act  of  August  14,  1935  (42  U.S.C.  1104).  For  further  details  see  annual  report  of  the  Secretary 
for  1941,  p.  1451 

I.— RECEIPTS  AND  EXPENDITURES  (EXCLUSIVE  OF  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  Jmie  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

St.\te  Unemployment  Accounts 

Receipts: 

Deposits  by  States 

$30,849,859,741.43 

3,  257, 675, 084. 43 
7,051,105.02 

$2,728,617,229.72 

164,779.924.03 
401. 593.  70 

$33, 578, 476, 971. 15 

Interest  earned: 

CoUeeted                    -  

3. 422. 455. 008. 46 

Accrued     ,  

7. 452, 698.  78 

Total  receipts     

34,114,585,930.88 

2, 893. 798,  747.  51 

37, 008, 384. 678. 39 

Expenditures: 

Withdrawals  by  States--  

28.649,711,171.07 
5. 783. 506. 04 

107.226.931.89 

2, 857, 092,  767.  43 
-509,  743. 81 

31.506,803,938.50 

Advances  to  States  ' 

5, 273,  762. 23 

Transfers    to   railroad    unemployment 
insurance  account 

107,226,931.89 

Total  expenditures  .-      

28,762,721,609.00 

2, 856, 583, 023.  62 

31,619.304,632.62 

Transfers: 

From  undistributed  appropriations 

From  Federal  imemployment  account  2- 
From  Federal  extended  compensation 
account  (reimbursement) 

138,024,733.38 
235, 965, 000.  00 

6, 104, 161.  CO 
-3,000,000.00 

138,024,733  38 

800, 000.  00 
37.786,101.04 

236,765,000.00 
43, 890, 262.  04 

To  Federal  unemployment  accotmt  ^ 

-3, 000, 000.  00 

Net  transfers  . 

377,093,894.38 

38, 586, 101.  04 

415,  679, 995. 42 

Balance  .                      ..  -  

5, 728, 958,  216.  26 

75,801,824.93 

5,804,760,041.19 

Railroad  Unemployment  Insurance 
Account  < 

benefit  payments  account 

RGCClDtS' 

Deposits     by     Railroad     Retirement 
Board  ' 

1,557.673,675.60 

316, 075, 000. 00 

106, 187, 199.  00 

107,226,931.89 

15, 000, 000.  00 

220.910,514.70 
7. 427. 16 

147.  Ill,  229.  55 
101,470,000.00 

1,704,784,905.15 

Advances  from  the  railroad  retirement 
account 

417,545,000.00 

From  the  railroad  unemployment  in- 
surance administration  fund 

106, 187. 199.  00 

From  State  unemployment  funds  • 

Advance  bv  Secretary  of  Treasury    

107,  226, 931.  89 

15.000,000.00 

Interest  earned: 

Collected - 

211, 12.=..  88 
5, 169. 39 

221, 121. 640.  58 

Accrued - - 

12,  596,  55 

Total  receiots                       -      

2,323,080,748.35 

248.  797.  524. 82 

2,571,878,273.17 

Expenditures: 

Benefit  payments       .-    ..      

2.173.435.212.14 

12,338.198.54 

118,356,373.00 

15,000,000.00 

201, 622. 168. 64 

2, 375, 057, 380. 78 

Transfers  to  railroad  unemployment  in- 
surance administration  fund      .      

12.338.198.54 

Repayment    of   advances    to    railroad 
retirement  account 

37,  214, 796. 80 

155,571.169.80 

Repayment  of  advance  to  Secretary  of 
theTreasurv 

15,000,000.00 

Repayment  of  advances  from  general 
fund   for   temporary  imemployment 
compensation  benefits 

2, 4.54, 882. 81 

2, 454. 882. 81 

Total  expenditures 

2, 319, 129, 783. 68 

241, 291, 848. 25 

2, 560, 421, 631. 93 

Balance 

3,950.964.67 

7, 505, 676.  57 

11,456,641.24 

Footnotes  at  end  of  Section  I. 


TABLES 


791 


Table  89. — Unemployment  trust  fund,  June  SO,  1962 — Continued 

I— RECEIPTS  AND  EXPENDITURES  (EXCLUSIVE  OF  INVESTMENT  TRANSACTIONS)— 

Continued 


Cumulative 

through  June  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

Administrative  Expense  Fund  ' 

Receipts: 

Deposits  by  Railroad  Retirement  Board. 
Adjusted  for  prior  year  (unexpended 
balance) 

$25,387,160.53 

7, 237, 031. 36 

407, 354.  60 
5, 847.  04 

$8. 148, 065. 03 

$33, 535, 225.  56 
7,237,031.36 

Interest  earned: 

Collected 

113, 773.  89 
-213.80 

521, 128. 49 

Accrued 

5,  633.  24 

Total  receipts 

33, 037, 393.  53 

8, 261, 625. 12 

41, 299. 018.  65 

Expenditures: 

Administrative  expenses 

2S.  108, 566.  54 

9,078,341.19 

37, 186. 907.  73 

Total  expenditures 

28, 108. 566.  54 

9.078,341.19 

37, 186. 907.  73 

Balance 

4, 928, 826.  99 

-816, 716.  07 

4.112.110.92 

Tempokary  Extended  Railroad  Unem- 
ployment Insurance  Account 

BENEFIT  payment  ACCOUNT 

Receipts: 

Transfer  from  temporary  extended  rail- 
road   unemployment    insurance    ac- 
count (general  fund  advances) 

13,000,000.00 

7,000,000.00 

20,000.000.00 

Expenditures: 

Temporary   extended   railroad   unem- 
ployment benefits.. 

10,017,469.29 

9, 287. 528. 52 

19. 304, 997. 81 

Balance 

2, 982. 530.  71 

-2. 287. 528.  52 

695, 002. 19 

Federal  Extended  Compensation 
Account  » 

Receipts: 

Advances  from  general  fund 

498,138,622.00 

332, 921.  543. 74 

831. 060, 165.  74 

Expenditures: 

Temporary    extended    imemployment 
compensation  payments  _. 

481, 151, 560.  00 
6, 104, 161. 00 

303, 932, 269. 15 
37.786,101.04 

785, 083, 829. 15 

Reimbursement  to  State  accounts ._ 

Repayment  of  advances  from  general 
fund 

43,890,262.04 

Total  expenditures... 

487, 255, 721. 00 

341, 718. 370. 19 

828, 974, 091. 19 

Balance 

10,882,901.00 

-8,  796, 826. 45 

2, 086, 074.  55 

Employment    Security    Administration 
Account  » 

Receipts: 

Transfers      (Federal     unemployment 
taxes) : 
Appropriated 

345,979,586.45 
-2, 195, 526.  13 

301,500,000.00 

-250, 000, 000. 00 

1,433.635.03 
29. 363.  65 

457. 257,  583.  60 
-4,991,080.56 

320, 311, 596. 38 

-285,400,000.00 

940, 857.  59 
33,384.39 

803, 237, 170. 05 

Less  refund  of  taxes 

-7, 186, 606. 69 

Advance   from   general    (revolving 
fund) 

621.811,596.38 

Less  return  of  advances  to  general 
fund 

-535,400,000.00 

Interest  earned: 

Collected 

2, 374, 492. 62 

Accrued 

62,  748.  04 

Total  receipts 

'  396, 747, 059. 00 

488.152.341.40 

884, 899, 400. 40 

Footnotes  at  end  of  Section  I. 


792 


19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  89. — Unemployment  trust  fund,  June  SO,  1962 — Continued 

I.— RECEIPTS  AND  EXPENDITURES  (EXCLUSIVE  OF  INVESTMENT  TRANSACTIONS)- 

Continued 


Cumulative 

through  June  30, 

1961 

Fiscal  year  1962 

Cumulative 

through  June  30, 

1962 

Employment  Security  Administra- 
tion Account  '—Continued 

Expenditures: 

Transfers    to    Federal   unemployment 
account — reduced  tax  credits  (Alaska) 

$157,404.42 
10, 028, 947.  84 

467, 592, 405. 86 

5.067,327.60 

3,471,482.61 
57, 482.  99 

$157, 404.  42 
17  767  666  15 

Salaries  and  expenses,  Bureau  of  Em- 
ployment Security 

$7, 738, 718. 31 
374,975.294.37 

5,100,863.15 

2,910,388.25 
49, 563. 48 

Grants  to  States  for  unemployment  com- 
pensation  and   employment   service 
administration ... 

842, 567, 700.  23 
10. 168  190  75 

Paj'ments  to  general  fund: 
Reimbursement    for    administrative 
expenses 

Interest  on   advances   from   general 
(revolving)  fund 

6,381.870.86 
107  046  47 

Interest  on  refund  of  taxes 

Total  expenditures 

'  390, 774, 827.  56 

486,375,051.32 

877  149  878  88 

Balance 

5. 972,  231. 44 

1. 777, 290. 08 

7,  749, 521.  52 

Feder.vl  Unemployment  Account 

Receipts: 

Interest  earned: 

Collected 

33,081,408.76 
260, 998.  28 

6.508,933.08 
29, 270. 08 

39,590  341  84 

Accrued 

290  268  36 

Total  receipts 

33,342,407.04 

6, 538, 203. 16 

39, 880,  610.  20 

Transfers: 

To  State  unemployment  agencies 

From  State  unemployment  asencies 

-235,  965,  000.  00 
3, 000, 000.  00 

-800,000.00 

-236,765,000.00 
3,000,000  00 

From  employment  security  administra- 
tion account — reduced  tax  credits.. 

157,404.42 

157  404  42 

From  undistributed  appropriations 

207, 350, 872. 17 
-6,070,914.73 

207,350,872  17 

To  Bureau  of  Employment  Security, 
Department  of  Labor 

—6,070  914  73 

Net  transfers . 

-31,685,042.56 

-642,  595.  .58 

—32  397  638  14 

Balance 

1,657,364.48 

5, 895, 607.  58 

7,552,972.06 

Undistributed  Appropriations  i" 

Receipts: 

Appropriations  from  general  fund 

345,375,605.55 

345, 375,  605.  55 

Transfers: 

To  Federal  unemployment  accoimt 

To  State  unemployment  agencies. 

-207,350,872.17 
-138,024,733.38 

-207, 350, 872. 17 
—  138,024,733.38 

Total  transfers .. 

-345, 375, 605.  55 

—345, 375,  605.  55 

Balance 

Summary  of  Balances 
State  unemployment  agencies..    . 

5,728,9,58,216.26 

3. 950, 964.  67 
4,928,826.99 

2, 982, 530.  71 
10,882,901.00 

5,972,231.44 
1, 657, 364. 48 

75,801,824.93 

7.  505.  676. 57 
-816. 716.  07 

-2, 287. 528.  .52 
-8, 796. 826.  45 

1, 777, 290.  08 
5,895,607.58 

5,804,760,041.19 
11,456  641  24 

Railroad  unemployment  insurance  accounts: 
Benefit  payments  account . 

Administrative  expenses 

4,112,110.92 

Temporary  extended  railroad  unemployment 
insurance     account     (benefit     payment 
account) .. 

695,002  19 

Federal  extended  compensation  account 

Employment       security       administration 
account 

2. 086. 074. 55 
7, 749, 521.  52 

Federal  unemplovment  account 

7, 552, 972. 06 

Undistributed  appropriations 

Total  balances 

5, 759  333, 035.  55 
20,103,315.63 

79,079.328.12 
-14.829,553.40 

5, 838, 412,  363.  67 

Cash  advance  repayable  to  the  trust  fund.... 

5. 273, 762.  23 

Total  assets  of  the  fund 

5,779,4.36,351.18 

64.249,774.72 

5,843,686,125.90 

Footnotes  on  following  pa.ge. 


TABLES 


793 


'  Revised  for  reclassification. 

1  Amount  actually  withdra\Mi  against  advances  (see  footnote  2). 

■  Includes  advances  to  Alaska  as  authorized  by  law  (42  U.S.C.  1321). 

'  Rppre.sents  repayments  made  by  Alaska  pursuant  to  law  (42  U.S.C.  1322). 

*  Established  by  the  Railroad  Unemployment  Insurance  Act  of  1938  (45  U.S.C.  360,  361). 

5  Contributions  under  the  Railroad  Unemployment  Insurance  Act  of  1938,  as  amended  (45  U.S.C.  360(a)), 
in  excess  of  the  amount  specified  for  administrative  expenses. 

8  Amounts  equivalent  to  taxes  collected  from  employers  covered  by  section  13(d)  and  section  13(f)  of  the 
Railroad  Unemployment  Insurance  Act  during  the  period  January  1936  to  June  1939,  inclusive. 

'  Maintained  in  the  trust  fund  pursuant  to  an  act  approved  September  6,  1958  (45  U.S.C.  361(a)),  previ- 
ously maintained  as  a  separate  account  in  the  Treasury. 

8  Established  by  the  Temporary  Extended  Unemployment  Compensation  Act  of  1961  (42  U.S.C.  1105). 

»  Established  by  the  Employment  Security  Act  of  1960  (42  U.S.C.  1101(a)). 

'"  This  account  reflects  amounts  appropriated  to  the  unemployment  trust  fund  representing  the  excess  of 
collections,  if  any,  from  Federal  unemployment  tax  over  employment  security  expenses  as  provided  by  law 
(42  U.S.C.  1101(b)). 


Table  89.' — Unemployment  trust  fund,  June  SO,  1962- — Continued 

11.— ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT  (ACCRUAL  BASIS) 

June  30, 1961 

Fiscal  year  1962, 
increase,  or 
decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 

Special  issues,  Treasury  certificates  of 
indebtedness,    unemployment    trust 
fund  series  maturing  June  30: 
3%of  1962„. 

$4, 624, 985, 000. 00 

-$4,624,985,000.00 
4,656,911,000.00 

3i/i%  of  1963- - 

$4,656,911,000.00 

Total  special  issues.-            .    . 

4,624,985,000.00 

31,926,000.00 

4,656,911,000.00 

Public  issues: 

Treasury  notes: 

3!4%  Series  D-1963 

25,000,000.00 

25  000  000  00 

5%  Series  6-1964 

10,  ono,  000. 00 
10, 000, 000. 00 

10, 000, 000. 00 
10,  000, 000. 00 

7, 000, 000. 00 

14, 000, 000. 00 

2, 600, 000. 00 

10,000  000  00 

45i%  Series  A-19e5 

10, 000, 000. 00 

Treasury  bonds: 

254%  of  1965. 

-10,000,000.00 

3%  of  1966... 

10  000  000  00 

2yi%  of  1967-72  (dated  Oct.  20, 
1941) 

-7,000,000.00 

Z%%  of  1%7 

14, 000, 000.  00 
2  500  000  00 

3J^%ofl968 

3%%  of  1968- 

5,000,000.00 
10, 100, 000. 00 
10, 000, 000. 00 

5, 000, 000.  00 
25  100  000  00 

4%  of  1969 

15,000,000.00 

4%  of  1971 

10,000,000.00 
5,000,000  00 

Zli%  of  1974 

5, 000, 000. 00 
5, 000, 000. 00 
53, 050, 000. 00 
53, 000, 000. 00 
12, 000, 000. 00 
89,221,000.00 
54,  200, 000. 00 

745, 000, 000. 00 

414%  of  1975-85.... 

5  000  000  00 

3)4%  of  1978-83 

53,050  000.00 

3;^%  of  1980.. 

53  000  000  00 

3H%of  1985. 

12,000  000  00 

3)4%  of  1990-... 

89  221  000  00 

3)4%  of  1998-... 

7, 000, 000. 00 

61,200,000.00 
745  000  000  00 

2%%  Investment  Series  B-1975- 
80 

Total  public  issues 

1,094,971,000.00 

40, 100, 000. 00 

1,135,071,000.00 

Total  investments,  par  value. 
Unamortized  discount  . 

5, 719, 956, 000. 00 

-4,134,522.70 

401,287.02 

300,  454.  04 

72,026,000.00 

478. 660.  99 

-72,339.66 

-300, 454. 04 

5,791.982,000.00 

-3,  655, 861.  71 

328, 947. 36 

Unamortized  premium 

Accrued  interest  purchased 

-                     ----__-._« __ 

Total  investments 

5,716,523,218.36 
15, 176, 320.  79 

977, 287. 86 
314, 131.  64 

2, 982, 530.  71 
10, 882, 901. 00 

5, 121, 904.  04 

72,131,867.29 
16,874,577.77 

-347,168.64 
-88, 341. 19 

-2,  287,  528.  52 
-8,  796, 826. 45 

1, 123, 544. 04 

5,788,655,085.65 
32, 050, 898. 56 

630  119  22 

Unexpended  balances: 

Trust  account.   . 

Deposit  accounts,  railroad  unemploy- 
ment insurance: 
Benefits  and  refunds.-- 

Administrative  expenses 

225, 790. 45 
695  002  19 

Temporary   extended   railroad   unem- 
ployment benefits... 

Federal  extended  compensation  account. 
Employment  security   administration 
account 

2,086,074.55 
6,  245, 448. 08 

Subtotal 

5,  751,  978,  294. 40 

7.354,741.15 

20, 103, 315.  63 

78,610,124.30 

469.  203. 82 

-14,829,553.40 

5, 830,  588. 418.  70 
7. 823, 944.  97 

Accrued  interest  on  investments 

Cash  advances  repayable  to  the  trust  fund- 

5, 273,  762.  23 

Total  assets 

5, 779, 436, 351. 18 

64, 249,  774.  72 

5, 843, 686, 126. 90 

794   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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796   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  90. —  U.S.  Government  life  insurance  fund,  June  30,  1962 

[This  trust  fund  operates  in  accordance  with  the  provLsions  of  the  act  of  .Tune  7,  1924,  as  amended  (38  U.S. C. 
755).  This  act  repealed  the  act  of  Sept.  2,  1914  (38  Stat.  712),  which  established  a  Bureau  of  War  Risk 
Insurance  in  the  Treasury  Department  and  repealed  the  amending  act  of  Oct.  6,  1917  (40  Stat.  398).  For 
further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  142] 

I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through 
June  30, 1961 

Fiscal  year  1962 

Cumulative 

through 
June  30,  1962 

Receipts: 

Premiums  and  other  receipts 

$2,024,731,697.65 
1,093,039,850.10 

$18, 097, 443. 80 

36, 044, 092. 34 

166, 114. 10 

$2, 042,  829, 141. 45 

Interest  and  profits  on  investments 

Payments  from  general  fund  i       

1,129,083.942.44 
166,114.10 

Total  receipts..  

3,117,771,547.75 
2,043,713.018.36 

54, 307,  650. 24 
96, 243,  320. 28 

3,172,079,197.99 

Expenditures: 

Benefit  payments,  dividends,  and  re- 
funds  

2, 139, 956, 338.  64 

Balance 

1,074,058,529.39 

-41, 935, 670. 04 

1, 032, 122, 859. 35 

II.  ASSETS  HELD  BY  THE  TREASURY 


Assets 

June  30,  1961 

Fiscal  year  1962, 
increase,  or 
decrease  (— ) 

June  30,  1962 

Investments  in  public  debt  securities: 
Special  issues,   U.S.   Government  life 
insurance     fund     series     maturing 
June  30: 

Treasury  certificates: 

3"^%  of  1963                        -  . 

$6,774,000.00 

-73,100,000.00 

-670, 000. 00 

-5,774,000.00 

$6,774,000.00 

Treasury  notes: 

3}^%  of  1962 .- 

$73, 100, 000. 00 
670, 000. 00 
73, 100, 000. 00 
670, 000. 00 
73,100,000.00 
670, 000. 00 
670, 000. 00 

73, 100, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73,100,000.00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73, 100, 000. 00 

670, 000. 00 
73,  770, 000. 00 
38, 653, 000. 00 

3^%  of  1962       .             

3'4%ofl963 

67, 326, 000. 00 

3'/i7o  of  1963 

670, 000. 00 

3!^%  of  1964 

73, 100, 000. 00 

3^%  of  1964 

670, 000. 00 

35^%  of  1965 

670, 000. 00 

Treasury  bonds: 
31^%  of  1965 

73, 100, 000. 00 

3!^%  of  1966 

73, 100, 000. 00 

3'xi%  of  1966 

670, 000.  00 

314%  of  1967         

73, 100, 000. 00 

3^%  of  1967 

670, 000. 00 

3J4%  of  1968 

73, 100, 000. 00 

ZH.%  of  1968 

670, 000. 00 

Z\4%  of  1%9 

73, 100, 000. 00 

3?^%  of  1969  -    .             

670, 000. 00 

Z\4%  of  1970 

73, 100, 000. 00 

3?^;%  of  1970 

670, 000. 00 

3H%of  1971 

73, 100, 000. 00 

3?^%  of  1971 

670, 000. 00 

314%  of  1972..    .               

73, 100, 000. 00 

3^%  of  1972 

670, 000. 00 

314%  of  1973 

73, 100, 000. 00 

3?^:%  of  1973 

670, 000.  00 

3'/?%  of  1974 

73, 100, 000.  00 

3?4%ofl974 

670, 000. 00 

3^%  of  1975 

73,  770, 000. 00 

3}^%  of  1976    

29,146,000.00 

67,  799, 000. 00 

Total  investments 

Undisbursed  balance 

1, 071, 433, 000. 00 
2,625,529.39 

-43,624.000.00 
1, 688, 329.  96 

1, 027, 809, 000. 00 
4,313,859.35 

Total 

1,074,058,529.39 

-41, 935, 670. 04 

1,032,122,859.35 

'  Included  under  premiums  and  other  receipts  prior  to  fiscal  1962. 

Note. — Policy  loans  outstanding,  on  basis  of  information  furnished  by  the  Veterans'  Administration, 
amounted  to  $102,294,525.11  as  of  June  30,  1962. 


TABLES 


797 


Table  91. —  U.S.  Naval  Academy  general  gift  fund,  June  SO,  1962 
[This  trust  fund  was  established  in  accordance  with  the  act  of  Mar.  31, 1944  (10  U.S.C.  6973)] 
I.  RECEIPTS  AND  EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 


Cumulative 

through  June 

30,  1961 

Fiscal  year 
1962 

Cumulative 

through  June 

30,  1962 

Receipts: 

Donations 

$175, 395.  63 
36, 625. 73 

$10, 490. 00 
2, 818.  64 

$185, 885. 63 

Interest  on  investments.                             .      -. 

39, 444. 37 

Total  receipts ...               

212, 021. 36 
90, 125. 37 

13, 308.  64 
8, 872. 37 

225, 330. 00 

Expenditures 

98, 997. 74 

Balance 

121,895.99 

4, 436. 27 

126, 332. 26 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30, 1961 


Fiscal  year 
1962,  increase, 
or  decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  secm"ities: 
Public  issues: 

Treasury  bonds: 

21/2%  of  1965-70.. 

31/2%  of  1990 

3%  of  1995 

3J4%  of  1998...- 

U.S.  savings  bonds: 

Series  J  (2.76%) 

Series  K  (2.76%) 


Total  investments. 
Undisbursed  balance 


Total  assets. 


$85, 000. 00 

7, 000. 00 

11, 500. 00 


-$85,000.00 
38, 000. 00 


47, 000.  GO 


500.00 
5, 000. 00 


$45, 000. 00 
11,500.00 
47, 000. 00 

500.00 
5,000.00 


109,000.00 
12, 895. 99 


4,436.27 


109. 000. 00 
17, 332. 26 


121, 895. 99 


4, 436. 27 


126, 332.  26 


798   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  92. —  Workmen'' s  Compensaiion  Act  within  the  District  of  Columbia,  relief 

and  rehabilitation,  June  30,  1962 

[This  trust  fund  was  established  pursuant  to  the  provisions  of  the  act  of  May  17,  1928  (45  Stat.  600).    For 
further  details,  see  annual  report  of  the  Secretary  for  1941,  p.  141] 


I.  RECEIPTS  AND 

EXPENDITURES  (EXCLUDING  INVESTMENT  TRANSACTIONS) 

Cumulative 

through  June 

30,  1961 

Fiscal  year 
1962 

Cumulative 

through  June 

30, 1962 

Receipts: 

Deposits 

$161, 300. 00 
51, 382.  87 

$5, 000. 00 
4,  691.  84 

$166  300  00 

Interest  and  profits 

on  investments 

56, 074.  71 

Total  receipts 

212,682.87 
79, 383.  89 

9,691.84 
3, 989.  73 

222,374  71 

Expenditures ^                                _      _     

83,  373.  02 

Balance 

133,298.98 

5,  702. 11 

139, 001. 09 

II.  ASSETS  HELD  BY  THE  TREASURY  DEPARTMENT 


Assets 


June  30,  1961 


Fiscal  year 
1962,  increase, 
or  decrease  (— ) 


June  30,  1962 


Investments  in  public  debt  securities: 
Public  issues: 

Treasury  notes: 

m%.  Series  A-1964. 

5%,  Series  B-1964- 

Treasury  bonds: 

25.i%  of  1965 

2Vi%  of  1966-71-- — 

3%%  of  1968- 

4%  of  1969— 

3H%  of  1978-83 - - 

ZViJc  Of  1980 

4%  of  1980- 

ZW7o  of  1990. 

3%  of  1995— .- 

2%%  Investment  Series  B-1975-80- 

U.S.  savings  bonds: 

Series  O  (2.50%) 

Series  K  (2.76%) 


Total  investments. 
Undisbursed  balance 


Total  assets- 


$12, 000. 00 
25, 000. 00 

4, 000.  00 
10, 000.  00 


23, 000.  00 
4. 000. 00 
5, 000. 00 


20, 000. 00 
6, 000.  00 

5, 000. 00 
11,500.00 


125,500.00 
7,  798. 98 


133,  298. 98 


-.$4,000.00 

-10,000.00 

5, 000.  00 


4, 000. 00 
10, 000. 00 


-5,000.00 


5,702.11 


5,702.11 


$12, 000. 00 
25, 000. 00 


5, 000. 00 

23, 000. 00 

4, 000. 00 

5,  000.  00 
4.  000.  00 

10,  000.  00 
20,  000.  00 

6,  000.  00 


11,500.00 


125.  500. 00 
13,501.09 


139, 001. 09 


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800    196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  94. — Refugee  Relief  Act  of  1953,  loan  'program  through  June  30,  1962 


Agency 

Loans 
made 

Repay- 
ments 

Balances 
due 

Estimated 
number  of 
persons 
receiving 
transpor- 
tation 
through 
loans 

Tolstoy  Foundation,  Inc 

United  Lithuanian  Relief  Fund  of  America,  Inc 

United  Ukrainian  American  Relief  Committee 

$85, 000.  00 
25,  000.  00 

204,  000.  00 
70,  000.  00 

$65, 000.  00 

15, 000.  00 

204, 000.  00 

$20, 000.  00 
10,  000.  00 

'2,069 

540 

4,025 

American  Fund  for  Czechoslovak  Refugees,  Inc 

70, 000. 00 

'  1, 091 

Total     

384, 000. 00 

284,000.00 

100, 000. 00 

'  7, 725 

'  Revised. 

Note.— Under  section  16  of  the  Refugee  Relief  Act  of  1953,  approved  Aug.  7,  1953  (50  App.  U.S.C.  1971n), 
the  Secretary  of  the  Treasury  was  authorized  to  make  loans  not  to  exceed  $5,000,000  in  the  aggregate  to 
public  or  private  agencies  for  the  purpose  of  financing  inland  transportation  of  immigrants  from  ports  of 
entry  to  places  of  resettlement  in  the  United  States.  Although  no  immigrant  visas  were  authorized  to  be 
issued  under  this  act  after  Dec.  31, 1956  (50  App.  U.S.C.  1971q),  those  issued  through  that  date  were  covered, 
and  the  loan  program  continued  imtil  June  30, 1957,  at  which  time  funds  available  for  making  loans  expired. 


*l 


TABLES 


801 


Federal  Aid  to  States 

Table   95. — ■Expenditures   made  by  the   Government  as  direct  payments  to  States 

under  cooperative  arrangements  and  expenditures  within  States  which  provided 

relief  and  other  aid,  fiscal  year  1962 

[On  basis  of  checks  issued  except  wiiere  it  is  not  practicable  to  report  certain  detail  for  all  payments.  The 
differing  basis  of  such  detail  is  footnoted  and  a  checks-issued  figure  is  used  for  the  total.  The  differences 
in  amounts  between  the  two  bases  are  included  in  "Undistributed  to  States,  etc."] 

PART  A.     FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS 


States,  Territories, 
etc. 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District  of 

Columbia 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisana 

Maine 

Maryland 

M  assachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories, 

etc.8 

Undistributed  to 

States,  etc 


Department  of  Agriculture 


Total - 


Agricul- 
tural ex- 
periment 
stations ' 


(1) 


$959,  572 
237,  670 
425,  774 
773, 668 
1,011,200 
518, 144 
389, 361 
295, 435 


510,  493 
1,  002,  775 
329,  674 
414,  573 
916,  201 
855, 608 
921, 117 
650, 690 
955,  293 
675, 242 
411,  777 
493,  741 
479, 971 
901,  522 
811,741 
945, 013 
861, 139 
432,  622 
592, 488 
277, 446 
315, 900 
481, 121 
379, 226 
1,  051,  444 
1, 304, 986 
434, 106 
1,033,771 
699, 498 
578, 132 
1, 145,  203 
307, 873 
753,  463 
451, 301 
971, 494 
1,317,817 
393,  502 
313, 177 
852,  864 
660, 136 
647,  645 
850, 399 
346, 649 
877, 423 


Coopera- 
tive agri- 
cultural 
extension 
works 


(2) 


«  243, 202 


34, 460, 282 


$2, 085, 648 
135,  440 
392, 191 
1,  682,  683 
1,  500,  586 
604,  086 
305, 299 
148,  717 


705,  341 
2, 166, 353 

267. 659 
436, 017 

1,  787, 074 
1, 493, 102 

1,  595, 270 
1, 143, 643 

2,  076,  781 
1, 351,  042 

393,  549 
556, 232 

436. 660 
1,641,807 
1,  528,  710 
2, 174, 382 
1, 850,  597 

520, 116 
930, 860 
184,  569 
216,  409 
428, 357 
4,52, 953 

1,  569, 390 
2, 824,  482 

675, 907 
2, 043,  549 
1, 407,  429 

630,  754 

2,  057,  719 
107, 381 

1,  509. 489 
653, 251 

2, 084,  488 

3, 404, 839 
374,  044 
262, 840 

1,  702, 067 
790, 610 

1, 057,  519 

1,  528,  923 
305,  491 

1, 431, 962 


'"8,682,982 


66, 297, 249 


School 

lunch 

program' 


(3) 


$4,  611, 981 
131,241 
1, 358,  848 
2, 632,  698 
9,  554, 034 
1,  584, 822 
1,  552, 262 
249,  734 

272, 191 
5, 135, 061 
5, 657,  779 
913, 323 
800,  514 
6,  497, 063 
4, 318, 387 
2, 894,  618 
2, 071,  371 

4,  356,  975 

5,  546,  539 
952,  699 

2, 219, 007 
3,  605,  786 

5,  699,  567 
3, 496, 132 
3, 804, 195 
3, 927,  619 

650,  797 

1,  214,  652 
159, 829 
510,  512 

3, 068,  597 

1,130»457 

10,  781,  791 

6,  696,  570 
727,  510 

7,411,430 

2,  545,  727 

1,  760,  765 
8, 451, 363 

552, 073 

3,  789, 109 
667,  259 

4, 681, 968 

9, 122, 282 

1, 147, 286 

374,  605 

4,  29.3,  071 

2,  428, 121 
2,  274,  541 
3, 322, 256 

336,  865 

4, 669, 992 

75, 185 

74, 024 

738, 000 


167,  501, 083 


National 
forests 

fund  1— 
shared 

revenues 


(4) 


$181,  610 
212, 432 
501, 106 
870, 485 
2,  693, 001 
277,  913 


215,  016 
197,  619 


1, 121,  453 

5,077 

10, 633 

166 


68,  770 

370, 834 

3,116 


188,  865 

260,  563 

684,  316 

46,  079 

511.427 

15,854 

41.071 

43, 120 


146,  540 


132, 651 

51 

8,189 

118,473 

10, 224, 467 

128, 250 


494, 076 
63,  527 
83, 009 

471,827 

141, 458 
45,  714 
57, 388 
, 309, 990 
97, 609 
78,  201 

155,  072 
2,091 


25, 279, 109 


National 

grass- 
lands 5 — 
shared 
revenues 


(5) 


$5, 161 

519 

24, 863 


7,927 
236 


1,686 


125 
83, 770 

268 
1,458 


2,007 
"3,123" 


-10, 063 
798 


7,545 


11,  556 

604 

165 

180,  896 

605 

11, 008 

2,292 


791 
37, 250 


14, 435 


7 

19,  648 

241 


7,323 


416,  545 


Coopera- 
tive proj- 
ects in 
market- 
ings 


(6) 


$54, 800 
20, 150 
13.000 
36,  943 

155,  500 
48,  055 
10,  960 
28, 000 


84, 097 

98, 435 

26, 958 

11,859 

55, 672 

123, 067 

95.  511 

119, 386 

112,  500 

100, 183 

98,  698 

77, 309 

63, 344 

246, 419 

73,  998 

89, 016 

158, 392 

27,  949 

30, 250 


9,467 

71. 249 
50, 760 

131,399 
1.59,  457 
63,  479 
60, 626 
88, 614 
87,  907 
31,  604 
4,060 

27. 250 
12,  723 
46,  800 
48, 820 
18,  221 
22, 386 
83,  774 
71,  263 
46, 200 
68, 404 
10, 230 


112, 866 


3, 388, 010 


State 
and  pri- 
vate for- 
estry co- 
opertion, 

etc.7 

(7) 


$324, 719 
51,  666 


402,  012 

1,  233,  585 

61, 330 

26, 359 

20,  431 


790, 939 

698. 813 

35, 937 

300,  729 

19,  542 

53, 284 

50,  768 

11, 221 

280, 829 

503, 275 

398, 128 

212, 155 

141, 194 

613, 610 

494,  371 

508, 316 

307, 375 

171,910 

14,  500 

62, 105 

146, 981 

181,331 

62, 916 

289, 297 

549, 162 

18,  593 

142,  803 

157, 883 

745, 372 

373, 627 

,54, 010 

533,  214 

59, 874 

517, 088 

407, 345 

45, 999 

94,  931 

387, 269 

577,  500 

259,  653 

615, 844 

16, 618 


14, 026, 413 


Footnotes  at  end  of  table. 
661496—63 52 


802   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  95. — Expenditures  made  by  the  Government  as  direct  paijments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories, 
etc. 


Alabama 

Alaska 

Arizona.. 

Arkansas 

California 

Colorado.-- - 

Connecticut 

Delaware 

District  of 

Columbia 

Florida 

Georsria 

Hawaii - 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri.. 

Montana 

Nebraska 

Nevada -.. 

New  Hampshire.. 

New  Jersey 

New  Mexico 

New  York 

North  Carolina... 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah - 

Vermont 

Virginia- 

Washington.- 

West  Virginia 

Wisconsin 

Wyoming--. 

Puerto  Rico. 

Virgin  Islands 

Other  Territories, 

etc." --. 

TTndistributed  to 

States,  etc 


Department  of  Agriculture— Continued 


Watershed 
protec- 
tion and 
flood  pre- 
vention " 


(8) 


$495,  764 


Total... 


872,  479 
833, 002 
2, 099,  798 
,')48,411 
378, 657 
110,555 


Removal  of  surplus 
agricultural 
commodities 


Food 

Stamp 

Pro- 
gram 12 

(9) 


162, 032 

,  360, 365 

67.  675 

19. 569 

181,  965 

674. 629 

947. 007 

666, 471 

560, 020 

441,  256 


188.045 
197, 623 
152, 584 
250, 908 

,  899,  813 
316, 172 
190.818 
431,466 
163,411 
241,905 
140,  739 
508.  291 

,031,  253 
473,  770 
643. 387 
155,  847 

,  870. 490 
939, 350 
546,  977 


191.088 
183,  937 
303, 216 
642, 407 
290,  270 


394. 092 
533. 990 
792.  229 
496. 438 
193, 650 


38, 783. 821 


$440, 408 


796,  856 


7,  695,  837 
486, 138 


140, 066 


369, 869 


2, 007, 980 


1,215,541 


Value  of 
commodi- 
ties dis- 
tributed 

(10) 


13, 152, 695 


$3,  900,  205 
2.5.241 

1,  439.  960 

4.  155,  975 

2.  856.  500 
1,009.751 

324, 1.59 
465, 337 

935, 041 

1,  965.  264 
2. 786,  278 

195, 860 
197,  743 

2,  564,  782 
2,  705, 919 

2,  074, 167 
848, 631 

5, 855,  881 

3,  483,  736 
782, 122 

1.  2.59,  587 

1, 097, 625 

6,  602.  273 

1,657,712 

4.671,923 

3,  339, 126 

433.  620 

228, 133 

55,  870 

268, 172 

833, 370 

1,  7.53,  288 
9,  433.  735 
3.  505. 639 

339,  806 
6,691.413 

5.  135,445 
1,441.246 

11.401.484 

239.  986 

820,  1,50 

625.  087 

4, 136, 667 

4,729,791 

506,  819 

347,419 

1,6,54,015 

2,  772,  087 
5.  406, 168 
1,  708, 189 

229, 052 

6, 835. 662 

38,460 

61,304 

53, 000. 000 


Commodity  Credit 
Corporation 


Value  of 
commodi- 
ties 
donated  '3 

(11) 


$7,  459,  263 

127, 140 

1.741,054 

6.914,414 

7,  607, 126 
2,111,465 

1,  257,  844 
618,  446 

1. 149,  391 
5, 034. 298 
4, 827.  381 
659.  339 
510.377 
6. 660. 942 
4. 278. 841 

3,  668, 576 
1.931,243 
9,  498, 870 

8,  .521, 912 
1, 633, 1.50 
2, 103,  348 

2,  722,  845 
10,117,220 

3. 238.  540 

9,  228. 092 
6,230.  1.54 

784.  780 

826. 383 

120,  925 

577,  433 

2.  260,  506 

2,  602,  832 

17,712.632 

6. 074,  491 

858, 158 

8, 778,  404 

8.  .537.  228 

2,  430,  609 

20.  413.  ,590 

452,  526 

2, 379, 014 

1,0.58,412 

8.  603,  016 

9,  770.  085 
1.  320,  988 

,522.  422 

4.  249!  021 
4,494,  127 
8.  2.32,  391 
3,241,041 

437, 432 

10. 029, 135 

88, 152 

271, 482 

-37, 073, 963 


181, 832, 875 


199, 904, 523 


Special 
milk 
pro- 
gram '< 

(12) 


$1,  195,  153 

28,  310 

562,  639 

672,  264 

8,135,614 

841,031 

1, 390,  092 

311,232 

489,  776 

1,257,934 

1, 145,  938 

185,  397 

227,  735 

6,110.240 

2,  157, 077 

1,844,685 

1.010.421 

1,  576, 965 

559, 698 

425.  794 

1,  900,  384 
3,241,  168 
5,  575,  481 

2,  523,  828 
1,331,117 
2,  .509,  798 

177, 853 

550. 314 

82,  522 

328,  596 

2.  512. 188 
771,  886 

9. 097,  073 

1,  878,  309 
330, 017 

5,  592.  986 
920. 508 
570.  033 

4.  225,  875 
400,  234 
658,  813 
413, 449 

1,  956,  1,55 

3,  212,  620 
269,  260 
176,351 

1.666,371 
1,  495,  805 

497, 149 
3. 310.  233 

162,  897 


Department 
of  Commerce 


Bureau  of  Public 
Roads — construction 


2. 159, 627 
90. 626, 895 


Federal- 
aid  highways 
(trust  fund) 


(13) 


$64.  .585.  102 
1,3,86.5.441 
36.  792.  217 
33,  320,  767 

270,  510,  263 

31,  486,  723 

34, 161,  298 

4, 701, 439 

19,  168,  701 
42,  612,  953 
61.120,974 

3,  902.  319 
23,  328. 437 
141.824.624 
67, 467. 015 
38. 463,  749 
36,  828, 187 
58,  792,  968 
63,  268,  471 
13,  420.  463 
44,  354,  374 
61, 348,  995 
98.  593,  316 
58,  326,  986 
35,  408.  672 
79.  292. 098 
31, 844,  776 
29,  237, 594 
15,  538. 813 
17.  268, 451 
69, 906, 897 

20,  532,  307 
141.663.543 

42,  797.  798 

16, 479,  476 

17.5,400,5.55 

35,  257,  070 
46,  896, 069 
98,  783, 365 

8.491,934 
33, 985, 333 

36,  229, 835 
67,  740,  318 

128.6.59.500 
25,  968.  946 
29.  282,  722 
75,  948,  642 
,54,  505.  137 
21. 913.  985 
54,  730,  4.59 
26, 558,  508 
3, 699, 129 


5, 682. 627 


2,  751, 950, 343 


Other's 


(14) 


$172,  610 
2,  308,  660 
2,  232, 662 
507,  309 
4,723,311 
1, 370,  275 


110.612 
20,  774 


3,  649,  731 

8,659 

61,721 


658 

15,  470 

185, 000 


320,  592 

362.  469 

203.  700 

74,  509 

2, 057, 186 


i 


738,  567 
174,371 


1,  509,  556 


132, 635 

1,268 

31,  272 

10. 656 

3,  207, 257 

18, 100 


85,  800 

344.  659 

140. 605 

75.  100 

1,4.34,276 

4,52, 194 

132,870 

1,941,671 

13.3,690 

429, 927 

1. 192,  729 

8,652 


247, 703 


30, 889, 467 


Footnotes  at  end  of  table. 


TABLES 


803 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.  FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories,  etc. 


Depart- 
ment of 

Com- 
merce— 

Con- 
tinued 


State 

marine 

scliools  " 


(15) 


Department  of  Defense 


Army 


Lease  of 
flood 
control 
lands — 
shared 
revenues 

(16) 


Civil 
Defense  '' 


(17) 


Funds  ap- 
propriated 

to  the 
President 


Disaster 
relief  " 


(18) 


Department  of 

Health,  Education, 

and  Welfare 


American 

Printing 

House 

for  the 

Blind 


(19) 


White 
House 
Confer- 
ence on 
Aging  " 

(20) 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware -- 

District  of  Columbia 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa.— 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York -- 

North  Carolina 

North  Dakota 

Ohio- 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Termessee -. 

Texas 

Utah 

Vermont 

Virginia 

W^ashington 

West  Virginia — — 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories,  etc' 

Undistributed  to  States,  etc- 

Total 


$146, 010 


126, 600 
"  131,' 902' 


136,  966 


541, 478 


$4,  718 


469 

74,  874 

174, 299 

11,  939 

182 

3,306 


9,336 
44,  535 


78 
72, 927 
737 
40.199 
77,  538 
88, 068 
21, 051 


256 

2,  79f 

3,163 

1,229 

107, 659 

92, 215 

16,709 

45,  725 


1,971 

786 


2,331 

2,876 
159, 162 

5,099 
260, 601 

6,010 
11,029 


1,126 

33,  873 

41, 379 

164,  602 


672 

15, 354 

4.750 

744 
5,441 


1,611,813 


$438,  475 

38, 479 

163,  880 

171,  777 

1,  975,  572 

246, 333 

46, 842 

60,  555 

80, 372 

414,309 

329, 088 

215,  721 

81,057 

240, 322 

107,  206 

136. 254 

207,  309 
104,  897 
312, 981 
437, 308 
500, 215 

1,548,177 
419, 203 
386,  544 
116,897 

208,  456 
58,  895 

388, 303 
39, 138 
77, 269 

434, 029 

198,  489 
1,  945,  952 

500,  951 
251,  528 
192, 367 
245, 237 
180, 079 
854,  454 
88, 232 

199,  540 
47, 473 

113,525 
810, 353 
344,  472 

54,  872 
171,277 
191,535 

86, 044 
386,  766 

54. 185 

-114,619 

-9,014 

10, 252 


i«  16,  789,  813 


$351, 098 


707,  835 
-2, 310 


300, 198 


1,132,673 
211,  820 
159, 174 
655,  643 
619,  562 
572,  762 


39,  735 


860,165 
315,  587 


175,353 
129, 605 


3, 233, 298 


500,  837 


-54,  744 
-418 


348,  736 


136,  540 

's'oii.iee 


-2,  526 
979, 833 


14,  381,  924 


$12,  602 


5,961 
6,641 

61,  728 
6,281 

15, 002 
1,920 
1,640 

18,  522 
16. 682 

2,  720 

1,120 

29,684 

13, 042 

7.001 

8,241 

7,281 

11,241 

1,600 

14, 122 

26,483 

28, 124 

11, 121 

6,721 

10,  921 
2, 120 
3,761 

840 
1,960 

24, 283 
4,441 

61,  568 

19,  682 
1,280 

31,964 
4,081 
8,841 

46,  406 
3, 280 
7,001 
2,000 

12,  202 
23, 483 

2,840 
840 

13,  802 

11,  962 
8,561 

11,001 
1,160 
3,160 


80 
31,000 


670,  000 


-$564 


-394 
-6, 173 


-3,  576 


-2, 674 


-984 
-1,114 


-1,331 
-5,'5i4 


-7,  234 


-254 
-398 
-749 


-73 
-213 


-31,245 


Footnotes  at  end  of  table. 


804   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  95. — Expenditures  made  by  the  Government  as  direct  -payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  i  95^— Continued 

PART  A.  FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories, 
etc. 


Department  of  Health,  Education,  and  Welfare — Continued 


Office  of  Education 


Colleges 
of  agricul 

ture  and 

mechanical 

arts  19 


(21) 


Cooperative 

vocational 

education  20 


(22) 


Assistance 
for  school 
construc- 
tion 


(23) 


Mainte- 
nance and 
operation 
of  schools 


(24) 


Library 

services 


(25) 


Defense 
education 
activi- 
ties " 


(26) 


Expan- 
sion of 
teaching 
in  edu- 
cation of 
the  men- 
tally 
retarded 

(27) 


Alabama 

Alaska.. 

Arizona 

Arkansas. 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia. 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana. 

Iowa. 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi..- 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas . 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin. 

Wyoming. 

Puerto  Rico.. 

Virgin  Islands. 

Other       Territories, 

etc.8 

Undistributed  to 

States,  etc 


$205, 079 
144, 50b 
105, 941 
175,  5S5 
453, 113 
174,  942 
19U,  506 
148,  S91 


238,  643 
21s,  553 
i,  927,  606 
153, 292 
340,  833 
232, 885 
194, 935 
183, 402 
200,  525 
204, 885 
159, 309 
2U1,  771 
242,  568 
295, 851 
208, 010 
183, 392 
226, 058 
153, 443 
168, 116 
145, 683 
152, 091 
260, 860 
158, 946 
474,  331 
230,  766 
152,  599 
333, 367 
186, 383 
175,  235 
365,  500 
157, 122 
187, 465 
153, 557 
211,062 
330, 843 
157,  743 
147,  767 
219, 028 
196, 841 
177,063 
218,  726 
146,  575 
186, 807 


$990 
105, 
22U, 
727 

2,208, 
344, 
401 
193, 
130 
783, 

1, 081 
184 
245, 

1,  762, 

1,051 
837 
562, 

1, 043 
864, 
258, 
487 
760, 

1,481 
925, 
910, 

1, 069, 
209, 
426, 
187 
166, 
821 
229, 

2, 533, 

1,  575, 
300, 

1, 881, 
647 
413 

2, 206, 
168, 
758, 
278, 

1, 126 

1, 885, 
192 
187 

1,041 
603, 
594, 
997, 
167, 
843 
45 


741 
085 
026 
818 
211 
140 
206 
601 
480 
377 
943 
230 
250 
663 
590 
088 
000 
741 
324 
375 
335 
604 
963 
875 
428 
557 
056 
436 
272 
675 
993 
030 
312 
466 
483 
780 
009 
665 
709 
172 
009 
494 
226 
982 
416 
793 
996 
848 
047 
420 
872 
307 
016 


57,  582 


$1, 579, 099 

1,  694, 182 

831,264 

379,  047 

8,865,911 

744,  494 

1,  187,  099 


$5, 368, 962 
6,  573, 061 
4,  714, 003 
1, 250, 882 

34, 127, 084 

8,401,913 

2, 121, 080 

694, 462 


726, 135 
1,011,844 
962,  988 
364, 082 
380,  899 
103,  617 
34,  673 
384,  602 


46,  921 

296,  486 

1,  220,  706 

1,  783, 395 

1, 480,  415 

216, 902 

689, 394 

465, 058 

928,  775 

616,  734 

675, 445 

94,  614 

379, 902 

1,  526,  571 

462, 970 

962, 365 

535,  294 

522, 553 

611,861 

161, 405 

1,610 

205, 413 

734,615 

1, 169, 399 

66, 000 

2, 660, 877 

657,  662 


1, 050,  776 

851,  770 

9,256 

650,  705 

397, 144 


6, 199,  914 
5, 189,  019 
4,  448,  245 
1,  655,  960 

3,  991,  894 
1, 115,  532 

839, 694 
5, 850, 869 
1, 369, 394 

935, 910 

1,  959,  054 
8,  442,  404 
6,897,532 
1, 894, 389 

476, 446 
1, 472, 551 
2, 630, 359 
1, 779, 085 
2, 777, 929 
1, 454, 329 
1,241,875 
5, 033, 997 

4,  915,  634 

6,  047,  882 

2,  643,  686 
824,  356 

5,216,913 

7,  289, 031 

1. 066. 479 

5. 089. 480 
1, 909, 874 

3,  596, 961 
2, 182,  508 
2, 355, 447 

13, 234, 662 

2, 170, 042 

37, 568 

14,  588, 827 

8, 766, 325 

128, 996 

741, 405 

819, 863 


815, 563 


81,518 

820, 336 

10, 872. 405 


$184,  761 

40, 000 

72, 538 

140,  200 

250, 030 

85,  259 

105,  425 

62, 005 


165, 938 

212, 827 

54, 606 

74,  029 
231,168 
405,  552 
167, 096 

75,  721 
205,363 
157, 418 

85,  752 
173,  999 
100, 898 
244,  534 
173, 045 
173,  202 
178, 493 

73, 006 
103, 329 

61,500 

64, 845 
102,  236 

71,851 
280, 484 
310, 305 

66, 348 
294, 172 
134, 745 
105, 614 
670, 452 

84,  548 
250, 039 

80, 565 
207, 063 
331, 190 

61, 932 

63, 550 
212, 929 
128, 774 
152, 796 
180, 303 
106, 364 
162,  220 

11,382 

14,247 


Total. 


14,  519, 000 


40, 178, 617 


42, 084, 492 


226, 307, 926 


8, 196, 654 


$909, 952 

105,  268 

588, 990 

2, 801, 142 

3, 335, 692 

391, 857 

704, 395 

224.  716 

217, 913 

1, 985, 848 

1, 980, 911 

411,006 

-23,  663 

2,  811,  424 

1, 103,  597 

1,  299, 835 

785,  488 

1, 056,  508 

979, 181 

227, 422 

1,  096,  241 

2, 074,  731 

4,  261,  859 

1,181,877 

440,  644 

1,  567,  266 

36, 705 

506, 955 

175, 118 

286, 055 

2, 321, 569 

632, 325 

5, 167, 210 

3, 332, 827 

573,315 

4,  278,  223 

1, 424, 342 

1,376,830 

2, 603, 353 

220, 087 

1, 056, 821 

76, 960 

1,511,547 

853, 260 

434,  466 

299. 823 

1,  542, 117 

1,  299, 512 

847, 773 

1,  756, 349 

37, 082 

537,  669 

66, 354 

54,  770 


65, 833,  507 


$11,042 
4,900 


13, 000 
22,300 
17, 586 
11,633 


11,643 
12, 600 


12,564 
11,800 
13, 000 
13, 812 
20, 450 

9,800 
11,209 
10,600 
11, 000 

8.100 
12, 200 
13, 000 
11,400 
11,800 

7,300 
12, 867 
10,600 
12,200 
11, 000 
10,  682 
16. 700 
11. 400 
10, 600 
11,000 
12.200 
24, 866 
13,800 

8,900 

"11^406 

9,800 

10, 600 

11,319 


II 


9,400 
22. 967 
10. 600 
13.800 

4,942 


554, 382 


Footnotes  at  end  of  table. 


TABLES 


805 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories, 
etc. 


Alabama 

Alaslsa 

Arizona 

Arljansas 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia. 

Florida -. 

Georgia... 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania... 

Rhode  Island 

South  Carolina 

South  Dakota 

Termessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories, 

etc.8... 

Undistributed  to 

States,  etc 


Total. 


Department  of  Health,  Education,  and  Welfare — Continued 


Public  Health  Service 


Control  of 
venereal 
diseases 


(28) 


$40, 044 

1,000 

17, 0S4 

75,  325 

106,  769 

2,449 

10, 854 

11.  339 

71, 278 

105, 494 

233,  471 

1,250 

5, 650 

218, 056 


8,387 
15,  347 
40, 425 
67, 074 


35, 435 


59,119 

920 

31, 095 

42,  572 

7,248 

12, 438 

7,488 


67,  081 

35. 306 

531, 874 

114,231 

11,367 

9,003 

18. 744 

6, 259 

116, 712 

2,050 

83,  295 

8,724 

86, 479 

141,  976 


46, 364 

4,246 

18,  909 


32,  538 
6,065 


23  2,  568, 834 


Control  of 
tubercu- 
losis 


(29) 


.$111, 676 
17, 089 
70,424 
53, 406 

279,  887 
40, 067 
34, 443 
14, 926 
32, 948 
97, 402 

109,  284 
19. 347 
14, 077 

196,  650 
65, 172 
31,  747 
28, 151 
94,  420 
89, 609 
20, 372 
83, 423 

132,  526 

152,  729 
40,142 
72,  387 
82, 300 
18,  259 
22,  790 
11,612 
12, 727 
99,245 
29, 480 

384. 065 
75,  383 
14, 485 

152, 514 
45, 355 
30, 293 

271,058 
45, 380 
62, 438 
13, 000 

111,9.35 

167, 733 

13. 143 
17, 335 
88, 827 
45, 393 
46,  290 

49. 144 
10, 334 

154, 350 
6,474 

11, 357 


2*  4, 001, 003 


Community 
health  prac- 
tice and 
research 

(30) 


$397,  652 

41,264 
132, 143 
255, 928 
988, 812 
163,  200 
134, 410 

27, 164 

42, 495 

416, 975 

433, 197 

22  904, 877 

90,  531 
610, 979 
348,  489 
250,  725 
196, 277 
301,  730 
337, 344 
100,  258 
221,  719 
349, 407 
517, 898 
297, 950 
338, 497 
351,077 

82, 338 
147,  509 

40,403 

56, 878 
369, 809 
117,363 
944,  527 
519,  769 
106, 208 
661,064 
238,418 
148, 224 
822, 933 

64, 102 
302, 846 
100, 414 
391, 350 
815, 470 
106, 300 

60, 189 
330, 349 
201,  796 
189, 824 
310, 362 

53,  534 

334, 622 

6,441 

11,317 


24  15,  785, 357 


Mental 
health 
activ- 
ities 

(31) 


$125,  252 
51, 804 
50, 494 
58,  246 
464,  733 
66,  417 
73,  284 

73. 450 
66,  597 

163, 582 

144,  975 

66,  597 

66,  597 

298, 113 

144, 349 

80,  468 

72, 846 

112, 394 

118, 029 

65,  528 
98,  050 

149,  330 
245,  895 
104. 161 
92, 884 
141, 059 

66,  597 
66,  519 
46, 993 
65, 046 

184, 421 
66,  597 

503. 813 

171,088 
66, 597 

303, 688 

79. 451 
66, 245 

370, 325 
65, 470 
93,  952 
64,  976 

135,  794 
323, 188 

39, 000 
75,089 

136,  267 
90,  577 
66, 535 

127, 866 
24, 000 
96, 177 
23,287 

35,  409 


6,  650, 161 


National 

Cancer 

Institute 


(32) 


$76, 699 


25, 007 
44, 368 

239, 402 
33, 945 
35, 865 
26, 354 
32,  439 

125, 347 
84, 334 
26, 350 
26, 354 

152, 170 
77,  216 
29,200 
43, 431 
61, 196 
67,  272 
8,911 
51,971 
95, 028 

127,  111 
64,  591 
63, 317 
85, 153 
18, 079 
30, 414 
5,073 
24, 605 

100,  260 
26, 354 

273, 326 
96, 825 
26, 354 

161,589 
51,313 
24, 643 

205, 864 

26, 006 

56,  925 

8,894 

73, 449 

174, 676 

5,773 

31,  865 

71, 839 

47, 182 

40,  737 

74, 003 

7,179 

59,  532 

4,748 

5,604 


24  3, 436, 142 


National 
Heart 

Institute 


(33) 


$116, 974 

3,930 

1,300 

77,  970 

274, 735 
69, 321 
60,  735 
27, 900 
46,  951 

124,  734 

126,  500 
44, 177 
50, 853 

168, 632 

113,093 
50, 365 
59, 165 
99, 107 

110,688 
16, 000 
89,  509 

120, 414 

161,  641 
78, 084 

112, 745 
86,  981 
30, 000 
12, 600 
10,  975 
18,  900 

121,  747 
57,  277 

283, 315 

124, 252 
51,397 

197, 080 
85. 7.50 
35, 349 

225,  585 
48, 886 

107,  585 
11,877 

126,  754 

234, 997 
9,028 

13,  793 
76,  580 
78, 632 
65, 126 

102, 802 

14,  200 
116, 932 

5,976 

6,559 


4, 566, 458 


Water 

supply 

and  water 

pollution 

control  21 

(34) 


$96. 

15. 

35, 

63. 

267. 

44. 

76. 

4' 

38 

107, 

108, 

35 

26 

149 

111 

62, 

54, 


36 

89, 

135 

171 

82, 

81 

52, 

24 

27, 

11 

33 

144, 

30 

306 

132, 

26 

207 

59, 

46 

239, 

60 

81 

27 

103 

191 

17 

25, 

97 

80. 

58, 

97, 

17 

28, 

4, 


864 
610 
872 
267 
746 
245 
158 
864 
383 
200 
856 
665 
257 
148 
428 
980 
480 
870 
318 
699 
111 
217 
192 
081 
048 
199 
190 
531 
321 
287 
857 
186 
400 
529 
361 
788 
005 
106 
835 
660 
771 
291 
377 
763 
520 
948 
898 
386 
822 
400 
988 
220 
363 


6,400 


4,355,961 


Footnotes  at  end  of  table. 


806   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories, 
etc. 


Alabama , 

Alaslta 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia. 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa -. 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan. 

Muuiesota... 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon_ 

Pennsylvania _ . . 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah... 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories, 

etc.8 

Undistributed  to 

States,  etc 


Department  of  Health,  Education,  and  Welfare— Continued 


Public  Health  Service — Continued 


Chronic 

diseases  and 

health  of 

the  aged 


(35) 


Total. 


$114,927 


16,  704 

61,400 

356, 300 

52,  200 

37,  640 

40. 000 

40, 000 

168,  900 

47, 097 

40, 000 

40,  000 

253,  500 

52, 450 

44,  550 

80,  500 

89, 177 

43. 200 

23, 000 

72,  700 

90, 180 

197, 600 

121, 200 

121,600 

152.900 

25  21,837 

20, 100 

25, 000 


143, 900 
40. 000 

417,900 

168, 100 
40, 000 

262, 000 
92, 700 
21,600 

339,  900 
40,  000 
73, 330 
15,000 
57, 693 

208, 900 


33. 338 
99, 800 
61,524 
67,  400 
105,  264 
33,  429 
50, 000 
12, 000 


Construction 


Hospital 
activities 


(36) 


Waste 

treatment 

works 


(37) 


2*  4, 808, 440 


$3, 265, 303 
3, 827, 827 
1,540,051 
4.031,209 
7,004,415 

1,  749,  942 
663,  761 
639, 148 
605, 033 

5,  457,  808 
5,  799.  705 
694.  594 
998. 313 
4.  895. 160 
3, 159.  509 
3,  466, 056 

2,  574, 140 
4,117,346 
2,  271,  263 
1, 103,  273 

2.  999.  243 

3.  180.  198 
4. 965.  850 
3. 329, 367 

4.  695. 193 
4, 314,  863 

801,119 
1,277,263 

680, 453 
1,254,093 
2,834,165 
1.513.092 
9. 352.  540 

5.  945,  879 
1,472,443 

5,  744, 950 
2.  457, 998 
1,684,791 
8, 484, 193 

947,  973 

4, 782,  605 

1,499.020 

4,881.741 

10, 646. 381 

311.707 

417.021 

6,  737, 031 
1,750.845 
1.711.186 
3,991.938 

273. 906 
44,684 


4, 727, 094 


167,  575, 281 


1, 


$1,219,765 

73,  560 

426, 920 

869,717 

735,  949 

761,623 

656. 000 

379, 301 

117,447 

1,021.841 

1,  264,  2.58 

331, 055 

615,946 

1, 624,  431 

1,101,215 

572, 077 

794, 986 

1,091,278 

1,314,672 

167,  398 

610,915 

1,004,030 

1,407,602 

975, 946 

864,  906 

633,  551 

434, 168 

341,313 

483,  750 

174,600 

1, 007, 853 

805.  178 

1,  586.  .587 

1,170,316 

846,  323 

1,286.812 

1,109,300 

772,941 

2,502,710 

142,  .■■)35 

414,  568 

180,414 

1,  133,925 

1,264,401 

882, 104 

403.  242 

642.  825 

791,609 

480,  578 

824, 102 

288.  776 

495, 996 


Health 
research 
facilities 


(38) 


42,103,315 


$165,  469 


15,316 


5,750 


370, 000 


428,  200 


4,365 


1,378 
"43,124" 


1,033,992 


Social  Security  Administration 


Maternal  and  child  welfare  serv- 
ices—Children's Bureau 


Maternal 

and  child 

health 

services 

(39) 


$684, 400 
173, 946 
232, 462 
386, 924 

1, 338, 044 
423. 203 
396, 156 
130, 135 
311, 248 
774, 088 
734, 173 
180, 392 
190, 638 
673.316 
373, 634 
306, 992 
260, 489 
548, 688 
480, 514 
177,746 
451,  250 
416,328 
920,  920 
509. 429 
625. 387 
523.  274 
141,666 
140,  500 
123, 208 
108, 940 
354, 651 
254, 940 

1,179.338 
889. 007 
140. 164 

1,005.029 
381.051 
212.  299 

1,090.985 

220.  072 

527, 017 

63,  432 

666,  787 

1,036,041 
138, 756 
125, 742 
752, 957 
389,411 
431, 143 
417, 464 
128,  574 
108, 716 


Services  for 
crippled 
children 


(40) 


600, 005 


23,851,671 


$766, 394 
148,  791 


403,  568 

1,080,945 
304, 621 
286, 180 
127,851 
280, 212 
584, 334 
841,  875 
181,867 
162,  K80 
748,013 
572. 177 
498.  743 
287. 338 
526, 695 
569. 690 
155,152 
465.  672 
4.52.  289 
954,  296 
693.  725 
564, 984 
442, 124 
193, 333 
121,333 
82, 327 
123,9.53 
276,  567 
217.683 
894,  541 

1,011,378 
145,056 
910,  510 
366, 922 
238.  977 

1,130,773 
178.007 
583. 067 
140, 465 
727. 044 

1,484,967 
164,  446 
125, 967 
695, 063 
320, 317 
404, 408 
513,414 
125, 825 
108, 621 


Child 
welfare 
services 


(41) 


700, 297 


$472, 465 

69,  732 

184,834 

283.  504 

1.027.620 

208, 154 

182, 907 

77, 364 

89, 181 

453, 712 

533, 931 

115,419 

95,  274 

700. 950 

444,551 

315,928 

251,452 

430, 459 

445, 975 

149, 680 

296,  645 

404, 396 

733, 868 

380, 892 

362, 306 

411,436 

119,572 

184, 249 

71, 672 

100, 096 

418, 107 

160, 473 

1.010,675 

631,553 

130, 137 

818,  792 

283,711 

206. 303 

939, 497 

120,879 

400,  424 

130, 464 

471,735 

1,039,606 

156,758 

91,880 

472,  434 

284, 914 

278,  793 

413,234 

82, 717 

56, 313 


448,  230 


24,091,677    18,645,853 


Footnotes  at  end  of  table. 


TABLES 


807 


Table  95— Expenditures  made  hy  the  Government  as   direct  payments   to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962— Conimued 
PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS-Continued 


States,  Territories,  etc. 


Alabama 

Alaska.. 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia 

Florida. 

Georgia 

Hawaii 

Idaho --- 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota. 

Mississippi 

Missouri 

Montana 

Nebraska - 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina.. 

North  Dakota 

Ohio -- 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota .-- 

Tennessee -- 

Texas 

Utah... 

Vermont --- 

Virginia 

Washington 

West  Virginia 

Wisconsin.. 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories,  etc." 

Undistributed  to  States,  etc 


Total. 


Department  of  Health,  Education,  and  Welfare— Continued 


Social  Security  Administration— Continued 


Old-age 
assistance 


(42) 


$55, 317, 235 
739, 118 
7, 230, 896 
27,  505. 483 
146.  459, 357 
29, 101, 163 
8,  550, 846 
504,811 
1, 956, 976 
38, 060, 045 
41, 977, 307 
718, 140 
3,  637, 059 
42, 420,  597 
14, 051, 318 
21, 489, 852 
17,624,637 
26, 849, 908 
83,  595, 177 
6, 685,  760 
5,071,218 
35, 694,  891 
32, 436, 083 
29, 169, 869 
25, 272,  372 
57,001.936 
3, 413,  705 
9,381,030 
1,479,918 
3, 143, 157 
10, 391, 386 
6, 817, 136 
33, 333, 441 
21,  873,  788 
4, 676, 899 
50, 841,  613 
60, 920, 140 
10, 033, 224 
24, 268,  796 
4, 358, 225 
11, 949, 075 
5,  574, 303 
22, 239,  795 
116,734,125 
4, 097, 331 
3, 226,  585 
7, 463, 887 
26, 160, 348 
7. 313, 348 
20,351,314 
1.733,194 
2, 013, 488 
142,  233 
25, 060 


Bureau  of  Family  Services 


Aid  to 

dependent 

children 


(43) 


Aid  to  the 
permanent- 
ly and 
totally 
disabled 

(44) 


$9, 671, 142 
1,087,156 
9, 859, 617 

4,  253, 001 
85, 809, 978 

9, 145, 409 

11,224,450 

2, 047, 069 

6,  716,  427 

16,502,276 

14. 144, 939 

3, 204, 916 

2,  603, 795 

64,019,374 

11,769,947 

10, 170,  541 

7, 155, 175 

19,089,639 

23, 069, 689 

5,  592, 373 
12,981,187 
16,  532, 645 
30,184,088 
11, 044, 644 

7, 421, 700 

23,151,612 

2, 038, 957 

3, 803. 059 

1, 275, 352 

1,  209,  541 

19, 912, 314 

8, 342, 061 

100, 203, 266 

24,  590,  237 

2, 078, 396 

34, 349, 167 

19,741,045 

7,  872,  297 

70, 037, 636 

5, 990, 820 

5, 450, 006 

2, 984,  225 

16, 352, 112 

15,  486, 357 

4, 422.  385 

1,253,526 

10, 481, 801 

14, 148, 058 

29,  754, 177 

10, 202, 919 

830,  507 

5, 477, 977 

132, 608 

80, 900 


$4, 829, 778 


3, 180, 860 

10, 046, 803 

3, 152, 142 

1,453,576 

261, 187 

1, 494,  862 

6, 896,  539 

11,  405, 349 

527,  781 

1,082,137 

12, 978,  282 


Aid  to 
the  blind 


(45) 


468,  988 
2, 420, 415 

4,  825, 360 
9, 356, 389 
1,  345, 698 
3,  362,  507 

5,  288, 657 
3, 143, 286 
1,463,060 
4, 196,  542 
7, 990, 717 

757, 018 
1,399,849 


1,233,078,598 


836, 954, 495 


289, 050 

3, 766, 983 

1,726,115 

18,  739, 008 

11,303,100 

743, 930 

8, 129,  582 

6, 495, 219 

2,761,181 

7,864,871 

1,759,076 

3.  526, 986 

674, 877 

4, 959, 275 

3, 856, 493 

1, 721, 222 

473, 018 

3, 808, 754 

3. 694,  .594 

3, 088,  674 

2,  506, 304 

332, 929 

1,356,688 

25, 002 

16, 996 


Medical 

assistance 

for  the  aged 


$659, 787 
54,530 
519,  478 
1,015,187 
6, 923, 907 
143, 155 
164, 330 
149, 330 
102, 368 
1,335,087 
1, 699, 238 
55, 252 
79,  552 
1, 669, 202 
1,086,185 
792, 950 
334, 754 
1,327,765 
1, 654, 744 
233,  579 
217,612 
1, 112,  573 
889, 033 
612,319 
1, 380, 850 
2,201,245 
182, 408 
448, 254 
108,  612 
141,648 
523, 232 
215,683 
1,876,113 
2, 945, 061 
59, 301 
1,972,393 
1,050,868 
149, 020 
2, 807,  860 
71, 645 
767, 922 
91, 247 
1,119,053 
3,152,425 
93, 202 
57, 920 
671,023 
340,  742 
404, 410 
500, 971 
32, 060 
101, 809 
3,928 
1,592 


(46) 


$289, 288 


438,  261 
13,561,630 


451, 174 

1,388,752 

646, 079 


Office  of 
Vocational 
Rehabili- 
tation 


(47) 


321, 456 

1,613,702 

360, 183 

964, 185 

20, 426, 004 

8,544,715 


111,116 


57,231,883 
"i,"i87,'638 


476, 186 
1,187,349 
3, 460, 000 


839, 192 
'300^887' 


370, 907 


16, 897 

526, 040 

4, 142, 479 


196, 947, 709 


46, 304, 414 


118,  855, 403 


$2,  560, 487 
117,704 
559,  730 
1, 953.  272 
3, 333,  797 
734, 068 
393, 050 
174, 095 
283, 157 
2, 401,  748 
3,  522, 857 
452,  465 
230, 010 
2,  550,  552 
610, 777 
1,033,524 
817, 082 
792,  231 
2, 075, 946 
352,045 
710, 078 
1, 382, 419 
1, 636, 747 
1, 263, 766 
1, 144, 840 
1, 280, 402 
329, 211 
439, 899 
85, 818 
142,  710 
278, 607 
269, 229 
4, 888,  358 
2,  585, 752 
399, 710 
1, 659, 652 
1, 559,  545 
699, 028 
5,  533, 700 
445, 288 
1,370,333 
305, 945 
1,  829,  469 
2, 016, 287 
292, 040 
247, 260 
1, 503, 138 
879, 437 
1,  585, 399 
1, 132, 416 
115, 066 
1,022,907 
27, 498 
67, 074 


1, 


65,077,625 


Footnotes  at  end  of  table. 


808 


196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
tinder  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


Department  of  the  Interior 

Depart- 
ment of 
Labor 

States,  Territories,  etc. 

Federal  aid 

in  wildlife 

restoration, 

and  fish 
restoration 
and  man- 
agement 26 

(48) 

Migratory 
Bird  Con- 
servation 
Act  and 
Alaska 
game  law- 
shared  rev- 
enues 27 

(49) 

Payments 
from  re- 
ceipts un- 
der Min- 
eral Leas- 
ing -\ct— 
shared  rev- 
enues 

(50) 

Payments 
under  cer- 
tain special 

funds — 
shared  rev- 
enues 28 

(51) 

Bureau  of 

Indian 
Affairs  29 

(52) 

Lfnemploy- 
ment  Coni- 
pensation 
and  Em- 
ployment 
Service 
Adminis- 
tration 
(trust  fund) 

(53) 

Alabama                      -.  .- 

$462. 527 
521,615 
543,  560 
424, 315 
830,  081 
324.  728 
135.  238 
143, 000 

$22 
8,070 

$874 

4,  524, 289 

196,  579 

56,  738 

2, 885, 796 

3, 283,  001 

$166 

18,  502 

351,  578 

176 

142, 333 

30,  438 

$5,  515,  653 

Alaska                 .  

$587,  995 
2, 456, 848 

1, 885, 345 

Arizona--  .  

5,  535, 520 

Arkansas                 _  

10.411 
3,154 

1,887 

4, 502,  365 

California           ..  

53, 054, 051 

Colorado                          . 

88,216 

4,711,501 

Connecticut           

6, 987, 800 

Delaware-           

44 

1,  071,  465 

District  of  Columbia    . 

2,716,019 

Florida.-                    

285, 283 
407, 982 
129,  289 
402. 357 
360, 397 
489,  674 
403,  406 
418,  557 
280, 352 
354,  769 
198, 377 
169.368 
130, 926 
832, 359 
740, 869 
284.  588 
628,  275 
701, 155 
316,521 
261,  750 
98, 127 
140.  784 
417.  707 
855.  552 
434.  314 
249.  262 
476,  600 
433,  867 
472,  074 
628, 283 
73, 145 
327, 228 
187,  472 
421,  529 
1, 106. 154 
398.  292 
113, 173 
364,  595 
391, 869 
171, 040 
360, 082 
393,  723 
25,  428 
40, 434 
30,370 

4.007 
12,019 

120 

1,340 

21, 200 

8,  622, 965 

Oeorfia— 

5, 822, 935 

Hawaii                       _  

1,617,431 

Idaho--.           .      

2,738 
4,964 

101.204 

42,376 
176 

130,  000 

2,  742, 781 

Illinois                             

20, 242, 255 

Indiana                       . 

6, 805, 265 

Iowa 

811 

1,275 

446 

283.  015 

1,131 

319 

68 

5.396 

2.534 

12.417 

1.031 

12,  299 

31,405 

4,177 

29,118 
10,500 

3, 907,  794 

Kansas.                        

150. 914 

3, 206. 387 

Kentucky .      .  

4, 556, 094 

Louisiana                         

118,223 

381 

5, 930,  730 

Maine.  .             .      

2, 107,  538 

Maryland                         - 

7, 172, 559 

Massachusetts          .  . 

15,645,306 

Michigan 

5,746 

135 

1,012 

216 

6 

127. 909 

177 

385, 384 

20,  844, 031 

Minnesota 

164. 171 
200,  000 

5, 937,  866 

Mississippi..  .      .  

2.818 

4.  086,  591 

Missouri                          

7,  647,  678 

Montana.-             .  

1,  756. 999 

11,382 

197,  508 

166.  866 
165,000 
109,  690 

2, 186,  846 

Nebraska... 

2,  417, 787 

Nevada                     

1, 886,  585 

New  Hampshire    

1,  705, 256 

New  Jersey                .  . 

16,  714,  078 

New  Mexico.         

604 
1, 8.59 

530 
8.372 

9, 184,  838 

52,  617 

1,  623, 302 

2,  598, 579 

New  York                     . 

62, 481, 830 

North  Carolina      

18, 300 
257, 038 

8, 259,  486 

North  Dakota 

99, 490 

1,616 

1,752,590 

Ohio. 

19, 932,  617 

Oklahoma 

12. 325 

45,  883 

124 

79.  575 
6,175 

8,391 
14,  669, 853 

543.  565 
23, 960 

6, 020, 990 

Oregon .  

6, 032, 172 

Pennsylvania 

31,846,393 

Rhode  Island            .      

4, 073,  738 

South  Carolina 

89 

4,183 

185 

9,063 

215 

18 

737 

3,617 

3.  986, 0t)5 

South  Dakota 

51,  277 

11,878 

630, 038 

1,  428,  713 

TennesspR 

5, 189, 205 

Texas  .                                 

3,422 
35,044 

17,851,851 

Utah... 

2, 918, 309 

100, 717 

4.  243, 197 

Vermont                          

1,  369,  654 

Virginia ..    

4, 568, 321 

Washington 

2,656 

21,331 

96, 900 

8, 249, 497 

West  Virginia...    

3. 325, 890 

Wisconsin 

6,173 
37 

108 
112, 129 

92,  000 
55, 766 

6.314,700 

Wyoming .  

13,  431, 374 

1,207,815 

Puerto  Rico 

2, 819, 175 

Virgin  Islands 

138, 189 

Other  Territories,  etc.*.. 

28, 221 

2"  7, 219, 361 

19, 792, 421 

497, 655 

39, 065, 885 

16,  018,  695 

7, 571, 190 

448,  724, 728 

Footnotes  at  end  of  table. 


TABLES 


809 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.    FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


States,  Territories,  etc. 


Alabama 

Alaska 

Arizona 

Arkansas.- 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia 

Florida 

Georgia 

Hawaii 

Idaho 

Elinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia.. 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  Territories,  etc.* 

Undistributed  to  States,  etc. 

Total 


Federal 
Aviation 
Agency 


Federal 

airport 

program  " 


(54) 


$1, 185,  781 

2, 163,  929 

1, 137. 159 

158,  964 

6, 087, 904 

1,  592, 163 

695, 869 

103,  523 


1,  474, 157 
471, 184 

1, 168.  784 
173,  725 

2, 396, 078 
959,  898 

1,002.535 
76,  635 

1,000,413 
733. 505 
131,808 
490, 957 

1,  754, 359 

2,  496,  281 
2, 026, 258 

502.  797 

1,405,777 

913.813 

588. 139 

617.411 

241.076 

702, 813 

139.  872 

4. 127,  431 

1,037,923 

4,260 

3. 359. 045 

1,  741,  255 

404,  633 

4, 003,  602 

200, 760 

578. 929 

135. 192 

1.236.981 

1, 947,  225 

525,  615 

50,  278 

858,  528 

740,  918 

534, 481 

832,  294 

98,  712 

676,  979 

169, 048 


Federal 
Power 
Commis- 
sion 


Payments 
to  States 
under 
Federal 
Power 
Act- 
shared 
revenues 


(5.';) 


57, 857, 657 


$612 

397 

4 

27,  794 

494 


4 
36 


4,801 


105 
11 
24 


10, 897 
""""§94 


3 
"31 


4,440 
2 


183 


1,423 


16 

,894 

3 

74 

106 

13 


Housing  and  Home  Finance  Agency 


Office  of  Administrator 


Urban 

renewal 
program 

(56) 


$2, 920, 483 
488,  948 


241,810 
13, 156,  236 

155,  576 
7, 634,  539 

635, 026 
5, 848, 814 


4. 838, 824 
4, 943,  543 


10,948,911 
2, 006, 064 
1, 344,  700 
3,  244, 382 
1,111,124 


158,  822 

7, 829, 447 

1,  542,  252 

11,  568,  716 

3, 060,  775 


4, 980, 116 


162.  523 

548.  288 

6,  596,  620 


13,  454,  539 

2,  268, 120 

248,  799 

9,  643, 849 

65,  404 

918, 188 

19, 284, 391 

1,089,769 

139, 480 


8. 351,  720 
3,017,314 


54, 261 


4, 308. 381 
703,  844 


Urban 
planning 
assistance 


(57) 


$40, 470 

31, 660 

2,092 

78, 229 

534,  969 

155, 181 

125,  930 


96, 626 
83, 411 
83,  295 


277, 334 

33, 493 

107, 670 

109,  100 

102, 041 

67,  246 

98,  951 

152, 338 

417, 264 

32  322, 936 

427,  220 

82, 287 

90,000 

6,842 

13,  687 

8,568 

27,  767 

319,  627 

125,003 

52, 850 

129, 043 


217, 160 

88,560 

199, 081 

608, 562 

57, 090 

21,  294 


596, 143 


2,  475,  633 


162,  532, 113 


151,  750 

132, 630 

33,  900 

33,  507 

116,500 

273,  736 

75,  586 

257, 410 

5,170 

427,  785 


Public 
Housing 
Adminis- 
tration 


Annual 
contribu- 
tions 


(58) 


Grants  for 
research  and 
manage- 
ment 
counseling 

(59) 


$6,  293, 084 

217,  701 

412, 127 

813, 788 

6, 604, 230 

1,097,097 

2, 639, 899 

544,  912 

3, 164,  546 

3,010,814 

7, 970,  221 

503,  912 

21, 976 

12, 197, 371 

1,031,938 


2, 895, 839 

4, 300, 363 

47, 919 

3,  620,  592 

5, 839, 123 

3, 301,  561 

1,  599, 171 

1, 639,  547 

4, 276, 352 

218, 883 

357, 969 

155, 959 

406,  745 

10,  522,  595 

46,  431 

23, 097,  982 

3, 132,  907 

17,  573 

4, 180, 411 


Small 
Business 
Adminis- 
tration 


262,013 

10, 182, 155 

1, 357,  851 

1,275,092 


259 


6, 903, 110 


4, 991, 474 
7,  952,  939 

4,  261,  877 
929,  573 
506,  896 
772, 816 

5, 313, 387 
275, 176 


154, 262, 784 


$3,960 
12, 625 


9,550 


17,000 
10, 742 
15, 867 


24, 210 
9,800 
12,919 
12,000 
10,000 


26,190 
29, 849 


13,650 
2,300 

15,000 
6,000 


10,000 

4,000 

9,000 

15, 000 

17, 100 


16, 133 


2,000 
22,  500 


897 

12,000 

9,400 

16, 000 

9,000 

17, 000 

17, 313 

1,043 

18, 800 

6,000 

4,000 

6,000 


444, 848 


Footnotes  at  end  of  table. 


810   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  A.  FEDERAL  AID  PAYMENTS  TO  STATES  AND  LOCAL  UNITS— Continued 


Termessee 

Valley 
Authority 

Veterans'  Administration 

Miscellane- 
ous grants 

(03) 

States,  Territories,  etc. 

Shared 
revenues  3' 

(60) 

State  homes 

for  disabled 

soldiers  and 

sailors  si 

(61) 

Approval  and 
sui)ervision 
of  training 
establish- 
ments '5 

(62) 

Total  grant 
payments 
(Part  A) 

(64) 

Alabama 

$1, 440, 898 

$51, 534 

$194, 810, 580 

Alaska     .          .. 

3«  $6,  568, 801 

49, 288. 896 

Arizona 

84, 633, 878 

Arkansas 

21, 625 
135.084 

13,587 
469 

3'  82, 000 
38  9,740 

110,  657, 503 

California - 

$1,651,629 

64,  276 

660,  779 

730.  281, 936 

Colorado 

108,  643, 707 

Connecticut 

88, 194, 6.'?3 

Delaware            

15, 599, 317 

District  of  Columbia 

39  30,318,087 

76. 820, 972 

Florida                  

42, 180 
44, 415 

158, 666, 430 

Georgia 

63,912 

108, 541 

194,439,110 

Hawaii 

"6,617,211 

40, 071, 087 

Idaho     ..                 .--  

45, 558 
542,  256 
159,070 
205, 419 

42, 472 

49, 308, 451 

Illinois     _     

86, 484 

20, 943 

9,476 

359, 619, 064 

Indiana 

134,516,458 

Iowa                       - - 

102, 824, 267 

Kansas 

93, 863, 541 

Kentucky 

874,  242 

27,  636 
70,928 

160,  680, 868 

Louisiana .  

227, 613, 692 

Maine      

41, 605, 203 

Maryland 

113,860,188 

Massachusetts       .  

694, 163 
591, 491 
236,349 

49, 355 
13, 973 

82, 490 

200, 020, 344 

Michigan  ..  

275, 905,  506 

Minnesota                - 

141, 630,  667 

Mississippi  _      

259,  409 

120,796,592 

Missouri 

47,  247 

46, 395 

107, 600 

34, 133 
4,335 

223, 760, 642 

Montana              ...    _.  _  . 

56, 047, 958 

Nebraska    .    

61, 190, 533 

Nevada 

28, 545, 082 

New  Hampshire    .  _  

31,141 
166,323 

6,178 

32, 273, 284 

New  Jersey  ..  

169.675,334 

New  Mexico 

72,959,015 

3,119 

1,117 
52, 738 

548.354,416 

North  C  arolina 

111,512 

166,414.428 

North  Dakota 

71, 583 
424, 855 
412,  629 

38, 560, 368 

Ohio 

50,  498 
32,854 

367, 038, 538 

177, 527, 237 

Oregon                      _..-__ 

122,329,878 

Pennsylvania 

164.360 
221,935 

62,760 

*i  90,963 

359, 403, 994 

Rhode  Island           ..  -    .. 

35, 123, 067 

South  Carolina 

11,268 

89, 832, 132 

South  Dakota 

118,448 

59, 435, 989 

3,964,576 

28, 813 
56,073 

3'  35, 700 

178.071,662 

Texas 

384,  260, 408 

Utah                                        .  .. 

57, 051, 061 

Vermont  ..     . 

35,237 

941 
14,  822 
10.  279 
28, 539 
16,100 

40, 979, 172 

Virginia 

25,604 

159, 018, 444 

Washington.             .          

312,074 

148, 307, 493 

West  Virginia 

100,361,351 

Wisconsin 

188, 274 
12, 714 

126,560,803 

51,127,791 

Puerto  Rico 

4,676 

»?  29,  776, 857 

"  6, 173, 478 

"  15, 576, 450 

82, 356. 267 

7, 599, 788 

Other  Territories,  etc.* 

24, 564, 834 

51, 923, 134 

6,740,153 

7,365,937 

1.086,303 

95,  249, 287 

7, 895, 006, 993 

Footnotes  at  end  of  table. 


TABLES 


811 


Table  95. — Expenditures  made  by  the  Government  as  direct  -payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  B.     FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES 


States,  Territories, 
etc. 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia... 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey.. 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio.. 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico- 

Virgin  Islands 

Other  Territories,  etc.'. 
Undistributed    to 
States,  etc 


Total. 


Department  of  Agriculture 


Agricul- 
tural con- 
servation 
program  « 


(65) 


812, 459 
67, 583 
696,  927 
572, 030 
495, 001 
395,  600 
449,  422 
371,855 


3, 


6, 
11, 

6, 
7, 
4, 
1 
1, 

5, 
7, 
7, 
9, 
4, 
7, 


2, 
5, 
7, 
8, 
6, 
8, 
2, 
5, 

3 

5, 
5, 
22, 
2, 
1, 

5, 
2, 
1, 
6, 
2, 


134, 118 
601, 968 
135,  971 
695,  506 
737, 370 
229,  559 
577, 317 
829, 365 
859, 393 
532,  552 
011,458 
405, 237 
577,  994 
525, 975 
979, 551 
205,  752 
394,  637 
423, 048 
118,  574 
412, 708 
556, 730 
744, 372 
046, 973 
119, 805 
779,  216 
531, 139 
576, 851 
515,  978 
698,  480 
298,  571 
80, 114 
729, 121 
381, 833 
748, 339 
254, 984 
380, 376 
086, 461 
248, 751 
618,315 
724, 380 
226,  278 
260, 383 
993, 957 


237, 850,  237 


Sugar 

Act 

program 


(66) 


)9, 820, 317 
6, 074, 487 


1,  713, 388 


9, 965,  253 

5, 556, 038 

76, 392 


49, 108 
377, 665 


9, 103,  593 


2, 630, 686 
2, 918, 419 


2, 307, 323 
2, 860, 148 


5,475 


1,410,518 
711,025 


1, 136, 323 


251, 687 


79, 128 
861, 206 


2, 936, 437 


151,  597 

1,  773, 852 

15, 157, 650 


77. 927, 715 


Conserva- 
tion 
reserve 
program  *6 


(67) 


$5, 059, 168 


102, 984 

7, 095, 447 

2, 607,  354 

9,812,592 

86, 631 

300, 863 


2, 194, 520 
12, 044, 342 


3,489,681 
7, 458, 227 
8, 926, 517 

11,  754, 864 

17, 138, 187 
6,  216, 304 
2, 942, 157 
1, 504, 929 
1, 391, 497 
35,  231 
9, 213, 193 

20, 865, 155 
4, 323, 023 

11, 690, 347 
5, 508,  708 

10,  439,  293 


154, 346 

842, 184 

7, 031, 362 

6, 395,  797 

4, 058, 609 

25, 636, 845 

8,  768,  969 

15, 949, 657 

3,  253,  655 

5,  ,'■,92,  291 

1,233 

8,116,518 

18, 351, 9,53 

7, 386,  728 

38,  490, 970 

2, 017, 473 

455,  254 

1, 799,  952 

4, 222, 016 

860,  208 

10, 045, 390 

1, 050,  712 


332, 683, 936 


Great 
Plains 

conserva- 
tion 

program 

(68) 


$483, 498 


418, 246 


506, 613 
712, 983 


464, 027 


538, 259 
"447"3ii' 


382, 863 
'2,"o86^96o" 


198,  203 


6, 238, 903 


Rural 
liousing 
grants 


(69) 


$970 
6"505' 


2,000 


370 
1,500 

500 
3,500 


1,850 

500 

12,640 

920 


500 
500 


500 
1,990 


500 


500 


500 
500 
500 
500 
24,  700 
500 


62, 940 


Depart- 
ment of 
Com- 
merce 


State 
marine 
schools 
(subsist- 
ence of 
cadets) 

(70) 


$120, 381 


170, 953 


272,811 


675,  662 


Depart- 
ment of 
Defense 


Air  Force 


National 
Guard  " 

(71) 


$2, 
1 
2, 
1 
8 
3 
1 
1 
1 
1 
4 
3 
1 
2, 
1 
3 
2, 
1 
1 
1 
1 
2, 
4 
2, 
1 
3 
1 
1 
1 

2, 
1 
6, 
1 
1 
3, 
2, 
1 
5, 
1 

1 

4, 
5, 
1 
1 

2, 
2, 
3 
1 
1 


:,  246, 973 
,  121,  625 
, 459, 305 
,  878, 308 
,  552, 046 
,  410, 267 
,  878, 902 
,  231, 267 
, 495, 765 
,  798,  960 
,  061, 642 
,  896, 047 
,  687, 889 
,  945,  241 
,  673, 802 
,  984, 792 
,  482, 711 
,  568, 961 
,  821,  263 
, 799, 345 
, 888, 070 
:,  307, 286 
,  134,  597 
:,  513,  272 
,  781, 977 
.031,411 
, 668, 938 
, 367, 016 
,158,083 

772,  619 
,  733, 265 
,  568, 559 
,061,134 
, 376, 418 
,  596, 094 
,  722, 498 
!,  668, 566 
, 868, 785 
,  440, 013 
,  222, 994 

962, 581 
,  727,  523 
,  122, 360 
i,  528, 097 
,  936, 117 
,  719, 436 

593, 658 
,  557, 780 
,  101, 051 
, 753, 838 
,  067, 906 
, 665, 860 


"  89,  111,  799 


217, 724,  712 


Footnotes  at  end  of  table. 


812   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  B.    FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES— 

Continued 


Department 
of  Defense- 
Continued 

Department  of  Health, 

Education, 

and  Welfare 

States,  Territories, 
etc. 

Army 

Public  Health  Service 

National 
Guard  " 

(72) 

Arthritis 

and 

metabolic 

disease 

activities 

(73) 

Neurol- 
ogy and 
blindness 
activities 

(74) 

National 
Cancer 

Institute  '" 

(75) 

National 
Institute 
of  Dental 
Research 

(76) 

Allergy 

and 
infectious 

disease 
activities 

(77) 

National 

Heart 
Institute 

(78) 

Alabama       .          

$6, 417, 363 

$346, 406 

$90,208 

$283, 338 

$225, 731 

$134, 476 

$645, 331 

2,252 
1,526 
4,049 

12,  240 
1,256 
4,507 
1,775 
890 
3,306 
6,183 
4,  416 
1,816 
7,382 
4,650 
3,402 
3,181 
2,235 
3,560 
1,937 
5,165 
7,668 
7,713 
6,168 
6,741 
3,877 
1,994 
2,082 
871 
1,740 
7, 526 
2,351 

14, 167 
3, 979 
1,627 
0,803 
3,533 
3,056 
9, 893 
2,405 
4,450 
2,068 
6,  251 
7,822 
2,407 
2,019 
5, 393 
4,462 
2,022 
3,072 
1,047 
2,865 

127 
578 
648 
941 
795 
852 
454 
063 
2a6 
256 
629 
742 
732 
353 
267 
857 
283 
148 
484 
153 
887 
419 
589 
444 
200 
724 
189 
940 
982 
732 
323 
436 
535 
160 
351 
709 
811 
312 
370 
160 
948 
926 
486 
031 
430 
940 
031 
872 
078 
595 
919 

Arizona 

129, 101 

325,  134 

4,601,118 

344,  921 

801,  4a8 

6,  796 

895,  643 

692, 110 

547,  622 

12,  650 

111,207 

3i,62a 

4, 115,  148 

159,  300 

700,  269 

82,  949 

87,  644 

5,  485,  429 

648,  610 

909,  856 

27,  363 

785, 468 

1, 032,  465 

309,  619 

18, 100 

19,  658 

143,  U63 
178,  757 

3,  796,  288 
848, 736 
509,  914 
23,882 
702,  941 
793,  353 
374, 161 
127, 054 
16,512 

2, 124,  831 
444,  980 
21o,  694 
248,  976 
212,817 
920, 006 
15,  579 

1,  505,  444 

1,  736,  813 
632, 303 
652, 809 
153, 968 
537,  111 
96, 106 
130, 910 

31,  492 

Arlcan^ia*? 

153,  222 

California 

Colorado 

606,  272 

6, 127, 021 
704, 104 

Connecticut _._ 

21, 666 

628, 361 

"Oplftwarp 

21, 690 

District  of  Columbia. 
Florida     .. 

369,  609 

662,  IM 

261,  669 

3,611 

181,  878 
89,  084 
91, 167 

1,168,067 
1,147,495 

Georgia.. . 

1,  274, 151 

Hawaii 

27,  785 
1,464 

Illinois.- 

2,  910,  654 

569,  976 

584, 686 

305,  208 

385,  713 

388,  224 

12,  699 

1,  834,  591 

7, 163, 843 

1, 626,  565 

1, 698, 396 

206,  345 

1, 378,  658 

10,  204 

116,  912 

1, 876,  302 
401,043 
836,  728 
320, 809 
143,  692 
844, 873 

2,324,779 

364,  668 

266,  730 

356, 078 

265, 663 

1,314,276 

606,  045 

1,  772,  760 

4,  772,  882 

1,  193,  708 

1,  029,  894 

54,  380 

826,  946 

30,  039 

184, 130 

762,  759 

260, 178 

166,  079 

44,541 

18,051 

30, 151 

3, 430, 204 

Indiana 

831, 507 

Iowa 

Kansas 

286,966 
206, 749 

Kentucky 

Louisiana 

534, 185 
1, 424, 558 

117, 733 

Maryland 

Massachusetts 

Michigan 

2, 197, 829 

4,  842,  336 

1, 486,  293 

1,  603,  207 

79, 961 

1,  290, 012 

26, 101 

72,  275 

147,  046 

881,  227 

421,  653 

85, 019 

2,210,889 
6,026,965 
1,353,493 

Minnesota  .. 

2,413,417 

MissLssiDDi 

398, 287 

Missouri . 

267, 351 

1,  259, 772 

Montana 

20,342 

Nebraska 

Nevada 

71, 168 

229,046 

New  Hampshire 

New  Jersey 

152,  304 

401,  976 

49, 079 

8,345,283 

1, 263, 413 

69, 578 

2, 113, 552 

529,  299 

667, 829 

3,  240, 476 

169, 875 

76,  770 

60,  630 

805, 233 

1, 221, 360 

804, 767 

190, 985 

680, 374 

1,  555, 100 

242, 084 

1, 093, 490 

6,034 

220, 084 

38, 628 

392, 300 

11,618 

8,090,513 

678, 003 

122, 143 

635,  848 

55,  475 

9, 829, 086 

897, 836 

5, 000 

922,  289 

359, 027 

539, 608 

4,  226, 730 

320, 888 

84, 172 

8,594 

593, 145 

2, 165,  223 

512,914 

68, 579 

404, 069 

746, 578 

45, 143 

1,549,424 

-500 

127,831 

88,373 
569, 346 

10,  796 

5, 124, 347 

535, 804 

40, 044 

1,097,613 

211,  769 

265, 939 

2, 198, 578 

66,  211 

14, 450 

16,  242 
399,  731 
961,088 
180,011 
181, 177 
246, 312 
520, 747 

42, 742 
891, 607 

24,703 
152, 928 

287,244 

104, 129 

6,125 

1, 053, 308 

213,  216 

2,400 

208, 372 

29, 501 

253, 674 

531, 910 

9,145 

15,  541 

10, 679 

143,481 

190, 195 

712, 143 

New  Mexico . 

54, 185 

New  York 

8, 646, 753 

North  Carolina 

North  Dakota 

2,  275, 944 
16, 314 

Ohio 

837,  768 
175, 543 
950, 769 
2, 199, 196 
378, 090 
132, 490 

2,  701, 070 

Oklahoma.   

1, 001, 639 

Oregon 

3, 772, 406 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

5, 143, 982 

21, 064 

354,  421 

39, 358 

Tennessee 

Texas 

548, 545 
384, 267 
375, 107 
142,422 
762, 178 
604,  769 
64, 949 
809,  366 

1, 136, 537 
1,701,381 

Utah 

367,031 

Vermont 

11,563 

82, 830 
268, 427 

44, 005 

122, 831 

3,561 

36, 896 

310, 694 

Virginia 

574, 100 

Washington 

1, 458, 349 

West  Virginia 

Wisconsin 

178,  791 
1, 475, 686 

Wyoming 

9,349 

Puerto  Rico. 

199,  219 

171, 777 

Virgin  Islands 

Other  Territories,  etc.' 

1,884,342 

1,  620, 620 

2,051,038 

283, 092 

2, 126, 328 

2, 235, 228 

Undistributed  to 
States,  etc 

«  118,  508, 528 

Total.  . 

336,  747, 078 

53,  529, 330 

41,  728,  218 

51, 152, 945 

7,904.459 

33,  243,  270 

67, 319, 742 

Footnotes  at  end  of  table. 


TABLES 


813 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
tinder  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  B.  FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES— 

Continued 


States,  Territories,  etc. 


Department  of  Health,  Education,  and  Welfare — Continued 


Public  Health  Service — Continued 


Mental 

health 

activities 


(79) 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District  of  Columbia. 

Florida- 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland..- 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota-. 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming. 

Puerto  Rico 

Virgin  Islands 

Other  Territories,  etc' 

Undistributed    to    States, 
etc 


$168, 978 


]  26,  225 

244, 809 

7, 475, 342 

1,  229, 690 

2, 213, 009 

7,759 

1, 801, 812 

789, 943 

637, 971 

193,  680 

78, 848 

3, 785, 953 

910, 881 

428,911 

963,404 

417,  235 

691, 203 

170, 669 

1, 823, 6<<9 

7, 849. 399 

3, 043, 345 

1,147,907 

155, 389 

1, 888,  592 

174,168 

677, 665 

73, 801 

40, 693 

972, 325 

75, 388 

10, 639,  111 

1, 958, 101 

59, 732 

2, 139, 078 

476, 044 

589. 506 

3, 685, 415 

372, 891 

144, 222 

61, 096 

971, 157 

1, 263, 498 

540, 249 

157, 478 

452. 722 

692, 741 

46. 096 

1, 052,  287 

122, 464 

261,  277 


General 

research 

and 

services 


(80) 


902, 953 


$249, 853 

33, 905 

147. 126 

240, 454 

8. 718, 974 

724,316 

2, 066,  510 

64, 387 

I.  545, 077 

1, 081. 008 

773, 669 

203, 972 


Nursing 

services 

and 

resources  " 


(81) 


$136, 370 


30, 865 

12, 148 

483, 716 

169,  527 

98,  520 


Chronic 
disease 

and 
health  of 
the  aged 

(82) 


$8,  253 


49,  630 
11. 230 
18. 347 


1, 


4. 583,  715 

1,028.758 

766  621 

527. 501 

433, 139 

207,  215 

128,  238 

3,  591, 178 

6, 986. 194 

2, 418, 749 

1, 456, 019 

193, 459 

2, 160,  598 

34, 405 

224, 947 

5,666 

374. 382 

1, 030, 079 

147. 991 
10, 202, 676 

2. 665, 369 

52, 009 

2. 986. 077 

577. 883 

634, 262 

3, 643. 699 

650, 527 

43, 360 

2,189 

1. 505, 932 

1, 687, 884 

592. 992 
257,  722 
543, 358 

2, 034,  527 
87. 303 

2, 021, 047 

6,770 

56. 794 


2, 202, 759 


268. 306 

80,  672 

66, 496 

5,679 


167, 228 

170,  586 

36, 996 


15.  214 
34, 901 


173, 172 
475, 573 
161.051 
157, 668 
7,312 
64, 143 
194, 163 


3,073 

26,  585 
-246 


1, 575, 790 
121, 737 


201, 460 
29, 173 
61, 814 

330. 520 
15,  600 
38, 248 
21,646 
35, 800 

362, 149 
41, 506 


10, 214 

387, 985 

9,037 

140, 349 


43, 465 


21.815 
12. 400 


Commun- 
ity health 

practice 
and 

research 

(83) 


$5. 894 


1,681 

5.681 

621. 408 

15,  699 

128, 860 


Accident 
preven- 
tion 


(84) 


13, 000 


117,300 
9,595 
1,738 


7,887 
9.437 
3,431 


17, 700 


2,840 
"5'550" 


18, 344 

19,  211 

70,811 

1,561 


73, 911 
42, 010 
15. 931 
18. 933 


115, 103 


219, 181 
338,  291 
500, 309 
197. 291 


58. 732 


16,206 

10, 476 

428, 347 

406, 230 


81,601 

90,  812 

42, 526 

200, 721 


6,709 

9,986 

1,819 

74, 001 

14, 264 


9,352 
61. 430 


46, 559 
"i59."2i2" 


$20, 297 
"262,'i47' 


64,115 


24, 996 


170, 171 
4.181 


45. 948 
31,  709 


9.688 


239, 675 


20,102 

'll'.lm 


Air 
pollu- 
tion 


(85) 


$434, 283 


7,416 
75, 172 
70, 575 


28,454 


13,263 
"33,"6i6 


100. 884 
71, 834 

169, 183 
94, 415 


14, 000 


1,768 
21.727 


169. 789 
31. 163 


100, 611 
'"97,'900 


45, 318 
30. 711 


4.560 
4.020 


14, 100 


Total. 


66, 846, 801 


75, 605, 244 


6, 466, 211 


310, 153 


4, 129, 093 


937, 435 


1, 634, 162 


Footnotes  at  end  of  table. 


814   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
U7ider  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  B.  FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES— 

Continued 


Department  of  Health,  Education,  and  Welfare— Continued 

PubUc  Health  Service— Continued 

States,  Territories,  etc. 

Milk, 
food,  in- 
terstate 
and  com- 
munity 
sanitation 

(86) 

Occupa- 
tional 
health 

(87) 

Radio- 
logical 
health 

(88) 

Water 

supply 

and  water 

pollution 

control 

(89) 

Hospital 

and 
medical 
facility 
research 

(90) 

General 

research 

support 

grants 

(91) 

Construc- 
tion of 
health 
research 
facilities 

(92) 

Alabama 

$62, 605 

$126, 857 

$114, 994 

Alaska.. 

Arizona 

26, 071 

$1, 909 

21,  620 

207, 304 

28, 686 

7,720 

2,313 

58, 872 

86, 469 

11,256 

311  946 

Arkansas .._ 

72,  678 

1, 344, 954 

155, 635 

300, 328 

California . 

335, 337 
8, 283 

$129, 372 
7,512 

$91,989 
35, 932 
17, 490 

$36, 807 

9, 431 

61,319 

1,965,365 
208, 316 
136,819 

Colorado 

Connecticut 

Delaware 

District  of  Columbia 

Florida 

31, 066 
63, 351 
35,311 
38,013 

22,578 

13, 046 
30, 038 
67,452 

12, 924 

""'i2,'562" 
12, 000 

308,  502 
296.029 
230,  505 

390, 786 
446, 709 

Georgia..      .             

69,  592 

145, 580 
233, 125 

Hawaii 

Idaho 

Illinois    ..           .      . 

81,715 
61,462 
78, 814 
25, 957 

4,361 
73, 087 
12, 885 

4,314 

1,475 

7,707 

9,545 

10,300 

114,  589 

108, 027 

986, 037 
192, 343 
184, 243 
119, 540 
197, 958 
313, 160 

2  365  437 

Indiana 

728  029 

Iowa 

26,221 
21, 849 
23. 907 
16,  595 

527.928 

Kansas 

18, 881 

237, 063 

Kentucky 

1,008,000 

Louisiana 

7,521 

4,515 

410, 569 

Maine ...    .. 

10, 377 

99, 048 

134, 507 

74, 564 

3,700 

3,488 

Maryland 

18, 294 
70, 741 
51,306 
77,315 
11, 108 
42.  686 
4,  500 
4,704 

23, 575 
94. 587 
47,  626 
89, 308 

69,620 
118, 183 
55, 929 
37, 323 
10, 523 
18,813 

20,428 
29,  665 
67,005 
14, 378 

51.5,715 
698, 953 
,542. 372 
353, 741 
83, 906 
494, 782 

656, 234 

Massaciiusetts 

2,986,318 
150, 246 

Michigan 

M  innesot  a 

93, 279 

Mississippi  . 

153, 500 

Missouri 

Montana 

12,  754 

38, 842 

62, 589 

236,348 
49, 399 

Nebraska . 

5,895 

7,073 

145, 845 

302, 686 

Nevada 

New  Hampshire 

6,476 
17,851 

1,500 
16,  700 

29, 894 
63, 601 
16,  790 
97,003 
33, 084 
6,858 
64,768 
36,645 
117,216 
52, 610 
41,  224 

79, 083 
138,090 

70,668 

New  Jersey ..  . 

90, 553 

New  Mexico 

New  York 

170,  253 
41,438 

5,500 
120, 153 

3,  680 
168,013 
114,057 

190, 783 
12.402 

239, 988 
61, 690 

86, 882 
24,000 

2, 363, 726 

443,868 

32, 038 

648, 107 

80, 877 

173, 794 

1, 170. 635 

4, 200, 909 

North  Carolina 

1,503,714 

North  Dakota 

"  125,079 

Ohio 

154, 246 
18,985 

30,831 

137, 697 
15, 000 
34, 256 

119, 374 

2, 804, 141 

Oklalioma 

78, 781 

Oregon 

15,  200 
32, 666 

840, 429 

Pennsylvanin. . 

177,055 

570, 957 

Rhode  Island 

598. 749 

South  Carolina 

61,  904 

30,  545 
349, 877 
522  523 
158,  670 

6?,  515 
252,  699 
265, 056 

57, 099 
325, 631 

379, 798 

South  Dakota...           

3,574 
18, 296 
34. 102 
77, 931 

Tennessee 

4, 370 
12, 603 
21,410 

22, 464 
84,  671 
30, 354 

377. 566 

Texas    .. 

10,  748 

1, 238, 102 

Utah 

236. 243 

Vermont 

18, 110 

320, 140 

Virginia 

2,860 
55, 997 

7,184 
58, 896 

3,666 

3,935 
16,640 

2,930 
85,  240 

4,370 
74,000 

1, 340, 392 

Washington 

14,  583 

366, 738 

West  Virginia 

11,775 
17, 195 

Wisconsin... 

85,000 

16, 409 

969, 828 

Wyoming . 

Puerto  Rico 

113,235 

3.400 

Virgin  Islands 

Other  Territories,  etc.  s— 

261, 571 

8,000 

51,  750 

Undistributed  to  States, 
etc - 

Total 

2, 212, 838 

1, 211, 850 

1,335,815 

1,809,408 

925,805 

15, 000, 055 

29, 978, 351 

Footnotes  at  end  of  table. 


TABLES 


815 


Table  95. — Expenditures  made  by  the  Govei-nment  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 


PAKT  B. 


FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES— 

Continued 


Department  of  Health,  Education,  and  Welfare- 

-Continued 

Office  of  Education 

Office  of  Vocational 
Rehabilitation 

Social  Security 
Administration 

States,  Territories,  etc. 

Expan- 
sion of 
teaching 
in  the 
education 

of  the 
mentally 
retarded 

(93) 

Defense 
educational 
activities  i" 

(94) 

Coopera- 
tive 
research 

(95) 

Grants 

for 

special 

projects  " 

(96) 

Training 

and 
trainee- 
ships 

(97) 

Maternal  and  child 
welfare  services- 
Children's  Bureau 

Maternal 

and  child 

health 

services 

(98) 

Services 

for 
crippled 
children 

(99) 

Alabama          .         

$497. 450 

-200 

709, 885 

$4, 032 
19,  127 
74, 085 

4,000 

680, 915 

60. 207 

32, 440 

18. 489 

8,677 

111,274 

30, 381 

4,230 

$55, 193 

39, 000 

55, 084 

361 

756, 271 

153, 401 

31, 927 

37, 929 

301,  792 

125, 565 

36, 158 

13, 943 

$79, 213 

Alaska 

Arizona                     .     

50, 411 

17,  256 

1, 002,  627 

143,  742 

32, 894 

Arkansas 

781 

3,005 

1,026 

984 

252 

1,042 

858 

874 

208 

239 

2,217 

1,739 

535 

602 

272 

595 

156 

341 

1,588 

1,693 

946 

331 

683 

426 

331 

25 

248 

650 

376 

3,775 

843 

403 

1,163 

765 

1,100 

1,882 

317 

181 

104 

960 

1,536 

454 

53 

587 

921 

233 

603 

223 

161 

13 

775 
563 
108 
973 
325 
920 
528 
989 
318 
609 
254 
561 
637 
340 
134 
616 
413 
432 
008 
830 
967 
095 
584 
028 
460 
166 
634 
091 
213 
477 
300 
265 
761 
020 
993 
630 
550 
819 
572 
438 
585 
118 
452 
428 
339 
602 
876 
105 
315 
30? 

California 

$21, 400 
23, 368 
10,600 

$64, 684 

$272, 490 

Colorado.  

Connecticut 

Delaware 

District  of  Columbia 

589, 670 

156,  691 

55, 397 

4,045 

9,000 

Florida 

Georgia 

23, 200 

23,025 

Hawaii . 

Idaho 

Illinois 

21, 150 

442, 843 
77,  435 
24, 049 
50, 156 
20, 164 

267, 344 

34, 704 

98, 356 

57,611 

6,067 

522, 231 
82, 685 

121,269 

123, 420 
58,  800 

181, 864 

Indiana .  

Iowa -  -- 

Kansas .  .  .._ 

52, 000 

Kentucky 

Louisiana. 

Maine 

61, 128 

62, 254 

373, 476 

376, 845 

525. 650 

33,315 

174, 700 

43, 301 

44, 963 

Maryland 

17,  442 
205, 153 
355, 560 
133, 263 
5,000 
115,346 

45,  741 
595, 868 
441,  528 
303, 771 
8,845 
203, 579 

174,421 

170,  247 

67, 741 

26,  841 

133, 625 

Massachusetts . 

Michigan 

21. 600 
22, 400 

Minnesota. 

Mississippi...  

Missouri 

Montana       _  _ 

Nebraska 

13, 162 

71,767 

Nevada.-  _ 

New  Hampshire 

3,273 
20, 620 
713 
418, 441 
36,  709 
23,  262 
15,  674 
32, 835 

-3, 059 

101. 107 

13, 000 

2, 372, 302 

38, 276 

3,279 
62, 707 

New  Jersey 

7,350 

New  Mexico 

New  York 

71, 788 

2, 028, 021 

62, 283 

3,250 

347,911 

138,  528 

92,  912 

586,  278 

135.  562 
69, 050 

50,000 

North  Carolina 

North  Dakota 

Ohio 

238, 982 

Oklahoma 

22, 400 

Oregon 

17,  839 
273, 196 
106, 571 

42, 533 

230, 271 
69, 106 
26, 137 

186, 697 

36, 000 

Rhode  Island 

South  Carolina 

13, 967 
1,947 

99, 317 
236,641 

87, 072 

36, 201 
201, 858 
158, 937 

71,434 
231, 621 

South  Dakota 

29,090 
75,304 

245,068 
74, 077 
13.045 

105, 661 
38,301 
12, 000 
96, 810 

Tennessee  . 

24, 133 
16, 500 

13, 432 
70, 406 
65, 537 

42, 234 

Texas 

Utah 

Vermont 

Virginia 

10, 200 

14, 897 

Washington .. 

16, 464 

West  Virginia 

12, 495 
149,  710 

Wisconsin 

22,800 

Wyoming 

Puerto  Rico. 

9,200 
2,329 

1,984 

106, 583 

Virgin  Islands 

Other  Territories, 
etc.  8 

Undistributed  to 
States,  etc 

Total 

361,422 

40,530  65.^ 

3, 724, 461 

7,  612, 908 

9, 464, 061 

985, 966 

544  115 

Footnotes  ui  end  of  table. 


816   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  95. — Expenditures  made  by  the  Government  as  direct  payments  to  States 
under  cooperative  arrangements  and  expenditures  within  States  which  provided 
relief  and  other  aid,  fiscal  year  1962 — Continued 


PART  B.  FEDERAL  AID  PAYMENTS  TO  INDIVIDUALS, 

Continued 

ETC.,  WITHIN  THE  STATES— 

Department  of  Health,  Education,  and 
Welfare— Continued 

Department  of  Labor 

Social  Security 
Administration— Continued 

Office 
of  the 

Secre- 
tary 

Unemploy- 
ment com- 
pensation for 

Federal 
employees 

and  ex- 
servicemen 

(104) 

Temporary 
extended 
unemploy- 
ment com- 
pensation 
(trust 
fund) 

(105) 

States,  Territories,  etc. 

Maternal 
and  child 

welfare 
services- 
Children's 
Bureau — 
Con. 

Bureau  of 
Family 
Services 

Office 
of  the 
Commis- 
sioner 

Area  Re- 
develop- 
ment 
Act 

(106) 

Child 
welfare 
research 

and 
demon- 
stration 

grants 

(100) 

Assist- 
ance to 
repatri- 
ated U.S. 
nationals 

(101) 

Coopera- 
tive 
research 

(102) 

Juvenile 
delin- 
quency 

and 

youth 

oflenses 

(103) 

Alabama 

$10, 000 

$2,115,477 
1, 027, 801 
1, 186, 991 
1,141,821 

20, 162, 070 

1,  283, 020 
777,  685 
185, 108 

2,  399, 072 
2,312,716 
2, 353, 180 
1, 198, 156 

898,  290 

6, 004,  808 

2,  508, 289 

770,  803 

1,  541. 088 

2, 439, 440 

2, 521, 128 

603, 980 

2, 180, 666 

4, 000,  989 

5, 331, 864 

2, 594, 150 

1, 158, 359 

2, 308, 021 

843, 432 

444,  396 

316, 759 

424, 671 

3, 448, 616 

1, 123, 084 

9, 294, 928 

1, 968, 171 

449. 778 

6,  738,  571 

1,  665, 693 
1, 752, 660 

11,907,049 
734,312 
909,  983 
290,  546 

2,  81.5,  833 
4, 598, 696 

994,683 

213,  773 

1, 290, 006 

4, 845,  600 

1,  763,  207 

2, 372,  318 

481, 842 

1,  710,  210 

4,782 

$2. 079,  210 

1,059,819 

344, 447 

1, 690, 891 

48, 193, 105 
1,238.012 
6,  847,  970 
652, 254 
1, 373, 453 
5,  212, 125 
5, 631,  698 

2.  148,  390 
975,  705 

23,  490, 000 
15, 381, 423 
1, 199,  898 
2, 179, 594 
5,  902, 644 
5,  498,  804 
1, 368,  219 
5,  618, 152 
11,060,410 
9,  460,  421 

4,  743,  351 
2, 091, 935 
5, 125, 508 
1,  259. 267 
1, 019, 760 

498. 246 
722, 995 

13, 072, 037 
982, 490 

41,043,196 

5,  794, 996 
682, 086 

23, 957,  214 
1, 962,  562 

3,  643, 603 
10, 020, 979 

1, 6.52,  547 

2, 105, 823 

176, 387 

6, 919,  794 

8, 669, 635 

616,  733 

859, 365 

1,113,000 

1, 100. 000 

805,  587 

865,  266 

654,  532 

3, 166,  243 

488 

Alaska  ..  .  

$55, 660 

Arizona 

12, 400 

Arkansas                 

47, 840 

California        

20,000 

$1, 060 
10 

$184, 604 

15,  744 

Colorado 

28,  704 

Connecticut 

155,  825 

89, 688 

Delaware 

District  of  Columbia 

6,000 

166, 065 

274, 552 

69 

14.  848 

Georgia            -    

42,  560 

Hawaii 

Idaho 

Illinois                     -     

20,  500 

$75,  532 
21,  698 

229, 514 

Indiana        

56,  812 

32,  256 

Iowa 

Kansas                  - . 

18,000 

Kentucky     

91,  830 

Louisiana 

1,133 

Maine                        _  _  _. 

9,108 

Maryland       _  _. 

146,  816 

M  assach  usetts 

19,  500 
9,500 

31,  289 
95, 670 

105, 024 

368,  742 

Minnesota 

67, 591 

88,912 

MississiDoi 

Missouri 

45, 360 

Montana     ..     .  

70,  870 

Nebraska 

Nevada 

9,120 

New  HamDshire 

New  Jersey 

207 

28, 989 

New  Mexico                

48, 600 

New  York      

18. 000 
13,  454 

8,087 

147,  451 
48, 214 

178, 664 

North  Carolina 

41, 536 

North  Dakota            

20,880 

Ohio 

38,  631 

124,  228 

74,  466 

Oklahoma 

208, 656 

Oregon 

1,023 

Peiuisylvania  

28,360 

165, 000 

602. 643 

Rhode  Island 

298,  072 

South  Carolina     

15, 456 

South  Dakota 

7,680 

Tennesspp 

223 

68,640 

Texas.-- 

22,753 

173, 833 

13,225 

Utah 

Vermont 

Virginia 

7,488 

Washington             . 

2,808 

West  Virginia 

347, 070 

Wisconsin 

14, 350 

65,  764 

Wyoming 

Puerto  Rico      -  -  .. 

13,000 

Virgin  Islands 

223 

Other  Territories,  etc  '    . 

Undistributed  to  States 
etc 

Total - -.- 

131,304 

452, 652 

540, 598 

1,109,365 

S0134, 408,  572 

303,  932, 269 

3, 354, 161 

Footnotes  at  end  of  table. 


1 


TABLES 


817 


Table  95. — Expenditures   made   by  the    Government  as  direct  payments  to  States 

under  cooperative  arrangements  and  expenditures  within  States   which  provided 

relief  and  other  aid,  fiscal  year  1962 — Continued 

PART  B.  FEDERAL  AID  PAYMENTS   TO  INDIVIDUALS,  ETC.,  WITHIN  THE  STATES— 

Continued 


States, 

Territories, 

etc. 


Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut- 

Delaware 

District  of  Colum- 
bia  

Florida 

Georaia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New  Hampshire.. 

New  Jersey 

New  Mexico 

New  York 

North  Carolina.. 

North  Dakota 

Ohio 

Oklahoma. 

Oregon 

Pennsylvania 

Rhode  Island 

South  Carolina... 

South  Dakota 

Tennessee 

Texas 

Utah... 

Vermont 

Virginia 

Washington 

West  Virginia 

Wisconsin 

Wyoming 

Puerto  Rico 

Virgin  Islands 

Other  territories, 

etc' 

Undistributed  to 
States,  etc 


Atomic 
Energy 
Commis- 
sion 


Fellow- 
ships and 
assistance 
to  schools  " 


(107) 


$57, 981 


45, 530 
16, 183 
455, 836 
5, 528 
27, 981 
12,  437 

107, 335 

57,501 

31. 344 

21, 226 

19, 989 

,  299,  458 

191,119 

108, 395 

92, 997 

112, 172 

133, 383 

17, 472 

63, 911 

349, 746 

263, 989 

188, 992 

27,  854 

105, 839 

35, 917 

56, 687 

4,863 


Total. 


96, 933 

40, 858 

987, 005 

1.54,  713 

15, 597 

164, 252 

23,317 

34,120 

281,  791 

30, 965 

28,702 

6,623 

724, 835 

142, 282 

29,891 

1,805 

143, 003 

143, 584 

52,529 

82, 495 

28,778 

1, 582, 452 


National  Science 
Foundation 


Research 

grants 
awarded 


(108) 


142, 311 


53  8, 850, 506 


$803,  590 

459,  769 

1, 270, 545 

45-1,  769 

15,  .541, 635 

2,  223, 264 

2, 134, 829 

198, 190 

7, 601, 153 

2,  388, 042 

2, 013, 029 

1,044,955 

291,203 

5,  770,  456 

5,  323,  283 

2, 428, 680 

2, 195,  623 

703, 170 

2, 337, 253 

577,  733 

2,  227, 068 

10, 477, 393 

3, 614, 104 

2,  643, 648 

989, 185 

2, 329, 809 

557,  295 

553,  257 

166, 885 

937,  250 

3, 987,  280 

1, 527, 510 

14, 238,  771 

2,  799, 046 

717, 675 

4, 952, 397 

1, 975, 932 

2, 868, 198 

7,  568, 920 

1, 793, 435 

561, 660 

824,840 

1, 918, 840 

3, 877,  751 

1,  414, 279 

326, 071 

1, 436, 453 

2,612,305 

638, 847 

3, 376, 838 

206, 365 

489. 200 

127, 170 


Fellow- 
ship 
awards  »2 


(109) 


140, 501, 848 


.$68,  086 

18,  674 

58, 884 

72, 998 

1,366,913 

134, 651 

179, 614 

22, 915 

95, 877 
121, 202 

81,512 

11, 382 

39. 991 
716, 237 
307, 453 
207, 418 
153. 328 

77, 366 
164,  776 

34,  482 
200, 364 
467, 959 
440,  567 
201, 835 

56, 434 

193. 479 
37, 482 
59, 721 

9,109 

39,  579 

288,  626 

33, 068 

1,  224,  601 

115, 495 

23, 908 

469, 137 

174, 032 

100, 134 

603, 334 

122, 979 

43, 173 

36, 379 

133, 608 

355. 480 
85, 723 
23, 001 

104,  782 

250, 822 

48, 900 

293, 270 

15,700 

18,429 


Veterans'  Admin- 
istration 


Auto- 
mo- 
biles, 
etc.,  for 
dis- 
abled 
veter- 
ans 

(110) 


$11,200 


6, 305 

9,600 

55, 857 

12,  425 

10, 622 


10, 204, 868 


9,600 

20,800 

14, 303 

3,200 

8,000 

28,689 

4,800 

4,795 

11,  200 

4,800 

6,700 

4,800 

1,600 

27, 145 

30,343 

17, 600 

12, 340 

15, 922 

3,200 

3,200 


Readjust- 
ment 
benefits 
and 
vocational 
rehabili- 
tation 


(111) 


4,800 
24,000 

6,400 
47,995 
22,205 

9,600 
23, 995 
19,090 

4,800 
38, 318 
16,000 

3,200 


8,890 

36, 499 

6,400 


1,600 
19,200 
12,800 
19,200 


4,800 


668,838 


$5,  309,  517 

59, 042 

1,  573,  894 

1,  732, 106 

17, 816, 160 

2, 163, 751 

1,  .581, 153 

227, 951 

2, 283,  757 
6,581,015 
5,  531, 720 
314,  705 
487, 648 
4, 963, 978 
2, 842, 899 
1, 805, 511 
1, 690, 100 
2, 197,  596 

3. 606. 974 
550,  .541 

2, 127, 355 
4, 337, 499 
4,818,184 
2, 783, 161 
1, 683, 813 

3. 239. 975 
635, 149 
894,  703 
137,600 
331, 486 

3, 163, 868 
1,037,032 
9. 627,  982 
2, 621, 023 

472, 400 
5,111,713 
2, 669, 090 
1, 614, 440 
8, 529,  .549 

450, 665 
2, 434, 390 

455,045 
3, 092, 069 
7,  798, 876 
1,  593, 643 

281, 341 
1,  731, 692 
2, 949, 860 
1, 454, 389 
2, 511, 823 

192,041 
2,045,168 


Total  pay- 
ments 
within  States 
(Part  B) 


(112) 


3, 824, 638 


149, 971, 680 


$34, 227, 175 

6,  213, 932 

12, 357, 905 

25, 956, 303 

195, 239, 878 

38, 138, 318 

28, 441, 434 

5, 441, 227 

27, 049, 364 
37,  579, 713 
51, 744, 942 
24, 301, 576 
19. 303, 115 
99, 399, 287 
56, 338, 634 
42,  521,  318 
42, 639,  224 
33,  415, 198 
44,  763, 730 
10, 876, 373 
40, 170, 370 
89, 824,  879 
70, 637,  517 
66, 838,  704 
26, 981, 437 
53, 174, 426 
20, 960, 722 
30, 260, 541 

3. 693. 019 
7, 257, 326 

41,881,612 
19,094,610 

189, 497, 276 
44, 999, 356 
42,  578, 006 
87, 373,  562 
44, 489, 024 
32, 379, 904 
96, 999, 159 
11,938,608 
24, 934,  775 
30, 362, 455 
46, 320, 896 

116, 034, 108 
19, 008, 519 

8. 816. 020 
2.5,160,094 
38, 995, 226 
13, 002, 449 
44,711,067 

9, 377. 561 

31,  560, 804 

148, 794 

17, 368, 503 

207, 762, 638 


Grand  total 

(Parts  A 

and  B) 


(113) 


2, 490, 542, 613 


$229,  037,  755 

55, 502, 828 

96, 991, 783 

136, 613, 806 

925, 521, 814 

146, 782, 025 

116,636,067 

21, 040, 544 

103, 870, 336 

196, 246, 143 

246, 184, 052 

64, 372, 663 

68, 611, 566 

4.59, 018, 351 

190, 855, 092 

145, 345,  585 

136, 502, 765 

194, 096, 066 

272, 377, 422 

52, 481, 576 

154, 030, 558 

289, 845,  223 

346,  543, 023 

208, 469, 371 

147,  778, 029 

276, 935, 068 

77, 008, 680 

91, 451, 074 

32, 238, 101 

39, 530, 610 

211,  556, 946 

92, 053, 625 

737, 851. 692 

211, 413, 784 

81, 138, 374 

454, 412, 100 

222, 016, 261 

154, 709, 782 

456, 403, 153 

47, 061, 675 

114, 766, 907 

89, 798, 444 

224, 392, 558 

500, 294, 516 

76, 059, 580 

49, 795, 192 

184, 178, 538 

187, 302, 719 

113, 363, 800 

171,  271, 870 

60,  505, 352 

11.3,917,071 

7, 748, 582 

41, 933, 337 

259, 685, 772 


10, 385,  549, 606 


Footnotes  at  end  of  table. 
661496—63 53 


818   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Footnotes  for  Table  95. 

I  Excludes  $500,000,  "State  experiment  stations,  Agricultural  Research  Service,"  included  In  column  6. 

'  Excludes  $1,450,144,  "Cooperative  extension  work,  payments  and  expenses.  Extension  Service,"  included 
in  column  6. 

« Includes  $68,913,830,  value  of  commodities  distributed  to  participating  schools,  and  payments  of 
$5,572,599  made  directly  to  private  schools.  In  addition  the  school  lunch  program  is  a  recipient  of  some 
of  the  commodities  shown  under  the  appropriation  "Removal  of  surplus  agricultural  commodities,"  and 
under  "Commodity  Credit  Corporation,  value  of  commodities  donated." 

4  Consists  of  $25,056,348,  "Payments  to  States,  National  Forests  Fund";  $99,211,  "Payments  to  school 
funds,  Arizona  and  New  Mexico,  act  June  20, 1910  (receipt  Umitation)";  and  $123,550,  "Payment  to  Minne- 
sota (Cook,  Lake,  and  St.  Louis  counties)  from  the  National  Forests  Fund." 

»  Formerly  "Submarginal  land  program." 
F  •  Includes  $500,000,  "State  experiment  stations.  Agricultural  Research  Service";  $1,450,144,  "Cooperative 
extension  work,  payments  and  expenses.  Extension  Service";  and  $1,325,000,  "Payments  to  States  and 
possessions.  Agricultural  Marketing  Service." 

'  Consists  of  $13,625,550,  "Forest  protection  and  utilization.  Forest  Service"  and  $400,863,  "Assistance 
to  States  for  tree  planting, 'Forest  Service." 

'  Includes:  American  Samoa,  Canal  Zone,  Guam,  Trust  Territory  of  the  Pacific,  and  certain  foreign 
countries. 

•  Includes  $250,000,  penalty  mail  costs  for  which  a  breakdown  by  States  is  imavailable. 

'"  Includes  $2,490,000,  penalty  mail  costs  and  $6,157,982,  retirement  costs  of  cooperative  extension  agents. 

•1  Consists  of  $25,462,917,  "Watershed  protection.  Soil  Conservation  Service"  and  $13,320,904  for  "Flood 
prevention,  Soil  Conservation  Service." 

'2  Federal  share  of  the  value  of  food  stamps  redeemed  under  the  pilot  food  stamp  plan. 

'»  Cost  of  food  commodities  acquired  through  price  support  operations. 

•<  Cash  payments  to  States  to  increase  consumption  of  fluid  milk  by  children  in  nonprofit  schools.  Net 
of  refunds. 

"  Consists  of  $28,622,622,  forest  highways  and  $2,266,845,  public  lands  highways. 

n  See  also  Part  B,  column  70. 

"  Credit  amounts  are  refunds  of  advances  in  prior  years. 

'8  Includes  $1,192,670  paid  from  "Federal  Contributions,  Office  of  Emergency  Planning"  and  $29,173 
paid  from  "Research  and  Development,  Office  of  Emergency  Planning"  (Executive  Office  of  the  President). 

'9  Consists  of  $8,194,000,  "Colleges  for  agriculture  and  the  mechanic  arts";  $2,550,000,  "Further  endowment 
of  colleges  of  agriculture  and  the  mechanic  arts";  and  $3,775,000,  (Hawaii)  "Land  grant  college  aid." 

'"  Consists  of  $33,031,504,  "Promotion  and  further  development  of  vocational  education,  Office  of  Educa- 
tion" and  $7,147,113,  "Promotion  of  vocational  education,  act  of  Feb.  23,  1917,  Office  of  Education." 

2'  Formerly  "Environmental  health  activities."  Total  excludes  $252,447  paid  to  interstate  agencies  to 
control  water  pollution. 

"  Includes  $849,159  for  treatment  of  leprosy  patients,  Hawaii,  paid  from  "Hospitals  and  medical  care. 
Public  Health  Service." 

2'  Includes  $974,468,  supplies  and  services  furnished  in  lieu  of  cash, 

*<  Includes  small  amounts  of  services  in  kind  furnished  in  lieu  of  ca-sh. 

s«  Includes— $1,063,  "Grants  for  poliomyelitis  vaccine." 

29  Consists  of  $14,860,885,  "Federal  aid  in  wildlife  restoration.  Bureau  of  Sport  Fisheries  and  Wildlife" 
and  $4,931,536,  "Federal  aid  in  fish  restoration  and  management.  Bureau  of  Sport  Fisheries  and  Wildlife 
(receipt  limitation)." 

"  Consists  of  $496,840,  "Payments  to  counties  from  receipts  under  Migratory  Bird  Conservation  Act, 
Bureau  of  Sport  Fisheries  and  Wildlife"  and  $815,  "Payments  to  Alaska,  Alaska  game  law,  Bureau  of 
Sport  Fisheries  and  Wildlife." 

"  Consists  of  $213,765,  "Payments  to  States  from  grazing  receipts,  etc.,  public  lands  within  grazing  dis- 
tricts, Bureau  of  Land  Management";  $259,900,  "Payment  to  States  (proceeds  of  sales).  Bureau  of  Land 
Management  (receipt  limitation)";  $7,401,  "Payments  to  Oklahoma  (royalties).  Bureau  of  Land  Man- 
agement (receipt  limitation)";  $14,454,673,  "Payments  to  counties,  Oregon  and  California  grant  lands"; 
$4,411,  "Payments  to  State  of  Alaska,  income  and  proceeds,  Alaska  school  lands";  $143,926,  "Payments  to 
Coos  and  Douglas  counties,  Oregon,  in  lieu  of  taxes  on  Coos  Bay  wagon  road  grant  lands";  $10,418,  "Opera- 
tion and  maintenance.  Bureau  of  Reclamation";  $740,  "Payments  to  States  (grazing  fees).  Bureau  of  Land 
Management";  $3,-884,  "Payments  to  States  from  grazing  receipts,  etc.,  public  lands  within  grazing  districts, 
miscellaneous.  Bureau  of  Land  Management";  $200,711,  "Payments  to  States  from  grazing  receipts,  etc., 
public  lands  outside  grazing  districts,  Bureau  of  Land  Management";  $300,000  each  to  Arizona  and  Nevada, 
"Colorado  River  Dam  Fund,  Boulder  Canyon  Project";  $28,565,  "Payment  in  lieu  of  taxes  on  lands  in 
Grand  Teton  National  Park,  National  Park  Service"  (Wyoming);  $86,277,  "Payments  due  counties. 
National  Grasslands,  Bureau  of  Land  Management";  and  $4,025,  "Payment  due  counties.  National  Grass- 
lands, Bureau  of  Sport  Fisheries  and  Wildhfe." 

2'  Consists  of  $6,836,957,  education  and  welfare  services  and  $734,233,  resources  management. 

«»  Consists  of  $7,145,533  for  postage  and  $73,829  for  other  expenditures. 

"  Consists  of  $1,012,942,  "Grants-in-aid  for  airports"  and  $56,844,716,  "Grants-in-aid  for  airports,  liquida- 
tion of  contract  authorizations." 

»  Includes  $75,000,  "Mass  transportation." 

»9  Payment  in  lieu  of  taxes. 

"  Paid  from  "Medical  care,  Veterans  Administration." 

w  Paid  from  "General  operating  expenses.  Veterans  Administration." 

»«  Consists  of  $5,944,017,  "Transitional  grants  to  Alaska";  $87,975,  "Alaska  public  works,  Interior";  and 
$536,809.  "Payments  to  Alaska  from  Pribilof  Islands  Fund,  Interior"  (shared  revenues). 

»'  Area  redevelopment  assistance.  Department  of  Commerce. 

»'  Construction  and  rehabilitation,  Bureau  of  Reclamation,  Department  of  the  Interior. 

•»  Consists  of  $30,000,000,  "Federal  payment  to  District  of  Columbia"  and  $318,087,  "Hospital  facilities 
in  the  District  of  Columbia,  General  Services  Administration." 

"  Center  for  Cultural  and  Technical  Interchange  between  East  and  West,  Department  of  State. 

«i  Drainage  of  anthracite  mines,  Bureau  of  Mines,  Department  of  the  Interior. 

*>  Internal  revenue  collections  for  Puerto  Rico  (shared  revenues). 

«  Internal  revenue  collections  for  Virgin  Islands,  Office  of  Territories,  Department  of  the  Interior  (shared 
revenues). 


TABLES 


819 


Footnotes  for  Table  95— Continued 

*'  Consists  of  $9,429,950,  Grants  to  American  Samoa  from  "Administration  of  Territories,  Office  of  Terri- 
tories" and  $6,146,500,  "Trust  Territory  of  tlie  Pacific  Islands,  Office  of  Territories." 

«  Consists  of  $229,053,693,  "Agricultural  Conservation  Program"  and  $8,796,544,  "Emergency  Conserva- 
tion Measures." 

<»  Formerly  "Soil  Bank  Program." 

<'  On  obligations  basis. 

*>  Accounted  for  by  the  National  Guard  Bureau;  breakdown  by  States  unavailable. 

*'  Includes  $115,300  paid  from  "Grants  for  cancer  research  facilities." 

'» Includes  $5,049,068  representing  fiscal  year  1961  unemployment  compensation  for  Federal  employees 
and  ex-servicemen  unexpended  balances  retimied  by  the  States  and  credited  to  the  fiscal  year  1962 
appropriation. 

"  By  State  of  the  recipient  institution. 

"  Based  on  State  of  permanent  residence  of  recipient. 

M  Consists  of  $2,400,422,  equipment  grants;  $1,301,520,  student  fellowships;  $1,241,972,  faculty  training; 
and  $3,906,592,  material,  services,  and  other.  The  fellowship  awards  are  included  in  the  State  in  which 
the  awards  are  to  be  used. 

Note. — Compiled  from  figures  furnished  by  the  departments  and  agencies  concerned  pursuant  to 
Treasury  Department  Circular  No.  1014,  Aug.  8, 1958  (see  1958  annual  report,  exhibit  70,  p.  381). 


Customs  Statistics 

Table  96. — Merchandise  entries,  fiscal  years  1961  and  1962 


1961 


1962 


Percentage 
increase,  or 
decrease  (— ) 


Entries: 

Consumption  free 

Consumption  dutiable 

Warehouse  and  re  warehouse 

Other  formal 

Total  formal  entries 

"Warehouse  withdrawals 

Appraisement 

Drawback 

Outbound-unmediate  transportation;  transportation  and 
exportation;  etc. 

Mail 

Informal 

Passenger  declarations — total 

Crew  declarations 

Military  declarations 

Passenger  declarations — dutiable 

Other  informal 

All  other  entries. 

Baggage  entries  and  written  declarations 


298, 594 
1, 023, 331 

76, 198 
n.a. 


1, 398, 123 


386,  737 

3,921 

17, 857 

-■  524, 362 

1, 139, 896 
579, 206 
0) 

?! 

(') 

n.a. 

593, 299 

3,  762, 548 


317,330 
1, 132, 856 

75,  980 

21,  774 


1, 547, 940 


373, 006 

2,606 

18, 803 

599, 180 

1,195,063 

594, 155 
2,  550, 388 
842, 867 
856, 997 
288, 743 
1, 040, 456 


2  4, 250, 252 


6.3 
10.8 
-.3 


10.7 


-3.6 

-33.5 

5.3 

14.3 

4.8 
2.6 


12.9 


••  Revised, 
n.a.  Not  available. 

» Included  under  "Baggage  entries  and  written  declarations." 

'  Total  of  passenger,  crew,  and  military  declarations.    Closely  approximates  prior  year  figme  for  "Baggage 
entries  and  written  declarations." 


820   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  97. — Principal  commodities  on  which  draivback  was  paid,  fiscal  years  1961 

and  1962  ' 


Commodity 


Petroleum  and  products..- 

Chemicals 

Citrus  fruit  juices 

Tobacco,  unmanufactured 

Coal-tar  products 

Sugar 

Watch  movements 

Copper  and  manufactures 

Iron  and  steel  semimanufactures 

Aluminum 

Medicinal  preparations.. 

Automobiles,  aircraft,  and  parts 

Lead  ore,  matte,  pigs,  and  bars 

Magnesite.- ._. 

Cotton  cloth 

Tungsten  ore ..- 

Steel  mill  products.. 

Paper  and  manufactures 

Zinc  ore  and  manufactures 

Chromium  and  alloys 

Knit  fabrics,  cotton 

Tires  and  tubes,  rubber  and  synthetic 

Fcrroalloying  ores  and  metals 

Rayon  and  other  synthetic  textiles 

Nickel 

Burlap 

Brass  and  bronze  manufactures 

Manganese  ore 

Tire  cord  fabric,  rayon 

Quicksilver  or  mercury 

Peanut  oil 

Cotton,  unmanufactured 

Cork  and  manufactures. 

Wool  fabrics 

Wool  and  semimanufactures 

Other.. 

Total 


1961 


1, 


$441,  729 

450,  737 

4,963 

564,  6S3 

170,533 

590, 088 

355, 148 

251,565 

845,  618 

,  781,  283 

291,834 

165, 802 

394,  6S0 

142,823 

313,084 

239, 905 

74, 032 

300. 356 

136,529 

207, 006 

7,801 

132,930 

437,  784 

75, 123 

47,146 

86,  619 

15,  666 

16.5, 108 

314,364 

24,  731 

1.50. 954 

19,218 

5,870 

29,  810 

24. 196 

'  1, 294,  636 


10,  554, 354 


1962 


$1,670,867 

1,  620, 292 

1,114,  4.'50 

1,019,538 

990,114 

713,009 

606,  539 

545.  365 

534, 147 

505,  987 

426, 668 

.397, 471 

338, 007 

249. 840 

244,  682 

239, 238 

207, 689 

199,  949 

173. 677 

138,  076 

127,  952 

123,  359 

74, 399 

69, 830 

6.5, 121 

63,397 

52,  777 

40,  566 

34,  269 

28,372 

24.  470 

17,811 

17,  703 

12, 183 

4, 035 

705, 184 


13.  397, 033 


Percentage 
increase,  or 
decrease  (— ) 


(?) 


(?) 


278.1 
259.2 

80.5 

480.6 

20.8 

70.8 

116.8 

-36.8 

-71.6 

46.2 

139.7 

-14.4 

74.9 

-21.9 

-.3 

180.5 

-33.4 

27.2 

-33.3 


-7.2 
-83.0 

-7.1 

38.1 

-26.8 

236.9 

-75.  4 

-89.1 

14.7 

-83.8 

-7.3 

201.6 
-59.1 
-83.3 
-4.5.  6 

26.9 


'  Revi'-ed. 

'  Includes  Puerto  Rico. 

'  Percentage  comparison  is  inappropriate 


TABLES 


821 


Table  98. — Carriers  and  persons  arriving  in  the   United  States,  fiscal  years  19ft  1 

and  1962  i 


Type  of  entrant 


Carriers  arriving: 

Vessels  entering  direct  from  foreign  ports.. 
Vessels  entering  via  United  States  ports.. 
Vessels  reporting  only  from  foreign  ports: 

Government 

Ferries 

Otner 

Commercial  planes 

Military  planes 

Private  planes 

Autos,  empty  trucks.. 

Buses - 

Trucks 

Other  vehicles 

Passenger  trains 

Freight  cars 


Total  carriers. 


Persons  arriving: 

Passengers  arriving  on: 

Vessels  entering  direct  from,  foreign  ports. 
Vessels  entering  via  United  States  ports.. 
Vessels  reporting  only  from  foreign  ports: 

Government 

Ferries 

Other 

Commercial  planes 

Military  planes. 

Private  planes 

Autos,  empty  trucks 

Buses 

Trucks — 

Other  vehicles 

Passenger  trains 

Pedestrians. 


Total  persons- 


1961 


42, 


1, 


48,364 

(38, 459) 

n.a. 

107, 883 

37, 235 

88, 395 

28.608 

45, 043 

,  023,  513 

316,880 

(') 

591,  505 

14,  549 

873, 822 


45. 175, 797 


110, 


27, 


804, 956 

n.a. 

, 643. 445 
222,  519 

.501,014 
446,  275 
132. 076 
717,063 
265,  763 

585, 837 
915,  601 
031,  616 


'  157, 266,  765 


1962 


47, 463 
2  (39, 631) 

1,211 

105, 453 

44, 383 

93,645 

31,272 

47, 268 

41,769,740 

244,  522 

740, 039 

423, 828 

12,  698 

1, 809,  767 


45,371,289 


630, 527 
46, 463 

257, 195 
1,312,313 

245, 986 
3,639,215 

525,  522 

142,223 

110.328,909 

4, 879.  465 

607, 858 
4, 352,  767 

833, 097 
29, 900, 441 


Percentage 
increase,  or 
decrease  ( — ) 


157,701,981 


'  Revised. 

n.a.  Not  available. 

1  Excludes  Puerto  Rico. 

2  Not  included  in  totals,  already  counted  under  entering  direct  from  foreign  ports. 
'  Included  under  automobiles. 

*  Included  under  entering  direct  from  foreign  ports. 


-1.9 
3.0 


-2.3 

19.2 

5.9 

9.3 

4.9 

-.6 

-22.8 


-28.4 

-12.7 

-3.4 


-21.; 


-20.2 

10.5 

3.9 

17.8 

7.2 

-.4 

-32.8 


-5.1 

-9.0 

10.6 

.3 


822   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  99. — Aircraft  and  aircraft  passengers    entering  the    United    States,   fiscal 

years  1961  and  1962 


District 

.\ir  craft 

Aircraft  passengers 

Percentage  increase, 
or  decrease  (— ) 

1961 

1962 

1961 

1962 

Aircraft 

Passen- 
gers 

Maine  and  New  Hampshire 

2,254 
1,494 
9,597 

428 
2,013 
1,149 
2,982 
22,232 
7,057 
1,724 
1,453 

298 
2,544 

467 
35, 353 
1,680 
1,165 
7,813 
1,552 
3,823 
3,519 
3,807 
2,490 
8,058 
3,115 
8,340 
2,121 
2,175 

514 
4,454 
4,741 
4,948 
4,829 

442 
1,415 

2,649 
1,381 
5,450 

480 
1,552 
1,273 
3,039 
25.347 
7,371 
2,105 
1,728 

362 
2,191 

599 
39,  557 
1,618 
1,477 
8, 228 
1,544 
4,065 
3,432 
3,473 
3,461 
8,301 
3, 556 
9,950 
2,318 
2,689 

392 
5,051 
4,784 
4,566 
5,029 
1,026 
2,141 

7,901 

297,359 

82,057 

2,339 

9,544 

13, 129 

393, 660 

1,207,634 

233, 478 

25, 869 

28, 988 

5,242 

56,  637 

4,770 

638, 127 

47,  713 

28,680 

04,417 

4, 381 

12, 379 

7,273 

119,806 

27, 340 

140, 382 

66, 150 

268, 359 

19,647 

16,813 

15,481 

11,608 

27, 683 

92,  610 

30, 436 

4,880 

7,193 

16,010 

278, 444 

94, 476 

4,569 

5,417 

13,826 

402,  727 

1, 340, 836 

271,084 

34,630 

29, 986 

5,534 

52, 862 

6,041 

645, 558 

49, 884 

34, 268 

68,225 

4,624 

15, 551 

14,  478 

134,  201 

30,231 

152,593 

35,  846 

318,461 

20, 282 

38, 694 

2,535 

13, 153 

29, 340 

80,  598 

31,913 

9,555 

20, 528 

17.5 

-7.6 

-43.2 

12.1 

-22.9 

10.8 

1.9 

14.0 

4.4 

22.1 

18.9 

21.5 

-13.9 

28.3 

11.9 

-3.7 

26.8 

5.3 

-.5 

6.3 

-2.5 

-8.8 

39.0 

3.0 

14.2 

19.3 

9.3 

23.6 

-23.7 

13.4 

.9 

-7.7 

4.1 

132.1 

61.3 

6.3 

102.6 

Vermont       .                           

—6  4 

Massachusetts    

15.1 

Rhode  Island 

95.3 

St.  Lawrence. 

-43.3 

Rochester.    .            

5.3 

Buffalo 

2.3 

New  York 

5.8 

Philadelphia                 .            .- 

16.1 

Maryland 

33.9 

Virginia   ..- 

3.4 

North  Carolina. 

5.6 

South  Carolina         .  ..           

—6.7 

Georgia 

26.6 

Florida  .  . 

1.2 

New  Orleans             ..              .      

4.6 

Galveston ._ 

19.5 

Laredo 

5.9 

El  Paso 

5.5 

San  Diego 

25.6 

Arizona 

99.1 

Los  Angeles 

12.0 

San  Francisco         --- 

10.6 

Washington 

8.7 

—45.8 

Hawaii.. 

18.7 

Montana  and  Idaho.. 

3.2 

Dakota 

130.1 

Minnesota    .. 

-83.6 

Duluth  and  Superior 

13.3 

Michigan .  .  

6.0 

Chicago 

—13.0 

Ohio 

4.9 

St.  Louis 

95.8 

Other 

185.4 

Total 

162, 046 

172, 185 

4,079,965 

4,306,960 

5.6 

TABLES  823 

Table  100. — Seizures  for  violations  of  customs  laws,  fiscal  years  1961  and  1962^ 


1961  total 

1962 

Seizures 

Seizures 
Customs 

Seizures 
by  other 
agencies 

Joint  sei- 
zures by 
Customs 
and  other 
agencies 

Total 

Automobiles: 

Number .. 

566 
$535, 664 

90 

$275, 445 

7 
$93, 500 

34 

$9, 135, 127 

1,161 

$128,  765 

5,590 

37, 029 

$694, 003 

3,076 
$185, 971 

4,831 

$5,441 

191,  773 

16, 777 

57,  654 

694, 905 

10, 457 

59,876 

52, 809 

774, 484 

2,938,267 

472 
$600,017 

70 
$225, 743 

12 
$1,342,000 

43 
$12, 007, 961 

954 
$166,262 

5,381 

13,  556 

$282, 602 

5,054 
$37, 154 

4,569 

$10, 461 

35, 699 

7,244 

15,440 

563, 220 

4,202 

13, 230 

373, 635 

106,  631 

10, 527,  751 

104 
$118,516 

20 
$187,302 

36 
$26,  655 

2 

$400 

612 

Value 

$745, 188 
92 

Trucks: 

Number 

Value 

$413, 445 
12 

Aircraft: 

Nimiber — - 

Value 

$1,342,000 
46 

Boats: 

Number 

2 

$35,  636 

6 

$20 

22 

88 

$1,253 

15 
$334 

109 

1 
$19, 500 

44 
$10, 837 

110 

143 

$2, 609 

51 
$1,431 

160 

$350 
293 

Value 

$12,063,097 

1,004 
$177, 119 

5,518 

13,  787 

$286, 364 

5  120 

Narcotics: 

Number 

Value 

Liquors: 

Number 

Gallons.-- -. 

Value .- 

Prohibited  articles  (obscene,  lottery,  etc.): 
Number 

Value           

$38, 919 

4,838 

$10, 811 

64, 432 

7,544 

Other  seizures: 

Number 

Value: 

Cameras . 

Furs — skins  and  manufactures 

$28, 440 
300 

587 

fliins  and  nrnmnnitinn 

1,852 
1,171 

257 

17,879 

564,391 

14, 070 

13, 252 

Jewelry,  including  gems 

9,611 
22 

Tobacco  and  manufactures- 

Watches  and  parts _. 

373,  635 

Wearing  apparel 

42 
84, 174 

32 
2,627 

106, 705 
10, 614, 452 

Miscellaneous  - . 

Total  value  of  other  seizures 

4,802,443 

11,  657,  513 

123, 176 

6,482 

11,787,171 

Grand  total: 

Number  3      . 

14,  658 
$15, 850, 918 

15,958 
$26, 319, 252 

152 
$466,237 

365 

$67, 814 

16  475 

Value 

$26,853,303 

'  Includes  Puerto  Rico  and  the  Virgin  Islands. 

'  Excludes  number  of  carriers  confiscated  in  connection  with  seizures  of  liquor,  narcotics,  etc. 


824        196  2    REPORT    OF    THE    SECRETARY    OF    THE    TREASURY 
Table  101. — Investigative  activities,  fiscal  years  1961  and  1962 


Activity 


Investigations  of  violations  of  customs  laws: 

Undervaluations  and  false  invoicing,  irregular  entries 

Marking  of  merchandise. 

Baggage  declaration  violations 

Smuggling: 

Diamonds  or  jewelry 

Narcotics __ 

Other... 

Touring  permit  violations 

Navigation,  aircraft,  and  vehicle  violations 

Prohibited  importations  (19  U.S. C.  1305) 

Other  investigations: 

Customs  procedures 

Drawback 

Classification  and  market  value 

Customs  brokers,  license  applications 

Petitions  for  relief  from  additional  duties 

Character  investigations  of  applicants 

Pilferages  and  shortages 

Export  control  violations... 

Kxamination  of  customs  brokers'  records 

Miscellaneous 

Total 


1961 


1,636 
145 


445 

5,  450 

1,797 

14 

1,326 

149 


111 

1,000 

367 

163 

924 

1,092 

.527 

707 

287 

1,990 


18, 828 


1962 


2,032 

125 

1,046 

476 

5,527 

1,754 

26 

1,375 

240 

164 

1,100 

438 

129 

898 

1,290 

490 

652 

321 

2,273 


20, 356 


Percentage 

increase,  or 

decrease  (— ) 


24.2 

-13.8 

50.0 

7.0 

1.4 

-2.4 

85.7 

3.7 

61.1 

47.7 

10.0 

19.3 

-20.9 

-2.8 

18.1 

-7.0 

-7.8 

11.8 

14.2 

8.1 


Engraving  and  Printing  Production 

Table  102. — Neio  postage  stamp  issues  delivered,  fiscal  year  1962 


Issue 


Denomi- 
nation 
(cents) 


Comraemoratives: 

Naval  Aviation 

Workmen's  Compensation  Law 

Frederic  Remington 

Sun  Yat-sen. 

BasketbaU 

Nmses. 

New  Mexico  Statehood 

Arizona  Statehood 

Project  Mercury _. 

Malaria  Eradication 

Shiloh  (Civil  War  Centennial) 

Charles  Evans  Hughes 

Seattle  World's  Fair 

Louisiana  Statehood 

The  Homestead  Act 

Canal  Zone  Air  Mall... 

Canal  Zone  Anniversary  of  Girl  Scouts 

U.S.  Ordinary  (Pershing) 


15 
4 

8 


TABLES 


825 


Table  103.— Deliveries  of  finished  work  by  the  Bureau  of  Engraving  and  Printing, 

fiscal  years  1961  and  1962 


Class  of  printed  work 


Number  of  pieces 


1961 


1962 


Face  value  1962 


Currency: 

U.S.  notes 

Silver  certificates 

Federal  Reserve  notes. 


28, 720, 000 

1,046,812,000 

540, 720, 000 


30, 900, 000 
999,112,000 
526,352,000 


Total - 


1,616,252,000 


1, 556, 424, 000 


Bonds,  notes,  bills,  certificates,  and  debentures: 
Bonds: 

Panama  Canal,  registered 

Treasury 

D.C.  Armory  Board  stadium 

Depositary,  act  of  Sept.  24,  1917 — 

U.S.  savings,  registered 

Consolidated  Federal  Farm  Loan  for  the  12 

Federal  intermediate  credit  banks 

Consolidated,  of  the  Federal  home  loan  Ijanks. 
Notes: 

Treasury 

Special,  U.S.  International  Monetary  Fund.. 
Special,    U.S.    International    Development 

Association 

Consolidated,  of  the  Federal  home  loan  banks. 
BiUs: 

Treasury 

Certificates: 

Treasury  certificates  of  indebtedness 

Military  payment 

Debentures: 

Consolidated  collateral  trust  for: 

Twelve  Federal  intermediate  credit  baiiks. 

Thlrteen  b:mks  for  cooperatives 

Federal     National     Mortgage     Association 

secondary  market  operations 

Federal  Housing  Administration 


950 

1, 113, 844 

20, 202 

550 
1,578,000 

133, 920 
523,765 


837, 419 


131 
61,780 

2, 404, 000 

288, 561 


103, 455 
29,000 

71,732 

70, 365 


500 
1,687,000 

96, 316 
16, 196 

794,019 
350 

200 
82, 650 

2,321,011 

273, 043 
51, 409, 554 


139, 800 
61,003 

91,356 

397, 308 


Total. 


6, 400, 255 


58, 207. 725 


Stamps: 

Customs 

Internal  Revenue: 

To  office  of  issue 

To  Smithsonian  Institution. 

Puerto  Rican  revenue 

Virgin  Islands  revenue 

U.S.  postage: 

Ordinary 

Air  mail 

Commemoratives 

Special  delivery 

Postage  due 

Experimental— ordinary 

Canal  Zone  postage: 

Ordinary 

Airmail 

Commemoratives 

U.S.  savings  stamps 

D.C.  beverage  tax  paid 

Federal  migratory  bird  hunting. 
Food  stamp  coupons 


10, 818, 604 

,  771, 544, 467 

116, 700 

180, 800, 925 

54,  500 

,  864, 852, 200 
916,111,400 

,  032, 289, 800 

34, 265, 000 

154,290,000 


3,585,000 
3,950,000 


96, 379, 500 

34, 450, 000 

5,214,000 

7, 980, 086 


15,618,010 

2, 048, 278, 677 

14, 328 

192,215,000 

145, 800 

20, 344, 484, 200 

975,971,800 

2, 150, 087, 800 

34,820,000 

148,930,000 

66,000 

2,178,264 

3, 070, 400 

640, 400 

109,205,500 

17,630,000 

3, 612, 240 

40, 300, 150 


Total. 


25, 116, 702, 182 


26,087,268,569 


Miscellaneous,  checks,  certificates,  etc.: 
To  offices  of  issue 


Grand  total. 


6, 872, 713 


26,746,227,150 


14,072,024 


$139,680,000 
1,214,072,000 
6,417,000,000 


7,770,752,000 


28, 880,  819, 100 


1,424,375,000 

1,224,816,000 
392, 560, 000 

43, 593, 692, 000 
8, 650, 000, 000 

800, 000, 000 
3,480,000,000 

174,734,550,000 

19,828,002,000 
113, 814, 400 


3,710,000,000 
1,577,515,000 

1,131,030,000 
640, 625, 500 


290,181,799,000 


129, 352, 314 
377 


280, 328 

935, 832, 430 
80, 508, 926 
86, 525, 288 
10,446,000 
16, 708, 750 


255, 150 

259,700 

25,600 

18, 737, 500 

626, 062 

10,836,000 

38,121,000 


1, 328, 515, 425 


27,715,972,318    299,281,066,425 


826   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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828   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  105. —  Yugoslav  claims  fund  as  of  June  30,  1962 

{This  special  fund  was  established  In  accordance  with  the  provisions  of  the  act  of  Mar.  10, 19504.as  amended 
(22  U.S.C.  1627).    For  further  details,  see  annual  report  of  the  Secretary  for  1954,  p.  Ill] 


Status  of  the  fund 

Amount 

Receipts: 

Payment  received  from  the  Government  of  Yugoslavia  imder  agreement  of  July  19, 
1948 - - 

$17. 000. 000. 00 

Expenditures: 

Amounts  paid  to  American  nationals: 
Fiscal  years: 

1953-61 - - 

16, 630. 407.  32 

1962.. 

2, 022. 21 

Total  exuendltures 

16, 632.  489.  53 

Undisbursed  balance  June  30, 1962 

367.  510. 47 

Claims  certified  for  payment  by  the: 

International  Claims  Commission  of  the  United  States  ' 

793,  596.  69 

Foreign  Claims  Settlement  Commission  of  the  United  States 

18.024,308.20 

Total  claims  certified. 


18,817,904.89 


«  By  Reorganization  Plan  No.  1  of  1954,  the  name  of  this'Commlssion  was  changed  to  the  Foreign  Claims 
Settlement  CommLssion  of  the  United  States,  effective  July  1, 1954. 


TABLES 


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830   19  62  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


International  Financial  Transactions 

Table  107. —  United  States  net  monetary  gold  transactions  with  foreign  countries 

and  international  institutions,  fiscal  years  1945-62 

[In  millions  of  dollars  at  $35  per  ounce.    Negative  figures  represent  net  sales  by  the  United  States;  positive 

figures,  net  purchases] 


Country,  etc. 

1945-1956 

1957 

1958 

1959 

1960 

1961 

1962 

Afghanistan 

-4.5 
677.2 
-6.2 

-244.  1 

134.9 

18.8 

-25.4 

-0.6 
115.3 

-0.2 
55.2 

Argentina... 

67.2 
-123.5 

-120.7 
-210.  2 

-140.0 

85  0 

Austria 

-44.5 

—56  3 

Bank  for  International  Settle- 
ments  

-89.5 
-157.7 

-59.0 
-90.1 

Belgium 

6.8 

-50.8 

—207  4 

Bolivia 

Brazil 

Burma 

-3.8 
-12.0 

—5  0 

Cambodia. 

—3  1 

Canada 

586.5 

19.8 

190  0 

Ceylon 

-7.5 
-1.3 

Chile 

22.2 
41.0 

2.8 
28.1 

3.0 

-8.6 
-6.3 

Colombia. 

Congo  Republic 

28.8 

Costa  Rica.. 

—2  3 

Cyprus 

—2.0 

Denmark 

-38.4 

-13.2 

2.1 

-120.8 

-18.1 

-9.0 

202.3 

-375.  6 

7.0 

-17.0 

-5.0 

-10.0 

-50.0 

Dominican  Republic 

—3.1 

Ecuador 

Egypt.. 

-7.5 

—8  5 

El  Salvador 

-3.5 

6.4 

-3.0 

-173.0 

-56.3 

-5.6 

-47.0 

—5  7 

Finland 

-4.7 
-265.  7 

France. 

—  142  5 

Germany,  Federal  Republic  of. 

Greece 

-45.2 

-15.0 
-2.4 
-6.0 

—29  2 

Iceland 

—  7  1 

Indonesia 

-75.0 
18.8 
97.3 

-2.0 

-5.0 

-24.9 

—  2 

International  Bank 

International  Monetary  Fund '. 
Iran 

699. 9 

-7.3 

2  -352.  6 

252.1 

300.0 

150.0 
—  16  2 

Iraq 

-29.8 

Israel 

-1.1 
-114.3 

-4.4 

—  10  0 

Italy 

-168.8 

-180.0 
-125.0 

100.0 
-15.2 

-62.5 
-1.6 

Korea 

-1.9 

Kuwait 

-9.8 
-1.9 

Laos .  .  .. 

Lebanon 

-21.8 
64.9 

—32.1 

Mexico 

-20.0 

-10.0 

-20.0 

-21.0 

-214.  4 

Morocco .  . 

Netherlands 

-101.3 
19.9 

25.0 

-104.8 

-186.0 

-34.9 

—24.9 

Nigeria 

—20.0 

11.7 
-10.7 

Peru 

3.5 

21.9 

-20.0 



-20.0 

Philippines 

11.9 
-10.0 

5.0 

Portugal 

-11.6 

-4.1 

1, 121. 3 

Saudi  Arabia 

-35.0 

—25.1 

South  Africa 

Spain 

31.5 

31.7 
-2.5 

-171.5 
-2.5 

—204. 1 

Surinam 

Sweden 

231.2 

-209.  4 

-10.4 

15.2 
-8.0 

Switzerland 

-140. 1 

-75.1 

20.1 

-399. 1 

46.9 

Syria 

—  1.1 

Tunisia 

—.5 

Turkey 

57.9 

947.2 

-40.1 

6.1 

-225.9 

-8.6 

-475.  4 

-3.8 

-7.0 

—  1.1 

United  Kingdom 

100.3 

29.1 

3.0 

-200. 0 

-750. 0 

3.1 

-1.5 

-350. 0 

-150.  0 

—711.6 

Vatican  City 

-3.2 

1.0 

65.0 

-1.5 

-4.5 

Venezuela 

Yugoslavia 

-15.9 
-6.3 

-.7 

All  other 

-129.7 

-.2 

-3.2 

-5.8 

-6.8 

Total 

2, 403. 5 

840.1 

-1,346.9 

-1,660.7 

-341.6 

-1, 730. 4 

-1,025.7 

'  International  Monetary  Fund  figures  prior  to  1961  include  gold  purchases  by  the  Fund  on  behalf  of 
member  countries  for  their  payments  to  the  Fund. 

'  Includes  $343.8  million  payment  to  the  International  Monetary  Fund.  Pursuant  to  an  act  approved 
June  17,  1959  (22  U.S.C.286e-l),  the  United  States  made  payment  ofits  increase  in  quota  to  the  International 
Monetary  Fund,  amounting  to  $1,375,000,000,  on  Jime  23,  1959.  The  payment  was  made  in  gold  in  the 
amount  of  $343,750,000.40,  and  in  nonncgotiable,  non interest-bearing  notes  of  the  United  States  amounting 
to  $1,031,249,999.60,  in  place  of  a  like  amount  of  currency. 


TABLES 


831 


Table  108. — Estimated  gold  reserves  and  dollar  holdings  of  foreign  countries  and 
international  institutions  as  of  June  30,  1961  and  June  30,  1962 

[In  millions  of  dollars] 


June  30,  1961 

June  30,  1962 

Area  and  country 

Total 
gold  and 
short- 
term 
dollars 

U.S.  Gov- 
ernment 
bonds 
and 
notes 

Gold 

Short- 
term 
dollar 
holdings 

Total 
gold  and 
short- 
term 
dollars 

U.S.  Gov- 
ernment 
bonds 
and 
notes 

Western  Europe: 

Austria                        -  

480 

'  1, 307 

81 

112 

2.862 

6,588 

136 

3,059 

'  1,  735 

'134 

546 

352 

574 

2,850 

150 

4,109 

14 

'595 

3 
'1 
31 

2 
4 
3 
(*) 
(*) 
3 
132 
1 
1 
51 
87 
(*) 
'435 

363 

1,335 

31 

62 

2,270 

3,667 

96 

2,242 

1,581 

30 

454 

409 

182 

2,409 

140 

2,600 

6 

415 

277 

258 

52 

71 

1,394 

2,622 

110 

1,187 

307 

101 

130 

159 

425 

951 

23 

2,264 

12 

234 

640 

1,593 

83 

133 

3,664 

6,289 

206 

3,429 

1,888 

131 

584 

508 

607 

3,360 

163 

4,864 

18 

649 

(*) 

2 

Denmark                 - 

29 

"Finland 

2 

France              -  - 

3 

Germany,  Federal  Republic  of 

3 

(*) 

Italy 

(*) 

Xetherlands                        .  - 

2 

2\orway                  -- 

85 

Portueal- 

1 

Spain                   -  --  -- 

1 

Sweden                             

123 

83 

Turkey               -  - 

(*) 

United  Kinedom 

440 

Other  and  unidentified  ' - 

47 

46 

Total  Western  Europe — 

'  25,  684 

'801 

18,292 

10, 577 

28,869 

820 

Canada — 

'3,565 

463 

669 

2,897 

3,566 

227 

Latin  America: 

Argentina                

475 
22 

474 

171 

202 
22 
59 
31 
47 
49 
83 
12 
15 

450 

12 

78 

5 

'118 

230 
'829 

'88 

1 

(*) 
2 

(•) 
1 

(•) 
(*) 
(*) 
(*) 
(*) 
(*) 
(*) 

102 

2 

286 

45 

93 

2 

1 

3 

19 

18 

24 

1 

(*) 
106 
1 
(*) 
(•) 
47 
180 
401 

208 

25 

225 

131 

159 

13 

37 

48 

24 

35 

52 

10 

15 

518 

17 

87 

5 

90 

79 

364 

122 

310 

27 

511 

176 

252 

15 

38 

51 

43 

53 

76 

11 

15 

624 

18 

87 

5 

137 

259 

765 

122 

I 

(*) 

1 

Chile — 

(•) 

1 

Costa  Rica                         - 

(*) 

(*) 

"Dominican  Remiblic    -      - 

(•) 

(*) 

Kl  Salvador                             - 

(*) 

(•) 

Haiti     -    -    

(•) 

Honduras                - - 

(*) 

6 

(•) 

1 

Peru              -    

(*) 
1 
1 

67 

(*) 

TJruena  V                         - 

1 

Venezuela. 

1 

156 

'  3, 472 

69 

1,331 

2,264 

3,595 

168 

India                                   

288 

142 

178 

47 

2,262 

170 

64 

'184 

23 

331 

'729 

6 

1 
(•) 
(*) 

3 

247 
43 

129 
20 

304 

2 

53 

34 

19 

104 

470 

49 
82 
26 
76 
<  1,906 

164 
10 

179 
3 

327 

390 

296 
125 
155 

96 

*  2, 210 

166 

63 
213 

22 
431 
860 

6 

1 

Iran .. 

(*) 

Israel                       -  

1 

Janan 

3 

PhUiDDines      - 

2 

i 

Thailand-- 

45 

(•) 

Other  and  unidentified  ' 

40 

Total  Asia  « - 

'  4, 418 

57 

1,425 

<3,212 

«4,637 

52 

1 

' 

Footnotes  at  end  of  table. 


832 


1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  108. — Estimated  gold  reserves  and  dollar  holdings  of  foreign  countries  and 
international  institutions  as  of  June  30,  1961,  and  June  30,  1962 — Continued 

[In  millions  of  dollars) 


June  30,  1961 

June  30,  1962 

Area  and  country 

Total 
gold  and 
short- 
term 
dollars 

U.S.  Gov- 
ernment 

bonds 
and 

notes 

Gold 

Short- 
term 
dollar 
holdings 

Total 
gold  and 
short- 
term 
dollars 

U.S.  Gov- 
ernment 
bonds 
and 
notes 

Other  countries: 

Australia 

238 

70 

192 

190 

-■548 

(♦) 

177 
1 
432 
174 
148 

104 

4 

39 

19 

487 

281 
5 
471 
193 
635 

(*) 

New  Zealand 

South  Africa 

(*) 
(*) 
37 

(*) 

United  Arab  Republic  (Egypt) 

Other  and  unidentified  ^  6 

(*) 
39 

Total  other  countries  « 

-■1,238 

37 

932 

653 

1,585 

39 

Total  foreign  countries ' ' 

-•  38, 377 

>•  1, 427 

22,  649 

4  19, 603 

«  42,  252 

1,306 

International  institutions '  ^ 

-•  6, 393 

1,011 

2,110 

4,453 

6,563 

1, 009 

Memorandum  item:  Sterling  area 

5, 179 

•■518 

3,581 

2,747 

6,328 

525 

•Less  than  $500,000.       '  Revised. 

J  Includes  holdings  of  European  regional  Institutions  such  as  the  Bank  for  International  Settlements 
(B.I.S.)  and  the  European  Fund,  gold  to  be  distributed  by  the  Tripartite  Commission  for  the  Restitution 
of  Monetary  Gold,  and  unpublished  gold  reserves  of  certain  Western  European  countries.  The  figures 
includedfor  the  gold  reserves  of  the  B.I.S.  represent  the  Bank's  net  gold  assets. 

2  Includes  Inter-American  Development  Bank. 

'  Data  for  short-term  dollars  exclude  nonnegotiable,  noninterest-bcaring  special  U.S.  notes  held  by  the 
Inter-American  Development  Bank  and  the  International  Development  Association. 

4  Total  short-term  dollars  include  $109  million  reported  by  banks  first  included  as  of  June  30,  1962.    0 
this  total,  the  holdings  of  Japan  amount  to  $105  million. 

'  Excludes  gold  reserves  of  the  U.S.S.R.,  other  Eastern  European  coimtries,  and  China  Mainhmd. 

« Includes  coimtries  in  Africa,  Oceania,  and  Eastern  Europe,  and  Western  European  dependencies  out- 
side Europe  and  Asia. 

?  Principally  the  International  Monetary  Fund  and  the  International  Bank  for  Reconstruction  and 
Development. 

Note:  Gold  and  short-term  dollars  represent  reported  and  estimated  gold  reserves,  and  official  and 
private  short-term  dollar  holdings  (principally  deposits  and  U.S.  Treasury  bills  and  certificates)  reported 
by  banks  in  the  United  States.  U.S.  Government  bonds  and  notes  represent  estimated  ollicial  and  iirivate 
holdings  of  U.S.  Government  securities  with  an  original  maturity  of  more  than  one  year.  Gold  and  short- 
term  dollars  plus  U.S.  Government  bonds  and  notes  represent  the  gold  and  liquid  dollar  holdings  of 
foreign  countries  and  international  institutions. 


TABLES 


833 


Table  109. — United  States  gold  stock,  and  holdings  of  convertible  foreign  currencies 
by  U.S.  monetary  authorities,  fiscal  years  1952-62 

[In  millions  of  dollars] 


Total  gold 

stock  and 

foreign 

currency 

holdings 

Gold  stock  I 

Foreign 

End  of  fiscal  year  or  month 

Treasury 

Total  2 

currency 
holdings  ' 

1952                     .                                -     

23, 533 
22, 521 
22, 027 
21. 730 
21,868 
22,732 
21,412 
19, 746 
19,363 
17, 789 
17.081 
17, 695 
17.636 
17, 519 
17,443 
17, 148 
17,063 
16, 963 
16.948 
16, 873 
16, 762 
16, 718 
17,081 

23, 346 
22, 463 
21,927 
21. 678 
21,799 
22, 623 
21,356 
19, 705 
19, 322 
17, 550 
16,435 
17, 527 
17,451 
17, 376 
17, 300 
16, 975 
16,889 
16,815 
16. 790 
16. 608 
16,495 

16. 434 

16. 435 

23, 533 
22,  521 
22  027 
21, 730 
21,868 
22, 732 
21,412 
19, 746 
19,363 
17, 603 
16, 527 
17, 590 
17, 530 

17. 457 
17.331 
17,021 
16,947 
16, 847 
16, 795 
16,643 
16,519 

16. 458 
16, 527 

1953..       

1954                                                 

1955..      

1956  .                 .              .              

1957 

1958                      .              .              

1959  .          

1960                 .  .              

1961  .          

186 

19fi2                 .  .      .                 

554 

igijl—jnly         .                                             .       

105 

August  ..      .      _             ... 

10') 

September .  - 

62 

October         .      .             .... 

112 

November 

127 

December, 

116 

1962 — January . 

116 

February                                   .  -      .  .  .  . 

153 

March                         .  . -  .  .  .  . 

230 

April .  -. - 

243 

May                            -          -      

260 

554 

'  Includes  gold  sold  to  the  United  States  by  the  International  Monetary  Fund  with  the  right  of  repur- 
chase, the  proceeds  of  which  are  invested  by  the  Fund  in  U.S.  Government  secuiities;  as  of  June  30,  1962, 
this  amounted  to  $800  million. 

2  Includes  gold  in  Exchange  Stabilization  Fund,  •which  is  not  included  in  Treasury  gold  figures  shown 
in  the  daily  Treasury  statement  or  in  the  Circulation  Statement  of  United  States  Money. 

5  Includes  holdings  of  Treasury  and  Federal  Reserve  System. 

Note:  The  United  States  also  has  certain  dra\ving  rights  on  the  International  Monetary  Fund,  in  which 
the  United  States  has  a  quota  of  $4,125  million.  In  accordance  with  Fund  policies,  these  drawing  rights 
include  the  right  to  draw  virtually  automatically  an  amount  equal  to  the  sum  of  the  U.S.  gold  subscription 
to  the  Fund  ($1,031.2  million)  and  the  Fund's  net  use  of  dollars;  on  June  30, 1962,  these  two  amounts  totaled 
$1,409.3  million.  Under  appropriate  circumstances  the  United  States  could  draw  an  additional  amomit 
equal  to  the  U.S.  quota. 


661496—63- 


-54 


834   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  110. —  U.S.  international  investment  and  gold  position,   end-selected  years 

[In  billions  of  dollars] 


1919 

1930 

1939 

1946 

1949 

1959 

1960 

1961 

U.S.  investments  abroad,  total 

7.0 

17.2 

11.4 

18.7 

30.7 

64.8 

71.5 

»77.3 

U.S.  Government  subscriptions 
to  Infprnational  institutions 

0.3 
18.4 

3.4 
27.3 

4.8 
60.0 

4.9 
66.6 

5.0 

Other  U.S.  Investments  abroad.. 

7.0 

17.2 

11.4 

72.3 

Private  investments 

7.0 

17.2 

11.4 

13.5 

16.9 

44.8 

50.4 

155.5 

Direct 

3.9 
2.6 
0.5 

8.0 
7.2 
2.0 

7.0 
3.8 
0.6 

(•) 

7.3 
5.0 
1.3 

4.8 

10.7 
4.9 
1.3 

10.3 

29.8 

11.4 

3.6 

15.2 

32.8 

12.6 

5.0 

16.2 

134.7 

Other  long-term 

14.2 

Short-term                 

6.6 

U.S.  Government  credits  and 
claims  in  foreign  countries. 

16.8 

Lone-term   

(*) 

4.6 
0.2 

15.9 

10.0 
0.3 

16.9 

12.8 
2.4 

42.1 

13.3 
2.9 

44.7 

13.9 

Short-term                     .  _-  ._ 

2.9 

Foreign  assets  and  investments  in 
the  U.S..  total 

4.0 

8.4 

9.6 

50.0 

Long-term     .    

3.2 

0.8 

(-) 
2.5 

5.7 

2.7 

(-) 
4.2 

6.3 

3.3 

(-) 
17.8 

7.0 

8.9 

(0.5) 
20.7 

7.1 

9.8 

(1.8) 
24.6 

18.1 

24.1 

(3.8) 
19.5 

18.4 

26.3 

(4.8) 
17.8 

2  21.5 

Liquid  (short-term  assets  and 
U.S.    Government    obliga- 
tions)         . 

28.6 

(of  which  international  in- 
stitutions held) 

(5.0) 

U.S.  gold  stoclj       

16.9 

•Less  than  $50  mUlion. 

1  Reflects  various  adjustments  including  omission  of  Investments  m  Cuba  ($956  million)  and  a  $36  mil- 
lion downward  revision  for  South  Africa,  partly  offset  by  an  upward  revision  of  $406  million  for  invest- 
ments in  Venezuela. 

2  Due  in  large  part  to  price  increases  in  1961;  figure  may  be  substantially  reduced  in  1962  because  of  price 
decline. 

Source — U.S.  Department  of  Commerce,  and  U.S.  Treasury  Department,  Washington,  D.C.,  Sept. 
15,  1962. 


1 


TABLES 

Table  111. —  U.S.  balance  of  payments  by  major  components,^ 

[In  millions  of  dollars] 


835 

seasonally  adjusted 


Goods  and  services,  Government 
assistance    and     long-term 
capital  accomits:  ^ 
Nonmilitary  merchandise  ex- 
ports  

Less  those  financed  by  Gov- 
ernment grants  and  cap- 
ital  

Merchandise    exports     other 
than  those  financed  by  Gov- 
ernment grants  and  capital.. 
Nonmilitary  merchandise  im- 
ports  

Balance  on  trade,  excluding  ex- 
ports financed  by  Govern- 
ment grants  and  capital 

Nonmilitary  service  exports. . . 
Less  those  financed  by  Gov- 
ernment grants  and  cap- 
ital  

Service  exports,  other  than 
those  financed  by  Govern- 
ment grants  and  capital 

Nonmilitary  service  imports... 
Balance  on  services,  other  than 
those  rendered  mider  Govern- 
ment grants  and  capital 


Balance. 


Other  major  transactions: 

Military  expenditures 

Military  cash  receipts 

Government  grants  and  cap- 
ital—dollar payments  to  for- 
eign countries  and  interna- 
tional institutions 

Repayments  on  U.S.  Govern- 
ment loans,  excluding  fund- 
ings by  new  loans 

U.S.  direct  and  long-term  port- 
folio investments  abroad  2... 

Foreign  direct  and  long-term 
portfolio  investments  in  the 
United  States 

Remittances  and  pensions 

Balance 


Balance  on  goods  and  services.  Gov- 
ernment assistance  and  long- 
term  capital  account 

Recorded  U.S.  private  short- 
term  capital  outflow  less  for- 
eign short-term  credits  to  the 
United  States  (excludmg  for- 
eign liquid  dollar  holdings) 

Unrecorded  transactions 

Overall  balance,  seasonally  ad- 
justed  

Less  seasonal  adjustment 

Overall  l)alance,  actual  (not  sea- 
sonally adjusted)' 

Equals: 
Changes  in  liquid  liabihties 
to  foreign  private  holders, 
including  banks  and  non- 
monetary international 
and  regional  Institutions 
Plus: 
Changes  of  holdings  of  gold 
and  convertible  currencies 
by  U.S.  monetary  authori- 
ties and  changes  in  U.S. 
liquid  liabilities  to  foreign 
and    mternational    mone- 
tary  authorities 


1960 


19, 459 

1,798 

17, 661 
-14,723 


2,938 
7,219 


322 

6,897 
-5,417 

1,480 
4,418 

-3, 048 
336 


-1,235 

585 
-2,  544 


430 
-842 

-6, 318 


-1,900 


-1,433 

-592 

-3,925 


1961 


-3,925 


-361 


19,915 

2,183 

17, 732 
-14,514 


3,218 
7,745 


391 


7,354 
-5,462 


1,892 
5,110 

-2, 947 
398 


-1,283 

1,199 
-2,481 


466 

-878 

-5,  526 


-416 

-1,443 
-602 

-2,461 
-2,461 


-1,202 


-3.564      -1,259 


1961 


Jan.- 

Mar. 


5,061 

559 

4,502 
-3, 369 


1,133 
1,937 


86 


1,851 
-1,309 


542 
1,675 

-770 
66 


-302 

123 
-577 


122 
-221 

-1,559 


116 


-406 
-29 

-319 
-11 

-308 


74 


Apr.- 
June 


4,768 

435 

4,333 
-3,417 


916 
1,910 


-382 


92 


1,818 
-1,337 


481 
1,397 

-756 
150 


-254 

828 
-487 


201 
-221 

-539 


858 


-316 
-366 

176 
87 

89 


-570 


July- 
Sept. 


4,940 

594 

4,346 
-3,840 


506 
1,863 


105 


1,758 
-1,388 


370 

876 

-699 

87 


-303 

59 
-623 


20 
-216 

-1,675 


-799 


-304 
193 

-910 
-1 

-909 


-234 


Oct.- 
Dec. 


5,146 

595 

4,551 
-3,888 

663 
2,035 

108 


1,927 
-1,428 


499 
1,162 

-722 
95 


-424 

189 
-794 

123 
-220 

-1,753 
-591 


-417 
-400 

-1,408 
-75 

-1,333 


-472 


659       -675  I     -861 


1962 


Jan.- 
Mar. 


5,070 

596 

4,474 
-3,920 


554 
2,093 


115 


1,978 
-1,388 


590 
1,144 

-752 
220 


-279 

126 
-627 

160 
-234 

-1,386 

-242 


-340 
106 

-476 
-14 

-462 


-692 


'  Excludes  military  transfers  under  grants. 

'  Short-term  capital  movements  between  parent  companies  and  their  foreign  afliliates 
part  of  direct  investment.  b  >• 

>  Licrease  in  U.S.  liabilities  and  sales  of  gold  (-) 


230 


Apr.- 
June 


5,345 

560 

4,785 
-4,032 


753 
2,154 


122 


2,032 
-1,405 


627 
1,380 

-743 
247 


-271 

212 
-707 


62 
-222 

-1,422 


-42 


-5 
-171 

-218 
90 

-308 


10 


-318 


io£?^^^^~^'^"  Department  of  Commerce,  OflJce  of  Busmess 
19o2* 


are  reported  as 
Economics,  Washington,  D.C.,  September 


836   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  112. — Assets  and  liabilities  of  the  Exchange  Stabilization  Fund  as  of  June  30, 

1961  and  1962 


Assets  and  liabilities 


Assets 

Cash: 

Treasurer  of  the  United  States,  checking  accounts.  .. 
Federal  Reserve  Bank  of  New  York,  special  account 

Total  cash 

Special  account  of  the  Secretary  of  the  Treasury  in  the 
Federal  Reserve  Bank  of  New  York— gold  (sched- 
ule 1) 

Foreign  exchange  due  from  foreign  banks: 

Central  Bank  of  Argentina 

Banco  de  Brazil 

Bank  of  Canada 

Bank  of  England 

Deutsche  Bundesbank 

Banco  d'ltalia 

Netherlands  Bank.. 

Swiss  National  Bank 

Investments  in  U.S.  Government  securities  (schedule  2). 

In  vestments  in  foreign  securities  (schedule  2) 

Accrued  interest  receivable  (schedule  2) 

Accounts  receivable 

Unamortized  premium  on  U.S.  Government  securities.- 
Office  equipment  and  fi.xtures,  less  allowance  for  de- 
preciation  


Total  assets. 


Liabilities  and  Capital  ' 

Liabilities: 

Vouchers  payable 

Employees'  payroll  allotment  account,  U.S.  savings 
bonds _ 

Accounts  payable 

Unamortized  discount  on  U.S.  Government  securi- 
ties.  


Total  liabilities. 


Capital: 

Capital  account 

Cumulative  net  income  (schedule  3). 

Total  capital 

Total  liabilities  and  capital 


June  30,  1961 


$745, 020. 70 
111,  81)6,950.15 


112,611,970.85 

52, 810, 064. 16 
14, 000, 000. 00 


25,399,951.81 
20,  132, 000.  22 


04. 999, 028.  28 
46, 000, 000, 00 


306.291.55 

91,35().  15 

1, 943. 28 

20. 482. 93 


336, 373, 089. 23 


162,719.11 

2.  682.  47 
231,052.33 

9,  605.  58 


406, 059. 49 


200, 000, 000. 00 
135, 967, 029.  74 


335, 9S7, 029.  74 


333.373,089.23 


June  30,  1962 


$1,234,967.79 
77,025.  123.  17 


78, 260, 090.  90 


91,750.542.72 

2, 000, 000. 00 

44,  500, 000. 00 

5, 000, 000. 00 


2,  506, 456. 80 

892,062.14 

3,377.481.05 

20. 229, 010. 13 

72, 250, 000. 00 

21,359,073.02 

300,291.54 

352.  796.  86 

716.04 

27,  879. 09 


342, 812, 400. 35 


57, 866.  65 

3, 335. 23 
263,  525. 68 

122,821.32 


447,  548. 88 


200, 000, 000. 00 
142,364,851.47 


342,364,851.47 


342,  812, 400.  35 


Fiscal  year 
1962,  increase, 
or  decrease  (— ) 


$489,9)7.09 
-34,841,826.98 


—34,  351, 879.  89 


38,  940, 478.  56 


-12.000, 

44.  500, 

5,  000, 

-25,  399, 

-17,625, 

892, 

3. 377, 

-44,  770, 

26.  250, 

21,359, 

261, 
-1, 


000.  ou 
000.  00 
000. 00 
951.81 
543.  42 
062.  14 
481.05 
018.15 
000.  00 
073.02 
-.01 
440.71 
227.  24 


7, 396. 16 


6,439.311.12 


-104,852.46 

().52.  76 
32,  473. 35 

113,215.74 


41, 489. 39 


6,397,821.73 


6,397,821.73 


6,439,311.12 


'  For  contingent  liabilities  under  outstanding  stabilization  agreements,  see  schedule  4. 

SCHEDULE  1.— SPECIAL  ACCOUNT  OF  THE  SECRETARY  OF  THE  TREASURY  IN  THE 
FEDERAL  RESERVE  BANK  OF  NEW  Y^ORK- GOLD 


Location  of  gold 

June  30, 1961 

June  30,  1962 

Ounces 

Dollars 

Ounces 

Dollars 

Federal  Reserve  Bank  of  New  York — 
U.S.  Assay  Office,  New  York 

1,354.295.6.57 
154,  .563.  189 

$47, 400, 348.  03 
5,409.716.13 

943, 390. 424 
1,430,167.976 

247. 320. 238 

$33,018,664.85 
60, 055, 883.  92 

Federal  Reserve  Bank  of  New  York, 
Account  No.  4 

8, 675, 993.  95 

Total  gold -- 

1,508,858.846 

,52,  810, 064. 16 

2, 620, 878. 638 

91,750,542.72 

TABLES 


837 


Table  112. — Assets  and  liabilities  of  the  Exchange  Stabilization  Fund  as  of  June  SO, 

1961  and  1962 — Continued 

SCHEDULE  2.— INVESTMENTS  HELD  BY  THE   EXCHANGE   STABILIZATION  FUND, 

JUNE  30,  1962 


Securities 


Face  value 


Cost 
(in  dollars) 


Average 
price 


Accrued 
interest 


U.S.  Government  Securities,  public  issues: 

Treasury  bills 

Treasury  notes,  25*%  Series  A-1963 

Treasury  bonds: 

2M%  of  1963 

2H%  of  1964-69  (dated  Apr.  15,  1943)... 
2J^%  of  1964-69  (dated  Sept.  15,  1943)... 

23^%  of  196.5-70. 

2>^%  of  1966-71 

2K%  of  1967-72  (dated  Nov.  15,  1945)... 

Total 


Foreign  securities: 
Republic  of  Germany,  Treasury  bills. 


$26, 250, 000 
16,000,000 

5, 000, 000 

2, 200, 000 

400, 000 

10, 000, 000 
2, 400. 000 

10,000,000 


$25, 836, 656.  94 
16,005,625.00 

4, 976, 562.  50 

2,199,625.00 

399,  875. 00 

10, 000, 000. 00 
2, 398, 843.  75 

10, 000, 000. 00 


100. 03515 

99. 53125 
99.  98295 
99. 96875 

100. 00000 
99.  95182 

100. 00000 


72, 250, 000 


71,817,188.19 


DM85,460,465.97 


21, 359, 073. 02 


$156,629.83 

46, 616. 02 
2,254.10 
409.  83 
72, 690. 21 
17, 445.  65 
10, 245. 90 


306, 291.  .54 


SCHEDULE  3.— INCOME  AND  EXPENSE 


Classification 


Jan.  31, 1934,  through- 


June  30, 1961 


June  30, 1962 


Income: 

Profits  on  transactions  in: 

British  sterling 

French  francs 

Gold  and  exchange  (including  profits  from  handling  charges  on 

gold) 

Sale  of  silver  to  U.S.  Treasury 

Silver 

Investments 

Miscellaneous 

Interest  on: 

Investments 

Foreign  balances 

Chinese  yuan 


Total  income- 


Expense: 

Personal  compensation  and  benefits. . 

Travel 

Transportation  of  things 

Rent,  communications,  and  utilities- 
Supplies  and  materials 

Other 


Total  expenses 

Cumulative  net  income. 


$310, 638. 09 
351, 527. 60 

129,617,820.51 

3, 473, 362. 29 

102,  735. 27 

2.  554. 630.  63 

70, 372.  96 

21, 709, 798.  70 
4,179,817.45 
1,975,317.07 


$310, 638. 09 
351, 527. 60 

135, 020, 638. 48 

3, 473, 362. 29 

102. 735. 27 

2,  583, 989. 43 

91, 169.  90 

23,261,965.29 
6,221,464.64 
1,975,317.07 


164, 346, 020.  57 


173,392,808.00 


21,591,018.59 

1,185,379.47 

1, 846, 797. 63 

728, 455. 88 

168, 547. 36 

2, 858, 791. 90 


23, 538. 812. 86 

1,422,462.92 

2,016,752.65 

755, 302.  78 

182, 895. 44 

3,  111,  729. 94 


28, 378, 990. 83 


31,027.956.59 


135, 967, 029.  74 


142,364,851.47 


SCHEDULE  4.— CURRENT  U.S.  STABILIZATION  AGREEMENTS,  JUNE  30,  1962 


Efiective  dates 

Amounts 

Country 

Origuial 

Renewal 

Expiration 

Original 
agreement 

Advances 

Repay- 
ments 

Argentina 

June    7,19621 
May  16,1961 
Sept.    6,1961 
Jan.      1,1958 
June  30,1962 

June    6, 1963 
May  15,1963 
Sept.    5,1962 
Dec.  31,1963 
Dec.  31,1962 

(In  millions) 

$50 

70 

6 

75 

25 

(In  millions) 

(InmiUions) 

Brazil.. 

$74.5 

$30 

Costa  Rica 

Mexico    .  .. 

Jan.     1, 1962 

Philippine  Republic 

'  Agreement  dated  Jan.  1, 1959,  terminated. 


838   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  113. — Summary  of  receipts,  wilhdraxoals,  and  balances  of  foreign  currencies 
acquired  by  the  United  Stales  without  purchase  with  dollars,  fiscal  year  1962 

[In  U.S.  dollar  equivalent '] 

Balance  held  by  Treasury  Department,  July  1,  1961 $1,323,393,406.49 

Collections: 

Development  Loan  Fund  Giquidation  account)  sec.  204,  Mutual 

Security  Act  of  1954,  as  amended  (22  U.S.C.  1874)  2.. $12,291,294.53 

Sale  of  suiplus  agricultural  commodities  pursuant  to: 

Section  402.  Mutual  Security  Act  of  1954  (22  U.S.C.  1922) 110,883,288.42 

Title  I,  Public  Law  480,  Agricultural  Trade  Development  and 

Assistance  Act  of  1954,  as  amended  O  U.S.C.  1704-5>- 985,058.442.50 

Commodity  Credit  Corporation  Charter  Act  (15  U.S.C.  713a).  2,828.07 

Loans  and  other  assistance. 

Section  104(e)  and  104(g)  Public  Law  480,  loan  repayments, 

including  interest 17,874,484.02 

Section  H35.  Foreign  Assistance  Act  of  1901  (22  U.S.C.  2395). .  141. 149. 43 

Section  612,  Foreign  Assistance  Act  of  1961  (22  U.S.C.  2362) 

principal  and  interest  on  loans 32,228,602.62 

Informational  media  guaranties  (22  U.S.C.  1442): 

Principal 3,560,988.67 

Interest...- - --  15,795.50 

Lend-lease  and  surplus  property  agreements  (55  Stat.  32;  22  U.S.C. 
412b,  1946  ed.),  and  (60  Stat.  754;  50  App.  U.S.C.  1641(b)(1),  1946 

ed.)  ' --- — 26,197,136.40 

Bilateral  agreements  5%  and  10%  counterpart  funds,  (22  U.S.C. 

1852(b)) --- 20,710,885.67 

Foreign  programs  to  be  held  in  trust. 24,659,288.62 

President's  siiecial  international  program  (22  U.S.C.  1990) 5.035.56 

All  other  sources- - - 78,  592,  ,539. 61 

Total  collections -- 1,318,221,759.62 

Total  available 2,641,615,166.11 

Withdrawals: 

Sold  for  dollars,  proceeds  credited  to:  < 

Treasury  accounts  and  miscellaneous  receipts 88, 110, 366. 45 

Commodity  Credit  Corporation  capital  fund 146,976,045.83 

U.S.  Information  Agency 4,492,437.13 

Development  Loan  Fund  (liquidation  account)  ^ 1, 306, 187. 63 

Treasury  suspense  account 1,259,445.84 

Presiden  t  's  special  international  program 5, 035. 55 

Total  sold  for  dollars.. 242,149,518.43 

Requisitioned  for  use  without  reimbursement  to  the  Treasury 
pursuant  to: » 

Section  104,  Public  Law  480.  as  amended  (7  U.S.C.  1704) 946, 704, 221. 46 

Section  204,  Mutual  Security  Act,  as  amended  (22  U.S.C.  1874) 

(See  also  footnote  2).-- 926,387.35 

Section  402,  Mutual  Security  Act,  as  amended  (22  U.S.C. 

1922) 113,289,673.60 

Trust  agreements 24,664,508.99 

Other  authority 586,  .576. 01 

Total  requisitioned  without  reimbursement - 1,086,171,367.41 

Total  withdrawals --  1,328,320,88.5.84 

Adjustment  for  rate  differences -28,684,000.94 

Balances  held  by  Treasury  Department,  June  30. 1962 1.284,610,279.33 

Footnotes  at  end  of  table. 


TABLES  839 

Tablk  113. — Summary  of  receipts,  withdrawals,  and  balances  of  foreign  currencies 

acquired  by  the  United  States  without  purchase  with  dollars,  fiscal  year  1962 — Con. 

[In  U.  S.  dollar  equivalent '] 

Analysis  of  balance  held  by  Treasury  Department  June  30, 1962: 

Proceeds  for  credit  to  miscellaneous  receipts $200, 757, 747. 91 

Proceeds  for  credit  to  agency  accounts: 
Informational  media  guaranty  funds: 

Principal 1,526,622.30 

Interest  account 169, 128.89 

Commodity  Credit  Corporation  capital  funds 223,396,612.19 

Held  in  suspense  for  identification 4,863.26 

For  program  use  under  sec.  103(c),  Mutual  Security  Act  of  1954,  as  amended  (22 

U.S.C.  1813) 13,901.82 

For  program  allocations: 

Section  104.  Title  I,  Public  Law  480,  as  amended 845, 454, 551. 31 

Section  635.  Foreign  Assistance  Act  of  1961  (22  U.S.C.  2395) 236,996. 82 

Section  612,  Foreign  Assistance  Act  of  1961  (22  U.S.C.  2362) 13,049,854.  83 

Total 8  1,284,610,279.33 

Balances  held  by  other  executive  agencies,  June  30. 1962,  for  purpose  of: 

Economic  and  technical  assistance  under  Mutual  Security  Act 136, 419,323. 40 

Programmed  uses  imder  Agricultural  Trade  Development  and  Assistance  Act 1, 286, 548, 885. 34 

Military  family  housing  in  foreign  countries 10, 516, 656. 70 

Trust  agreements  with  foreign  countries 8, 410, 946. 44 

Other 1, 375, 562.  57 

Balances  held  by  Agency  for  International  Development  (to  be  deposited  in  Treasury): 

Interest  earned  on  bank  balances 45. 45 

Interest  on  Cooley  loans  ' 126, 146. 66 

Repayments  on  Cooley  loans  ' 325, 778. 84 

Total 1, 443, 723, 345.  40 

Grand  total 2,728,333,624.73 


1  For  the  purpose  of  providing  a  common  denominator,  the  currencies  of  86  foreign  countries  are  herein 
stated  in  U.S.  dollar  equivalents.  It  .should  not  be  assumed. that  dollars  in  amoimts  equal  to  the  balances 
shown  are  actually  available.  The  dollar  equivalents  are  calculated  at  varying  rates  of  exchange.  Foreign 
currencies  generated  under  the  Public  Law  480  program  comprise  more  than  76  percent  of  the  total  deposits. 
Foreign  currencies  deposited  under  certain  provisions  of  Public  Law  480  and  the  Mutual  Security  Act  were 
converted  at  deposit  rates  provided  for  in  the  international  agreements  vdth  the  respective  countries.  The 
greater  portion  of  these  currencies  is  available  to  agencies  without  reimbursement  pursuant  to  legislative 
authority  and,  when  disbursed  to  the  foreign  governments,  wlU  generally  be  accepted  by  them  at  the  de- 
posit or  collection  rates.  Currencies  available  for  sale  for  dollars  and  certain  other  U.S.  uses  were  converted 
at  market  rates  of  exchange  in  effect  on  the  date  of  the  sale  and  market  rates  in  effect  at  the  end  of  the  month 
for  transactions  during  the  month ,  these  market  rates  betag  those  used  to  pay  U.S.  obligations.  The  closing 
balances  were  converted  at  the  June  30,  1962.  market  rates.  These  statements  do  not  include  the  partici- 
pating country-owned  foreign  currencies  equivalent  to  $267,517,921.06  which  are  reported  by  the  Agency 
for  International  Development.  These  cuirencies  are  under  jouit  control  of  the  Agency  for  International 
Development  and  the  foreign  governments  involved.  This  agency  was  established  within  the  Department 
of  State  under  authority  of  Executive  Order  10973,  dated  Nov.  3,  1961,  pursuant  to  the  provisions  of  the 
Foreign  Assistance  Act  of  1961,  Public  Law  87-195.  Sept.  4.  1961  (22  U.S.C.  2381). 

2  Repealed  by  the  Foreign  Assistance  Act  of  1961.  Public  Law  87-195,  pt.  III.  sec.  642(a) (2) (4),  Sept.  4, 
1961.  75  Stat.  460. 

3  Collections  under  lend-lease  and  surplus  property  agreements  will  continue  to  be  made  until  such  agree- 
ments are  satisfied ,  although  the  act  originally  authoriziag  such  action  has  been  repealed. 

<  Dollars  acquired  from  the  sale  of  foreign  currencies  are  derived  from  charges  against  the  dollar  appropria- 
tions of  the  Federal  agencies  which  use  the  currencies.  These  dollar  proceeds  are  credited  to  either  mis- 
cellaneous receipts  or  other  appropriate  accounts  on  the  books  of  the  Treasury. 

5  Includes  advances  pursuant  to  the  cited  provisions  of  the  Agricultural  Trade  Development  and  Assist- 
ance Act  of  1954,  as  amended;  the  mutual  security  acts,  as  amended;  and  withdrawal  of  foreign  currency 
held  in  trust. 

^Represents  the  dollar  value  of  currencies  held  in  the  accounts  of  the  Treasury  Department  only.  Cur- 
rencies transferred  to  agency  accounts  pursuant  to  requisitions  submitted  to  the  Treasury  Department, 
or  as  otherwise  authorized .  are  accounted  for  by  the  U.S.  Government  agencies.  Balances  held  by  executive 
departments  and  agencies  as  of  June  30. 1962.  are  stated  at  end  of  summary. 

'  The  loans  were  made  under  section  104e  (Cooley  Amendment)  of  the  Agricultural  Trade  Development 
and  Assistance  Act  of  1954,  as  amended  (7  U.S.C.  1704(e)). 

Note.— For  detailed  data  on  collections  and  withdrawals  by  country  and  program,  see  Part  V  of  the 
Combined  Statement  of  Receipts,  Expenditures  and  Balances  of  the  United  States  Government  for  the  Fiscal 
Year  Ended  June  SO,  1962. 


840   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  114.- — Balances  of  foreign  currencies  acquired  by  the  United  States  without 

purchase  with  dollars,  June  30,  1962 


Currency 

In  Treasury  accounts 

In  agency  accounts 

Country 

Foreign 
currency 

Dollar 
equivalent 

Foreign 
currency 

Dollar 
equivalent 

Afghanistan 

Argentina 

Australia 

Austria. 

Afghani 

Peso 

361,898.78 

41,478.806.97 

1, 541. 86 

13, 895, 255.  59 

32,835,580.00 

$7, 539.  56 

341,422.13 

3, 478. 15 

508, 714. 98 

660, 409. 90 

20,494,001.51 

111,497,793.40 

513. 05 

32. 242, 190.  57 

392,841.00 

339.23 

32, 789, 583, 149.  00 

21, 482,042.080.  .50 

113,612,041.44 

20, 149,  684. 40 

48, 479.  789.  01 

15,197,913.10 

1.  543, 908,  786. 40 

35.  519. 478.  83 

3, 919.  00 

97,  690. 89 

351.00 

9,  573.  52 

34, 190, 606.  56 

$426,958.36 
917,  077. 30 

Pound 

Schilling 

Franc 

1, 1.57. 35 
1,  253,  584. 39 

Belgium 

7,901.07 

Herniuda 

Pound 

953.  72 

Bolivia 

Boliviano 

Cruzeiro 

Kvat 

21,852,251,870.00 

5, 134, 946, 040. 80 

42, 269, 160.  38 

7, 876,  699. 34 

14, 353, 263.  57 

4, 351,  278. 49 

404, 715, 781. 12 

38, 986. 749.  51 

167, 800, 205. 00 

23,419.25 

106. 131. 96 

4, 405, 384.  27 

15, 927.  628.  70 

4, 085. 85 

604, 146. 00 

1,379,011,585.00 

32, 465. 244.  86 

10, 083, 078. 41 

32, 042.  69 
16, 368. 36 

318.  739,  .569. 10 
27, 764.  55 

359, 132, 850.  00 

1  805, 971.  23 

14,671,274.41 

8,861,459.22 

220, 082.  08 

3, 013, 492.  25 

2, 722.  510. 56 

10, 117, 894.  54 

4, 545, 048. 01 

2. 599, 538. 42 

3, 537.  65 

296. 872.  62 

639, 852. 47 

702, 276. 41 

1,  634. 34 

244. 099. 39 

4,301.346.18 

G,  578, 197. 04 

2,528,354.66 

2. 584. 09 

46, 408.  75 

10, 624, 652. 30 

27, 764.  55 

1, 456, 928. 40 

2. 709, 882. 90 

Brazil 

61,377,264.81 

Burma  .  

23, 818, 038. 03 

Cambodia 

Rid      

578, 349. 15 

Cevlon  . 

Rupee 

Escudo 

N.T.  Dollar- 
Peso 

10,178,414.66 

Chile    

9, 267, 020. 18 

China 

Colombia          

38.  597, 719.  66 
4, 040. 896.  35 

Congo,  Republic 

of  the. 
Costa  Rica 

Franc 

60.71 

Colon 

14, 7.56.  93 

Cyprus 

Pound 

Krone.  .  . 

981.82 

Denmark 

1, 390. 49 

Ecuador     

Sucre. 

1.507,522.34 

El  Salvador 

Colon 

Ethiopia 

Finland 

E.  Dollar 

Markka 

New  Franc 

W.D.  Mark... 

ED.  Mark... 

Pound 

Drachma 

Quetzal 

Franc  ...  .. 

1,079,462.97 

359, 907, 552.  00 

14,295,951.18 

82, 344, 106.  21 

436. 146.  66 
1.122,606.21 

France _ 

Germany,  Federal 
Republic  of. 

Germany,  East 

Ghana  _. 

2. 917,  .541.  06 
20, 642, 955.  41 

732.  97 
391, 876,  589.  40 

378,  767. 81 
246, 498,  728. 00 

166, 722. 41 

2, 078. 18 

Greece 

13, 062. 552. 98 

Guatemala... 

Guinea 

378, 767. 81 
999,994.84 

Haiti 

Gourde..  ..  . 

33, 344. 48 

Honduras 

Lempira. 

H.K.  Dollar... 

Forint 

Krona 

Rupee 

Rupiah 

Rial 

183, 393.  39 

171,446.06 

500, 000.  00 

43, 043, 624. 15 

1.307.895.644.36 

1.324.543.478.31 

59. 691, 482. 35 

91,696,69 

29, 973.  09 

10,416.67 

999, 619.  69 

276, 803, 310.  95 

29,434.299.50 

785, 414.  25 

Hong  Kong 

Hungary 

125, 855.  24 

22, 002.  66 

Iceland    ..        

65, 887, 648. 34 

3, 493,  716,  .504.  86 

2, 990,  219, 519.  60 

516,861,809.10 

113.08 

674.  52 

58, 605, 731.  65 

5, 943. 298. 494. 00 

287.  53 

483,097,824.35 

764. 40 

12.281.47 

230,916,481.13 

7,271,016.00 

1.5,30.135.81 

India 

739. 410, 900.  50 

Indonesia           

66, 449  322.  66 

Iran 

6,800,813.28 

Iraq 

Dinar 

317.  82 

Ireland 

Pound 

Pound 

Lira 

Pound 

Yen  .  

6, 479.  28 

81, 758. 256.  79 

2. 908, 880, 779. 00 

9, 502.  60 
2,790,799,035.25 

18. 225. 84 

27, 788. 524.  53 

4,684,188.06 

26, 805.  64 
7, 752, 219.  51 

1,897.40 

Israel 

19, 535, 243. 89 

Italy 

10,085.522.05 

Jamaica 

811.11 

Japan 

1,341,938.41 

Jordan 

Dinar 

2. 155.  71 

E.A.  Shilling.. 

1,731.49 

Korea,  Republic 

of. 
Laos. 

Won 

1,701.276,347.22 
27. 502.  61 

13,210,751.82 
339.  54 

1,783,138.86 

Kip 

89,765.63 

Footnotes  at  end  of  table. 


TABLES 


841 


Table  114.^ — Balances  of  foreign  currencies  acquired  by  the  United  States  without 
purchase  with  dollars,  June  SO,  1962 — Continued 


Currency 

In  Treasury  accounts 

In  agency  accounts 

Country 

Foreign 
currency 

Dollar 
equivalent 

Foreign 
currency 

Dollar 
equivalent 

Lebanon 

Pound .. 

14,881.87 
268. 35 

$4,980.55 
755  28 

Libya 

Pound - 

Malaya,  Federa- 

Malayan 
Dollar. 
C.F.A.  Franc- 
Peso.. 

246, 017. 04 

30, 759, 473. 00 

24, 463, 779. 36 

75, 174, 556.  61 

2,153,438.93 

103,  512. 46 

5, 936, 192. 53 

$81,033.28 

84,  732.  54 

1,  958,  669. 28 

14, 998, 913. 93 

455, 754. 27 

13, 478. 18 

1, 653, 996.  24 

tion  of. 
Mali.. 

Mexico 

4, 863, 740.  59 
39,684,699.98 
24, 469, 335. 51 

389, 410. 78 
7,917,936.98 
5, 178, 695. 35 

Morocco 

Dirham 

Indian  Rupee. 
Nepalese 
Rupee. 

Guilder.- 

Pound 

Nepal 

Nepal 

Netherland  s 

New  Zealand 

3, 266, 659. 00 

286. 88 

910, 186. 40 
795. 35 

Nicaragua 

Cordoba 

Pound 

Krone 

217,811.33 

5. 603.  32 

1,532,620.19 

488, 147, 647. 43 

29,041.51 

15,833.09 

215,  558. 39 

103,377,309.67 

Nigeria...  

610.  48 

35, 437.  90 

292, 915, 634. 33 

104,452.35 

1  725  02 

Norway.. 

4, 984. 23 

62,032,112.32 

22, 120. 36 

Pakistan 

Rupee 

Pakistan 
Rupee. 

Balboa 

Guarani 

Sol 

(Afghanistan, 

U.S.D.O.) 
Panama 

758. 36 

755,  506, 020. 27 

64,  444,  623. 14 

17,  503, 883.  51 

9.  429, 418,  701.  57 
14, 920, 344. 06 

758. 36 
5,996,079.53 
2,411,432.69 
4,  519, 463.  86 

392,892,445.90 
522,787.11 

Paraguay 

Peru 

124,830,931.66 
69,  518,  553. 92 

360, 684.  56 

1, 133, 685. 89 

469, 712. 00 

28. 958. 94 

2, 570.  40 

198, 442. 42 
224.  45 

4, 792,  274, 308. 02 

558,  719.  31 

9, 196.  84 

30, 324.  45 

63,300,343.54 

18,  557, 424.  72 

2, 155, 264. 89 

250,  283,  290.  24 

35,619,641.09 

5, 865, 615.  92 

17, 244, 029. 49 

4, 657. 870.  59 
17, 949,  536.  26 

15,028.52 

39, 722.  70 

1  917  19 

Philippines, 

Peso. 

Republic  of  the. 
Poland 

Zloty 

Portugal.    - 

Escudo 

C.F.A.  Franc- 
West  African 

Pound. 
Malayan 

Dollar. 
Somalo 

Senegal 

Sierra  Leone 

81.828.04 
846.  64 

Singapore. 

Somali 

27, 949. 63 
316. 48 

South  Africa, 

Rand 

13, 794. 75 

3,348,967,399.11 

152,822.91 

3,  524.  261.  34 

2,  794,  546. 09 

17, 370, 825.  81 

24,  633, 408.  48 

2, 839,  523.  92 

347, 482,  264.  61 

33, 099,  531. 25 

2,  969, 356. 01 

26, 222,  493.  43 

1,215,438.71 

705,  766,  754.  78 

83,351,780,222.00 

19,451.14 

55, 862,  705. 00 

438,390.47 

684,  588.  45 

646,  735.  96 

4, 865,  777.  53 

1,181,458.44 
6,814,312.27 

38. 609. 206.  26 

75. 226. 207.  38 
8,369,098.12 
2, 388,  205.  24 

267,423.26 

9, 698,  594. 95 

111,135,706.96 

Union  of. 
Spain 

Peseta 

Pound 

Krona. 

80, 457, 083.  54 

1, 602, 751.  94 

1  786  49 

Sudan.. 

Sweden 

Switzerland 

Franc 

7  017.92 

Syrian  Arab 
Republic. 
Thailand 

Pound 

Baht . 

17, 731, 188.  66 

890, 044. 35 

5, 172, 221. 96 

27, 809. 254. 47 

80, 953, 729. 79 

16,  532, 175.  64 

1,  570, 494. 49 

Tunisia 

Dinar 

Turkey 

Lira . 

United  Arab 
Republic: 
Cairo... 

Egy.  Pound... 

Pound. 

Peso.. 

United  Kingdom.. 
Uruguay 

Venezuela... 

Bolivar-. 

Piastre 

Dinar 

Viet-Nam. 

280,  580, 853.  27 
49,911,705,635.00 

3, 855, 721.  50 
66, 548, 940. 85 

Yugoslavia 

Total. 

'1,284,610,279.33 

■1,443,723,345.40 

'  For  the  purpose  of  providing  a  common  denominator,  the  cinrencies  of  86  foreign  countries  are  herein 
stated  in  U.S.  dollar  equivalents.  It  should  not  be  assumed  that  dollars  in  amounts  equal  to  the  balances 
shown  are  actually  available. 


842   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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TABLES 


843 


Table  116. — World  War  I  indebtedness,  payments,  and  balances  due  under  agreements 
between  the  United  States  and  Germany  as  of  June  30,  1962 


Agreements  of  June  23,  1930, 
and  May  26, 1932 

Army  costs 
(reichsmarks) 

Mixed  claims 
(reichsmarks) 

Total 
(reichsmarks) 

Total 
(U.S.  dollars) 

Indebtedness  as  funded 

1, 048, 100, 000. 00 

11,632,000,000.00 

2,  680, 100, 000. 00 

2$1, 080, 884, 330. 00 

Payments: 

Principal 

SO,  600, 000. 00 
856, 406.  25 

81,  600, 000. 00 
5, 610, 000. 00 

132,200,000.00 
6, 466, 406. 25 

3  31, 539, 595. 84 

Interest 

3  2, 048, 213. 85 

Total 

51, 456, 406. 25 

87, 210, 000. 00 

138,666,406.25 

«  33, 587, 809. 69 

Balance: 

Principal 

997, 500, 000. 00 
«  405, 253, 520. 25 

1, 550, 400, 000. 00 
358, 530, 000. 00 

2,547,900,000.00 
<  763, 783, 620. 25 

2 1, 027, 568, 070. 00 

Interest 

2  308,033,893.72 

Total-  

1, 402, 753, 520. 25 

1,908,930,000.00 

'3,311,683,520.25 

« 1, 335, 601, 963. 72 

Agreement  of  February 

27,  1953 » 

Indebtedness  as 

funded  in  U.S. 

dollars 

Total  payments 

through 

Jime  30,  1962 

Balance  due 

Mixed  claims  (U.S.  dollars) 

$97, 500, 000. 00 

$33, 500, 000. 00 

$64,000,000.00 

1  Excludes  489,600,000  reichsmarks  canceled  under  agreement  of  Feb.  27,  1953  (see  footnote  6). 

2  The  amount  of  indebtedness  as  funded  was  converted  to  U.S.  dollars  at  the  rate  of  40.33  cents  to  the 
reichsmark. 

3  The  amount  of  payments  was  converted  at  the  rate  applicable  at  time  of  payment,  i.e.  40.33  or  23.82  cents 
to  the  reichsmark. 

<  Includes  interest  accrued  under  unpaid  moratorium  agreement  annuities  amounting  to  5,289,989  reichs- 
marks. 

'  Includes  4,027,611.95  reichsmarks  deposited  by  the  German  Government  in  the  Konversionskasse  fur 
deutsche  Auslandsschulden  and  not  paid  to  the  United  States  in  dollars  as  required  by  the  agreement. 

'  Under  the  agreement  of  Feb.  27,  1953,  the  United  States  agreed  to  cancel  and  deliver  to  the  German 
Government  24  reichsmark  bonds  of  20,400,000  reichsmarks  each,  issued  under  the  agreement  of  June  23, 1930, 
and  receive  26  dollar  bonds  amounting  to  $97,500,000.  These  bonds  mature  serially  over  a  period  of  25  years 
beginning  Apr.  1 ,  1953.  The  first  5  bonds  are  in  amounts  of  $3,000,000  each,  the  next  5  in  amounts  of  $3,700,000 
each,  and  the  remaining  16  in  amounts  of  $4,000,000  each. 


844   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  117. — Outstanding  indebtedness  of  foreign  countries  on  United  States  Govern- 
ment credits  (exclusive  of  indebtedness  arising  from  World  War  I)  as  of  June  30, 
1962,  by  area,  country,  and  major  program  ' 

[In  millions  of  dollars] 


Under 
Export- 
Import 
Bank 
Act 

Under 
"Ameri- 
can Aid" 

(and 

related 

acts) 

Under  Agricultural  Trade 

Development  and 

Assistance  Act 

Lend- 
lease, 
surplus 
property, 
and  grant 
settle- 
ments 2 

Otlier 
credits 

Area  and  country 

Loans  of  foreign 
currencies 

Long- 
term 
dollar 
credits 

Total 

To 

foreign 
govern- 
ments 

To 

private 
enter- 
prises 

Western  Europe: 
Austria                          - 

27 

45 

6 

58 

650 

8 

10 

(*) 

24 

1 
7 

52 

Belgium  and  Luxerabourg... 

59 
33 

111 

38 

Finland..  

19 

3 

5 

9 

479 

211 

24 

(*) 

88 

France                     

215 

16 

46 

22 

121 

87 

117 

30 

30 

74 

179 

368 

142 

84 
6 

1,348 

Germany,  Federal  Republic  of. 
Greece. 

235 

44 
6 

3 

127 

28 

IrGltind 

121 

Italy 

3 
23 
12 
12 
93 

8 

93 

3 

37 
6 

(*) 

222 

N^pthprlfinds 

145 

Norway 

42 

3 

138 

53 

12 

57 

Spain 

304 

Turkey       

8 

1 

514 

(*) 

""3'260" 

250 

United  Kinedom             

4,143 

Yuffoslavia      . 

48 

188 

7 

384 

European   Coal    and    Steel 

O  nm  TTi  1  in  i  t  V 

84 

North  Atlantic  Treaty  Orga- 
nization (Maintenance  Sup- 
nlv  Rpr vices  Aeencv) 

6 

Total  Western  Europe... 

1,003 

1,627 

567 

22 

19 

1,288 

3,260 

7,787 

Other  Europe: 

C  /echoslo  vakia 

5 

9 

17 

206 

5 

Hunearv          -  .  . 

9 

Poland 

22 

61 

100 

USSR 

206 

Total  other  Europe 

22 

61 

237 

320 

.\sia: 

Afghanistan 

37 

12 

16 

5 

100 

572 

26 
174 

85 

49 

6 
4 
4 

289 

24 

11 

105 

105 

1 

23 

Ceylon 

9 

China — Taiwan 

29 

147 

95 

49 

97 

198 

(*) 

1 
22 

117 

3 

41 

24 

251 

India - 

1,033 

Indonesia 

185 

258 

Israel 

8 

295 

Japan 

1 

303 

Jordan 

6 

3 

6 

229 

33 

2 

1 

21 

27 

T  .pKnTioii 

2 

(*) 
1 
43 

5 

M  alay  a 

6 

Pakistan .  . 

118 
5 

2 

(*) 

3 

(*) 
4 

353 

Philippines 

82 

Sand    Arabia 

4 

1 
37 
51 

2 
3 

3 

Thailand 

19 

59 

51 

Other  Asia 

(*) 

(*) 

(♦) 

(•) 

Total  Asia 

717 

1,357 

676 

35 

215 

(*) 

3,000 

Footnotes  at  end  of  table. 


TABLES 


845 


Table  117. — Outstanding  indebtedness  of  foreign  countries  on  United  States  Govern- 
ment credits  (exclusipe  of  indebtedness  arising  from  World  War  I)  os  of  June  30, 
1962,  by  area,  country,  and  major  program  i — -Continued 

[In  millions  of  dollars] 


Under 
Export- 
Import 
Bank 
Act 

Under 
"Ameri- 
can Aid" 

(and 

related 

acts) 

Under  Agricultural  Trade 

Development  and 

Assistance  Act 

Lend- 
lease, 
surplus 
property, 
and  grant 
settle- 
ments 2 

Other 
credits 

Area  and  country 

Loans  of  foreign 
currencies 

Long- 
term 
dollar 
credits 

Total 

To 
foreign 
govern- 
ments 

To 
private 
enter- 
prises 

Latin  America: 

Argentina 

275 

34 

693 

168 

138 

15 

36 

26 
5 

75 

62 

35 

4 

12 

(*) 
89 
32 
26 

313 

Bolivia 

39 

Brazil 

4 

861 

Chile 

(*) 
2 

263 

Colombia. 

202 

Costa  Rica... _. 

19 

Cuba 

36 

l^ominican  Republic 

12 

18 

(') 
5 
4 
8 
2 
2 
9 
7 

10 
6 

10 

12 

Ecuador 

17 

7 

1 

27 

2 

301 

13 

8 

9 

109 

3 

83 

(*) 

24 

6 

(*) 

(*) 

41 

El  Salvador 

1 

8 

Guatemala 

6 

Haiti 

(*) 

(*) 

32 

Honduras _  . 

10 

Mexico 

10 

4 

317 

Nicaragua 

14 

Panama 

17 

Paraguay 

2 
13 

5 

18 

Peru . 

1 
2 

i 

(*) 

134 

Uruguay 

17 

Venezuela 

93 

Other  Latin  America 

(*) 

Unspecified  Latin  Amor- 
ica.. 

7 

31 

Total  Latin  America 

1, 965 

300 

195 

10 

1 

11 

(*) 

2,481 

Africa: 

Ethiopia.. 

5 
47 
(*) 

11 

1 

8 

153 

4 

11 

(•) 
19 

16 

Liberia 

67 

Libya 

8 

Morocco 

153 

Nigeria _     _ 

1 



5 

Rhodesia  and  Nyasaland.. 

11 

South  Africa 

59 

59 

Sudan 

10 

1 

12 

13 

(*) 
(*) 

10 

Tanganyika 

1 

Tunisia 

1 

128 

13 

United     Arab     Republic 
(Egypt).. 

26 
(*) 

1 

168 

Other  Africa 

(*) 

Unspecified  Africa 

(•) 

Total  Africa 

139 

224 

130 

1 

19 

512 

Oceania: 

Australia 

17 

5 

(*) 
1 

17 

New  Zealand .    _ 

6 

Total  Oceania 

22 

1 

23 

United  Nations . 

45 

45 

Unspecified 

10 

10 

Total  all  ai-eas 

3.867           3.578  1 

1, 567 

68 

19 

1,772 

3. 306       14. 178 

*Less  than  $500,000. 

•  Includes  estimates  for  the  U.S.  dollar  equivalent  of  receivables  denominated  in  other  than  dollars  and/or 
payable  at  the  option  of  the  debtor  in  foreign  currencies,  goods,  or  services.  The  total  amount  of  such  esti- 
mates approximates  $3,030,000,000. 

2  Data  on  lend-lease,  surplus  property,  and  settlements  for  grants  include  approximately  $342,000,000  for 
surplus  property  and  other  credits  outstanding  and  administered  by  Federal  agencies  other  than  the  Treas- 
ury Department  (Export-Import  Bank  $200,000,000,  State  Department  $112,000,000,  Department  of  the 
Army  $20,000,000,  Maritime  Administration  $9,000,000,  and  General  Services  Administration  $1,000,000), 
and  exclude  about  $64,000,000  in  defaulted  short-term  "cash"  credits  and  deferred  and  otherwise  past  due  in- 
terest. They  also  exclude  the  value  of  silver  received  by  the  U.S.  Government  ($1,000,000)  but  not  com- 
pletely recorded  in  the  accounts  of  the  Treasury  Department  as  of  June  30,  1962. 

Source— U.S.  Department  of  Commerce,  Office  of  Business  Economics,  from  data  supplied  by  the  operat- 
ing agencies. 


846   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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848   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table   118. — Status  of  accounts  under  lend-lease  and  surplus  property  agreements 
{World  War  II)  as  of  June  SO,  1962— Continued 

PART  II.— BALANCES  DUE  BY  TYPE  OF  AGREEMENT 


Country,  etc. 

Lend-lease 
settlement 
agreements 

Other  lend- 
lease  accounts 

Surplus 

property 

agreements 

Total 

Australia 

.$27, 103. 23 

458, 253. 71 

7, 057, 706. 44 

808, 971. 10 

$27, 103. 23 

Austria 

458, 253. 71 

Belgium  and  Congo  Repulilic.  -  -. 

7,057,706.44 

Burma.       .  

808,971.10 

China 

.$82, 745, 300. 98 

82, 745, 300. 98 

CzechoslovAkia                           .     . 

6, 145, 334. 37 

6, 145, 334. 37 

Ethiopia                                

$23, 620. 60 

23, 620. 60 

Finland.                  

9,  485, 231. 22 

237.375,638.78 

10,716,231.10 

23, 094, 249.  33 

9,615,774.46 
109,  229.  73 

4.  299.  019.  61 

1.  998,  335.  32 
34,  978,  085.  58 
25,  428, 086. 06 

9. 485, 231,  22 

France 

250, 450, 080. 65 

487, 825,  719. 43 

Germany,  Federal  Republic  of. . 

10.716,231.10 

Greece                .      ...    

23, 094, 249. 33 

Hungary 

9,  615, 774. 46 

Iceland 

109, 229. 73 

India 

4, 539, 514. 23 
90, 000. 00 

8.  838, 533.  84 

Iran...                            

711, 753. 36 

2. 800, 088. 68 

Italy 

34. 978. 085. 58 

Korea 

25.  428, 086. 06 

Liberia                                          .  . 

18, 922, 682. 39 

18, 922, 682. 39 

Middle  East..                

15, 400. 00 

15, 400. 00 

Netherlands 

5, 929, 298. 55 

5, 929, 298.  55 

New  Zealand 

739, 799. 50 

739, 799. 50 

Pakistan 

3. 985, 999. 45 

3, 985, 999. 45 

5,  985.  80 
17,340,026.66 

5,  985.  80 

Poland  ^      .     

17,340,026.66 

Saudi  Arabia 

3,918,580.26 
43.  579. 09 

3,  918.  580,  26 

Southern  Rhodesia. 

43.  579. 09 

Turkev 

17,891.00 
""3i,"598,"975."49" 

17,891.00 

Union  of  Soviet  Socialist  Republics.. 

205. 905, 045. 91 

205,  905, 045.  91 

United  Kingdom  and  colonies. 

504,  m2. 442. 68 

260, 634.  80 

6,750,000.00 

530, 261,  418. 17 

Yugoslavia 

260, 634. 80 

American  Republics.  _ 

494,399.35 

7, 244, 399. 35 

Federal  agencies 

21,930.43 

21, 930. 43 

Total-. 

787,710,513.03 

301, 737, 819.  27 

421, 321,  858. 92 

1,  510,  770, 191. 22 

Footnotes  at  end  of  table. 


TABLES 


849 


Table  118. — Status  of  accounts  under  lend-lease  and  surplus  property  agreements 
(World  War  II)  as  of  June  30,  i 9(5^— Continued 

PART  III.— LEND-LEASE  SILVER  ACCOUNTS 


Country 

Silver 

loaned 

Silver  repaid 

Balance  out- 
standing 

(In  otinces) 

(U.S.  dollars) 

(In  ounces) 

(U.S.  dollars) 

(U.S.  dollars) 

Australia.-     _  __  .    .. 

11,772,730.21 

261,  333.  33 

5.  425, 000. 00 

172.  542, 107.  00 

56,  737,  341.  25 

53, 457, 797. 00 

21,316,120.01 

88. 270, 241. 84 

$8,  371. 719. 26 

185. 837. 03 

3. 857. 777.  77 

122,  696.  609.  42 

40, 346.  553.  77 

,38,014,433.42 

»  18,  583,  255.  72 

62,  769, 949.  72 

11,772.730.21 

261, 333. 33 

5.425,000.00 

172. 203. 891. 65 

56, 737,  341. 25 

47,  8.52.  485. 29 

9  15,  805,  616.  51 

88, 270. 241. 84 

$8, 371, 719. 26 

185, 837. 03 

3, 857, 777. 77 

122, 456, 100. 69 

40, 346. 553. 77 

34. 028, 433. 97 

14,  664,  675.  46 

62,  769, 949. 72 

Belgium 

Ethiopia 

India 

Netherlands 

s  $240, 508. 73 

Pakistan 

Saudi  Arabia 

United  Kingdom 

3, 985, 999.  45 
3, 918.  .580.  26 

Total 

409. 782, 670. 64 

294, 826. 136. 11 

398,328,640.08 

286,681,047.67 

8, 145, 088.  44 

'  Includes  accrued  interest  through  July  1,  1962. 

*  Represents  cash  payments  by  foreign  governments  in  e.xcess  of  billings  under  advance  payment  agree- 
ments.   Amounts  being  held  pending  settlement  for  lend-lease. 

3  Principally  billings  considered  past  due  as  of  June  30,  1901,  and  items  subject  to  negotiation. 

*  Principal  and  interest  in  the  amount  of  $.59,622,516.54  was  paid  Apr.  19,  1962.  The  amount  (previously 
reported  herein  as  postponed)  represented  the  two  annual  installments  originally  scheduled  to  be  made  on 
July  1,  1958  and  1959,  but  which  under  an  agreement  concluded  in  Januarv  1958  had  been  postponed  until 
1981  and  1982. 

5  Includes  silver  valued  at  $240,508.73  which  is  in  the  possession  of  the  United  States  and  is  currently  in  the 
process  of  being  assayed. 

8  Principal  obligation  increased  $3,425,125.95  to  give  effect  to  U.S.  dollar  payments  in  lieu  of  silver. 

'  Includes  .$28,647,846.90  principal  and  interest  installments  postponed  pursuant  to  agreements. 

8  Represents  amount  which  is  postponed  by  agreement  pending  final  settlement  of  certain  claims. 

'  Represents  repayment  of  1,371,410.28  fine  ounces  in  silver  bullion  and  the  equivalent  of  14,434,206.23  fine 
ounces  in  U.S.  dollars  computed  at  market  value  at  time  of  payment. 


661496 — 63 55 


1 


850   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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852   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  120. — Borroioing  authority  and  outstanding  issues  of  Government  corporations 
and  certain  other  business-type  activities  whose  obligations  are  issued  to  the  Secre- 
tary of  the  Treasury,  June  30,  1962  ' 

[In  millions  of  dollars.    On  basis  of  daily  Treasury  statements] 


Corporation  or  activity 


Agency  for  International  Development:  2 

Mutual  defense  program — economic  assistance 

Foreign  investment  guaranty  fund 

India  emergency  food  aid 

Loan  to  Spain. 

Commodity  Credit  Corporation 

Export-Import  Bank  of  Washington.. 

Federal  Deposit  Insurance  Corporation 

Federal  home  loan  banks 

Federal  National  Mortgage  Association: 

Management  and  liquidating  functions 

Secondary  market  operations 

Special  assistance  functions 

Federal  Savings  and  Loan  Insurance  Corporation 

Housing  and  Home  Finance  Administrator: 

College  housing  loans 

Flood  insurance 

Public  facility  loans _ 

Urban  renewal  fund 

Panama  Canal  Company 

Public  Housing  Administration 

Rural  Electrification  Administration 

Saint  LawTence  Seaway  Development  Corporation 

Secretary  of  Agriculture,  Farmers  Home  Administration: 

Rural  housing  loan  program  « 

Direct  loan  account  <* 

Agricultural  credit  insurance  fund  ? 

Secretary  of  Commerce: 

Area  Redevelopment  Administration,  area  redevelopment  fund.. 

Maritime  Admin.,  Federal  ship  mortgage  insurance  fund 

Secretary  of  the  Interior,  Bureau  of  Mines: 

Development  and  operation  of  helium  properties 

Secretary  of  the  Treasury  (Federal  Civil  Defense  Act  of  19.50,  as 

amended) 

Tennessee  Valley  Authority 

U.S.  Information  Agency,  informational  media  guaranty  fund 

Veterans'  Administration  (veterans'  direct  loan  program) 

Virgin  Islands  Corporation 

Defense  Production  .\ct  of  1950,  as  amended: 

Export-Import  Bank  of  Washington 

General  Services  Administration 

Secretary  of  Agriculture 

Secretary  of  tlie  Interior,  Defense  Minerals  Exploration  Admin 

Secretary  of  the  Treasury 

Unallocated 

D.C.  Commissioners,  Stadium  sinking  fund,  Armory  Board,  D.C. 


Borrov^ing 
authority 


1,001 

199 

23 

38 

14.500 

6,000 

3.000 

1.000 

1,494 

2,  250 

3,463 

750 


Outstand- 
ing obli- 
gations 
held  by 
Treasury 


1,001 


23 

38 

12,990 

1,880 


Unused 
borrowing 
authority 


(*) 


199 


1,323 

1^843" 


1,975 
500 
650 

1,000 
10 

1,600 

4,465 
140 

565 

598 

23 


(») 


300 


10 


Total. 


2,'iO 

9  150 

28 

1,830 

1 

20 

1. 854 

76 

36 

107 

7 
(•) 


1,227 


80 
260 


32 

3,484 

121 

232 

598 

23 


49.814 


(•) 


20 

1, 530 

1 


1,790 
65 
31 
91 


(*) 
1,510 
4.170 
3,000 
1.000 

M70 

<  2,  250 

1,619 

750 

748 
500 
570 
740 

10 

1,468 

981 

19 

333 


300 


(*) 


10 

250 

150 

8 

300 


(•) 


20 
64 
12 
5 
16 


28. 634 


21, 180 


•Less  than  $500,C00. 

1  Excludes  authorizations  to  borrow  from  the  public:  also  excludes  authorizations  to  expend  from  public 
debt  receipts  for  subscriptions  to  capital  stock  of  the  following  agencies:  International  Bank  for  Recon- 
struction and  Development,  $6„l=i0  inillion;  International  Monetary  Fimd,  $2,325  million;  International 
Finance  Corporation,  .$35  milhon;  and  certain  Government  corporations,  $1,1.35  million.  In  addition,  the 
authorized  credit  to  the  United  Kingdom,  of  which  $3,2t)0  million  is  outstanding,  has  been  excluded. 

'  The  International  Cooperation  Administration  was  abolished  by  an  act  approved  Sent.  4,  1961  (22 
I'.S.C.  2381(b)),  and  certain  functions,  including  those  relating  to  borrowings  from  tlie  Tre;isury,  were 
transferred  to  this  Agency  which  was  established  under  authority  of  E.O.  10973.  dated  Nov.  3,  1961. 

3  Transferred  to  the  special  a^ssistance  functions  fund  as  of  July  1, 1962,  in  accordance  with  an  act  approved 
June  30,  1961  (12  U.S.C.  1721(f)). 

'  The  balance  shown  represents  unused  portion  of  authorization  to  expend  from  public  debt  receipts 
available  for  loans  to  the  secondary  market  operations  fund  without  further  action  by  Congress.  Because 
of  the  borrowing  and  capital  structure  of  the  fund,  the  maximum  it  could  borrow  from  the  Trea.sury  without 
adjusting  its  other  borrowing  or  its  capital  structure  as  of  Jimo  30,  1962,  would  be  as  follows- 

Borrowing  authorized  (10  times  capital  plus  surplus) $2,900,939,061 

Obligations  outstanding -    -2,557,630,000 

I'nused  balance  of  borrowing  authorized 343.309.061 

'  Formerly  identified  as  farm  housing  loan  program  but  changed  as  loan  operations  were  broadened  by 
the  Housing  Act  of  1961  approved  June  30,  1961  (42  U.S.C.  1471). 

6  Name  changed  from  regular  loan  programs  by  an  act  approved  Aug.  8,  1961  (7  U.S.C.  1988(c)). 

'  Name  changed  from  farm  tenant  mortgage  insurance  fund  by  an  act  approved  Aug.  8,  1961  (7  U.S.C. 
1929(a)) 

s  Autlioritv  to  borrow  from  the  Treasury  is  indefinite  in  amoimt.  Funds  may  be  borrowed  as  needed  to 
purchase  insured  defaulted  mortgages  as  provided  by  an  act  approved  July  15,  1958  (46  U.S.C.  1275(b)). 

»  Represents  amount  of  interim  obligations  outstanding  which  may  be  issued  to  the  Secretary  of  the 
Treasury  under  specified  conditions  as  provided  l)y  an  act  approved  Aug.  6,  1959  (16  U.S.C.  831n-4(c)). 

">  Funds  may  be  borrowed  from  the  Secretary  of  the  Treasury  under  certain  conditions  as  provided  by 
an  act  approved  July  28,  1958  (2  D.C.  Code  1727). 


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854   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table   122. — Description  of  obligations  of  Government  corporations  and  certain 
other  business-type  activities  held  by  the  Treasury,^  June  30,  1962 
[On  basis  of  daily  Treasury  statements,  see  "Bases  of  Tables"] 


Title  and  authorizing  act 


Agency  for  International  Development: ' 
Act  of  Apr.  3,  1948,  as  amended: 

Notes  of  Administrator  (E.G. A.). 

Notes  of  Administrator  (E.G. A.). 
Act  of  June  15, 1951: 

Notes  of  Director  (M.S. A.) 


Total. 


Commodity  Gredit  Gorporation,  act  of 
Mar.  8, 1938,  as  amended: 
Note,  Series  Fifteen— 1963. 


Export-Import  Bank  of  Washington,  act 
of  July  31,  1945,  as  amended: 

Notes,  Series  1965 

Notes,  Series  1965 

Notes,  Series  1965 

Notes,  Series  1965  and  1972 

Notes,  Series  1965 

Notes,  Series  1965,  1967,  and  1968 

Notes,  Series  1968 

Notes,  Series  1968  and  1969 

Notes,  Series  1969. 

Note,  Series  1977.. 

Notes,  Series  1968  and  1977. 


Total. 


Federal  National  Mortgage  Association, 
act  of  Aug.  2,  1954,  as  amended: 
Management  and  liquidating  func- 
tions: 

Note,  Series  C 

Note 

Note,  Series  C 

Note,  Series  C.. 

Notes,  Series  C 


Subtotal. 


Special  assistance  functions: 

Notes,  Series  D 

Notes,  Series  D 

Note,  Series  D 

Note,  Series  D 

Note,  Series  D. 

Note,  Series  D 

Note.  Series  D 

Notes,  Series  D 

Notes,  Series  D 

Notes,  Series  D 

Notes,  Series  D 

Notes,  Series  D 

Notes,  Series  D 

Note,  Series  D 

Notes,  Series  D 

Note,  Series  D 

Notes,  Series  D 

Note,  Series  D,  subseries  BMR. 


Subtotal. 


Total  Federal  National  Mort- 
gage Association 


Housing  and  Home  Finance  Adminis- 
trator: 
College  housing  loans,  act  of  Apr.  20, 
1950,  as  amended: 

Notes,  Series  B  and  D 

Notes,  Series  C,  E,  and  O. 

Notes,  Series  G  and  F 

Notes,  Series  H 

Notes,  Series  I 

Note,  Series  J 


Subtotal 

Footnotes  at  end  of  table. 


Date  of  issue 


Various  dates . 
do.. 

Feb.  6,  1952... 


June  30,  1962. 


Various  dates. 

do 

do... 

do 

do 


do... 

do 

do 

do 

June  30,  1959. 
Dee.  31,  1961- 


June  26,  1958.. 
Jan.  11,  1960-_. 
Aug.  15,  I960-. 
June  1,  1961... 
Various  dates  , 


Various  dates. 
do 

Jan.  2,  1958-... 
Mar.  3,  1958... 
Apr.  1,  1958... 
June  2,  1958--. 
Sept.  2,  1958... 
Various  dates. 
do.-.. 


....do 

...-do 

....do 


do.... 

Aug.  3,  1959-.. 
Various  dates. 
June  1,  1961-.. 
Various  dates. 
Mar.  28,  1962.. 


Various  dates. 

do 

do 

do 


do 

Nov.  30,  1961. 


Date  payable ' 


June  30, 1977. 
June  30, 1984- 

Dec.  31,  1986. 


June  30, 1963 


Various 
June  30, 
Various 

do-. 

Dec.  31, 
Various 
June  30, 
Various 
June  30, 
June  30, 
Various 


dates. 
1965.. 
dates. 

Y96"5".".' 
dates- 
1968-- 
datPS- 
1969- . 
1977- - 
dates. 


July  1,  1962.. 
Jan.  11,  1965. 
July  1,  1965.. 

do 

July  1,  1966.. 


Various  dates. 

do 

July  1, 1962.— 

do 

do 

do 

July  1,  1963.... 
Various  dates. 
do 


do. 

do. 

do. 


July  1,  1964. 

do-. 

do 

July  1,  1965. 

do 

July  1,  1966. 


Various  dates. 

do 

do 

do 


July  1,  1980. 
July  1,  1981. 


Rate 

of 

interest 


Percent 


2^i 
2H 
2li 
3H 
ZH 
ZH 
3^^ 
37i 
3% 
2H 
3 


2^ 

4 

3H 

3^ 

3H 


2H 

2% 

3 

2H 

2H 

2H 

314 

3^ 

334 

3% 

4 

4H 

AH 

ZH 
3>^ 
3\i 


2H 
2H 
2H 
2H 
3M 
3H 


Principal 
amount 


$38, 214, 346.  27 
<  1,000, 964, 134.32 

22, 995,  512.  59 


1, 062, 173, 993. 18 


12, 990, 000, 000. 00 


191,  500, 

48, 900, 
194,  600, 
180, 200, 

26, 400, 
162, 700, 

76, 100, 
100, 100, 

98,  600, 
299,  300, 
451, 100, 


000. 00 
000. 00 
000.00 
000.00 
000.00 
000. 00 
000.00 
000.00 
000. 00 
000.00 
000.00 


1,829,500,000.00 


624, 170, 000. 00 

120, 130, 224.  56 

566, 940, 000. 00 

9, 020, 000. 00 

3, 100, 000. 00 


1, 323, 360,  224.  56 


26, 372, 
29, 436, 
12,001, 
16,  507, 

16. 199, 
11,019, 
28,232, 

286, 278, 
228, 340, 
513,  653, 
150, 034, 
162,  574, 
124, 327, 
144,410, 
7,  270, 
3,100, 

77. 200, 
6,  520, 


411.21 
080.58 
257.  58 
793.  30 
624. 25 
173.23 
087.90 
903. 98 
364.54 
568.02 
904.80 
197. 47 
000. 00 
000.00 
000.00 
000.00 
000.00 
000.00 


1, 843, 477, 366. 86 


3, 166, 837,  591. 42 


321,375,000.00 
306,971,000.00 
208,  643, 000. 00 
234, 026, 000. 00 
148, 363, 000. 00 
8, 031, 000. 00 


1,227,409,000.00 


TABLES 


855 


Table   122. — Description  of  obligations  of  Government  corporations    and  certain 
other  business-type  activities  held  by  the  Treasury,^  June  30,  1962 — Continued 


Title  and  authorizing  act 

Date  of  issue 

Date  payable  2 

Rate 

of 

interest 

Principal 
amount 

Housing  and  Home  Finance  Adminis- 
trator— Continued 
Public  facility  loans,  act  of  Aug.  11, 
1955: 
Note,  Series  PF 

Nov.  30, 1961-... 
Nov.  22,  1961...- 

July  31, 1973 

July  1,  1976 

Percent 
39io 
3H 

$71,710,400.00 

Note,  Series  PF 

8, 335, 000. 00 

Subtotal  --           

80, 045, 400. 00 

Dec.  31,  1958.... 
do 

Dee.  31,  1963 

June  30,  1964 

Various  dates 

Dec.  31,  1964 

June  30,  1965 

Dec.  31,  1965 

Dec.  31, 1966.... 

3 

35/i 

4-5i 

m 

Urban  renewal  fund,  act  of  July  15, 
1949,  as  amended: 
Note  .-        

60, 000, 000. 00 

Note 

20,  000, 000. 00 

Notes  -  

Various  dates... 

June  30,  1959 

Dec.  31,  1959 

•Tune  30,  1960 

June  30,  1961 

60, 000, 000. 00 

Note                           

30, 000,  000.  00 

Note 

35, 000, 000.  00 

Note                         

25, 000, 000.  00 

Note 

30,000,000.00 

Subtotal                              -  - 

260, 000, 000.  00 

Total    Housing    and    Home 
Finance  Administrator 

1,  567, 454, 400. 00 

Various  dates... 
Various  dates... 

Nov.  26,  1954.... 

Various  dates... 

do 

On  demand 

Various  dates... 

Dec.  31,  1963 

Dec.  31,  1964.... 
Various  dates... 
Dec.  31,  1966.... 
Various  dates... 
do 

3 

2 

2% 
IVi 
25,i 
2H 
2^4 
3 

ZH 

3% 

Z\i 

3H 

3H 

4 

AH 

4H 

Public  Housing  Administration,  act  of 
Sept.  1,  1937,  as  amended: 
Notes      -    

32, 000, 000. 00 

Rural    Electrification    Administration, 
act  of  May  20,  1936,  as  amended: 
Notes  of  Administrator 

3,483,706,857.35 

Saint  Lawrence  Seaway   Development 
Corporation,  act  of  May  13,  1954,  as 
amended: 
Revenue  bond 

946, 686. 06 

Revenue  bonds  

800,000.00 

Revenue  bonds                        .  . 

700, 000. 00 

Revenue  bonds       

do... -- 

900, 000. 00 

Revenue  bonds 

do 

5, 100, 000. 00 

do 

7, 800, 000. 00 

Revenue  bonds 

..  do 

do 

8. 200, 000. 00 

Revenue  bonds  .           . 

do... 

do 

24,  600, 000. 00 

Revenue  bonds 

do 

do.... 

15, 900. 000. 00 

do 

do 

9, 900, 000.  00 

Revenue  bonds 

do 

do 

31, 100, 000. 00 

do 

do 

4, 600, 000. 00 

Revenue  bonds 

do 

do 

5, 900, 000. 00 

do 

do 

2,300,000.00 

Revenue  bonds 

do 

Dec.  31,  2003.... 
Dec.  31,  2004.... 

600,000.00 

Revenue  bonds 

do 

1,800,000.00 

Total 

121, 146, 686. 06 

Various  dates.. - 
do. 

Various  dates... 
do 

ZH 

3% 

4 

4H 

Secretary  of  Agriculture,  Farmers  Home 
Administration: 
Rural  housing  loan  program,  act  of 
Aug.  7,  1956,  as  amended:  » 
Notes .- 

20,  514, 255. 28 

Notes  -      . 

64,  250, 000. 00 

Notes 

do 

do 

80, 000, 000. 00 

Notes .  

do. 

do 

67,  540, 000. 00 

Subtotal 

232, 304, 255. 28 

Various  dates... 

Feb.  21,  1962 

May  28, 1962 

Various  dates... 

June  30,  1966 

.    do 

3 

3H 

Direct  loan  account,  acts  of  July  8, 
1959,  June  29,  1960,  and  June  30, 
1961: 8 
Notes 

34 

552,459,607.00 

Note 

37,  500, 000. 00 

Note 

8, 000, 000.  — 

31 

Subtotal 

597, 959, 607. 

Footnotes  at  end  of  table. 


856   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table    122. — Description   of  obligalions   of  Government   corporations    and  certain 
other  business-type  activities  held  by  the  Treasury,^  June  30,  1962 — ^Continued 


Title  and  authorizing  act 


Secretary  of  Agriculture,  Farmers  Home 
Administration— Continued 
Agricultural  credit  insurance  fund, 
act  of  Aug.  14,  1946,  as  amended:  ' 
Notes 


Notes. 
Notes. 
Notes. 
Notes. 
Notes. 


Subtotal. 


Total  Secretary  of  Agi'iculture. 


Secretary  of  the  Treasury,  Federal  Civil 
Defense  Act  of  1950,  as  amended: 
Note,  Series  FCD 


United  States  Information  Agency: 

Informational  media  guaranty  fund, 
act  of  Apr.  3,  1948,  as  amended: 
Note  of  Administrator  (E.C.A.). . 
Note  of  Administrator  (K.C.A.). . 
Note  of  Administrator  CE.C.A.)-  _ 
Note  of  Administrator  (R.C.A.)  . 
Note  of  Administrator  (B.C.  A.). . 
Note  of  Administrator  (E.C.A.).  _ 
Note  of  Administrator  (E.G. A.)- . 
Note  of  Administrator  (E.C.A.)., 
Note  of  Administrator  CE.C.A.") . . 
Note  of  Administrator  CE.C.A.),. 
Note  of  Administrator  (E.C.A.)_ . 
Noteof  Administrator  (E.G. A.")-. 
Note  of  Administrator  (E.C.A.). . 
Notes  of  Administrator  (E.C.A.). 
Notes  of  Administrator  (E.G. A.). 

Total 


Veterans'  Administration  (veterans'  di- 
rect loan  program),  act  of  Apr.  20,  19.')0, 
as  amended: 

Agreements 

Agreements 

Agreements 

A  greemen ts  

Agreements _ 

Agreement  

Agreement 

Agreement 

Agreement 

Agreements 

Agreements 

Agreements 

Agreements 

Agreement 

Agreement 

Agreement... 


Total. 


Virgin  Islands  Corporation,  act  of  Sept.  2, 
1958,  as  amended: 

Notes... 

Notes 

Note 

Note 

Note 

Note .- 


Total. 


Date  of  issue 


Various  dates. 

do... 

do 

do 


.do. 
.do. 


.July  1,  1959. 


Oct.  27,  1948... 

do.... 

do 

Jan.  24,  1949_-. 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Various  dates . 
do 


Various  dates. 

do... 

do 


Date  payable  • 


June  30,  1963.. 

do 

do 

June  30,  1965.. 
do 

Various  dates . 


July  1,  1964. 


June  30,  1986. 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 


Indefinite. 
do 


do 

f>ec.  31,  19,'^.6.. 
Mar.  29,  1957.. 
June  28,  1957. . 
Apr.  7,  1958... 
Oct.  6,  1958.... 
Various  dates . 
do 


do 

do 

Feb.  5,  1960.. 
Apr.  1,  I960.. 
Julv  19, 1960- 


Various  dates . 
do 

Sept.  30,  19.59_. 
Oct.  15,  1959... 
Feb.  24,  1960  . 
Oct.  20,  1961... 


-do. 


-do. 


.do. 
.do- 
-do. 


-do. 
.do. 
.do. 
-do- 
.do- 


-do. 
.do. 
.do. 
.do. 


Various  dates. 
do 

Sept.  30,  1979.. 
Oct.  15,  1979... 
Fob.  24,  1980.. 
Oct.  20,  1981.. 


Rate 

of 

interest 


Percent 
2.632 
2.638 

3H 

33^ 

3H 


m. 


2 

2^. 

2Vi 

2H 

234 

2-i 

3 

314 

3U 

35^ 
3H 

3^8 

4 


21  {. 
2»4 
2-4 
3 

3V-. 
31^ 
3'>>i 
334 

4M 
4H 
4-^^ 
4W 
4 


3?4 

37-^ 
4V6 
4% 
4H 
4 


Principal 
amount 


$450,  Ono.  00 

485,  000.  00 

1,  775, 000. 00 

3,  825,  000.  00 

3, 025, 000. 00 

13,  860, 000. 00 


23,  420, 000.  00 


853,  683,  862.  62 


300,  000.  00 


1,410, 
1,30.5, 
2,  272, 

775, 
75, 

302. 
1,86.5, 
1,  100, 

510, 
3,431. 

495. 

220, 
2. 625, 
2, 474, 
1, 096, 


000. 00 
000.  00 
610.  67 
000.00 
000.  00 
389.  33 
000.  00 
000.  00 
000.  00 
.548.  00 
000.  00 
000.  00 
960. 00 
000.  00 
942.  67 


19, 958,  450.  67 


88,  342, 

53, 032, 

102, 845, 

385,  853, 

49,  736, 

49,  768, 

49,  838, 

49,571, 

48, 855, 

99,  889, 

252,  344, 

109,  387, 

99, 909, 

20, 000, 

20,  703, 

50, 000, 


741.  00 
393. 00 
334. 00 
891.00 
333. 00 
442.  00 
707.  00 
200.  00 
090.  00 
310.  00 
555. 00 
321.00 
137.  93 
000.00 
,541.  07 
000. 00 


1,530,077,996.00 


450,030.00 
110, 000. 00 

10, 000. 00 
500. 00 

23,  400. 00 
350, 000. 00 


943, 900. 00 


Footnotes  at  end  of  table. 


TABLES 


857 


Table    122. — Description  of  obligations  of  Government  corporations   and 
other  business-type  activities  held  by  the  Treasury,^  June  30,  1962 — Continued 


Title  and  authorizing  act 

Date  of  issue 

Date  payable ' 

Rate 
of 

interest 

Principal 
amount 

Defense    Production    Act    of    1950,    as 
amended: 
General  Services  Administration: 
Notes  of  Administrator,  Series  D. 
Notes  of  Administrator,  Series  D. 
Note  of  Administrator,  Series  D.. 
Note  of  Administrator,  Series  D— 
Notes  of  Administrator,  Series  D. 
Notes  of  Administrator,  Series  D_ 
Notes  of  Administrator,  Series  D- 

Various  dates _.. 

do 

Feb.  17,1958 

Apr.  16,  1958 

Various  dates. .. 

do 

do 

Various  dates... 
do 

Feb.  17,  1963.... 

Apr.  16,  1963 

Various  dates... 

do— 

do 

Perctnt 

2H 

2H 

2'A 

24i 

3 

3H 

354 

3'4 

4 

4M 

iH 

3.Vi 

$115,000,000.00 

125, 000, 000. 00 

35, 000, 000. 00 

35, 000, 000. 00 

110,000,000.00 

220, 000, 000. 00 

90. 000.  OPO.  00 

Notes  of  Administrator,  Series  D. 
Notes  of  Administrator,  Series  D. 
Note  of  Administrator,  Series  D— 
Notes  of  Administrator,  Sfc-ies  D. 
Notes  of  Administrator,  Series  D. 
Notes  of  Administrator,  Series  D. 
Note  of  Administrator,  Series  D„ 
Note  of  Administrator,  Series  D.. 
Notes  of  Administrator,  Scries  D. 

do.... 

do 

June  1,  1939 

Various  dates _.. 

do 

do 

Oct.  21,  1959 

Oct.  11, 1960  . 

VarioU*  dates... 

do 

do 

June  1,  1964 

Various  dates... 

do-. 

do 

Oct.  21,  1964 

Oct.  11,  1965 

Various  dates... 

295, 000, 000. 00 

165, 000, 000. 00 

85, 000, 000. 00 

383,  700, 000.  00 

30, 000, 000. 00 

5S.  000. 000. 00 

8, 000, 000. 00 

10, 000, 000. 00 

30, 000, 000. 00 

Subtotal                         -         . 

1, 789,  roO,  000. 00 

Various  dates... 

July  8,  19.57 

July  1,  1959 

July  1,1960 

Feb.  7,  1961 

Various  dates.. . 

July  1,  1962 

July  1,1964 

July  1,  1985 

do 

2H 

m 
m 

4 

3H 

Secretary  of  Agriculture: 

Notes                   

10, 458, 000. 00 

Note 

3,097,000.00 

Note         

£0, 145, 000. 00 

Note 

62,000.00 

Notes      .    -         - 

813, 779.  63 

Subtotal     

64,  577,  779.  63 

Feb.  18,  1955 

Apr.  29,  1955... 

July  1,  1964 

do 

2H 

2H 

2^4 

3 

ZH 

3^ 

3li 
3H 
3H 

Secretary  of  the   Interior,   Defense 
Minerals  Exploration  Administra- 
tion: 
Note 

1,000,000.00 

Note                              

1, 000, 000. 00 

Notes 

Various  dates... 
.  do 

Various  dates... 
do 

6, 000, 000. 00 

Notes 

17,000,000.00 

Note 

Nov.  19,  1956.... 
Jan.  30,  19.57 

July  1,1966 

do 

1, 000, 000. 00 

Note 

1,000,000.00 

Notes                       .    . 

Apr.  22,  1957 

do 

1, 000, 000. 00 

Note 

Aus;.  12,  1957.... 
Oct.  11,  1957 

July  1,1967 

do 

1, 000, 000. 00 

Note                                         -  . 

1, 000, 000. 00 

Note 

Jan.  17,  1958 

do 

1, 000, 000. 00 

Subtotal -. 

31, 000, 000. 00 

July  1,1958 

Various  dates... 

Dec.  1,1962 

Various  dates... 

2% 
3% 

Secretary  of  the  Treasury: 

Note,  Series  TDP 

16,010,000.00 

Notes,  Series  TDP 

74,540,000.00 

Subtotal            . 

90,550,000.00 

Total  Defense  Production  Act 
of  1050.  as  smended. 

1, 975, 827, 779. 63 

Junel,  1962 

When  funds  ai-e 
available. 

3 

District  of  Columbia  Commissioners: 
Stadium    sinking     fund.     Armory 
Board,  D.C.,  act  of  Sept.  7,  1057,  as 
amended: 
Note 

415, 800. 00 

Total  obligations. 

28, 634, 027, 316. 93 

>  These  obligations  were  issued  to  the  Treasury  in  exchange  for  advances  by  the  Treasury  from  public 
debt  receipts  under  congressional  authorization  for  specified  Government  corporations  and  other  business- 
type  activities  to  borrow  from  the  Treasury. 

s  Obligations  may  be  redeemed  at  any  time. 

*  The  International  Cooperation  Administration  was  abolished  by  an  act  apprcwed  Sept.  4,  1961  (22 
U.S.C.  2381(b)),  and  certain  functions,  including  those  relating  to  borrowings  from  the  Secretary  of  the 
Treasury,  were  transferred  to  this  Agency  which  was  established  under  the  authority  of  Executive  Order 
No.  10973,  dated  Nov.  3,  1961. 

*  Not  reduced  by  $68,702.82  representing  access  repayments  returned  to  the  Agency  as  of  June  30,  1962, 
after  publication  of  the  daily  Treasury  statement. 

«  Formerly  identified  as  farm  housing  loan  prepram  but  changed  as  operations  were  broadened  by  the 
Housing  Act  of  1961  approved  June  30,  1961  (42  U.S.C.  1471). 

*  Name  changed  from  regular  loan  programs  by  an  act  approved  Aug.  8, 1961  (7  U.S.C.  1988(c)). 

'  Name  changed  from  farm  tenant  mortgage  insurance  luud  by  an  act  approved  Aug.  8,  1961  (7  U.S.C. 
1929(a)). 


858   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


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Fund  balances  with  the  U.S.  Treasury 

Deposits    with    Government    corporat 

agencies _._ 

Loans  receivable: 

Interagency' 

Others,  less  reserves 

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Interagency 

Others,  less  reserves 

Commodities,    supplies,    and    mater 

reserves 

Investments: 

Public  debt  securities. 

Capital  stock  and  paid-in  surplus  i 

Government  corporations  < 

Other  interagency.. 

Inter-Amerir^n   Development  Bar 

ment , 

International  Bank  for  Reconstru 

Development-stock 

International      Development     As 

subscription 

International  Finance  Corporation- 
International  Monetary  Fund-subs 

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1 

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1 
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1 
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Trust  and  deposit  liabilities: 

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others 

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860   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  124. — Statement  of  loans  outstanding  of  Government  corporations  and  certain 

other  business-type  activities,  J\ine  30,  1962 

|In  thousands  of  dollars] 

LOANS  OUTSTANDING,  EXCLUDING  INTERAGENCY  LOANS  AND  THOSE  MADE  BY 

DEPOSIT  AND  TRUST  REVOLVING  FUNDS.  CLASSIFIED   BY  TYPES  OF  iOANS  i 


Type  of  loan  and  lending  agency 


To  Aid  Agriculture 

Loans  to  cooperative  associations: 
Farmers  TToine  Administration: 

Direct  loan  account ' 

Rural  Electrification  Administration 

Crop,  livestock,  and  commodity  loans: 

Commodity  Creiiit  Corporation 

Farmers  Home  Administration: 

Direct  loan  accotint ' 

Emercency  credit  revolving  fund  < 

Virgin  Islands  Corporation 

Storage  facility  and  equipment  loans: 

Commodity  Credit  Corporation 

Farm  mortgage  loans: 

Farmers  Home  Administration: 

Agricultural  credit  insurance  fund  s 

Direct  loan  account  ^ 

Rural  housing  and  other  loans  « 

Guaranteed  loans  held  hy  lending  agencies: 

Commodity  Credit  Corporation 

Other  loans: 

Farmers  Home  Administration: 

Direct  loan  account  ^ 

Rural  housing  and  other  loans  « 

Total  to  aid  agriculture 

To  Aid  Home  Owners 

Mortgage  loans: 

Federal  Housing  Administration , 

Federal  National  Mortgage  Association: 

Management  and  liquidating  functions 

Special  assistance  functions ., 

Federal  Savings  and  Loan  Insurance  Corporation. 
Housing  and  Home  Finance  Administrator: 

Community  dispo.sal  operations  fund. 

Interior  Department: 

Bureau  of  Indian  Affairs: 

Liquidation  of  Hoonah  housing  project 

Public  Housing  Administration 

Veterans'  Administration: 

Direct  loans  to  veterans  and  reserves.. 

Loan  guaranty  revolving  fund 

Other  loans: 

Veterans'  Administration: 

Direct  loans  to  veterans  and  reserves 

Loan  guaranty  revolving  fund 

Total  to  aid  home  owners , 

To  Aid  Industry 

Loans  to  railroads: 

Expansion  of  defense  production: 

Treasury  Department 

Other  purposes: 

Interstate  Commerce  Commisson 

Treasury  Department: 
Reconstruction  Finance  Corporation  liquida' 

tion  fund 

Ship  mortgage  loans: 

Commerce  Department: 

Federal  ship  mortgage  insurance  fund 

Maritime  Administration... 

Other  loans: 

Expansion  of  defense  production: 

Interior  Department 

Treasury  Department 

Defense  production  guarantees: 

Air  Force  Department 

Army  Department 

Navy  Department 

Footnotes  at  end  of  table. 


U.S.  dollar  loans 

Total 

Public 

enterprise 

revolving 

funds 

Certain 

other 

activities 

Foreign 

currency 

loans ' 

14,071 
3,524,551 

1,280,845 

2,272 

87, 685 

2 

72,245 

31,839 
294,  560 
317,209 

'901,820 

545, 190 
5,480 

14,071 

3. 524, 551 

1,280,845 

2,272 

87, 685 
2 

72,245 

31,839 
294, 560 

317.209 

'901,826 
545. 190 

5, 480 

7,077,776 

3,230,536 

3, 847, 240 

291,834 

1,416,646 

1,  907, 635 

44, 662 

3,805 

165 
338 

1,333,612 
4, 195 

9,592 
456, 843 

291,834 

1,410.046 

1,907,6,35 

44, 662 

3,805 

165 
338 

1.333.612 
4.195 

9,592 
456, 843 

5,469,327 

5,469.327 

12,821 
14,676 

5.320 

3,470 
117.259 

12,317 
108, 486 

245 
2.S62 
5. 121 

12,821 

14,676 

5,320 
3,470 

117,259 

12,317 
108. 486 

245 
2,362 
5,121 

4 


TABLES 


861 


Table  124. — Statement  of  loans  outstanding  of  Government  corporations  and  certain 
other  business-type  activities,  June  30,  19S2 — Continued 

[In  thousands  of  dollars] 

LOANS  OUTSTANDING,  EXCLUDING  INTERAGENCY  LOANS  AND  THOSE  MADE  BY 

DEPOSIT  AND  TRUST  REVOLVING  FUNDS,  CLASSIFIED  BY  TYPES  OF  LOANS'— Con. 


U.S.  dollar  loans 

Type  of  loan  and  lending  agency 

Total 

Public 
enterprise 
revolving 

funds 

Certain 

other 

activities 

Foreign 

currency 

loans  2 

To  Aid  Industry— Continued 

Other  loans— Continued 
Other  purposes: 

Commerce  Department: 

Area  Redevelopment  Administration: 
Area  redevelopment  fund. . .  . 

1,188 
4,375 

558 
4,183 

7,393 

392 

44 

571,072 

1,404 

692 

2,677 

1,188 
4.375 

558 
4,183 

7,393 

Inland  Waterways  Corporation  (in  liquida- 
tion)  

General  Services  Administration: 

Reconstruction  Finance  Corporation  liqui- 
dation fund 

Housing  and  Home  Finance  Administrator: 
Liquidating  programs 

Interior  Department: 

Bureau  of  Commoricial  Fisheries: 
Fisheries  loan  fund 

Office  of  Minerals  Exploration 

392 

Virgin  Islands  Corporation 

44 

571,072 

1,404 

692 

2,677 

Small  Business  Administration: 

Revolving  fund  (lending  operations) 

Reconstruction  Finance  Corporation  liqui- 
dation fund 

Treasury  Department: 

Civil  defense  loans 

Reconstruction  Finance  Corporation  liqui- 
dation fund 

Total  to  aid  industry. 

876, 055 

743, 728 

132, 327 

To  Aid  Education 

Health,  Education,  and  Welfare  Department: 
Loan.s  to  institutions  and  nonprofit  schools 

3,250 
201,914 

82 

1, 188, 259 

3,250 
201,914 

82 

Loans  to  students  in  institutions  of  higher  education 

Loans  to  students  (World  War  II) 

Housing  and  Home  Finance  Administrator: 
College  housing  loans.. 

1,188,259 

Total  to  aid  education 

1,393,504 

1, 188, 259 

205, 246 

To  Aid  States,  Territories,  etc. 

Commerce  Department: 

Area  Redevelopment  Administration: 
Area  redevelopment  fund 

60 

62, 524 

680 

74,  574 

7,392 

142,  667 

52, 317 

18, 372 

527 

96, 369 

72,  663 

60 

General  Services  Administration: 

Public  Works  Administration  (in  liquidation) 

02. 524 
080 

Health,  Education,  and  Welfare  Department: 
Public  Health  Service 

Housing  and  Home  Finance  Administrator: 
Public  facility  loans 

74, 574 

7,392 

142, 667 

Liquidating  programs.. 

Urban  renewal  fund 

Interior  Department: 

Bureau  of  Reclamation 

52,317 

18, 372 
527 

Office  of  Territories: 

Alaska  public  works 

National  Capital  Planning  Commission 

Public  Housing  Administration 

96,369 

Treasury  Department: 

Miscellaneous  loans  and  certain  other  assets    . 

72, 663 

Total  to  aid  States,  Territories,  etc 

528, 145 

A , 

321, 062 

1 

207, 082 

1 

Footnotes  at  end  of  table. 


862   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Table  124. — Statement  of  loans  outstanding  of  Government  corporations  and  certain 
other  business-type  activities,  June  SO,  1962 — Continued 

[In  thousands  of  dollars] 

LOANS  OUTSTANDING,  EXCLUDING  INTERAGENCY  LOANS  AND  THOSE  MADE  BY 

DEPOSIT  AND  TRUST  REVOLVING  FUNDS  CLASSIFIED  BY  TYPES  OF  LOANS  i— Con. 


U.S.  dollar  loans 

Type  of  loan  and  lending  agency 

Total 

Public 
enterprise 
revolving 

funds 

Certain 

other 

activities 

Foreign 

currency 

loans  2 

Foreign  Loans 

Expansion  of  defense  production: 

Export-Import  Bank  of  Washington _ 

32 

17, 730 

31,479 

132,219 

84, 809 
183, 430 

32 

Military  assistance  credit  sales: 
Defense  Department: 

Air  Force  Department _ 

17, 730 

31,479 

132, 219 

Army  Department 

Navy  Department 

Other  purposes: 

Agency  for  International  Development: ' 

Development  loans ..  . 

84,809 
183, 430 

Development  loan  fund  liquidation  account 

653, 677 

Loans  to  U.S.  firms  and  domestic  or  foreign 
firms  in  foreign  coimtries_- 

68, 143 

All  other  loans 

1,816,322 

9,492 

3,567,294 
144, 879 

3 

3,266,011 

1,816,322 
9,492 

2, 220, 752 

Commerce  Department: 

Maritime  Administration 

Export-Import  Bank  of  Washington: 

Regular  lending  activities.- 

3,567,294 

Agent  for  certain  Mutual  Security  Act  loans 

144,879 

Liquidation  of  certain  Reconstruction  Finance 
Corporation  assets 

3 

Treasury  Department: 

Miscellaneous  loans  and  certain  other  assets 

3,266,011 

Total  foreign  loans. 

9,253,701 

3, 835, 568 

5, 418, 133 

2, 942, 572 

Other  Loans 

General  Services  Administration: 

Surplus  property  credit  sales  and  liquidation 
activities..  . 

110, 598 

4,873 
7,320 

22 

12,410 

155 
439 

71,019 

1,233 

110.598 

Housing  and  Home  Finance  Administrator: 

Housing  for  the  elderly 

4,873 
7,320 

Liquidating  programs 

Interior  Department: 

Bureau  of  Indian  Affairs: 

Loans  for  Indian  assistance ._  .  . 

22 

Revolving  fund  for  loans 

12,410 

155 
439 

71,019 

1.233 

Office  of  Territories: 

Loans  to  private  trading  enterprises 

Public  Housing  Administration 

Small  Business  Administration: 

Revolving  fund  (lending  operations) 

Reconstruction  Finance   Corporation  liquidation 
fund 

Footnotes  at  end  of  table. 


TABLES 


863 


Table  124. — Statement  of  loans  outstanding  of  Government  corporations  and  certain 
other  business-type  activities,  June  SO,  1962 — Continued 

[In  thousands  of  dollars] 

LOANS  OUTSTANDING,  EXCLUDING  INTERAGENCY  LOANS  AND  THOSE  MADE  BY 
DEPOSIT  AND  TRUST  REVOLVING  FUNDS  CLASSIFIED  BY  TYPES  OF  LOANS  i— Con. 


U.S.  dollar  loans 

Type  of  loan  and  lending  agency 

Total 

Public 
enterprise 
revolving 

funds 

Certain 

other 

activities 

Foreign 

currency 

loans ' 

Other  Loans— Continued 

State  Department: 

Loan  to  United  Nations 

45,000 
783 

1,257 
100 

799 

2,118 

36 

909 

76 

45,000 
783 

Emergency  loans  to  individuals 

Treasury  Department: 

Federal  Farm  Mortgage  Corporation'  liquidation 
fund.. 

1,257 

Miscellaneous  loans  and  certain  other  assets 

100 
799 

Veterans'  Administration: 

Insurance  appropriations  policy  loans 

Service-disabled  veterans'  insurance  fund 

2,118 

36 

909 

76 

Soldiers'  and  sailors'  civil  relief 

Veterans'  special  term  insurance  fund 

Vocational  rehabilitation  revolving  fund 

Total  other  loans 

259, 148 

101,845 

157,302 

Total  loans  i". 

"  24,857,656 

14,890,325 

9,967,330 

2  942  572 

1  In  accordance  with  an  amendment  issued  June  23,  1960,  to  Department  Circular  No.  966,  purchase 
money  mortgages,  mortgages  purchased  from  insured  lending  institutions  to  prevent  default,  and  similar 
long-term  paper  held  by  the  agencies  are  classified  as  loans  receivable  and  are  included  in  this  table.  Prior 
to  June  30,  1960,  these  assets  had  been  classified  as  accounts  and  notes  receivable  or  other  assets. 

2  The  dollar  equivalents  of  these  loans  are  computed  for  reporting  purposes  at  varying  rates.  Where 
the  loan  agreements  stipulate  a  dollar  denominated  figure,  the  loans  outstanding  are  generally  valued  at 
the  agreement  rates  of  exchange.  Loans  executed  in  units  of  foreign  currency  are  valued  at  the  market 
rates  (i.e.,  the  rates  of  exchange  at  which  the  Treasury  sells  such  currencies  to  Government  agencies). 

3  Certain  loan  programs  were  transferred  from  the  Farmers  Home  Administration  nonrevolving  fund 
to  this  revolving  fund  which  was  established  by  an  act  approved  Aug.  8,  1961  (7  U.S.C.  1988  (c)). 

<  Name  changed  from  disaster  loans,  etc.,  revolving  fund  by  an  act  approved  Aug.  8, 1961  (7  U.S.C.  1966). 

«  Name  changed  from  farm  tenant  mortgage  insurance  fund  by  an  act  approved  Aug.  8,  1961  (7  U.S.C. 
1929  (a)). 

8  Formerly  identified  as  the  farm  housing  loan  program  but  changed  as  loan  operations  were  broadened  by 
the  Housing  Act  of  1961,  approved  June  30,  1961  (42  U.S.C.  1471). 

'  Includes  certificates  of  interest. 

8  The  International  Cooperation  Administration  was  abolished  by  the  Foreign  Assistance  Act  of  1961, 
approved  Sept.  4,  1%1  (22  U.S.C.  2381(b));  and  this  Agency  was  established  under  authority  of  Executive 
Order  10973,  dated  Nov.  3,  1961,  pursuant  to  the  provision  of  the  act  (22  U.S.C.  2381). 

9  This  Corporation  was  abolished  and  its  remaining  assets  were  transferred  from  the  Farm  Credit  Admini- 
stration to  the  Secretary  of  the  Treasury  for  liquidation  pursuant  to  an  act  approved  Oct.4, 1961  (12  U.S.C. 
1020  note). 

If  Excludes  World  War  I  fimded  and  unfunded  indebtedness  of  foreign  governments,  and  World  War  II 
indebtedness  of  foreign  governments  involving  lend-lease  articles,  surplus  property  sales  agreements,  and 
certain  other  credit  shown  in  table  117. 

11  Does  not  include  foreign  currency  loans. 

Note.— For  explanation  of  reporting  coverage  see  note  to  table  123.  The  Treasury  Bulletin  for  November 
1962  contained  this  table  on  pp.  126-128,  and  also,  on  pp.  129-130,  a  table  by  years  beginning  with  1950  show- 
ing loans  outstanding  including  those  by  deposit  and  trust  revolving  funds.  Statistical  statements  of  finan- 
cial condition  by  agencies  as  of  June  30,  1962,  were  published  in  the  Treasury  Bulletin  for  November  1962. 
Statements  of  income  and  expense,  and  source  and  application  of  funds  by  agencies  as  of  June  30,  1962, 
were  published  in  the  Treasury  Bulletin  for  December  1962. 


864   1962  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 

Table  125. — Dividends,  interest,  and  similar  earnings  received  by  the  Treasury  from 
Government  corporations  and  certain  other  business-type  activities,  fiscal  years 
1961  and  1962 


Agency  and  nature  of  earnings 


Amounts 


1961 


1962 


Agency  for  International  Development,'  interest  on  borrowings 

Atomic  Energy  Commission,  defense  production  guarantees,  earnings.. 

Civil  Service  Commission,  investigations,  earnings 

Commerce  Department: 

National  Bureau  of  Standards,  working  capital  fund,  earnings 

Maritime  Administration,  Federal  ship  mortgage  insurance  fund 

interest  on  borrowings 

Commodity  Credit  Coriwration: 

Interest  on  capital  stock 

Interest  on  borrowings 

Defense  Department: 

Army  Department,  defense  housing,  profits 

Navy  Department,  defense  housing,  profits 

Air  Force  Department,  industrial  fund,  earnings 

Export-Import  Bank  of  Washington: 

Regular  activities: 

Dividends 

Interest  on  borrowings 

Liquidation  of  certain  Reconstruction  Finance  Corporation  assets: 

Earnings - --- 

Interest  on  borrowings 

Farm  Credit  Administration: 

Banks  for  cooperatives,  franchise  tax 

Federal  Farm  Mortgage  Corporation, 2  dividends _. 

Federal  intermediate  credit  ijanks,  franchise  tax 

Farmers  Home  Administration: 

Rural  housing  loan  progiam,^  interest  on  borrowings.- 

Direct  loan  aceoiuit,Mntcrest  on  borrowings... 

Agricultural  credit  Insurance  fund.s  interest  on  borrowings 

Federal  National  Mortgage  Association: 

Management  and  liquidating  functions: 

Earnings 

Interest  on  borrowings 

Secondary  market  operations; 

Dividends 

Interest  on  borrowings 

Special  assistance  functions,  interest  on  borrowings 

Federal  Prison  Industries,  Inc.,  earnings 

General  Services  Administration: 

Buildings  management  fund,  earnings 

General  supply  fund,  earnings 

Working  capital  fund,  earnings 

Government  Printing  Ofiice,  earnings 

Housing  and  Homo  Finance  Administrator: 

College  housing  loans,  interest  on  borrowings 

Public  facility  loans,  interest  on  borrowings 

Urban  renewal  fund,  interest  on  borrowings 


$19, 


3, 
406, 


22, 
42, 


1, 
1, 
1, 

n, 
i, 


996, 983.  81 
508,699.11 
1,368.87 

228, 299. 85 

54, 250.  00 

500,  000.  00 
074, 897. 12 

80,  000.  00 

300, 000.  00 

,  816, 502. 97 

500,  000.  00 
803, 072.  29 

860,  653.  52 
73, 548. 23 

527, 632.  86 
700,  000.  00 
128, 892. 81 

612, 573.  42 

i95,'868."62" 


27, 

3, 

64, 


768, 315.  07 

112,445.64 
986, 051.  68 
147, 173.  50 


20, 
1. 
2, 


803, 809.  64 

154, 594.  50 

6,  966.  51 

000,  000. 00 

017, 279. 61 
594,  232. 01 
914, 362. 22 


$18, 914, 551. 91 

i,l39."9i 

39, 171. 52 

9, 139. 95 

3, 125, 000. 00 
326,  458, 958.  01 


29, 018.  50 


30, 000, 000.  on 
56,  757, 420.  53 


2, 356,  664.  49 

800, 000. 00 

2,  492, 079.  64 

7, 300, 340.  69 

8, 999,  852.  64 

923,214.92 


40, 000,  000.  00 
43, 850,  589.  30 

3,  639,  600.  00 

1, 204,  563.  62 

70, 245, 342.  77 

4, 000, 000.  00 


3,  684, 809. 90 

17, 247. 31 

5, 194,  802. 14 

25,314.431.40 
2, 006, 416.  07 
3, 226, 513. 29 


Footnotes  at  end  of  table. 


TABLES 


865 


Table  125. — Dividends,  interest,  and  similar  earnings  received  by  the  Treasurij  from 
Government  corporations  and  certain  other  business-type  activities,  fiscal  years 
1961  and  1962 — Continued 


Agency  and  nature  of  earnings 


Amounts 


1961 


1962 


Interior  Department: 

Bureau  of  Reclamation: 

Colorado  River  Dam  fund,  Boulder  Canyon  project,  interest 

Upper  Colorado  River  Basin  fund,  earnings 

Virgin  Islands  Corporation: 

Interest  on  appropriations  and  paid-in  capital 

Interest  on  borrowings 

Panama  Canal  Company,  interest  on  net  direct  investment  of  the  Gov- 
ernment  

Public  Housing  Administration,  low  rent  public  housing  program  fund, 

interest  on  borrowings 

Rural  Electrification  Administration,  interest  on  borrowings 

Saint  Lawrence  Seaway  Development  Corporation,  interest  on  borrow- 


Secretary  of  the  Treasury  (Federal  Civil  Defense  Act  of  1950,  as  amended), 
interest  on  borrowings 

Small  Business  Administration,  interest  on  appropriations 

Tennessee  Valley  Authority,  earnings 

Treasury  Department: 

Federal  Farm  Mortgage  Corporation  liquidation  fund,^  dividends. .. 

U.S.  Information  Agency,  informational  media  guaranty  fund,  interest 
on  borrowings 

Veterans'  Administration: 

Canteen  service  revolving  fund,  profits 

Direct  loans  to  veterans  and  reserves,  interest  on  borrowings 

Rental,  maintenance,  and  repair  of  quarters,  profits 

Supply  fund,  earntags 

Veterans'  special  term  insurance  fund,  earnings -. 

Defense  Production  Act  of  1950,  as  amended: 

Export-Import  Bank  of  Washington,  interest  on  borrowings 

General  Services  Administration,  interest  on  borrowings 

Secretary  of  Agriculture,  interest  on  borrowings 

Secretary  of  the  Interior  (Defense  Minerals  Exploration  Administra- 
tion), interest  on  borrowings 

Secretary  of  the  Treasury,  interest  on  borrowings 


$3,113,866.35 
1, 293. 00 

396, 397.  61 
1, 362.  76 

8,  780, 538.  55 

1, 102, 450.  67 

64. 416. 156. 12 

2, 000, 000. 00 

25, 293. 04 

15. 238. 423. 13 
41, 432, 397. 60 


$3, 081, 323. 82 


310, 
35, 


611. 94 

816. 87 


9, 364, 406. 00 


1, 127, 
67, 797, 


578.  40 
047. 47 


2, 165, 000. 00 


1,064,720.00 

41, 191.  00 

31, 990, 233. 05 

10,  000.  GO 

126, 973.  47 


19, 
14, 248, 
36, 541, 

360, 

609, 

35, 

40, 049, 

10, 


294. 47 
587.  62 
639. 64 

340.  40 

592. 00 

129. 00 
945. 44 
386.20 


509,787.11 

781,250.01 

6, 942. 57 


4, 000, 000. 00 

106, 926. 98 
4, 182, 115. 69 


4, 842,  608. 02 


99, 861. 87 
3, 470, 904. 33 


Total. 


818, 350, 357.  92 


848, 207, 876.  65 


1  The  International  Cooperation  Administration  was  abolished  by  an  act  approved  Sept.  4,  1961  (22 
U.S.C.  2381  (b)),  and  certam  functions,  includtng  those  relating  to  borrowings  from  the  Treasury,  were 
transferred  to  this  Agency  which  was  established  under  authority  of  E.G.  10973,  dated  Nov.  3,  1961. 

•  This  Corporation  was  abolished  and  its  remaining  assets  were  transferred  from  the  Farm  Credit  Admin- 
stration  to  the  Secretary  of  the  Treasury  for  liquidation  pursuant  to  an  act  approved  Oct.  4, 1961  (12  U.S.C. 
1020  note). 

3  Formerly  identified  as  the  farm  housing  loan  program  but  changed  as  loan  operations  were  broadened 
by  the  Housing  Act  of  1961  approved  June  30,  1961  (42  U.S.C.  1471). 

*  Name  changed  from  regular  loan  programs  by  an  act  approved  Aug.  8,  1961  (7  U.S.C.  1988  (c)). 

'  Name  changed  from  farm  tenant  mortgage  insurance  fund  by  an  act  approved  Aug.  8,  1961  (7  U.S.C. 
1929  (a)). 


681496 — 63- 


-56 


866   196  2  REPORT  OF  THE  SECRETARY  OF  THE  TREASURY 


Govemment  Losses  in  Shipment 

Table    126. — Government    losses    in    shipment    revolving   fund,    June   SO,    1962 

[Established  July  8, 1937  under  authority  or  the  Government  Losses  in  Shipment  Act,  as  amended  (5  TJ.S.C. 

134-134h)] 

SECTION  I.— STATUS  OF  FUND 


Transactions 

Cumulative 

through 
June  30, 1961 

Fiscal  year 
1962 

Cumulative 

through 
June  30,  1962 

Receipts: 

Appropriation 

$802,000.00 
91, 803. 13 

50,000.00 

100, 000. 00 

481, 204.  49 

3,924.32 

$802. 000. 00 

Transferred  from  securities  trust  fund  pursuant  to: 
5U.S.C.  134b 

91, 803. 13 
50  000  00 

Transferred  from  the  account  "Unclaimed  Partial 
Payments    on    United    States    Savings  Bonds" 
pursuant  to: 
Public  Law  85-354 

Public  Law  86-561 

100, 000. 00 

Recoveries  of  payments  for  losses 

$18.90 

481, 223. 39 

Repayments  to  the  fund 

3, 924. 32 

Total  receipts 

1,528,931.94 

18.90 

1, 528, 950.  84 

Expenditures: 

Payment  for  losses. 

1,437,263.47 
92.57 

67, 271. 65 

1,504,535.12 
92.57 

Other  payments  (refunds,  etc.) 

Total  expenditures. 

1,437,356.04 

67, 271. 65 

1.504  627  69 

Balance  in  fund. 

91,575.90 

-67, 252. 75 

24  323  15 

Note.— This  statement  excludes  contingent  liabilities  for  pending  claims  against  the  fund  as  of  June  30, 
1962,  in  amount  of  $726,787.52,  chiefly  for  forged  U.S.  savings  bonds. 


SECTION  II.— AGREEMENTS  OF  INDEMNITY  ISSUED  BY  THE  TREASURY 

DEPARTMENT! 

Agreements  of  indemnity 

Number 

Amount 

Issued  through  June  30,  1961 

423 

12 

$2. 726, 979. 09 

Issued  during  the  fiscal  year  1962 

45,  820. 67 

Total  issued 

435 
29 

2, 772. 799. 76 

Canceled  through  June  30, 1962.. 

1,027,879.87 

In  force  as  of  June  30, 1962 

406 

1, 744, 919. 89 

SECTION  III.— CLAIMS  MADE  AND  SETTLED 


Claims 


Received: 

Through  June  30, 1961 

During  fiscal  year  1962  and  processed  by: 

Bureau  of  Accounts 

Bureau  of  the  Public  Debt 


Total  claims  received  through  June  30,  1962. 


Settled: 

Through  June  30,  1961 

During  fiscal  year  1962  and  processed  by: 
Bureau  of  Accounts: 

For  payment  out  of  the  fund 

For  credit  in  appropriate  accounts 

Without  payment  or  credit 

Bureau  of  the  Public  Debt: 

For  payment  out  of  the  fund,  U.S.  savings  bonds  redemption 

cases. 

Without  payment  or  credit 


Total  claims  settled  tlirough  June  30, 1962. 
Unadjusted  as  of  June  30,  1962  2 


Total. 


Number 


6,413 

120 
49 


6,582 


6,396 


55 

74 

2 


46 
3 


6,576 
6 


6,582 


Amount 


$7, 374, 482. 24 

377, 235. 08 
65, 039. 09 


7, 806, 756.  41 


7, 350, 830. 99 


17,  505.  20 

319, 148.  52 

7, 256. 45 


49, 766. 45 
19, 575.  95 


7,  764, 083. 56 
42, 672. 85 


7, 806,  756. 41 


•  The  Government  has  not  sustained  any  actual  monetary  loss  in  connection  with  its  liability  under 
these  agreements  of  indemnity. 
1  Includes  claims  in  process  of  adjustment  by  the  Bureau  of  the  Public  Debt. 


TABLES 


867 


Personnel 

Table   127. — Number  of  employees  in  the  departmental  and  field  services  of  the 
Treasury  Department,  quarterly  from  June  30,  1961,  to  June  30,  1962^ 


Organizational  miit 


OflBce  of  the  Secretary 

Comptroller  of  the  Currency,  Bureau  of. 

Customs,  Bureau  of 

Engraving  and  R-intin?,  Bureau  of 

Fiscal  Service: 

Accounts,  Bureau  of 

Public  Debt,  Bureau  of 

Treasurer,  Office  of. 

Internal  Revenue  Service — 

Mint,  Bureau  of 

Narcotics,  Bureau  of 

U.S.  Coast  Guard... 

U.S.  Savings  Bonds  Division 

U.S.  Secret  Service 

Total  civilian  employees 

Military  employees — U.S.  Coast  Guard. 

Grand  total 


June  30, 
1961 


650 
1,221 
8,553 
3,038 

2,159 

2,237 

993 

5?i630 

927 

417 

4,916 

506 

673 


79, 970 
31, 520 


111,  490 


Sept.  30, 
1961 


652 
1,219 
8,611 
3,005 

2,009 
2,241 

963 

53,  764 

1,011 

415 
4,882 

514 

690 


79, 976 
31, 840 


111,816 


Dec.  31, 
1961 


693 
1,207 
8,712 
2,993 

1.923 
2,255 

956 

54, 016 

1,022 

422 
4,784 

516 

692 


80. 191 
31, 491 


111,682 


March  31, 
1962 


711 
1,2.37 
8, 804 
2,973 

1,926 
2,258 

967 

:  58,  977 

1,037 

418 
4,865 

520 

697 


85, 390 
31,  707 


117,097 


June  30, 
1962 


728 
1,299 
8,929 
2,943 

1,815 

2,219 

998 

56, 510 


1, 


051 
422 
894 
526 
702 


83,036 
31,511 


114, 547 


Increase,  or 

decrea,se 

(— ),  since 

June  30, 

1961 


78 

78 

376 

-95 

-344 

-18 

5 

2,830 

124 

5 

-22 

20 

29 


3,066 
-9 


3,057 


'  Actual  number  of  employees  on  the  last  day  of  the  month  and  any  intermittent  employees  who  worked 
at  any  time  during  this  month. 
» Includes  seasonal  employees. 


INDEX 


Account  of  the  Treasurer  of  the  United  States.     See  Treasurer  of  the 

United  States. 
Accounting  and  financial  reporting,  Government:  Page 

Balance  of  payments 458 

Bases  of  accounts  and  reports 501 

Cash  operations,  description  of  accounts  relating  to 504 

Central  accounting  and  reporting  developments 130-132 

Foreign  currencies,  accounting  control 132 

Narcotics,  Bureau  of,  changes 185 

Publications 37,    130,    131,    501 

Revised  procedures  and  legislation  relating  to 1 29-1 32 

Revised  procedures,  savings  attributed  to__ 102 

Accounts,  Bureau  of 102,  128-141,  487,  542,  867 

Act  of  Bogota 43G,  438 

Adjusted  service  certificate  fund 619,  761 

Administration,  Treasury  Department 101-104 

Administrative  accounts  and  reports,  basis  for  certain  tables 503 

Administrative  and  staff  officers  of  Treasury  Department,  January  1,  1963_         xn 

Administrative  Assistant  Secretary 102,  487,  492 

Administrative  budget  (see  also  Budget;   Cash  budget;  National  income 
accounts) : 

1953-62,  chart 21 

1961  and  1962 21,  22 

Economic  considerations.-^ 2,  434,  443 

Estimates  1963 4 

European  countries,  comparison 434,  443 

Receipts  and  exj^enditures,  1962  and  estimates  1963  and  1964 22-28 

Admissions  taxes 383,  589,  597 

Advance  refunding.     See  Public  debt:  Management. 

Advisory  committees 493-498 

Africa,  loans  to 87,  90 

Ager.cy  for  International  Development: 

Borrowing  authority 852 

Establishment  and  purpose 90 

Expenditures  1961  and  1963  and  montlily  1962 522 

Foreign  currencies  acquired  without  purchase  with  dollars,  held  by_.       839 

Foreign  investment  guaranty  fund 524,  852 

Inter- American  social  progress  program 90 

Interest  paid  to  Treasury 864 

Latin  America,  loans  to 437 

Loans  and  grants 90,  410,  862 

Military  assistance  expenditures 532 

Obligations  held  by  Treasury 850,852-854 

Agricultural  adjustment  taxes  1934-36 599 

Agricultural  commodities  (surplus) : 

Barter  arrangements  reexamination 425 

Distributed  within  States,  values  of 802 

Foreign  currencies  derived  from  sale  of 838 

Agricultural  credit  insurance  fund. .526,  554,  556,  761,  850,  852,  853,  856,  860,  864 
Agricultural  Trade  Development  and  Assistance  Act  of  1954,  loans.  _  90,  838,  844 
Agriculture  and  agricultural  resources,  expenditures: 

1954-62 579,582 

1958-62  and  estimates  1963  and  1964 27,  28,  30 

869 


870  INDEX 

Agriculture,  Department  of: 

Expenditures :  Page 

1961  and  1962  and  monthly  1962 524 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc 811 

States  and  local  units 801 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Trust  account  receipts  and  expenditures  1961  and  1962  and  monthly 

1962 558,  564 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 577 

Agriculture,  loans  to  aid 860 

Ainsworth  Library  fund,  Walter  Reed  General  Hospital 761,  764 

Air  Force,  Department  of: 

Cadet  fund 762 

Defense  production  guarantees 860 

Expenditures: 

1949-62 513 

1961  and  1962  and  monthly  1962 528-535 

Federal  aid  to  States,   1962  for  payments   to  individuals,  etc., 

for  Air  National  Guard 811 

General  gift  fund 762 

Industrial  fund  earnings  paid  to  Treasury 864 

Intragovernmental  fund  receipts  and  expenditures  1961  and  1962 532 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 532,556 

Aircraft  and  passengers  entering  United  States 822 

Airport  program.  Federal 809 

Alaska  Railroad  revolving  fund 536,  556 

Alcohol  taxes 23,  24,  61,  71,  164,  380,  588,  595 

Alien  property  trust  fund 761 

Alliance  for  Progress  {see  also  Latin  America) 89, 

171,  353,  403-405,  407,  409,  410,  436-438 

American  States,  Organization  of  (OAS)  (see  also  Latin  America) 90, 

171,  353,  405,  410 
Argentina: 

Exchange  agreement  and  standby  arrangement 83,  481 

Tax  administration 354 

Armed  services  housing  mortgage  insurance  fund 620,  622,  641,  649,  676,  760 

Armory  Board  stadium  bonds.     >See  District  of  Columbia. 
Army,  Department  of: 

Central  hospital  fund.  Office  of  Surgeon  General,  investments  made 

by  Treasury  1952-62 761 

Defense  housing  profits  paid  to  Treasury 864 

Defense  production  guarantees 860 

Expenditures: 

1789-1962 509 

1961  and  1962  and  monthly  1962 528-535 

Federal  aid  to  States,  1962  payments  by  States  for: 

Individuals,  etc.,  for  National  Guard 812 

States  and  local  units  for  lease  of  flood  control  lands 803 

General  gift  fund 762 

Intragovernmental  fund  receipts  and  expenditures  1961  and  1962 532 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 532,556 

Assistant  Secretaries  of  the  Treasury,  address  and  statement  by: 

Leddy,  J.   M.,  July  31,   1961,  before  the  Senate  Foreign  Relations 
Committee   on   amendment   of  the   articles   of   agreement   of  the 

International  Finance  Corporation 468 

Surrey,  S.  S.,  October  25,  1962,  before  the  Tax  Institute  Symposium  on 

the  U.S.  tax  system  and  international  tax  relationships 349 


INDEX  871 

Atomic  Energy  Commission:  Page 

Earnings  paid  to  Treasury 864 

Expenditures : 

1954-62 579 

1961  and  1962  and  monthly  1962 544 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to  States,  1962  payments  for  individuals  for  fellow- 
ships and  assistance  to  schools  by  States 817 

Automatic  data  processing 121,  122, 

133,  139,  142,  145,  146,  150,  159,  161,  166,  167,  180,  197,  297,  317 

Automobiles,  trucks,  tires,  inner  tubes,  etc.,  taxes 24, 

26,  30,  61,  71,  384,  588,  596 

Aviation  fuel  taxes 24,  61 

Awards  program  for  suggestions  by  employees 101, 

103,  122,  125,  139,  144,  180,  185 

B 
Balance  of  payments,  U.S.: 
Analyses  of  situation: 

1950-62 450 

1958-60 79,447 

1958-61 412 

1959 459 

1960 459 

1961  calendar 274,  423-429,  459 

1962: 

Calendar 429,  447,  459 

Fiscal 79 

Basic 79,441 

Canadian  international  position 79 

Capital  movements: 

Administration  policies 435 

Reporting  by  the  Treasury 80 

Components,  seasonally  adjusted 835 

Deficit: 

Accounting  method 458 

Amounts,  total 412,  416,  419,  424,  443,  450,  835 

Basic  accounts 274,  412,  416,  423,  443,  459 

Measures  to  reduce: 

Debt  management 5,  41,  44,  278 

Dollar  (U.S.)  as  supplement  to  gold  in  financing  world  trade.       439 

European  capital  markets,  expansion,  recommendation 452 

Export  coordinator 16,  427,  430 

Export  insurance  and  credit  guarantees 16, 

91,  420,  427,  454,  459,  460 
Foreign  aid: 

Reductions 459 

Relationship 433 

U.S.  goods  instead  of  dollars 451 

Foreign  countries,  debt  prepayments 17, 

79,  416,  423,  447,  452,  458,  459 
Foreign  exchange.     See  Foreign  exchange  (convertible). 
Foreign  investments  in  United  States 453 

""i6,"4i,"56,"27i,"279,"280,'292,'339,~433,"446,'452,  460 

International  cooperation 17, 

79,  413,  428,  430,  439,  452,  456,  458,  461,  462,  466,  407 
International   Monetary   Fund,   special  borrowing  arrange- 
ments     1,  15,  85,  411-415,  429,  430,  462 

Military  assistance  expenditures,  offset  arrangements 17, 

425,  451,  452 

Objectives  and  means 419, 

420,  424-429,  431,  440,  448,  450,  458,  463,  465 

Organization  for  Economic  Cooperation  and  Development 351, 

414,  428,  435,  462,  463 


872  INDEX 

Balance  of  payments,  U.S. — Continued 
Deficit — Continued 

Measures  to  reduce — Continued  Pase 

President's  program 86,  415,  425,  450 

Tariff  negotiation  authority,  recommendation 416,  428,  430 

Tax  policies  and  programs  (see  also  Taxation) 10,  16, 

274,  307,  309,  311-315,  320,  337,  342-348,  349-352,  424,  426,  429, 
430,  433,  435,  444,  451,  454. 

Trade  expansion 16,  415,  419,  443,  453,  455,  458 

Visa  requirements  for  foreign  tourists  simplified 427,  430 

Foreign  aid  relationship 408,  409,  416,  425,  431,  441,  449,  450,  458 

Gold  and  dollar  movements,  U.S 78,  80, 

412,  423,  424,  425,  429,  450,  451,  459,  466 

International  investment  and  gold  position,  U.S 834 

Merchandise  accounts 79,  417,  423,  835 

Private  investment  abroad,  U.S 427,  435,  444,  447,  450,  451,  460,  834 

Problem,  nature  of 79,  311-315,  323,  340,  416,  423,  449 

Secretary  of  the  Treasury,  report  to  the  President,  March  1962.  79,  423-430 

Unrecorded  transactions 416,  451,  835 

Bank  circulation,  etc.,  taxes 384 

Bank  for  International  Settlements 461,  471,  476 

Banking,  Advisory  Committee  on 496 

Banking  system,   governmental  security   holdings    (see  also   Commercial 
banks;  Federal  Reserve  Banks;  National  banks): 
Federal  securities: 

1941-62  selected  dates,  and  changes  1962 56 

1952-62,  June  30 745 

1961  and  1962,  December  31 6 

1962  changes 59 

Nonguaranteed  securities  of  Federal  instrumentalites,  1952-62,  June  30_       745 
State,  local,  and  territorial  government  securities,  1952-62,  June  30_-       745 

Banks.     See  specific  classes. 
Banks  for  cooperatives: 

Capital  stock  owned  by  United  States  and  repayments  1962 850 

Debentures,  engraved,  printed,  and  delivered 825 

Franchise  tax  paid  to  Treasury 864 

Investment  fund,  receipts  and  expenditures  1961  and  1962 548,  557 

Investments: 

1952-62 .       .  _         763 

1961  and  1962 572 

Obligations: 

Market  transactions  (net)  1961  and  1962 574 

Outstanding  1953-62,  June  30 623 

Bases  of  tables,  explanation 501-505 

Beer  taxes 380,  588,  595 

Bills,  Treasury: 

Engraved,  printed,  and  delivered 825 

Interest  (discount) : 

Computed  charge  and  rate,  June  30,  1939-62 737,  738 

Computed  rate,  June  30,  1962 625 

Expenditures  1958-62 739 

Rates 248 

Issuance  policy 9,  42 

Limitation,  statutory,  application 652 

Matured  outstanding,  June  30: 

1961  and  1962 685-688 

1962 646 

One-year: 

Allotments  by: 

Federal  Reserve  districts 247 

Investor  classes 53,  722 

Exchanges 45,  48,  656,  660,  690,  698,  i05,  713 

Issues: 

Press  releases,  April  15,  1962,  issue.. 246,  247 

Summary  table  1962 251 


INDEX  873 

Bills,  Treasury — Continued 
One-year — Continued 

Issues  and  redemptions:  Page 

1961  and  1962  and  monthly  1962 656,  660 

1962 45,  47,  48,  50,  51,  52,  251,  668,  685-688,  690,  698,  705,  713 

Outstanding  June  30: 

1959-62 619 

1961  and  1962 668,  685-688,  748 

1962 625,627 

Description 627 

Ownership : 

Changes 60 

Summary  by  investor  classes  June  30,  1961  and  1962 748 

Prices  and  rates 248 

Regular  weekly  and  one-year  outstanding  1960-62,  chart 42 

Regular  weekly  series: 

Allotments  by  Federal  Reserve  districts 242 

Exchanges 656,  660,  690-721 

Issues: 

Press  releases,  June  21,  1962,  issue 240 

Summary  table  1962 2|18 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 _   656,  660 

1962 248,  668,  685-688,  690-721 

1962  calendar 9 

Outstanding  June  30: 

1952-62 619 

1961  and  1962 668,685-688,  748 

1962 625,627 

Description 627 

Ownership : 

Changes 60 

Summary  by  investor  classes  June  30,  1961  and  1962 748 

Strip  bills: 

Allotments  by: 

Federal  Reserve  districts 244 

Investor  classes 53,  722 

Issues  and  redemptions 9,  47,  242-244,  249,  668,  669 

Outstanding 668 

Press  releases,  November  15,  1961,  issue 242-244 

Regulations,  revision 257 

Tax  anticipation  series: 
Allotments  by: 

Federal  Reserve  districts 246 

Investor  classes 53,  722 

Exchanges 251,  656,  660,  711 

Issues: 

Press  releases,  March  23,  1962,  issue 244 

Summary  table  1962 251 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 656,  660 

1962 45,  46,  49,  51,  52,  668,  685-688,  690,  696,  697,  711,  720 

Outstanding  June  30 : 

1953,  1957,  1959,  1961  and  1962 619 

1960-62,  chart 42 

1961  and  1962 668,  685-688,  748 

1962 625,628 

Description S28 

Ownership : 

Changes 60 

Summary  by  investor  classes  June  30,  1961  and  1962 748 

Boats,  fuel  taxes 24,  61 

Bogota,  Act  of 436,438 

Bond  and  stock  transfers,  security  issues,  and  deeds  of  conveyance,  etc., 

taxes J "1 588 


874  INDEX 

Bonds  and  notes,   U.S.   Government,  holdings  of  foreign  countries    and      Pase 

international  institutions 80,  83 1 

Bonds,  Armory  Board  stadium.     See  District  of  Columbia. 
Bonds,  U.S.  Government: 

Adjusted  service  (matured) 612,  614,  646,  656,  662,  680 

Armed  Forces  leave  (matured) 612,  614,  646,  662,  680 

Depositary: 

Bank  holdings  June  30,  1961  and  1962 748 

Engraved,  printed,  and  delivered 825 

Interest: 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 656,  662 

1962. ._  675,  691,  694-697,  699-702,  704-706,  709,  712,  715,  719-721 
Outstanding  June  30: 

1952-62 619 

1961  and  1962 55,  675,  748 

1962 625,634 

Description 634 

Limitation,  statutory,  application 652 

Excess  profits  tax  refund  (matured) 609,  614,  621,  646,  652,  662,  689 

Investment  series,  Treasury  bonds: 

Exchanges 41, 

54,  55,  664,  692,  694-697,  699-702,  704-706,  709,  712,  715,  719-721 
Interest: 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Outstanding  June  30: 

1952-62 619 

1961  and  1962 55,  675,  748 

Ownership: 

Changes     60 

Summary  by  investor  classes  1961  and  1962 748 

Redemptions: 

1961  and  1962  and  monthlv  1962 662 

1962. ._  675,  692,  694-697,' 699-702,  704-706,  709,  712,  715,  719-721 
Liberty,  outstanding  June  30,  1961  and  1962,  and  redemptions  1962.  678 
Panama  Canal: 

Engraved,  printed,  and  delivered 825 

Outstanding  June  30: 

1952-60 619 

1961  and  1962  (matured) 678 

Postal  savings  (matured) 619,  646,  678 

Rural  Electrification  Administration  series: 
Interest: 

Computed  rate  June  30,  1962 625 

Expenditures  1961-62 739 

Issues  and  redemptions: 

1961  and  1962  and  monthlv  1962 656,662 

1962...   675,  692,  694-697,  699-702,  704-706,  709,  712,  715,  719-721 
Outstanding  June  30: 

1961  and  1962 619,  675,  748 

1962 625,  634 

Description 634 

Limitation,  statutory,  application 652 

Savings: 

Advertising  donated 195 

Agents  for  Series  A-E 147 

Audit  of  retired 142,  147 

Duplicate  bond  applications 149 

Engraved,  printed,  and  delivered 825 

Exchanges: 

Series  E  for  Series  H 730 

Series  E,  F,  and  J  for  Series  H 658,  662,  664 

Series  F  and  G  for  marketable  Treasury  bonds 47-48, 

55,  221,  223,  230,  236,  662,  664,  703,  706,  714,  721 


INDEX  875 

Bonds,  U.S.  Government — Continued 

Savings— Continued  ^^^e 

Freedom  Bond  Drive 196 

Interest  or  accrued  discount: 

1942-62  and  monthly  1962 729 

1961  and  1962  and  monthly  1962 658,  662 

Checks  issued  and  investment  yield.  Series  H 260-269 

Checks  issued   (number  and  amount)    and  accounts  main- 
tained for  Series  G,  H,  and  K-__ 148 

Computed  charge  and  rate  1939-62 737 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Payments  to  beneficiaries,  changes  in^method 257 

Yield  increase  and  term  extension,  Series  H 258-270 

Issues: 

1935-62 728 

1941-62 634,  729 

1961  and  1962  and  monthly  1962 658 

1962 145,  673,  691-721 

Series  E  and  H 728,  729,  734 

Series  E  through  K  by  series  1941-62  and  monthly  1962__  729-732 

Limitation  on  holdings,  changes.  Series  H 258,  270 

Lost,  stolen,  or  destroyed,  application  for  duplicates 149 

Objectives  of  sale 44,  195 

Outstanding  June  30: 

1941-62 729 

1952-62 619 

1961  and  1962 55,  673,  680,  748 

1962 145,  625,  634 

1962  by  series  and  denominations 147 

Description 634 

Limitation,  statutory,  application 652 

Matured 646,  680 

Series  E  and  H 729 

Series  E  through  K  by  series  1941-62  and  monthly  1962 729 

Ownership : 

Changes 60 

Summary  by  investor  classes  1961  and  1962 748 

Payroll  savings  plan 148,  195 

Records  of  sales  and  redemptions 145 

Redemptions : 

1935-62 728 

1941-62 634,  729 

1961  and  1962  and  monthly  1962 662 

1962 145,  673,  680,  691-721 

Series  E  and  H 728,  729 

Series  E  through  K  by  series  1941-62  and  monthly  1962..  728,  729 

Series  H,  1962 663 

Registering  and  accounting  operations 142 

Regulations  amended 257-270 

Sales  and  redemptions  of  Series  E  and  H  bv  denominations 733 

Series  H,  10-year  extension  and  holding  hniit  of  $20,000...   55,  258,  270 

State  sales  of  Series  E  and  H 734 

Thrift  promotion 195 

Treasury: 

Allotments  by: 

Federal  Reserve  districts 233-239 

Investor  classes 53,722 

Bank  eligible  outstanding  June  30,  1952-62 619 

Bank  restricted  outstanding  June  30,  1952-54 619 

Engraved,  printed,  and  delivered 825 

Exchanges 45,  47,  48,  50,  52,  207,  209,  210,  214-219,  227, 

230,  233-239,  656,  662,  692,  695-697,  700,  709,  713-717,  720 


876  INDEX 

Bonds,  U.S.  Government — Continued 
Treasury — Continued 

Interest:  Page 

Computed  charge  and  rate  June  30,  1939-62 737,  738 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Issues: 

Circulars: 

October  1,  1957  issue,  additional 225 

June  23,  1960  issue,  additional 219,221 

March  1,  1962  issue 227 

Summary  table  1962 230 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 656,  660,  664 

1962 :   45-51,  219,  225,  227,  230,  233-239,  672, 

678,  679,  692,  693,  695,  696,  699-703,  705,  708,  709,  711,  713, 
714,  716,  717,  720. 
Outstanding  June  30: 

1952-62 .        619 

1961  and  1962 672,  678,  748 

1962 625,631 

Description 63 1 

Limitation,  statutory,  application 652 

Matured _' 646,  678 

Ownership: 

Changes 60 

Summary  by  inyestor  classes  June  30,  1961  and  1962 748 

Prices  and  yields: 

1941-62,  monthly  and  annual  averages 741 

1961  and  1962,  June  30,  and  price  range  since  first  traded.-        742 
Special  issues.     See.  Trust  funds  and  certain  other  ii:-counts. 

Bowling  alleys  and  biUiard  and  pool  tables  taxes 385,  589 

Brazil: 

Exchange  agreement  and  standby  arrangement 84 

Financial  negotiations  with  the  United  States 481 

liretton    Woods  Agreements  Act,  amendment  authorizing  loan  to  Inter- 
national Monetary  Fund,  recommendation 411,  414 

liudget    (see    also   Administrative    budget;    Cash    budget;    Expenditures; 
National  income  accounts;  Receipts;  Surplus  or  deficit) : 

Accounts,  explanation 504 

European  countries,  comparison 434,  443 

Receipts  and  expenditures: 

1921-62 510-515 

1932-62  and  monthly  1962 506 

1954-62,  sources  and  major  functions 578 

1961  and  1962  and  monthly  1962 518-553 

1962  and  estimates  1963  and  1 964 588,  590 

Budget  and  Accounting  Procedures  Act  of  1950  authorizations 130,  503 

Budget,  Bureau  of,  expenditures ^ 522 

Budgetary  Appro])riations  and  Other  Authorizations,    Expenditures  and 

Unexpended  Balances 131 

Building  and  loan  associations.     *See  Savings  and  loan  associations. 

Bullion  charges,  receipts 589 

Business  and  store  machines  taxes 385,  588,  596 

Butter,  adulterated  and  process,  taxes 383 


Cabarets,  admission  taxes 589,  597 

Canada: 

Currency  revaluation  and  stabilization 18,  79,  83,  474 

Financial  assistance  (short-term)  to 84,91 

Joint  Canadian-United  States  Committee  on  Trade  and  Economic  Af- 
fairs           96 


INDEX  877 

Canal  Zone:  Page' 

Government  expenditures 534 

Postal  Savings  System: 

Deposits  June  30,  1946-62 651 

Investments  1952-62 761 

Treasury   notes   issued   to,   outstanding   June   30,    1952-57   and 

1959 619 

Taxes 385 

Capital  movements,  reporting  by  the  Treasury 80 

Capital  stock  taxes 382,  594 

Carriers  and  persons  entering  United  States 108,  821 

Cash  budget  (see  also  Cash  income  and  outgo;  Receipts  from  and  payments 

to  the  public) 4,32 

Cash  deposits  and  withdrawals,  Treasurer's  account 153 

Cash  Division,  Treasurer  of  the  United  States,  checks,  etc.,  deposited  for 

collection 156 

Cash  held  outside  the  Treasury,  change  in  balance: 

1952-62 608 

1961  and  1962 22 

1962  and  estimate  1963 593 

Cash  income  and  outgo   (see  also  Cash  budget;  Receipts  from  and  pav- 

ments  to  the  pubhc)    1952-62 I.       608 

Cash  operating  balances 277,  292,  294 

Cash  operations,  description  of  accounts  relating  to 504 

Central  accounting  and  reporting.     See  Accounting  and  financial  reporting. 

Government. 
Central  reporting.     See  Accounting  and  financial  reporting.  Government. 
Certificates  of  indebtedness.  Treasury: 

Engraved,  printed,  and  delivered 825 

Foreign  currency  series: 

Interest  expenditures  1962 739 

Issues  and  redemptions,  1962.  __    44,  82,  473,  475,  633,  656,  657,  662,  663, 

673,  697,  699,  704,  705,  710,  711,  713,  719 
Outstanding  June  30: 

1962 44,  55,  619,  625,  633,  673,  748 

Description 633 

Limitation,  statutory,  application 652 

Foreign  series: 

Interest  expenditures  1962 739 

Issues  and  redemptions,   1962 44,  633,  656,  657,  662,  663, 

673,  692,  699,  700,  708,  707,  710,  715,  717,  719,  720 
Outstanding  June  30: 

1962 44,  55,  619,  625,  633,  673,  748 

Description 633 

Limitation,  statutory,  application 652 

Tni"prf*st ' 

Computed  charge  and  rate,  June  30,  1942-62 737,  738 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Matured  outstanding  June  30,  1961  and  1962 646,683-685 

Ownership : 

Changes  1962 60 

Summary  by  investor  classes  June  30,  1961  and  1962 748 

Prices  and  yields  June  30,  1961  and  1962 744 

Regular  series: 

Allotm.ents  by: 

Federal  Reserve  districts 208 

Investor  classes 53,  723 

Exchanges 45,  50,52,209,210,214,216, 

218,  219,  230,  231,  233,  239,  656,  660,  692,  707,  716 
Issues : 

Circular  on  Februarv  15,  1962,  issue 205 

Summarv  table  1962 207 


878  INDEX 

Certificates  of  indebtedness,  Treasury — Continued 
Regular  series — Continued 

Issues  and  redemptions:  PagS 

1961  and  1962  and  monthly  1962 656,  660 

1962 48, 

50,  51,  52,  208,  629,  671,  684,  692,  707,  711,  713-715 
Outstanding  June  30: 

1952-62 619 

1961  and  1962 671,  748 

1961  and  1962,  matured 684,  685 

1962 625,629 

Description 629 

Limitation,  statutory,  application 652 

Special  issues.  See  Public  debt:  Special  issues  to  Government  in- 
vestment accounts;  Trust  funds  and  certain  other  accounts  of  the 
Federal  Government. 

Tax  anticipation  series  (matured) 661,  684 

Treasury  savings,  matured 646 

Charts: 

Administrative  budget  1953-62 21 

Federal  securities: 

Outstanding  1946-62,  semiannually 39 

Ownership 57 

Organization  of  Treasury  Department,  November  1,  1962 xv 

Public  and  private  debt: 

1946-62,  as  percentage  of  GNP 41 

1946-62,  selected  dates 40 

Public  debt: 

Advance  refunding 43 

Maturity  distribution 43 

Structure  of  under-1-year  debt  1960-62 42 

Check  forgery  insurance  fund 155,  542,  557 

Checks: 

Claims  involving 155 

Disbursing  officers'  accounts 155 

Foreign,  withheld  in  certain  areas 140 

Issued  by  Division  of  Disbursement,  unit  cost 134 

Outstanding: 

Clearing  account 506 

Deposits  in  transit  (net) ,  etc 22 

Paid  by  Treasurer  of  United  States 155 

Payment  and  reconciliation  program 150 

Cheese,  filled,  taxes 385 

Child  welfare  and  public  assistance  programs 70 

Chile  exchange  agreement 83 

China  (Communist),  foreign  assets  control 97,  172 

Cigar  taxes 381,  588,  595 

Cigarette  papers  and  tubes,  taxes 381,  588 

Cigarette  taxes 61,  71,  381,  588,  595 

Circulars,  Department,  Nos.: 

1-62,  January  15,  1962,  Treasury  bonds  of  1969 225 

2-62,  February  5,  1962,  certificates  of  indebtedness,  Series  A-1963-._       205 

4-62,  February  19,  1962,  Treasury  bonds  of  1971 227 

418,  revised,  amendment,  November  17,  1961,  regulations  governing 

Treasury  bills 257 

530,  revision,  August  2,  1961,  U.S.  savings  bonds 257 

530,  revision,  November  17,  1961,  regulations  governing  amounts  of 

U.  S.  savings  bonds  held 258 

905,  revision,  August  2,  1961,  Series  H  savings  bonds 258 

905,  revision,  November  17,  1961,  Series  H  savings  bonds 270 

1062,  July  17,  1961,  Treasurv  notes.  Series  H-1962 210 

1064,  Julv  17,  1961,  Treasury  bonds  of  1968 219 

1068,  Octol)cr  2,  1961,  Treasurv  notes,  Series  D-1963 212 

1072,  November  17,  1961,  Treasury  bonds  of  1968 221 

Circulation  Statement  of  United  States  Money 150,  752 


INDEX  879 

Page 

Civil  defense 123,  530,  542,  554,  557,  579,  803,  861 

Civil  Service  Commission  {see  also  Federal  employees) : 

Earnings  paid  to  Treasury 864 

Expenditures 546,568 

Investments  1956-62 760 

Receipts 562 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 -- 577 

Civil  service  retirement  and  disability  fund: 
Receipts  and  expenditures: 

1961  and  1962 546,  562,  568 

1962  and  cumulative 764 

Statement  1962 764 

Treasury  certificates  of  indebtedness,  notes,  and  bonds  issued  to: 

Description 638 

Interest  rates: 

Computation  provision,  statutory  change 135 

Computed  rate  June  30,  1962 625 

Investments 572,  760,  765 

Issues  and  redemptions 658,  664,  675 

Outstanding  June  30,  1962 619,  625,  638,  675,  765 

Claims : 

Against  foreign  governments  and  nationals 138 

Expenditures 542 

Nationals.     See  Nationals,  U.S. 

Texas  City  payment 534 

Clearing  account 506,  593,  612 

Club  dues  and  initiation  fees  taxes 589 

Coconut,  etc.,  oils  processed,  taxes 76,  389,  589 

Coin-operated  amusement  and  gaming  devices  taxes 385,  589 

Coins  {see  also  Money) : 

Minor  coin  and  subsidiary  coin: 

In  circulation,  Federal  Reserve  Banks,  and  Treasury,  and  stock.  _       175 

750,  752,  755-757,  758 

Manufactured  1962,  pieces  and  face  value 174 

Seigniorage 178 

Production 173 

Uncirculated  sets,  sale 156,  173,  488 

College  housing  loans 644,  554,  557,  850,  852,  853,  854,  861,  864 

Colorado  River  Basin  fund.  Upper 538,  556,  865 

Colorado  River  Dam  fund 554,  799,  865 

Combined  Statement  of  Receipts,  Expenditures  and  Balances  of  the  U.S. 

Government 130-1 32 

Commerce  and  transportation  expenditures: 

1954r-62 579,582 

1958-62  and  estimates  1963  and  1964 27-28,  30 

Commerce,  Department  of: 

Earnings  paid  to  Treasury 864 

Expenditures: 

1961  and  1962  and  monthly  1962 528 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,   etc.,  for  State  marine  schools,   subsistence  of 

cadets 811 

States  and  local  units 802 

Loans  outstanding 860,  861,  862 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Trust  account  receipts  and  expenditures 558,  564 

Commercial  banks: 

Agents  for  Series  A-E  savings  bonds 148 

Depositaries  for  receipt  of  public  moneys 134,  152,  750 

Export  financing,  agents  for  the  Export-Import  Bank 91 


880  INDEX 

Commercial  banks — Continued 

Security  holdings  (governmental) : 

Federal  securities:  Page 

1 94 1-62  selected  dates,  and  changes  1962 56 

1952-62,  June  30 745 

1961  and  1962,  December  31 6 

1961  and  1962,  June  30,  by  type  of  security 748 

1962  changes 60 

Allotments 722 

Nonguaranteed  securities  of  Federal  instrumentalities  June  30, 

1952-62 745 

State,    local,    and    territorial    government    securities    June    30, 

1952-62 745 

Tax  and  loan  accounts.  Treasury 750 

Commodity  Credit  Corporation: 

Borrowing  authority 852 

Capital  stock  owned  by  United  States,  June  30,  1961  and  1962 850 

Federal  aid  to  States,  1962  by  States  and  programs  for  States  and 

local  units 802 

Foreign  currencies  derived  from  sale  of  agricultural  commodities 838 

Interest  paid  to  Treasury 864 

Loans  outstanding 860 

Loss  (net)  1962 35 

Obligations: 

Held  by  Treasury 850,  852,  853,  854 

Held  outside  Treasury 622,  650 

Receipts  and  expenditures 526,  556 

Common  Market.     See  Eluropean  Economic  Community. 

Communication  services,  private  line,  ta.xes 71 

Comptroller  of  the  Currency,  Bureau  of 104-107,  156,  496,  761,  867 

Consumer  finance  companies  taxes 72 

Contributions  and  donations  to  U.S.  Government 140,  589 

Controlled  foreign  corporations.     See  Taxation:  Foreign  income  and  in- 
vestment. 

Cooperatives  and  patrons  ta.xes 11,  65,  307,  318,  337 

Corporate  debt  outstanding,  charts: 

1946-62,  as  percentage  of  GNP 41 

1946-62,  selected  dates 40 

Corporate  pension  trust  funds.  Federal  security  holdings 722,  749 

Corporation  income  taxes  (see  also  Ta.xation): 

1929-62 594 

1954-62 578 

1961  and  1962 22,519 

1962 23 

1962  and  estimates  1963  and  1964 25,  588 

1962  by  States 600 

Capital  gains  and  losses  treatment  1951-62 401 

Charitable  contributions  deductions 73 

Depreciation  of  assets,  guideknes  revision 10,  60,  69,  418 

Foreign  income  and  investment 11,  60,  65,  297,  349-351 

Imports,  tax  adjustment  for  injury 73 

Investment  in  depreciable  property  credit  1 962 375 

Plant  and  equipment  investment  tax  credit 10,  16,  60,  62,  297,  349 

Rate  extension 61,71 

Rates,  exemptions,  and  credits,  1950-62 370-379 

Refunds 590 

Revenue  Act  of  1962 10,60,297,349-351 

Special  classes,  rates  1950-62 402 

Corporations  and  certain  other  business-type  activities  of  U.S.  Govern- 
ment (see  also  specific  agencies): 

Advances  by  Treasury  1962 35,  850 

Assets,  liabihties,  and  net  investment  of  U.S 34,858 

Borrowing  authority 35,  852 

Capital  stock  owned  by  United  States 36,850 

Dividends,  interest,  etc.,  paid  to  Treasury 35,  864 

Financial  operations 33-37 


INDEX  881 

Corporations  and  certain  other  business-type  activities  of  U.S.  Govern- 
ment— Continued  Page 

Government-sponsored,  deposit  fund  account  expenditures  (net) 570, 

574,  584,  586,  610 

Income,  expense,  and  net  income  or  loss,  1962 34 

Interest  rates  on  advances,  determination 35 

Investments  in  public  debt  securities 22,  153,  572,  587,  592,  593 

Loans  outstanding 34,  860 

Loss  (net)  1962 34 

Obligations: 

Held  by  Treasury: 

1952-62,  June  30,  by  agencies 853 

1961  and  1962,  June  30 850 

1962,  June  30 852,  854 

Description 854 

In  custody  of  the  Treasurer  of  United  States 156 

Transactions 35,  850 

Held  outside  Treasury: 
Guaranteed: 

1934-62,  June  30 507,618 

1952-62,  June  30  bv  agencies 622 

1961  and  1962,  June  30 36,  39,  748 

1962,  June  30 626,  647,  649 

1962  and  estimates  1963  and  1964__    593 

Calls  for  redemption 252,  254 

Description 649 

Interest: 

Computed  rate 626 

Paid  1940-62  by  tax  status 740 

Issued,  redeemed,  and  outstanding  1961  and  1962 36 

Limitation,  statutory,  application 652 

Market  transactions  (net)   1961  and  1962  and  monthly 

1962  by  agencies 574 

Matured  outstanding  June  30,  1962 650 

Not  guaranteed: 

Bank  and  nonbank  investors,  1952-62 745 

Issued,    redeemed,    and    outstanding    1961    and    1962, 

June  30 36 

Market  transactions  (net)  1961  and  1962,  and  monthly 

1962  by  agencies 574 

Outstanding  1953-62  and  monthly  1962  by  agencies 623 

Ownership  by  investor  classes: 

1952-62 746 

1961  and  1962 748 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Review  for  1962 33-37 

Sales  and  redemptions  of  obligations  in  the  market.  _   22,  153,  570,  574,  587 

Statements,  financial  submitted  to  Treasury 34,  850 

Treasury  loans  to 34,  35,  135,  850 

U.S.  investment  in 34,  859 

Corporations  (nongovernment)  governmental  security  holdings: 
Federal  securities: 

1941-62  selected  dates,  and  changes  1962 56 

1952-62,  June  30 745 

1961  and  1962,  June  30 749 

1961  and  1962,  December  31 6 

Allotments 722 

Nonguaranteed  securities  of  Federal  instrumentalities  June  30,  1952- 

62 745 

State,  local,  and  territorial  government  securities,  June  30,  1952-62_       745 

Costa  Rica  exchange  agreement  and  standby  arrangement 83,  481 

Cotton  futures  tax 385 

Counterfeiting 199 


561496—63 -57 


882  INDEX 

Credit  unions:  Page 

Agents  for  Series  A-E  savings  bonds 148 

Bureau  of  Federal,  receipts  and  expenditures  1961  and  1962 534,  556 

Credits  and  claims  in  foreign  countries,  U.S.  Government 834 

Cuban  import  regulations 98,  172,  482-484 

Cumulative  sinking  fund.     See  Sinking  fund,  cumulative. 
Currency.     See    Coins;    Dollars;    Foreign    currencies;    Foreign    exchange; 
International  financial  and  monetary  developments;  International  Mone- 
tary Fund;  Money;  Paper  currency;  Silver. 
Customs: 

Bureau  of 108-122,542,605,867 

Collections: 

1789-1962 508 

1954-62 578 

1961  and  1962 22,  108,519,  604 

1962 24 

1962  and  estimates  1963  and  1964 25,  26,  589 

By  districts 602 

Cost 119,602 

Commissioner,  functions  delegated  to 486 

Drawback  transactions 109,  602,  605,  820 

Narcotic  seizures  1961  and  1962 ^ 117 

Refunds  and  drawbacks 516,520,578,590,  602,  605 

Seizures  1961  and  1962 823 

Czechoslovakia,  claims  fund 138.  829 

D 

Daily  Statement  of  the  United  States  Treasury: 

Account  of  the  Treasurer  of  the  United  States,  published  in 37 

Bases  of  data 501 

Dealers  and  brokers,  allotments  on  subscriptions  for  securities 722 

Debt  Management.     See  Public  debt:    Management. 

Defense,  Departnient  of  (see  also  National  defense): 
Expenditures: 

1954-62 578 

1961  and  1962  and  monthly  1962 528-535 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to.States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc.,  for  National  Guard 811 

States  and  local  units  for  lease  of  flood  control  lands 803 

Intragovernmental  fund  receipts  and  expenditures  1961  and  1962 532 

Military  assistance 440,  532,  835,  862 

Military  functions: 

1954-62 578 

1961  and  1962 528-533 

1962  and  estimates  1963  and  1964 590 

Profits  on  defense  housing  paid  to  Treasury 864 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 532,556 

Trust  account  receipts  and  expenditures  1961  and  1962 558,  564 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 577 

Defense  Lending,  Office  of 123 

Defense  Materials  Procurement  Agency 853 

Defense  Minerals  Exploration  Administration 851,  852,  853,  857,  864 

Defense  Production  Act  of  1950,  operations: 

Borrowing  authority 852 

Expansion  of  defense  production: 

Expenditures  196 1  and  1962  and  monthly  1962 522 

Loans  outstanding 860,  862 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961 

and  1962 556 


INDEX  883 

Defense  Production  Act  of  1950,  operations — Continued 

Guarantees:  ^^se 

Loans  outstanding 860 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961 

and  1962 , 532,556 

Interest  paid  to  Treasury 865 

Lending  activities 123 

Obligations  held  by  Treasury,  June  30,  1962 852,  853,  857 

Securities  owned  by  United  States 85 1 

Deficit.     See  Surplus  or  deficit,  U.S.  Government. 
Deposit  fund  accounts: 

Expenditures,  net 584,  586,  592 

Explanation 505 

Receipts  or  expenditures  (net)  1961  and  1962 570,  583 

Depositaries,  Government  (see  also  Tax  and  loan  accounts): 

Balance  1961  and  1962 750 

Number  and  amount  of  deposits  bj^  class  of  depositaries 152 

Number  and  services 134 

Receipt  system  for  taxes,  accounting  procedure 141,  599 

Securities  held  by  Treasurer  of  United  States  agaiast  deposits  in 156 

Depositary  receipts  for  Federal  taxes 141,  589 

Depositary  system.  Federal.     See  Depositaries,  Government;  Tax  and  loan 

accounts. 
Depreciation.     See  Taxation. 

Depreciation  Guidelines  and  Rules,  July  1962 1,  60,  69,  297,  335,  349 

Development  Assistance  Committee  (D AC) 93 

Development  loan  fund,  liquidation  account  (see  also  Agency  for  Inter- 
national Development) : 

Foreign  currencies  acquired  without  purchase  with  dollars 838 

Loans  outstanding 862 

Development  loan  funds: 

Expenditures  1961  and  1962  and  monthly  1962 524 

Public  enterprise  revolving  funds  receipts  and  expenditures  1962  and 

net  1961  and  1962 556 

Diesel  and  special  motor  fuels  taxes 386,  589,  598 

Disaster  relief  expenditures 522,  803 

Disbursement,  Division  of.    133 

Disbursing  officers'  checking  accounts,  classes  and  checks  paid 155 

Distilled  spirits  taxes 380,  588,  595 

District  of  Columbia: 

Advance  for  general  expenses 550 

Armory  Board  stadium  bonds: 

Engraved,  printed,  and  delivered 825 

Held  outside  Treasury 575,  626,  650 

Outstanding  June  30: 

1960-1962 622 

1962 626,  649 

Payment  of  interest  by  Treasurer  of  United  States  as  agent. 157 

Deposit  fund  account  receipts  or  expenditures  (net),  1961  and  1962_.        570 
Federal  pavments  and  loans  to: 

1961  and  1962 550,  564 

1962 801-819 

1962  and  estimates  1963  and  1964 590 

Investments  of  funds 592,  761,  763,  768 

Receipts  and  expenditures  1962  and  estimates  1963  and  1964 591 

Securities  held  in  custody  of  Treasurer  of  United  States 156 

Stadium  fund 550,  574,851,852,  853,  857 

Teachers'  retirement  and  annuity  fund 761,  767 

Trust  account  receipts  and  expenditures  1961  and  1962  and  monthlv 

1962 564,  570 

Divested  property  of  enemy  nationals 139 


884  INDEX 

Dividends,  interest,  etc.,  receipts:  I'age 

1961  and  1962 864 

1961  and  1962  and  monthly  1962 518 

1962 35 

1962  and  estimates  1963  and  1964 589 

Tax  proposals.     See  Taxation. 

Documents,  other  instruments,  and  playing  cards  taxes 23,  382,  588,  595 

Dollars,  silver,  in  circulation,  Federal  Reserve  Banks,  and  Treasury,  and 

stock 176,  750,  752,  755-757,  758 

Donations  and  contributions  to  U.S.  Government 140,  589 

Drawback  transactions 109,  602,  605,  820 

Dues,  club,  and  initiation  fees,  taxes 385,  589,  598 

E 

Earnings  from  interest,  dividends,  etc.     See  Dividends,  interest,  etc. 

Economic  Commission  for  Latin  America  (ECLA) 405 

Economic  Cooperation  and  Development,  Organization  for  (OECD).     See 
Organization  for  Economic  Cooperation  and  Development. 

Education  expenditures  1954-62 580,  582 

Education,  loans  to  aid 861 

Education,  Office  of: 
Expenditures: 

1961  and  1962  and  monthly  1962 534 

Federal  aid  to  States,  1962  for  payments  for: 

Individuals,  etc 815 

States  and  local  units,  by  States  and  programs 804 

Electric,  gas,  and  oil  appliances,  taxes 385,  588,  596 

Electric  light  bulbs  taxes 385,  588 

Electrical  energy  taxes 385,  596 

Electronic  data  processing.     See  Automatic  data  processing. 

El  Salvador  exchange  agreement  and  standby  arrangement 83,  480 

Employees  health  benefits  fund,  Civil  Service  Commission 546, 

570,  572,  577,  592,  760,  770 

Employees'  life  insurance  fund.  Civil  Service  Commission 570, 

572,  577,  587,  592,  760,  772 

Employment  Security,  Bureau  of  expenditures 538,  566 

Employment  taxes  {see  also  Internal  Revenue:  Receipts:  Taxation): 

1936-62 594 

1954-62.  transfers  to  trust  accounts 578,  582 

1958-1962  and  estimates  1963  and  1964 29 

By  acts: 

1961  and  1962 .       _  519 

1962  and  estimates  1963  and  1964 589 

Rates : 

1950-62 392 

1962  increases 157 

Refunds 582,  590 

Engraving  and  Printing,  Bureau  of 124-128,  542,  824,  825,  867 

Estate  and  gift  taxes 22,  23,  25,  26,  519,  578,  589,  590,  GOO 

Estate  taxes 23,  67,  379,  594 

European  Economic  Community  (Common  Market) : 

Commission,  member  of  the  Development  Assistance  Committee 93 

Currencies  of  members  held  by  International  Monetary  Fund 413 

Export  markets,  effect  on J 274,  430,  450 

International  Monetary  Fund  special  borrowing  arrangements 275,  412 

International  tax  adjustments 349 

Membership 93 

Tariffs . 9.3,94,416,417,  420 

Tax  treaties 351 

Trade  controls  on  agricultural  products 428 

U.S.  trade  and  tariff  negotiations 94,  406,  430,  454 

Exchange  Stabilization  Fund: 

Agreements  with  foreign  countries L 83,  84,  480-481 

Assets  and  liabilities,  June  30,  1961  and  1962 836 

Foreign  currency  sales  to  Federal  Reserve  System 475 


INDEX  885 

Exchange  Stabilization  Fund — Continued  Page 

Foreign  exchange  transactions,  profits 837 

Income  and  expense -_ 837 

Investments 761,  837 

U.S.  stabiUzation  agreements 83,  837 

Excise  taxes  (see  also  specific  taxes;  Taxation): 

1929-62 595-598 

1954-62 578 

1958-62  and  estimates  1963  and  1964 29 

1961  and  1962 22,23,  519 

1962  and  estimates  1963  and  1964 25,  26,  588 

1962  by  States 600 

Manufacturers'  advertising  increase  in  tax  deduction 75 

Manufacturers'  sales,  constructive  price  determination 75 

Rate  extension 24,  61,  71,  75 

Refunds 23,582,590 

Revisions  1962 71 

Savings  and  loan  associations,  certain  exemptions,  repeal 64 

Transfer  of  specified  excises  to  the  new  tariff  schedule,  provision  for._         75 
Transfers  to  highway  trust  fund 26,  29,  582 

Executive  OflSce  of  the  President: 

Expenditures 522,  590 

Public  enterprise  revolving  funds 522,  556 

Expenditures: 

1789-1962 508-515 

Administrative  budget: 

1953-62,  chart 21 

1958-62  and  estimates  1963  and  1964 27 

1961  and  1962  (net  basis) 22 

Review  for  1962  and  estimates  1963  and  1964 26-28 

Budget: 

1932-62  and  monthly  1962 506 

1954-62,  major  functions 578 

1961  and  1962  and  monthly  1962 520-553 

1962  and  estimates  1963  and  1964 590,593 

Interfund  deductions 27,  513,  551,  554,  581,  590 

Public  enterprise  revolving  funds.     See  Public  enterprise  revolv- 
ing funds. 

Federal  aid  to  States 801-819 

Payments  to  the  public  1952-62 1 608,  610 

Trust  funds  and  certain  other  accounts.     See  Trust  funds  and  certain 
other  accounts. 
Expense  account  deductions.     See  Taxation. 

Export  coordinator 16,  427,  430 

Export  credit  insurance 16,  91,  274,  420,  427,  454,  459,  460 

Export-Import  Bank: 

Borrowing  authority 852 

Canada,  financial  assistance  (short-term) 84,  91 

Capital  stock  owned  by  United  States 850 

Credit  commitments,  guarantees,  and  lending  authority 16, 

90,  91,  420,  427,  455,  459 

Dividends  and  interest  paid  to  Treasury 92,  864 

Expenditures  (net)  1961  and  1962  and  monthly  1962 546 

Financial  agreements  between  U.S.  and  Latin  American  countries—.   83,  410 

Foreign  indebtedness  on  U.S.  credits 844 

Latin  America,  assistance  to 437 

Loans  outstanding 862 

Obligations  held  by  Treasury 850,  852-854 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 557 

Export  programs  expenditures,"special 524 

Exports  and  U.S.  balance  of  payments 91, 

94,  419,  423,  426,  427,  443,  451-453,  455,  459 


886  INDEX 


Farm  Credit  Administration:  Page 

Expenditures 546 

Franchise  tax  and  dividends  paid  to  Treasury 864 

Notes  issued  to  banks,  outstanding  1961  and  1962,  June  30 36 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 546,557 

Farm  tenant  mortgage  insurance  fund  notes  outstanding  1952-55 619 

Farmers  Home  Administration  (see  also  Agricultural  credit  insurance  fund) : 

Borrowing  authority  (Secretary  of  Agriculture) 852 

Expenditures  1961  and  1962  and  monthly  1962 526 

Interest  paid  to  Treasury 864 

Loans  outstanding 860 

Obligations  held  by  Treasury 850,  853,  855 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 . 556 

State  rural  rehabilitation  funds,  investments 763 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 577 

Federal  agencies  and  trust  funds,  governmental  security  holdings.     See 
Government  investment  accounts. 

Federal- Aid  Highway  Act  of  1961,  provisions 29 

Federal  aid  to  States,  1962  payments  for  selected  programs  by  States  and 
by  agencies  for: 

Individuals,  etc 811-819 

States  and  local  units 801-810 

Federal  Aviation  Agency: 
Expenditures: 

1961  and  1962  and  monthly  1962 544 

1962  and  estimates  1963  and  1964 590 

Federal  aid  pavments  to  States  and  local  units  for  Federal  airport 

program,  1962  by  States 809 

Trust  account  receipts  and  expenditures  1961  and  1962 563,  568 

Federal  Bureau  of  Investigation  expenditures 538 

Federal  Civil  Defense  Act  of  1950  (Secretary  of  the  Treasury)  operations: 

Borrowing  authority 852 

Interest  paid  to  Treasury 865 

Lending  activities 123 

Loans  outstanding 861 

Obligations  held  by  Treasury 851,  853,  856 

Federal  Crop  Insurance  Corporation 526,  556,  850 

Federal  debt.     See  Federal  securities. 
Federal  Deposit  Insurance  Corporation: 

Borrowing  authority 852 

Investments: 

1952-62 760 

1961  and  1962 572 

Securities  held  in  custody  of  Treasurer  of  the  United  States 156 

Treasury  notes  issued  to: 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 658,  664 

1962 675 

Outstanding  June  30: 

1952-62 619 

1961  and  1962 675 

1962 625,639 

Description 639 

Federal  disabilitv  insurance  trust  fund: 

Investments 572,  587,  592,  760,  774 

Receipts  and  expenditures: 

1 957-62 586 

1961  and  1962  and'monthly  1962 ^ 560,  566 

1962  and  cumulative 774 

1962  and  estimates  1963  and  1964 591 


INDEX  887 

Federal  disability  insurance  trust  fund — Continued  Page 

Refunds  of  receipts 520,560,586,591 

Statement  1962 774 

Transfers  to: 

1957-62 517,  578 

1961  and  1962  and  monthly  1962 521,  560 

1962  and  estimates  1963  and  1964 590 

Treasury  certificates  of  indebtedness,  notes,  and  bonds  issued  to: 

Description 640 

Interest  rate,  computed,  June  30,  1962 625 

Issues  and  redemptions 658,  664,  675 

Outstanding 619,625,640,675,774 

Federal  employees: 

Health  benefits  fund 546,  570,  572,  577,  760,  770 

Life  insurance  fund 570,572,577,587,  760,772 

Retired  employees  health  benefits  fund 771 

Retirement  funds 546,  558,  562,  566,  568,  572,  576,  584,  586,  591,  592,  619 

620,  625,  638,  643,  658,  664,  666,  675,  677,  760,  764,  778 

Surety  bonds,  status  of  coverage 136 

Withholding  of  income  taxes  from  compensation 129,  600 

Federal  farm  loan  bonds 825 

Federal  Farm  Mortgage  Corporation: 

Dividends  paid  to  Treasury 864 

Fund 557 

Liquidation  fund 542,  557 

Loans  outstanding 863 

Obligations  held  outside  Treasury  June  30: 

1952-62 622 

1962 650 

Market  transactions  (net)  1961  and  1962  and  monthly  1962 574 

Principal  and  interest  paid  by  Treasurer  of  United  States  as  agent.       157 

Receipts  and  expenditures  1961  and  1962 546,  557 

Federal  highway  program.     See  Highway  trust  fund. 

Federal  Home  Loan  Bank  Board 548,  557 

Federal  home  loan  banks: 

Bonds  and  notes  engraved,  printed,  and  delivered 825 

Borrowing  authority 852 

Investments: 

1952-62 763 

1961  and  1962 572 

Obligations  |(not  guaranteed) 157,  574,  623 

Treasury  certificates  of  indebtedness  issued  to: 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions  1961  and  1962 658,  664,  676 

Outstanding  June  30: 

1952-62 620 

1961  and  1962 676 

1962 625,641 

Description 641 

Federal  Housing  Administration: 

Debentures,  engraved,  printed,  and  delivered 825 

Investments : 

1952-62 760 

1955-62 763 

1961  and  1962 572 

Loans  outstanding 860 

Obligations: 

Held  outside  Treasury 36,  574,  592,  622,  626,  649,  650,  851 

Principal  and  interest  paid  by  Treasurer  of  U.S.  as  agent 157 

Receipts  and  expenditures  1961  and  1962  and  monthly  1962 546,  557 

Treasury  notes  issued  to: 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 658,  664 

1962 676 


888  INDEX 

Federal  Housing  Administration — Continued 
Treasury  notes  issued  to — Continued 

Outstanding  June  30:  Page 

1952-62 620 

1961  and  1962 676 

1962 625,641 

Description 641 

Federal  Insurance  Contributions  Act  and  Self-Employment  Contributions 

Act.     See  Employment  taxes. 
Federal  intermediate  credit  banks: 

Bonds  and  debentures  engraved,  printed,  and  delivered 825 

Capital  stock  owned  by  United  States 850 

Franchise  tax  paid  to  Treasury 385,  864 

Investments: 

1952-62 763 

1961  and  1962  and  monthly  1962 572 

Obligations  (not  guaranteed) : 

Market  transactions  (net)  1961  and  1962  and  monthly  1962.__  574 

Outstanding  June  30,  1953-62 623 

Payments  to  Treasury 725 

Federal  land  banks 157,  572,  574,  623 

Federal  lending  agencies.     See  Corporations  and  certain  other  business- 
type  activities  of  U.S.  Government. 
Federal  National  Mortgage  Association: 

Borrowing  authority 852 

Capital  stock  owned  by  United  States 850 

Debentures  engraved,  printed,  and  delivered 825 

Dividends  and  interest  paid  to  Treasury 864 

Investments: 

1952-62 763 

1961  and  1962 572 

1962  and  estimates  1963  and  1964 592 

Loans  outstanding 860 

Obligations: 

Held  by  Treasury 850,  852,  853,  854 

Held  outside  Treasury,  transactions  (net) 574,  592,  851 

Outstanding  June  30,  1955-62 623 

Principal  and  interest  paid  by   Treasurer  of   United  States  as 

agent 157 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961 

and  1962 557 

Receipts  and  expenditures  1961  and  1962  and  monthly  1962 544,  568 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 577 

Federal  old-age  and  survivors  insurance  trust  fund: 

Investments 572,  587,  592,  760,  776 

Receipts  and  expenditures: 

1938-51 584 

1952-62 586 

1901  and  1962  and  monthly  1962 560,  566 

1962  and  cumulative 776 

1962  and  estimates  1963  and  1964 591 

Refunds  of  receipts 520,  560,  586,  591 

Statement  1962 776 

Transfers  to: 

1937-62 517 

1954-62 578 

1961  and  1962  and  monthly  1962 521,  560 

1962  and  estimates  1963  and  1964 590 

Treasury  certificates  of  indebtedness,  notes,  and  bonds  issued  to: 

Description 643 

Interest  rate,  computed,  June  30,  1962 625 

Issues  and  redemptions 643,  658,  664,  676 

Outstanding  June  30,  1962 620,  625,  643,  676,  776 


INDEX  889 

Federal  Open  Market  Committee,  Federal  Reser\-e  open  market  transac-      Page 

tions  in  foreign  exchange,  authorization 475,  478 

Federal  Prison  Industries,  Inc 538'  864 

Federal  Reserve  Bank  notes: 

In  circulation,  Federal  Reserve  Banks  and  Treasury,  and  stock..   750,  752, 

753,  755-757 

Redeemed  and  outstanding (347  759 

Federal  Reserve  Banks: 

Depositaries  for  Government  funds 134,  152,  750 

Federal  security  holdings: 

1941-62,  selected  dates,  and  changes  1962 56 

1952-62,  June  30 .  745  746 

1961  and  1962,  December  31 '   6 

1962  changes 60 

Franchise  tax  paid  to  Treasury  1918-33 725 

Interest  charges  on  Federal  Reserve  notes  deposited  in  Treasury.  .      140,  606 

Money  held  by  and  for 752,  754,  758 

Paper  currency,  destruction  of  unfit 154 

Payment  to  Treasury  for  outstanding  notes  of  series  prior  to  1928 153 

Treasury  deposits 152,  750 

Federal  Reserve  notes: 

Engraved,  printed,  and  delivered 825 

In  circulation,  Federal  Reserve  Banks  and  Treasury,  and  stock 750, 

752,  755-757 

Interest  charges  on  notes  deposited  in  Treasury 140,  606 

Issued,  redeemed,  and  outstanding 155,  759 

Old  Series  Currency  Adjustment  Act  effect 153 

Outstanding  1946-62 651 

Redemption  fund 750 

Unissued  stocks,  annual  audit 133 

Federal    Reserve    System    (see    also    Federal    Reserve    Banks;    Federal 
Reserve  notes;  Money;  Public  debt:   Management): 

Canada,  currency  stabilization  assistance 83,  85 

Foreign  exchange  operations  for  own  account 15, 

18,  82,  275,  429,  464,  469,  474,  475,  478 
Reciprocal  currency  agreements  with  foreign  central  banks  and  the 

Bank  for  International  Settlements 18,  82,  476-478 

Federal  Savings  and  Loan  Insurance  Corporation: 

Borrowing  authority 852 

Investments: 

1952-62 761 

1961  and  1962  and  monthly  1962 572 

Loans  outstanding 860 

Receipts  and  expenditures  1961  and  1962  and  monthly  1962 548,  557 

Treasury  notes  issued  to: 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 658,  666 

1962 677 

Outstanding,  June  30: 

1952-62 620 

1961  and  1962 677 

1962 625,643 

Description 643 

Federal  securities  (public  debt  and  guaranteed  obligations): 

Interest  paid  1940-62  by  tax  status 740 

Investments  in,  by  Government  agencies: 

1952-62 613,760 

1961  and  1962  and  monthly  1962 572 

Maturity  distribution  June  30: 

Call  and  maturity  classes,  1946-62 624 

Maturity  classes  and  investor  classes,  1961  and  1962 748 

Outstanding: 

1932-62,  June  30  and  monthly  1962 507 

1934-62,  June  30 618 

661496 — 63 58 


890  INDEX 

Federal  securities — Continued 

Outstanding — Continued  Pa^e 

1946-62,  as  percentage  of  GNP 40 

1946-62,  as  percentage  of  GNP,  chart 41 

1946-62,  as  percentage  of  public  and  private  debt 40 

1946-62,  semiannually,  chart 39 

1952-62  interest-bearing,  by  tax  status  and  investor  classes 746 

1962,  June  30 647 

1962  and  estimates  1963  and  1964,  June  30 593 

Description,  June  30,  1962 627-645 

Limitation,  statutory: 

Amounts  subject  to,  June  30: 

1938-62 507 

1962 652 

Legislative  history 653 

Temporary  increases  authorized 54 

Per  capita  1934-62 618 

Ownership: 

1941-62,  selected  dates,  by  investor  classes 56 

1952-62,  June  30,  by: 

Government  agencies  and  accounts 760 

Investor  classes 745 

Tax  status  and  investors  classes 746 

1961  and  1962,  December  31,  by  investor  classes 6 

1961  and  1962,  June  30,  by  investors  covered  in  Treasury  Survey.  748 

1962  by  investor  classes,  chart 57 

Estimated  changes  by  type  of  issue 60 

Foreign  and  international  accounts 80 

Review  for  1962 44,  55-60 

Summary  by  investor  classes 748 

Federal  ship  mortgage  insurance  fund 554,  761,  850,  852,  853,  860,  864 

Federal-State  tax  relations 77,  129 

Federal  Unemployment  Tax  Act.     See  Employment  taxes. 

Fees,  etc 554,589 

Financial  operations  summary 21,  506,  593 

Financing,    Treasury.     See   Financial  operations;   Public  debt:    Manage- 
ment. 
Fines,  penalties,  and  forfetures,  receipts  1962  and  estimates  1963  and  1964.  _       589 

Finland,  payments  on  World  War  I  indebtedness 137,  842 

Fire  and  casualty  insurance  companies.     See   Mutual  fire  and  casualty 

insurance  companies. 
Fire,  casualty,  and  marine  insurance  companies,  Federal  security  holdings.  _         58 

Firearms,  shells,  and  cartridges  taxes 385,588 

Fiscal  Assistant  Secretary 128,  487 

Fiscal  Service  administrative  reports 128-156 

Fisheries  loan  fund 861 

Fishermen,  tax  treatment 72 

Flood  insurance 852 

Food  for  Peace  program 90,  410,  437 

Foreign  and  international  accounts,  Federal  security  holdings 6,  56,  59,  80 

Foreign  assets  control 97,  140,  172,  482-484 

Foreign  Assistance  Act  of  1961,  advances  and  loans 591,  838 

Foreign  assistance  by  United  States  {see  also  Agency  for  International 
Development;  Development  Loan  Committee;  Export-Import  Bank; 
Foreign  government  indebtedness  to  United  States;  Inter- American 
Development  Bank;  International  Bank  for  Reconstruction  and  De- 
velopment; International  Development  Association;  International 
Finance  Corporation;  International  financial  and  monetary  [develop- 
ments; International  Monetary  Fund;  Mutual  security): 

Economic,  technical,  and  other  aid 91, 

137,  407,  416,  425,  448,  450,  451,  522,  556,  835,  839,  862 


INDEX  891 

Foreign  assistance  by  United  States — Continued  Pag-e 

Military  assistance 407,  416,  440,  448,  450,  451,  532,  579,  835,  862 

Revision  in  organization  and  basic  concepts 90 

U.S.  credits  outstanding,  indebtedness  by  area,  country,  and  type, 

June  30,  1962  (excluding  World  War  I) 833 

Foreign  Claims  Settlement  Commission 138,  548,  828 

Foreign  coins  manufactured  by  United  States 174 

Foreign    Credit   Insurance   Association    (FCIA)    (see   also  Export-Import 

Bank) 16,91,427,459 

Foreign  currencies  acquired  without  purchase  with  dollars: 

Accounting  control 129,  132 

Balances  held  by  United  States,  June  30,  1962,  by  countries  and  cur- 
rencies         840 

Holdings  June  30,  1962,  summary 132 

Loans 90,844,862 

Reports 131,  132 

Transactions  and  balances 133,  838,  846 

Foreign  currencies  (convertible)  >>ee  Foreign  exchange  (convertible). 

Foreign  depositaries,  Treasury  deposits 750 

Foreign  exchange  (convertible) : 

Acquisitions  and  holdings 81,  82,  448,  465,  467,  472,  474,  831 

Bank  for  International  Settlements,  reciprocal  currency  agreement 476 

Bank  of  England,  credits  to 461,  471 

Canadian  revaluation  and  stabilization  measures 18,  83,  84,  474,  477 

Currency  crisis  of  1960 470 

Deutsche  mark  revaluation 81,  460,  461,  466,  471 

Dollar  (U.S.)  convertibility  into  gold,  role  of 470 

Exchange  Stabilization  Fund  earnings 837 

Netherlands  guilder  revaluation 460,  461,  466,  471 

Operations: 

European  central  bankers  meetings  at  Basle 275,  461,  462 

Federal  Reserve  System: 

For  own  account 15,  18,  82,275,429,464,474,475,478 

Open  market  transactions,  authorization 475,  478 

Reciprocal  currency  agreements 15,  18,  82,  476-478 

Foreign  official  intervention  on  the  exchanges 81,  465,  466,  470,  471 

Foreign  treasuries  and  central  banks,  cooperation.    18,  275,  461,  469,  471 
Forward  market: 

German  marks 81,  466,  471-473 

Italian  lire 82,  466,  475 

Netherlands  guilders 82,  465,  466,  474 

Swiss  francs 81,  82,  466,  473 

Treasury  intervention 15,  18,  81, 

275,  429,  448,  461,  464,  465,  469,  471,  473,  474 

Operations  Staff,  establishment 493 

Reporting  by  the  Treasury 80 

Stabilization  operations 1,  18,  44,  81,  429,  448,  457,  461,  464,  465,  469,  471 

Foreign    government    indebtedness    to    United    States    (see    also    specific 
countries) : 

Foreign  obligations  held  in  custody  of  the  Treasurer  of  the  United 

States 156 

Lend-lease  and  surplus  property  agreements  (World  War  II),  amounts 

billed,  collected,  and  balances  due,  by  countries 846 

Outstanding  on  U.S.  Government  credits  (excluding  World  War  I) 844 

Payments: 

1960  and  1961 835 

1962 79,  137,  416,  423,  447,  452,  458,  459,  472 

Statutory  debt  retirements  from  repayments  1919-39 725 

World  War  I  by  countries  and  payments 842 

Foreign  insurance  policies  tax 382 

Foreign  investment  guaranty  fund 524,  556,  852 

Foreign  investments  in  the  United  States 453,  834,  835 

Foreign  loans  receivable  held  by  Government  agencies 862 


892  INDEX 

Page 

Foreign  service  retirement  and  disability  fund 558, 

566,  572,  620,  625,  643,  658,  666,  677,  760,  778 

Foreign  trade  zones 118 

Forest  Service  expenditures 526 

Forgery 197,200 

Forward  exchange  operations.     See  Foreign  exchange  (convertible). 

Fountain  pens  and  pencils  taxes 386,  588 

Fractional  currency 646,  689 

France : 

Payment  for  lend-lease  and  surplus  property  purchases 137 

Prepayment  on  debt  to  United  States 137,  447,  452 

Funds  appropriated  to  the  President: 
Expenditures: 

1961  and  1962 556 

1961  and  1962  and  monthly  1962 522,  564 

1962 803 

1962  and  estimates  1963  and  1964 590 

Receipts,  trust  account  and  other: 

1961  and  1962  and  monthly  1962 558 

Furs  taxes 386,  588,  597 

G 

Gasoline  taxes 24,  62,  386,  588,  596 

General  Accounting  Office  expenditures 548 

General  Agreement  on  Tariffs  and  Trade  (G ATT) 94,  42 1 

General  fund  receipt  and  expenditure  accounts,  explanation 504 

General  government  expenditures 581,  583 

General  Motors  (du  Pont)  stock 72 

General  Services  Administration: 

Borrowing  authority 852 

Earnings  paid  to  Treasury 864 

Expenditures : 

1961  and  1962  and  monthly  1962 544 

1962  and  estimates  1963  and  1964 590 

Loans  outstanding 861,  862 

Obhgations  held  by  Treasury 851,  852,  853,  857 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 557 

Trust  account  receipts  and  expenditures,  1961  and  1962  and  monthly 

1962 -_ 562,  568 

Trust  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 577 

Germany: 

Cooperative  logistics  system,  estabhshment  with  United  States 441,  452 

Currency  revaluation-1 460,  461,  466 

Indebtedness  and  payments  to  United  States: 

Awards  of  Mixed  Claims  Commission  to  United  States  and  its 

nationals 138,  826,  843 

Postwar  (World  War  II)  economic  assistance 137,  844,  846,  848 

Prepayment 423,  472 

World  War  I 137,  138,  843 

Purchases  of  U.S.  military  equipment 441,  452 

Tax  treaty  reexamination 78 

Gift  taxes 24,379,594 

Gifts,  donations,  and  contributions  to  U.S.  Government,  receipts 140,  589 

Gold  and  Silver  Operations,  Office  of  Domestic 124 

Gold  {see  also  Balance  of  payments,  U.S.) : 

Acquisitions 176 

Assets  and  habihties  in  account  of  Treasurer  of  United  States 750 

Balance  in  general  account  of  Treasurer  of  United  States 37,  151,  750 

Certificate  fund.  Board  of  Governors,  Federal  Reserve  System 750 

Certificates 153,  750,  752,  753,  755-757,  759 


INDEX  893 

Gold — Continued  .      .  ff^ 

Coordination  of  operations  among  countries  in  market 44» 

Dollar  (U.S.),  fixed  relationship  to  gold 451,  457 

Holdings  by  U.S 451 

In  circulation  June  30,  1925  and  1930 757 

In  Exchage  Stabilization  Fund r"";;rr,  ^ro 

In  Treasury 1^1,  752,  758 

Increment  from  reduction  in  weight  of  gold  dollar,  receipts 5b4 

Liabilities  against  gold: 

1925-62,  selected  dates '^^  n^l 

1961  and  1962 -    ,    750 

1962 151'  752 

Melting  losses,  payment  of,  1961  and  1962 570 

Percentage  of  total  stock  of  money 755 

Price,  maintenance  of  current 457,  465 

Production  and  use 179 

Received  and  withdrawn  (excluding  intermint  transfers) ---~z       llj. 

Reserve  against  U.S.  notes 750,  752,  754 

Reserves  and  dollar  holdings  of  foreign  countries 80,  H61 

Reserves,  relationship  of  foreign  exchange  holdings 467 

Standard,  and  international  accounts z----„„  ^Sb 

Stock__._ 80,  176,  752,  754-757,  758,  833,  834 

Transactions  with  foreign  countries  and  international  institutions 424, 

429,  439,  474,  830 
Government  corporations.     See  Corporations  and  certain  other  business- 
type  activities  of  U.S.  Government. 
Government  investment  accounts    (see  also   PubUc  debt:  Special  issues; 
specific  funds;  Trust  funds  and  certain  other  accounts):  ^ 

Accounts  handled  by  the  Treasury '60 

Governmental  security  holdings : 
Federal  securities : 

1941-62  selected  dates  and  changes  1962 ob 

1952-62,  June  30 745,  746,  760 

1961  and  1962,  December  31 6 

1962  changes 7,--;,,r  ^a^ 

Nonguaranteed  securities  of  Federal  instrumentalities  1952-62.   745,  74b 
State,  local,  and  territorial  government  securities  1952-62 745,  746 

1958-62,  and  estimates  1963  and  1964 29 

Rates  on  special  issues,  action  towards  uniformity 135 

Responsibility  for 1*^5 

Government  life  insurance  fund.  See  U.S.  Government  life  insurance  fund. 

Government  losses  in  shipment  revolving  fund 140,  542,  557,  866 

Government  Printing  Office: 

Earnings  paid  to  Treasury 864 

Expenditures  1961  and  1962 . 520 

Government-sponsored  enterprises.  See  Corporations  and  certain  other 
business-type  activities  of  U.S.  Government;  Public  debt:  Investments 
of  Government  agencies  in  securities. 

Guaranteed  obligations.  See  Corporations  and  certain  other  business- 
type  activities  of  U.S.  Government:  Obligations;  Federal  securities. 

H 

Health,  Education,  and  Welfare,  Department  of: 
Expenditures: 

1961  and  1962  and  monthly  1962 534-537 

1962  and  estimate  1963  and  1964 590 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc 812-816 

States  and  local  units 803-807 

Loans  outstanding 861 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Trust  account  receipts  and  expenditures  1961  and  1962 558,  564 


894  INDEX 

Page 

Health  insurance  for  aged,  recommendation 70 

Health,  labor,  and  welfare  expenditures: 

1954-62 580,  582 

1958-62  and  estimates  1963  and  1964 27,  28,  30 

Highway  motor  vehicles  use  tax 391,  589,  598 

Highway  trust  fund: 

Allocation  of  excise  taxes,  increase 26,  29 

Federal-aid  highways,  1962  payments  for  State  and  local  units 802 

Investments 572,  587,  592,  761,  779 

Receipts  and  expenditures: 

1957-62 . 586 

1961  and  1962 558,  564 

1962  and  cumulative 779 

1962  and  estimates  1963  and  1964 591 

Refunds  of  receipts 520,  586,  591,  779 

Statement  1962 779 

Transfers  to: 

1957-62 517,  578 

1961  and  1962 23,  521 

1962  and  estimates  1963  and  1964 590 

Treasury  certificates  of  indebtedness  issued  to: 

Description 644 

Computed  interest  rate,  June  30,  1962 625 

Issues  and  redemptions 658,  666,  677 

Outstanding 620,  625,  644,  677,  779 

Home  Owners'  Loan  Corporation,  obligations  held  outside  Treasury 157, 

574,  622,  650 

Home  owners'  loans 860 

Housing  and  community  development,  expenditures  1954-62 580,  582 

Housing  and  Home  Finance  Agency  (see  also  Federal  Housing  Administra- 
tion; Federal  National  Mortgage  Association;  Public  Housing  Admin- 
istration) : 

Borrowing  authority 852 

Expenditures: 

1961  and  1962  and  monthly  1962 544 

1962  and  estimates  1963  and  1964 590 

Federal  aid  payments  to  States  and  local  vuiits,  1962  by  States 

and  programs 809 

Interest  paid  to  Treasury 864 

Investments 763 

Loans  outstanding 860-862 

Obligations  held  by  Treasury 850,  852-855 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 544,  557 

Housing  insurance  funds 254,  620,  622,  641,  649,  676,  760 


Import  taxes 386 

Imports,  tax  adjustment  for  injury 73 

Income  taxes  {see  also  Corporation  income  taxes;  Individual  income  taxes; 
Taxation) : 

1863-1962 510 

1929-62 594 

India,  aid  to 87,90,852 

Indian  Affairs,  Bureau  of: 

Expenditures  1961  and  1962  and  monthly  1962 536 

Federal  aid  payments  to  States  and  local  units,  1962 808 

Public  enterprise  revolving  funds 536,  556,  860,  862 

Securities  held  in  custody  of  Treasurer  of  United  States  for  Com- 
missioner   156 

Indian  individuals  funds,  deposit  fund  accounts,  investment  in  Federal 

securities,  1952-62 761 


INDEX  895 

Indian  tribal  funds,  receipts  and  expenditures:  ^^se 

1961  and  1962  and  monthly  1962 558,  566,  570 

1962  and  estimates  1963  and  1964. 591 

Individual  income  taxes  (see  also  Taxation) : 

1929-62 594 

1954-62 578 

1961  and  1962 22,  519 

1962 23 

1962  and  estimates  1963  and  1964 25,  588 

Capital  gains  and  losses  treatment,  1950-62 400 

Casualty  losses  after  December  31,  1961,  deductions _-         72 

Charitable  contributions  deductions 63,68,73 

Depreciable  property,  gains  from  disposition  of.  Revenue  Act  of  1962.    11,  62 

Expense  account  deductions  limitation,  Revenue  Act  of  1962 11,  63 

Foreign  income  and  investment 60 

Foreign  trusts,  income  in 67 

Liabilities  and  effective  rates  under  the  revenue  acts  of  1913-54 355-369 

Medical  expense  deductions 74 

Nonresident  aliens  1950-62 399 

Pension  and  profit-sharing  plans 61,  69 

Pension  plans  providing  medical  benefits 74 

Rates,  effective  and  normal  1913-62 358-369 

Rates,  exemptions,  and  credits,  1950-62 370-372 

Refunds 590 

Retirement  income  credit  increase 74 

Revenue  Act  of  1962 61,  297 

Self-employed,  pension  and  profit-sharing  plans,  deduction 61 

Spreading  income  over  back  jj^ears,  computation  change 68 

Surtax  rates  and  total  surtax,  1913-62 363-369 

U.S.  citizens  living  abroad,  earned  income 11,66 

Withheld 518,  588,  594 

Withholding  agreements  with  States  and  Territories 77,  129 

Individual  income  taxes  and  employment  taxes  by  States,  1962 600 

Individuals,  governmental  security  holdings: 
Federal  securities: 

1941-62  selected  dates,  and  changes  1962 56 

1952-62 745 

Allotments 722 

Nonguaranteed  securities  of  Federal  instrumentalities  June  30,  1952- 

62 745 

State,  local,  and  territorial  government  securities,  June  30,  1952-62__       745 

Industrial  loans  by  Government  agencies,  outstanding  June  30,  1962 860 

Informational  media  guaranty  fund 550,  554,  838,  851,  852,  856,  865 

Inland  Waterways  Corporation 528,  556,  850,  861 

Inland  waterways,  fuel  used  on,  tax 589 

Insurance  companies: 

Governmental  security  holdings: 
Federal  securities: 

1941-62  selected  dates  and  changes  1962 56 

1952-62 745 

1961  and  1962,  June  30,  by  type  of  security 748 

1961  and  1962,  December  31 6 

Allotments 722 

Nonguaranteed  securities  of  Federal  instrumentalities,  1952-62__       745 
State,   local,   and   territorial    government    securities,    June    30, 

1952-62 745 

Tax  deduction.  Treasury  study 73 

Insurance  fund  debentures,  calls  for  partial  redemption 252 

Inter-American  Development  Bank: 

Annual  meeting 89,  96 

Fund  for  Social  Progress 405,  410,  436,  437,  438 

Fund  for  Special  Operations 88,  436 

Latin  America,  assistance 88,  437 


896  INDEX 

Inter-American  Development  Bank — Continued  Page 

Lending  operations 88,  436 

Remarks  by   the   Secretary   of   the   Treasurj',   third   meeting  of  the 

Board  of  Governors 435 

Resources 88 

Social  Progress  Trust  Fund 89,  90,  409 

U.S.  subscription 88,  522,  858 

Inter-American  Economic  and  Social  Council 89,  95,  403,  408,  410 

Inter- American  Program  for  Social  Progress 90 

Inter- American  Social  and  Economic  Cooperation  Program 89 

Interest  (see  also  Dividends,  interest,  etc.,  receipts;  Interfund  transactions; 
Public  debt;  Taxation): 
Expenditures: 

1954-62 580 

1954-62,  paid  to  trust  funds 582 

1958-62  and  estimates  1963  and  1964 27 

Rates : 

Administration  policy 8, 

16,  41,  50,  271,  279-282,  292,  339,  433,  446,  452,  460 

Special  issues,  action  toward  uniformity 135 

Receipts: 

1961  and  1962 519,864 

1962  and  estimates  1963  and  1964 589 

Interfund  transactions: 

Budget: 

1932-62 512-515 

1952-62 554 

1954-62 578,581 

1958-62  and  estimates  1963  and  1964 27 

1961  and  1962 22,  25 

1961  and  1962  and  monthly  1962 520,  550 

1962  and  estimates  1963  and  1964 .       25,  590 

Trust: 

1948-51 584 

1948-62 576 

1952-62 586,587 

1 954—62  _ 582  583 

1958-62  and  estimates  1963  and  iQuIlllllllllllllllllllll.,   29,  30 

1961  and  1962  and  monthly  1962 564,  570 

1962  and  estimates  1963  and   1964 591,  592 

Intergovernmental  Maritime  Consultative  Organization 112 

Intergovernmental  Relations,  Advisory  Commission  on 546 

Interior,  Department  of: 

Defense  production  expansion 860 

Expenditures: 

1961  and  1962  and  monthly  1962 536-539 

1962  and  estimates  1963  and  1964 590 

Federal  aid  payments  for  States  and  local  units,  1962  payments 

by  States  and  programs 808 

Interest  and  earnings  paid  to  Treasury 865 

Loans  outstanding 860,  861,  862 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 536,556 

Trust  account  receipts  and  expenditures  1961  and  1962 558,  566 

Internal  auditing  in  Treasury  Department 102,  125,  129,  133,  169,  185 

Internal  revenue: 

1792-1962 508 

1929-62  by  tax  sources 594 

1961  and  1962 22,  158,  519 

1962 157 

1962  and  estimates  1963  and  1964 588 

1962  by  States 600 

Refunds 158,  516,  520,  578,  590,  600 


INDEX  897 

Internal  Revenue  Service:  Page 

Administrative  report 1 57-17 1 

Advisory  group  to  the  Commissioner 497 

Assistance  to  taxpayers 158 

Automatic  data  processing  (ADP) 297,  317 

Bulletin    F    revision    (see   also   Depreciation    Guidelines    and    Rules, 

July  1962) 160,  299,  303,  305,  335 

Collections  for,  by  Bureau  of  Customs 602,  604 

Cost  of  administration 168 

Depreciation  Guidelines  and  Rules,  July  1962 1,  60,  69,  297 

Depreciation  studies  of  industries  by  Service  engineers 160 

Dividends  and  interest,  reporting  requirements 63 

Exchange  of  tax  information  with  States 77 

Foreign  subsidiaries,  reporting  requirements 67 

Latin  America,  aid  in  tax  administration 353 

Law  enforcement  activities 141,  162 

Long-range  planning 168 

Organizational  changes 166 

Personnel 166,  867 

Personnel  administration,  delegation  of  authority  to  Commissioner 

of  Internal  Revenue 487 

Receipts  and  expenditures  1961  and  1962 542 

Regulations,  publication  of 159 

Returns  received  and  examined 160 

Tax  data  studies  for  States 77 

Technical  assistance  to  foreign  government  officials 171 

Training  facilities  for  State,  local,  and  foreign  government  representa- 
tives   77 

Treasury-Internal  Revenue  Service  Committee  on  Statistics 498 

International  affairs  and  finance  expenditures: 

1954-62 579,  582 

1958-62  and  estimates  1963  and  1964 27 

International  Bank  for  Reconstruction  and  Development: 

Annual  meeting 95 

Holdings  of  marketable  U.S.  securities,  increase 59 

International  Development  Association  affiliate  of 87 

International  Finance  Corporation  affiliate  of 88,  468 

Operations 86 

U.S .  subscription 858 

International  claims 138,  826,  828,  829 

International  conferences 95 

International  Cooperation  Administration.  See  Agency  for  International 
Development. 

International  Development,  Agency  for.  See  Agency  for  International 
Development. 

International  Development  Association: 

Notes  of  United  States  as  payments  to.     See  Notes,  Special  notes  of 
United  States. 

Operations 87 

Resources 87,  95 

U.S.  subscription 87,  522,  858 

International  Finance  Corporation: 

Amendment  to  the  Articles  of  Agreement 468 

Operations 88,  468 

U.S.  subscription 468,  858 

International  Finance,  Office  of 171 

International  financial  and  monetary  developments  (see  also  Balance  of 
payments,  U.S.;  Foreign  assistance  by  United  States;  Foreign  exchange 
(convertible);  Foreign  government  indebtedness  to  United  States;  Gold; 
specific  agencies;  specific  countries;  Taxation): 

Exchange  and  stabihzation  agreements 83,  480-481 

Financing  of  economic  development  of  foreign  countries 17, 

86,  88,  90,  95,  404,  410,  428,  439,  452 


898  INDEX 

International  financial  and  monetary  developments — Continued  Page 

Foreign  assets  control 97,  140,  172,  482-484 

Foreign  exchange  stabilization  operations 1,  18, 

44,  81,  429,  448,  457,  461,  464,  465,  469 

Foreign  investment  of  U.S.  capital 17,  416,  834 

Gold  and  dollar  movements 80 

International  payments  system,  measures  to  strengthen 1,  15, 

18,  85,  275,  411,  413,  423,  424,  428,  430,  439,  456,  462,  464.  469 
Organization  for  Economic  Cooperation  and  Development,  participa- 
tion  92,  275,  349,  351,  352,  428,  435,  445,  462,  463 

Review 15-18,  78-98 

Tariffs  and  trade-    16,  18,  73,  94,  349,  415-423,  427,  428,  430,  439,  453-455,  458 

U.S.  balance  of  payments  and  gold  and  dollar  movements 78 

U.S.  international  investment  and  gold  position,  selected  years 834 

International  Monetary  Fund: 

Annual  meeting 95 

Drawings  and  repayments .    84,  85,  445,  460,  462 

Membership 412,445,  462 

Notes  of  United  States  as  payments  to.     See  Notes:  Special  notes  of 
United  States. 

Operations 84,  412,  445,  462,  468 

Resources  and  requirements 85,  412,  445.  462 

Special  borrowing  arrangements 85,  275,  411,  415,  429,  448,  462,  1,  15,  18 

Standby  arrangements  with  foreign  countries 83,  84,  85,  413,  480,  481 

Statement  by  the  Secretary  of  the  Treasury  September  19,  1962,  on  the 

annual  report 445 

U. S.  subscription 858 

International  organizations,  conferences,  and  commissions 92,  95,  540 

Interstate  Commerce  Commission: 

Expenditures 548 

Loans  outstanding 860 

Intertrust  fund  transactions.     See  Interfund  transactions:  Trust. 

Intragovernmental  revolving  funds: 

Expenditures  (net)  1961  and  1962  and  monthly  1962 520-553 

Income  (net)  1962 34 

Investments  of  Government  agencies  in  public  debt  securities,  net,  sum- 
mary for  1962 32 

Italian  claims  fund 138,  829 

Italy  prepayment  on  debt  to  United  States 423,  447.  452 

J 

Japan : 

Income  tax  protocol 78 

Joint    United    States-Japan    Committee    on    Trade    and    Economic 

Affairs 96 

Standby  arrangement 85 

Japanese-American  evacuation  claims  awards 68 

Jet  fuel  taxes 24,  61,  589 

Jewelry  taxes 387,  588,  597 

Judicial  survivors  annuity  fund 558,  564,  572,  760,  780 

Judiciary,  the,  expenditures 522,  590 

Justice,  Department  of: 

Expenditures: 

1961  and  1962  and  monthly  1962 538 

1962  and  estimates  1963  and  1964 590 

Trust  account  receipts  and  expenditures  1961  and  1962 566,  577 


Korea  (North)  foreign  assets  control 97,  172 


1 


INDEX  899 


Labor,  Department  of: 

Expenditures :  ^*s® 

1961  and  1962  and  monthly  1962 538 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to  States,  1962  by  States  and  programs  for: 

Individuals,  etc 816 

States  and  local  units 808 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Trust  account  receipts  and  expenditures  1961  and  1962  and  monthly 

1962 558,  566 

Land  conservation  fund  proposal 62,  72 

Latin  America: 

Act  of  Bogota 436,  438 

Agency  for  International  Development  loans 90 

AlUance  for  Progress 89,  171,  353,  403-405,  407,  409,  410,  436-438 

Charter  of  Punta  del  Este 90,  95,  408,  409,  411,  438,  439 

Coffee,  new  agreement  proposal 406 

Economic  and  social  development  assistance 89  404,  410,  438 

Economic  Commission  for,  (ECLA) 171,  405 

Export-Import  Bank  loans 410,  437 

Indebtedness  to  United  States  by  country  and  major  program 845 

Inter- American  Development  Bank 88,  405,  409,  435,  437 

Inter-American  Economic  and  Social  Council 89,  403,  410 

Inter- American  Program  for  Social  Progress 89,  90,  408 

Organization  for  Economic  Cooperation  and  Development,  working 

relationship 437 

Organization  of  American  States  (OAS) 90,  171,  353,  405,  410 

President's  proposals 437 

Social  Progress  Trust  Fund 410,  436-438 

Taxation : 

Administration  and  reform 349,  353,  438 

Technical  assistance  by  U.S.  officials 171 

Treaty  of  Montevideo 406 

U.S.  private  investment 353,  410 

Law  enforcement  activities: 

Customs,  Bureau  of 115,  121,  823 

Internal  Revenue  Service 141,  162 

Narcotics,  Bureau  of 181 

Treasury  Law  Enforcement  Officers  Training  School 101 

U.S.  Coast  Guard 188 

U.S.  Secret  Service 155,  199 

Legal  tender  notes  (see  also  U.S.  notes) 646 

Legislative  branch: 

Expenditures 520.  590 

Trust  accounts,  etc.,  receipts  and  expenditures  1961  and  1962  and 

monthly  1962 558,  564 

Lend-lease  and  surplus  property  (World  War  II) : 

Foreign  currencies  acquired 137,  838 

Foreign  government  indebtedness  to  United  States 137,  844,  846,  848 

Payments,  including  silver 96,  137,  178,  846,  849 

Liberty  bonds  and  Victory  notes 646,  678 

Library  of  Congress  trust  funds 761,  781 

Life  insurance  companies,  Federal  security  holdings: 

1961  and  1962,  June  30,  by  tj^pe  of  security 748 

1962,  June  30 57 

Taxes 73 

Liquor  taxes  (see  also  Alchohol  taxes) 380 

Loans  (see  also  Foreign  assistance  by  United  States;  Foreign  government 
indebtedness  to  United  States) : 

Foreign  currency 838 

Government  corporations  and  agencies,  by  type  of  loan 860 


900  INDEX 

Loans — Con  tinued 

Realization  upon  U.S.  loans  and  investments:  Page 

1961  and  1962  and  monthly  1962 518 

1962  and  estimates  1963  and  1964 589 

Treasury  to  Government  corporations  and  agencies 35,  850 

Longshoremen's  and  Harbor  Workers'  Compensation  Act  fund 761,  782 

Luggage,  handbags,  wallets,  etc.,  taxes 387,  588,  597 

Luxembourg,  pending  taxation  agreement 351 

M 

Machines,  business  and  store,  taxes 588,  596 

Management  fund  accounts,  explanation 505 

Management  improvement  program 101-104, 

120-122,  124-126,  134,  139,  142,  150,  166,  179,  184,  195,  197 
Manufacturers  excise  tax  collections: 

1929-62  bv  sources 596 

1961  and  1962 23 

1962  and  estimates  1963  and  1964 588 

Maritime  activities  {see  also  Federal  ship  mortgage  insurance  fund) : 

Expenditures: 

1961  and  1962  and  monthly  1962 528 

Federal  aid  to  States  for  State  marine  schools,  1962  payments  by 

States  for: 

Individuals,  etc 811 

States  and  local  units .        803 

Loans  outstanding 850,  853,  860,  862 

Maritime    Administration,     Federal,     public    enterprise    revolving    fund 

receipts  and  expenditures  1961  and  1962 556 

Matches  taxes 387,  588 

Medical  assistance.     See  Social  security. 

Merchandise  entries  into  United  States 108,  120,  819 

Merchant  marine  memorial  chapel  fund 761,  763 

Mexico,  exchange  agreement  and  standby  arrangement 83 

Military  assistance.     See  Defense,   Department  of;  Foreign  assistance  by 

U.S.;  National  defense  expenditures. 
Military  functions.     See  Defense,  Department  of. 

Military  housing  insurance  fund 620 

Minerals  Exploration,  Office  of 861 

Mint,  Bureau  of 173-180,  488,  542,  867 

Miscellaneous  excise  taxes 23,  589,  597 

Miscellaneous  receipts: 

1954-62 578 

1961  and  1962 22,  519 

1962 24 

1962  and  estimates  1963  and  1964 25,  26,  589 

Refunds 590 

Miscellaneous  taxes 589,  604 

Mixed  claims.  United  States  and  Germany 138,  826,  843 

Monetary  developments,  international.     See  International  financial  and 

monetary  developments. 
Money  (sec  also  specific  kinds) : 

Circulation  by  kinds,  selected  dates,  1925-62 757 

Counterfeit,  investigations  and  seizures 199 

Location  of  gold,  silver,  and  coin  held  by  Treasury 758 

Per  capita,  in  circulation 752,  754 

Stock  by  kinds,  selected  dates,  1925-62 755 

Stock   in    Treasury,    in    Federal    Reserve   Banks,   and   in   circulation 
June  30: 

1925-62,  selected  dates 754-757 

1962  by  kinds 752 

Montevideo,  Treaty  of 406 

Monthly  Statement  of  Receipts  and  Expenditures  of  the  U.S.  Government, 

basis  and  source  of  data 130,  501 


INDEX  901 

Municipalities  and  States.     See  State,  local,  and  territorial  governments.  Page 

Musical  instruments  tax 3SS 

Mutual  fire  and  casualty  insurance  companies 11,  65 

Mutual  mortgage  insurance  fund 252,  254,  620,  622,  642,  649,  676,  760,  763 

Mutual  savings  banks: 

Governmental  security  holdings: 
Federal  securities: 

1941-62  selected  dates,  and  changes  1962 56 

1952-62,  June  30 745 

1961  and  1962,  June  30,  by  type  of  security 748 

1961  and  1962,  December  31 6 

Allotments 722 

Nonguaranteed  securities  of  Federal  instrumentalities  1952-62.  _  745 

State,  local,  and  territorial  governmental  securities  1952-62 745 

Tax  provisions: 

Deduction,  limitation 75 

Revenue  Act  of  1962 11,  64 

Mutual  security  (see  also  Agency  for  International  Development) 838,  852 

N 

Narcotic  and  marihuana  laws  enforcement 117,  181 

Narcotic  Control  Act  of  1956,  effect  on  penalties  and  control  measures 181 

Narcotics,  Bureau  of 181-184,  542,  867 

Narcotics  Manufacturing  Act  of  1960,  establishment  of  basic  classes  for 

authorized  narcotic  drugs 182 

Narcotics  taxes 388 

National    Advisory    Council   on    International    Monetary    and    Financial 

Problems 95,  171,  413,  469 

National  Aeronautics  and  Space  Administration,  expenditures: 

1961  and  1962  and  monthlv  1962 546,  568 

1962  and  estimates  1963  and  1964 590 

National  Aeronautics  and  Space  Council  expenditures 522 

National  Archives  trust  fund 577,  761,  782 

National  bank  and  Federal  Reserve  Bank  notes 621,  652,  689 

National  bank  notes 384,  647,  750,  752,  753,  755-757,  759 

National  banks: 

Assets  and  liabilities 106 

Number,  capital  stock  changes,  and  liquidation 107 

National  Capital  Housing  Authority: 

Investments 762 

Receipts  and  expenditures 548,  570,  577 

National  Capital  Planning  Commission: 

Expenditures 548 

Loans  outstanding 86 1 

National  Capital  Transportation  Agency  expenditures 548 

National  debt.     See  Federal  securities;  Public  debt. 

National  defense  expenditures  (see  also  Atomic  Energy  Commission;  De- 
fense, Department  of) : 

1954-62 578,  582 

1958-62  and  estimates  1963  and  1964 27,30 

1962 21 

Military  assistance  1954-62 579 

National  defense  housing  insurance  fund 620,  622,  649,  760 

National  Export  Expansion  Council 427 

National  income  accounts,  receipts  and  expenditures  1963 4 

National  Institutes  of  Health  expenditures  1961  and  1962  and  monthly 

1962 534 

National  Park  Service: 

Account  for  preservation  of  birthplace  of  Abraham  Lincoln,  invest- 
ments made  by  Treasury  1952-62 762 

Expenditures 536 

National  park  trust  fund 762,  783 


902  INDEX 

National  Science  Foundation  expenditures:  Page 

1961  and  19G2  and  monthly  1962 548 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for  indi- 
viduals, etc 817 

National  service  life  insurance  fund: 

Investments 572,  587,  761,  784 

Receipts  and  Expenditures: 

1941-51 584 

1952-62 586 

1954-62 582 

1961  and  1962 562,  568,  660 

1962  and  cumulative 784 

Statement  1962 784 

Treasury  certificates  of  indebtedness,  notes,  and  bonds  issued  to: 

Description 644 

Interest  rate,  computed,  June  30,  1962 625 

Issues  and  redemptions 644,  660,  666,  677 

Outstanding 620,  625,  644,  677,  784 

Nationals,  U.S.,  international  claims  of 138,  826,  828,  829 

Natural  resources,  expenditures  1954-62 579,  582 

Navy,  Department  of: 

Defense  housing  profits  paid  to  Treasury 864 

Defense  production  guarantees 860 

Expenditures: 

1789-1962 509 

1961  and  1962  and  monthly  1962 528-533 

Intragovernmcntal  fund  receipts  and  expenditures  1961  and  1962 532 

Public  enterprise  revolving  fund  receipts  and  expenditures 532,  556 

Netherlands: 

Currency  revaluation 460,  461,  466 

,  Prepayment  on  debt  to  United  States 423 

Tax  treaty  reexamination 78 

Netherlands  Antilles  tax  treaty  reexamination 78,  351 

Nonbank  investors,  governmental  security  holdings: 
Federal  securities: 

1941-62,  selected  dates,  and  changes  1962 56 

1952-62  by  investor  classes 745 

1961  and  1962,  December  31 6 

1962  changes 60 

Nonguaranteed  securities  of  Federal  instrumentalities   1952-62,   by 

investor  classes 745 

State,  local,  and  territorial  government  securities  1952-62,  by  investor 

classes 745 

Nonbudget  accounts,  explanation 505 

North  Atlantic  Treaty  Organization  (NATO) 96,440 

Notes    (see   also   Federal    Reserve    Bank   notes;    Federal    Reserve   notes; 
National  bank  notes;  U.S.  notes;  Victory  notes): 

Engraved,  printed,  and  delivered 825 

Special  notes  of  United  States: 

Inter-American  Development  Bank  series: 

Issues  1962 612,  614,  656,  689 

Outstanding  June  30,  1962 621,  626,  646,  652,  689 

Description 646 

Limitation,  statutory,  appHcation 652 

International  Development  Association  series: 

IsSllGS' 

1961  and  1962 612,614 

1961  and  1962  and  monthly  1962 656 

1962 689 

Outstanding  June  30: 

1961  and  1962,  June  30 621,  689 

1962  and  June  30 626,  646,  652 

Description 646 

Limitation,  statutory,  application 652 


INDEX  903 

Notes — Continued 

Special  notes  of  United  States — Continued 

International  Monetary  Fund  series:  Page 

Authority  for  issuan  ce,  proposal  to  increase 415 

Issues  and  redemptions: 

1952-62 612,614 

1961  and  1962  and  monthly  1962 656,  662 

1962 689 

Outstanding  June  30: 

1952-62 621 

1961  and  1962 689 

1962 626,646 

1962  increase 59 

Description 646 

Limitation,  statutory,  application 652 

Treasury: 

Marketable: 

Allotments  by: 

Federal  Reserve  districts 215-218 

Investor  classes 53,  722 

Exchanges 45-54,  205, 

207-210,  214-219,  230,  233,  239,  656,  662,  692,  707,  716 
Interest: 

Computed  charge  and  rate,  June  30,  1939-62 737,  738 

Computed  rate  June  30,  1962 625 

Expenditures  1958-62 739 

Issues: 

Circulars: 

May  15,  1961  issue,  additional 212 

August  1,  1961 210 

Summary  table  1962 214 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 656,  660 

1962 45-54,  210,  212,  215-218,  671,  681,  691,  692,  694,  697, 

699,  702-709,  711,  712,  715,  716,  719,  721 
Outstanding  June  30: 

1952-62 619 

1961  and  1962 671,  681,  748 

1962 625,  629,  671,  681,  748 

1962  matured 646,  681 

Description 629 

Limitation,  statutory,  application 652 

Ownership: 

Changes  1962 60 

Summary  by  investor  classes,  1961  and  1962 748 

Prices  and  yields,  June  30,  1961  and  1962 743 

Special  issues.     See  Trust  funds  and  certain  other  accounts. 

Tax  and  savings  (matured) 619,646,662,683,737 

Notes  and  bonds,  U.S.  Government,  held  by  foreign  countries 80,  831 

O 

Officers,  administrative,  and  staff  of  Treasury  Department xii 

Oils,  coconut,  palm,  etc.,  taxes 76,  389,  589 

Oils,  lubricating,  taxes 387,  588,  596 

Old  demand  notes 646,  689 

Old  series  currency: 

Outstanding  June  30,  1962 647,  689 

Redemptions  1962 689 

Old  Series  Currency  Adjustment  Act,  authorizations 153 

Oleomargarine  taxes 389 

Orders,  Treasury  Department 485 

Organization  chart  of  the  Treasury  Department  November  1,  1962. xv 


904  INDEX 

Organization  for  Economic  Cooperation  and  Development  (OECD) :  Page 

Development  Assistance  Committee  (DAC) 93 

Economic  Development  and  Review  Committee 93 

Economic  Policy  Committee 92,  462 

Fiscal  Committee,  U.S.  representation 352 

International  tax  relationships 78,  352 

Latin  America,  working  relationship 437 

Membership 92 

Purposes  and  estabhshment 92,  349 

Successor  to  Organization  for  European  Economic  Cooperation 92 

Organization  of  American  States  (OAS) 90,  112,  171,  353,  405,  410 

Outer  Continental  Shelf  lands,  rental  receipts 26 

P 
Pakistan,  aid  to 87 

Panama  Canal  Company: 

Borrowing  authority 852 

Interest  paid  to  Treasury 136,  865 

Investments  1952-61 763 

Receipts  and  expenditures  1961  and  1962 534,  556 

U.S.  investment 135 

Paper  currency  (see  also  Money;  specific  kinds): 

Denominations  in  circulation 753 

Deposits  for  retirement  of  national  bank  notes  and  Federal  Reserve 

Bank  notes 621,  652 

Destroyed  or  irretrievably  lost,  determination  by  Secretary  of  Treas- 
ury         154 

Engraved,  printed,  and  delivered 825 

In  circulation,  Federal  Reserve  Banks  and  Treasury,  and  stock 752, 

755-757 

Issued,  redeemed,  and  outstanding 155,  759 

Old  Series  Currency  Adjustment  Act,  effect 153 

Unfit,  destruction  by  Federal  Reserve  Banks. 154 

Payments  to  the  public.     See  Cash  income  and  outgo;  Receipts  from  and 
payments  to  the  public. 

Payroll  savings  plan  for  U.S.  savings  bonds 148,  195 

Peace  Corps 90,523 

Pension  and  profit-sharing  plans,  self-employed,  contributions,  tax  deduc- 
tion    61,  69 

Pension  and  retirement  funds: 
Federal  securitv  holdings: 

Allotments 722 

Corporate  pension  trust  funds  1961  and  1962 749 

State  and  local  governments 722 

Taxation 74 

Pershing  Hall  Memorial  fund 762,  785 

Persons  and  carriers  entering  United  States 108,  821 

Philippine  Republic: 

Account  in  U.S.  Treasury  for  payment  of  pre-1934  bonds 140,  762,  786 

Exchange  agreement  and  standby  arrangement 83,  84,  481 

Prepayment  on  debt  to  United  States 423 

Securities,  payments  by  Treasurer  of  United  States  as  agent 157 

Photographic  equipment  taxes 389,  588 

Pistols  and  revolvers  taxes 389,  588 

Plant  and  equipment  investment  tax  credit.    See  Taxation. 
Playing  cards  taxes.    See  Documents,  other  instruments,  and  playing  cards 
taxes. 

Portugal,  income  tax  treaty  explored 78 

Post  Office  Department: 

Advances  from  Treasurj-  to  cover  postal  deficiency  1916-62 607 

Expenditures: 

1916-62 607 

1961  and  1962  and  monthlv  1962 540 

1962  and  estimates  1963  and  1964 590 

Post  oflSces,  issuing  agents  for  Series  A-E  savings  bonds 148 


INDEX  905 

Post  Office  Department — Continued 

Postal  revenues,  expenditures,  and  surplus  or  deficit:  Page 

1916-62 607 

1962 35 

Public  enterprise  revolving  funds  receipts  and  expenditures  1961  and 

1962_.....   540,556 

Postage  stamps,  new  issues 824 

Postal  Savings  System: 

Account  of  the  Treasurer  of  the  United  States,  liabilities 750 

Deposits: 

1946-62 651 

Securitv  for 156 

Investments  1952-62 761 

Treasurer  of  the  United  States,  designation  as  Treasurer  of  the  Board 

of  Trustees 487 

Treasury  notes  issued  to: 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions  1962 660,  666,  677 

Outstanding  June  30: 

1952-57  and  1962 620 

1961  and  1962 677 

1962 625,645 

Description 645 

Postal  Service.     See  Post  Office  Department. 

Prefabricated  housing,  loans  program 554,  853 

President: 

Foreign  aid  program 407 

Funds  appropriated  to: 
Expenditures: 

1961  and  1962 556 

1961  and  1962  and  monthly  1962 522,  564 

1962 803 

1962  and  estimates  1963  and  1964 590 

Receipts,  trust  account  and  other,  1961  and  1962  and  monthly 

1962 558 

Protection  by  U.S.  Secret  Service 198 

Recommendations  on: 

Antirecession  measures 431 

Balance  of  payments,  U.S 86,415,425,450 

Taxes 1,  10,  24,  308-329,  337 

Trade  program 91,  419,  430,  453 

Statement,  October  16,   1962,  on  signing  the  Revenue  Act  of  1962 

(H.R.  10650) 297 

Production  credit  corporations,  investments  1952-57 763 

Products,  receipts  from  sales  1962  and  estimates  1963  and  1964 589 

Property,  Federal,  personal  and  real: 

Expenditures  1961  and  1962  and  monthly  1962 544 

Receipts  from  sales: 

1961  and  1962  and  monthly  1962 518 

1962  and  estimates  1963  and  1964 589 

Public  assistance  and  child  welfare  programs 70 

Public  debt  (see  also  Circulars;  Federal  securities;  specific  classes): 

Accounts,  basis 503 

Allotments.     *See  Public  debt.  Marketable  securities. 

Changes 144,  507,  593,  668-688,  724 

Description,  amounts  issued,  retired,  and  outstanding 627-645 

Direct  borrowing   arrangements   with  foreign   monetary   authorities 

(see  also  Foreign  exchange  (convertible) ) 18,  44,  54,  59 

Financial  operations,  effect  of: 

1961  and  1962 21 

1962  and  estimates  1963  and  1964 593 

Financing  operations,  summary  tables 51-53,  207,  214,  230,  248 

Foreign  countries  and  international  institutions  holdings 6,  80,  831 

661496^63 59 


906  INDEX 

Public  debt — Continued 

Interest:  Page 

Checks  issued 148 

Clearing  account 612 

Computed  charge  and  rate  June  30: 

1916-62 735 

1939-62,  by  security  classes 737 

Computed  rate,  June  30,  1962,  by  security  classes 625 

Expenditures: 

1789-1962 509 

1940-62  by  tax  status 740 

1954-62 580,  582 

1958-62  and  estimates  1963  and  1964 27 

1958-62  by  security  classes 739 

1961  and  1962  and  montlily  1962 542 

Reporting  basis 502 

1962  by  issues 690-721 

Administration  policy 8, 

16,  41,  50,  271,  279,  280,  292,  339,  433,  446,  452,  460 

Special  issues,  action  toward  uniformity 135 

Investments  of  Government  agencies  in  securities: 

1952-62 587,760 

1953-62 858 

1961  and  1962 22 

1961  and  1962  and  monthly  1962 __       572 

1962  and  estimates  1963  and  1964 592,  593 

Government-sponsored  enterprises 570,  572,  584,  586 

Issues  and  redemptions  (receipts  and  expenditures) : 

1961  and  1962 153 

1961  and  1962  and  monthly  1962  by  security  classes 656,  660 

1962  by  security  classes 51-54,  668,  690-721 

Cumulative  by  issues 627-645 

Legislation  affecting 270 

Limitation,  statutory.     See  Public  debt:  Outstanding. 
Management: 

Advance  refunding 8,  9,  43,  45,  46,  48,  227,  272,  278,  281-289,  446 

Advisory  committees 493 

Balance-of-payments  considerations 5, 

15,  41,  272,  278,  280,  292,  429,  433,  446 
Competitive  bidding  for  long-term  bonds,  introduction  January 

1963 9 

Federal  Reserve  requirements 7,  9 

Pohcies,  problems,  and  proposals 1,5-10, 

16,  41-44,  47,  278-286,  442,  446 

Prerefunding  device,  introduction 9 

Marketable  securities: 
Allotments  by: 

Federal  Reserve  districts 208,  215-218,  233-239 

Investor  classes 53,  722 

Description 627 

Disposition  of 52 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 656 

1962 41,  45-54,  205-251 

Maturity  distribution: 

1946-62,  June  30 624 

1959-62,  June  30,  chart 43 

1960-62,  under-1-year,  chart 42 

1961  and  1962: 

June  30 .- 748 

December  31 7 

Maturity  extension:  «  „    ..„ 

1960-62 28/,  446 

1962 1,  7,  8,  43,  44,  47,  281-285 

Interest  cost.... 283,  284,  286,  288 


INDEX  907 

Public  debt — Continued 

Marketable  securities — Continued  Page 

Offerings  1962 45-51 

Outstanding  June  30: 

1952-62 619 

1961  and  1962 39^  668-672,  748 

1962 625,627 

Ownership: 

Changes 44  qq 

Summary  by  investor  classes  1961  and  1962 748 

Matured,  outstanding  June  30: 

1853-1962 fiifi 

1952-62 I  620 

1961  and  1962 Iir39,"678-688 

I  ■■:-.-■ 626,646 

Limitation,  statutory,  application 652 

Transferred  to,  by  issues  1962 __'"       668 

Nonmarketable  securities 39,  52-55,  619,  625,  656,'673-675,  748 

Offerings  by  issues  1962 45_51  205-257 

Old  Series  Currency  Adjustment  Act,  effect 153 

Operations: 

^^^^-^--V^-.l.----, 45-55,  205-257,  656 

Calendar  1962  and  early  1963 5_10 

Operations  and  ownership  of  Federal  securities 5  38-60 

Outstanding:  ' 

1790,  December  31,  to  June  30,  1962,  gross 616 

1853-1962,   June  30,  interest-bearing,  matured  and' noninterest- 

bearing,  and  gross 616 

1916-62,  June  30,  interest-bearing_.    _  _    "I_"I_  I"       735 

1932-62,  June  30,  and  monthly  1962 III."       507 

1934^62,  June  30,  gross "~       618 

1952-62,  June  30,  by  security  classes _  ~_  619 

1961  and  1962,  June  30 "ll"lllll[y"S9,  668 

1962,  June  30,  by  security  classes...   _  .  _  '       '625 

1962  and  estimates  1963  and  1964 _  ~_       593 

Description  June  30,  1962 ".!'  627-645 

Increase  or  decrease,  June  30: 

1916-62 _  724 

1952-62 _         _  fiiq 

1961  and  1962 l"l""lll  I  22 

T-    •J^?-^---;-r-r I"""II"r22,  38,  39 

Limitation,  statutory: 

Amounts  subject  to: 

1938-62 507 

J^^o---; "I"r277,'626,'647,  652 

1962  and  estimates  1963,  semimonthly 294 

1962  and  estimates  1963  and  1964 593 

1963,  estimates  by  months '...~.       296 

Legislative  history ~  653 

Temporary  increases: 

1963 270,  272,  276,  290,  293 

Recommendations : 

1962 276 

AT     -x        .J^^^ 276,290 

Nomnterest-bearing _  _  626 

Per  capita  gross  debt  1853-1962,  June  30 IIIILII'I'I'I  616 

Prices  and  yields: 

1941-62  monthly  and  annual  average  yield  of  taxable  long-term 

Treasury  bonds _  741 

1961  and  1962,  by  issues IIIIIIIIIII  742 

1962  prices  and  rates  of  Treasury  bills --."/..l       248 

Registered,  individual  accounts  for  other  than  savings  bonds     .   _  149 

Regulations  affecting 257-270 

Sinking  fund  for  retirement ~_~_  "'  725  726 


908  INDEX 

Public  debt — Continued 

Special  issues  to  Government  investment  accounts: 

Interest:  Page 

Computed  charge  and  rate,  June  30,  1939-62 737 

Computed  rate  by  funds,  etc.,  June  30,  1962 625 

Expenditures: 

1940-62 740 

1958-62 739 

Issues  and  redemptions: 

1961  and  1962  and  monthlv  1962  bv  funds,  etc 658,  664 

1962 675 

Outstanding  June  30: 

1952-62 619 

1961  and  1962 39,  675,  748 

1962 625,  638 

Description 638 

Limitation,  statutory  application 652 

Ownership  changes 59,  60 

Statutory  retirements  1918-62 724,  725 

Tax  status 647 

Public  debt  and  guaranteed  obligations.     See  Federal  securities. 

Public  Debt,  Bureau  of 141-149,  542,  869 

Public  enterprise  revolving  funds: 

Investments 572,  587 

Loans  outstanding  by  agency 860 

Loss  (net)  1962 34 

Receipts  and  expenditures: 

Net  basis  1961  and  1962  and  monthly  1962 522-529,  532-549 

Gross  1962  and  net  1961  and  1962 556 

Sales   and   redemptions   of   obligations   of   Government   agencies   in 

market  (net) 574,  587 

Public  facility  loans 554,  850,  852,  853,  855,  861,  864 

Public  Health  Service: 
Expenditures: 

1961  and  1962  and  monthly  1962 534 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc 812 

States  and  local  units 805 

Gift  funds 762,787 

Hospitals,  patients'  benefit  fund 762 

Loans  outstanding 86 1 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 534,  556 

Public  Housing  Administration: 

Borrowing  authority 852 

Capital  stock  owned  by  United  States 850 

Federal  aid  payments  for  States  and  local  units  for  annual  contributions, 

1962  by  States 809 

Interest  paid  to  Treasury 865 

Loans  outstanding 860-862 

Obhgations  held  by  Treasury 850,  852,  853,  855 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 546,557 

Public  Roads,  Bureau  of: 

Expenditures 528 

Federal  aid  to  States,  1962  for  highway  construction 802 

Public  utilities  taxes 10,  62,  72 

Public  Works  Administration 725,  86 1 

Puerto  Rican  securities,  payments  by  Treasurer  of  United  States  as  agent-  -        157 

Puerto  Rico,  payments  to  for  taxes  collected 542 

Punta  del  Este,  Charter  of 90,  95,  408,  409,  411,  438,  439 


INDEX  909 

R 

Page 

Radios,  phonographs,  television  sets,  etc.,  taxes 389,  588,  596 

Railroad  retirement  account: 

Investments 572,  587,  592,  761,  789 

Receipts  and  expenditures: 

1938-51 584 

1952-62 586 

1961  and  1962 560,  562,  570 

1962  and  cumulative 788 

1962  and  estimates  1963  and  1964 591 

Refunds  of  receipts 520 

Statement  1962 788 

Transfers  to: 

1938-62 517 

1954-62 578 

1961  and  1962 521,562 

1962  and  estimates  1963  and  1964 590 

Treasury  notes  issued  to : 

Description .-   645 

Interest 625 

Issues  and  redemptions 645,  660,  666,  677 

Outstanding 620,625,645,677,789 

Railroad  Retirement  Tax  Act.     See  Employment  taxes. 

Railroads,  loans  to 860 

Receipts    (see    also    Customs:    Collections;  Employment    taxes;    Internal 
revenue;  Miscellaneous  receipts;  specific  taxes) : 

1789-1962 508-514 

Administrative  budget: 

1953-62,  chart 21 

1961  and  1962  (net  basis) 22 

1962  and  estimates  1963  and  1964 25 

1963  estimates 4 

Review  for  1962  and  estimates  1963  and  1964 22-26 

Budget: 

1925-62  (net  basis) 512 

1932-62  and  monthly  1962  (net  basis) 506 

1954-62,  major  sources 578 

1961  and  1962  and  monthly  1962 518 

1962  and  estimates  1963  and  1964 588,  593 

Net,  derivation  of 520,  590 

Interfund  deductions 22,  25,  27,  512,  520,  554,  578,  590 

PubUc  enterprise  funds.     See  Public  enterprise  revolving  funds. 
Refunds  and  transfers  to  trust  funds.  23,  158,  512,  516,  520,  578,  590,  600,  605 
Trust  funds  and  certain  other  accounts  of  the  Federal  Government. 
See  Trust  funds  and  certain  other  accounts  of  the  Federal  Govern- 
ment. 
Receipts  from  and  payments  to  the  public  (see  also  Cash  income  and  outgo) : 

1952-62 608,  609 

1958-62  and  estimates  1963  and  1964 32 

1962 21 

Definition 31 

Reclamation,  Bureau  of 538,  556,  861,  865 

Reconstruction  Finance  Corporation: 

Earnings  and  interest  paid  to  Treasury 864 

Liquidation 123,  542,  557 

Loans,  securities,  and  commitments  outstanding 123,  860,  861 

Obligations  held  by  Treasury  1952-54 853 

Recoveries  and  refunds,  receipts 518,  589 

Refrigerators,  air  conditioners,  etc.,  taxes 389,  588,  596 

Refugee  relief,  loan  program 800 


910  INDEX 

Refunds  of  receipts  (see  also  Customs;  Internal  revenue;  Trust  funds):  Page 

1931-62 oir 

1954-62 578 

1961  and  1962 23,  158 

1961  and  1962  and  monthly  1962 520,  558-571 

1962 600 

1962  and  estimates  1963  and  1964 590 

Interest  paid: 

1954-62 580 

1961  and  1962 542 

Rent,  receipts  from,  1962  and  estimates  1963  and  1964 589 

Reporting  and  accounting  changes.  Government 80,  129-132 

Retailers  excise  taxes: 

1942-62  by  sources 597 

1961  and  1962 23 

1962  and  estimates  1963  and  1964 588 

Retired  employees  health  benefits  fund.  Civil  Service  Commission 771 

Retirement  funds,  Federal  employees  (see  also  Civil  Service  retirement  and 

disability  fund;  Foreign  service  retirement  fund): 

Investments 572,  587,  760 

Receipts  and  expenditures 546,  562,  568,  582,  584,  586,  591,  592 

Revenue  Act  of  1962.     See  Taxation. 
Revenue  estimates.     See  Receipts;  Taxation. 

Revolving  fund  accounts,  definition 505 

Rivers  and  harbors  and  flood  control  expenditures 532 

Royalties  receipts 518,  589 

Rural  Electrification  Administration: 

Borrowing  authority 852 

Expenditures  1961  and  1962  and  monthly  1962 526 

Interest  paid  to  Treasury 865 

Loans  outstanding 860 

Obligations  held  by  Treasury 850,  852,  853,  855 

Securities  held  in  custody  of  Treasurer  of  United  States  1961  and 

1962 156 

S 

Safe  deposit  box  taxes 387,  589 

Safety  program 103,  125,  139 

Saint  Elizabeths  Hospital: 

Expenditures 534 

Unconditional  gift  fund 762 

Saint  Lawrence  Seaway  Development  Corporation: 

Borrowing  authority 852 

Expenditures  1961  and  1962,  and  monthly  1962 548 

Interest  paid  to  Treasury 865 

Obligations  held  by  Treasury 850,  852,  853,  855 

Public  enterprise  revolving  funds 557 

Savings  and  loan  associations: 

Federal  security  holdings 6,  59,  749 

Revenue  Act  of  1962 11,  64,  75 

School  lunch  program  expenditures 524 

Secretary  of  Agriculture: 

Borrowing  authority 852 

Interest  paid  to  Treasury 865 

Obligations  held  by  Treasury 850,  853,  855,  857 

Secretary  of  Commerce: 

Borrowing  authority 852 

Obligations  held  by  Treasury 850,  853 

Secretary  of  the  Interior: 

Borrowing  authority 852 

Interest  paid  to  Treasury 865 

Obligations  held  by  Treasury 851,  853,  857 


INDEX  911 

Secretary  of  the  Treasury: 

Borrowing  under  Defense  Production  Act  of  1950  and  Federal  Civil     Page 

Defense  Act  of  1950 851,  852,  853,  856,  857 

Letter,  August  27,  1962,  to  the  Senate  Majority  Leader  concerning  the 

administration's  tax  bill 337 

Office  of,  number  of  employees 867 

Remarks  and  statements: 

August  7,   1961,  at  the  special  meeting  of  the  Inter-American 

Economic  and  Social  Council,  Punta  del  Este,  Uruguay 403 

August  23,   1961,  before  the  Senate  Appropriations  Committee 

in  support  of  the  President's  foreign  aid  program 407 

November  30,  1961,  at  the  Inter-American  Economic  and  Social 

Council  of  the  Organization  of  American  States 410 

January    18,    1962,    before    the    Joint    Committee    on    Internal 

Revenue  Taxation  on  depreciation  reform 297 

January  30,  1962,  before  the  Joint  Economic  Committee 270 

February  27,  1962,  before  the  House  Banking  and  Currency 
Committee  on  special  borrowing  arrangements  of  the  Inter- 
national Monetary  Fund 411 

February  28,  1962,  before  the  Senate  Finance  Committee  on  the 

public  debt  limit 276 

March  14,  1962,  before  the  Senate  Finance  Committee  on  debt 

management  policies 278 

March  15,  1962,  before  the  House  Ways  and  Means  Committee 

on  the  Trade  Expansion  Act  of  1962 415 

March  19,  1962,  before  the  Tax  Executives  Institute  on  the  role 

of  tax  policy  in  economic  growth 304 

March  21,  1962,  before  the  North  Carolina  Citizens  Association 

on  the  President's  trade  program 419 

April  2,  1962,  before  the  Senate  Committee  on  Finance  on  H.R. 

10650,  the  Revenue  Act  of  1962 309 

April  3,  1962,  joint  announcement  with  the  Minister  of  Finance 

of  Brazil  on  financial  negotiations 481 

April  24,  1962,  before  the  Economic  Club  of  New  York  on  re- 
sponding to  the  challenge  of  the  Common  Market 430 

April  25,    1962,   at  the  third  annual  meeting  of  the   Board  of 

Governors  of  the  Inter-American  Development  Bank 435 

May  10,  1962,  before  the  Senate  Committee  on  Finance  on  H.R. 

10650,  the  Revenue  Act  of  1962 330 

May  18,  1962,  at  the  ninth  annual  monetary  conference  of  the 

American  Bankers  Association,  Rome,  Italy 439 

June  26,  1962,  before  the  Senate  Finance  Committee  on  the  debt 

limit 290 

July  11,  1962,  on  the  issuance  of  the  new  Depreciation  Guide- 
lines and  Rules 335 

September  19,   1962,  on  the  annual  report  of  the  International 

Monetary  Fund 445 

November  15,  1962,  before  the  White  House  Labor-Manage- 
ment Conference  on  fiscal  and  monetary  policy 338 

Report  to  the  President  on  the  balance  of  payments  March  1962  _       79, 

423-430 
Secretary,  Under  Secretaries,  General  Counsel,  and  Assistant  Secretaries  of 

the  Treasury  Department  from  January  21,  1961,  to  January  1,  1963__         xi 
Securities.     See   Corporations  and  certain  other  business-type  activities 
of    U.S.    Government;    Federal   securities;    Public    debt;    Treasurer    of 
United  States. 

Securities'  transfers  to  avoid  income  tax,  tax 390 

Seigniorage : 

Deposits  by  Bureau  of  the  Mint 178 

Receipts  from: 

1961  and  1962  and  monthly  1962 518 

1962  and  estimates  1963  and  1964 589 

Servicemen's  mortgage  insurance  fund 255,  620,  622,  642,  649,  676,  760 


912  INDEX 

Silver  {see  also  Coins ;  Money ;  Seigniorage) :  Page 

Assets  and  liabilities  in  account  of  Treasurer  of  United  States  —      151,  750 

Balance  in  general  account  of  Treasurer  of  United  States 37,  750 

Bullion: 

Stock 152,  178,  750,  752,  755,  758 

Taxes  on  sales  or  transfers 383,  588 

Certificates: 

Engraved,  printed,  and  delivered 825 

In  circulation,  Federal  Reserve  Banks  and  Treasury,  and  stock  _      750, 

752,  753,  755-757 

Issued  and  redeemed 759 

Old  Series  Currency  Adjustment  Act,  effect 153 

Lend-leased    to    foreign    governments,    repayments,    and    status    of 

accounts 96,  137,  178,  849 

Monetized 151,  177 

Production  and  use 179 

Subsidiary  coin.     See  Coins. 

Transactions  at  mint  institutions 178 

Sinking  fund,  cumulative,  for  debt  retirement 725,  727 

Small  Business  Administration: 
Expenditures: 

1961  and  1962  and  montlily  1962 548 

Federal  aid  payments  to  State  and  local  units,  1962 809 

Interest  paid  to  Treasury 865 

Loans  outstanding 861,  862 

Obligations  held  by  Treasury,  June  30,  1955-57 853 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 548,557 

Social  Security  Administration  {see  also  Employment  taxes;  specific  trust 
funds;  Taxation): 
Expenditures: 

1961  and  1962  and  monthly  1962 534 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc 815 

States  and  local  units 806 

Public  enterprise  revolving  fund  receipts  and  expenditures  1961  and 

1962 556 

Space  research  and  technology  expenditures  {see  also  National  Aeronautics 

and  Space  Administration  expenditures) 27,  579 

Spain,  loan  to 852 

Special  fund  receipt  and  expenditure  accounts,  explanation 504 

Sporting  goods  taxes 389,  588 

Stamp  taxes.     See  Documents,  other  instruments,  and  playing  cards  taxes. 

Stamps,  engraved,  printed,  and  delivered 824,  825 

Stamps,  U.S.  savings: 

Issues  and  redemptions: 

1961  and  1962  and  monthly  1962 658,  664 

1962 196,  688 

Outstanding  June  30: 

1952-62 621 

1961  and  1962 688 

1962 646 

Limitation,  statutory,  application 652 

State,  Department  of  {see  also  Agency  for  International  Development) : 
Expenditures: 

1961  and  1962  and  monthly  1962 540 

1962  and  estimates  1963  and  1964 590 

Loans  outstanding 863 

Trust  accounts,  etc.,  receipts  and  expenditures  1961  and  1962 566,  558 

State,  local  and  territorial  governments: 

Debt  outstanding,  charts: 

1946-62,  as  percentage  of  GNP 41 

1946-62,  selected  dates 40 

Federal  aid  to,  expenditures  1962  by  States  and  program 801-810 


INDEX  913 

State,  local  and  territoral  governments — Continued 
Governmental  security  holdings: 

Federal  securities:  Fage 

1941-62  selected  dates,  and  changes  1962 56 

1952-62 745-747 

1961  and  1962 749 

1961  and  1962,  December  31 6 

Allotments 722 

Nonguarauteed  securities  of  Federal  instrumentalities  1952-62  by 

investor  classes 745 

State,    local,    and    territorial    government    securities,    June    30, 

1952-62 745-747 

Internal  revenue  collections  and  refunds,  by  States 600 

Loans  to,  by  Government  agencies 861 

Withholding  of  income  taxes  from  Federal  employees 77,  129 

State  unemployment  accounts.     See  Unemployment  trust  fund. 

Statistics,  Treasury-Internal  Revenue  Service  Committee  on 498 

Stock  transfers  taxes.     See  Documents,  other  instruments,  and  playing 

Sugar  taxes-'. 75,  390,  589,  598 

Surety  bonds 136 

Surplus  or  deficit,  U.S.  Government: 

1789-1962 509 

Administrative  budget: 

1953-62,  chart 21 

1961  and  1962 21,22 

1963  estimates 4 

Economic  considerations 2,  434,  442 

Budget: 

1932-62  and  monthly  1962 506 

1954-62 581 

1961  and  1962 550 

1962  and  estimates  1963  and  1964 590,  593 

1963  estimates  by  months 296 

Surplus  property  agreements.     See  Lend-lease  and  surplus  property. 

Sweden: 

Income  tax  treaty  reexamination 78 

Prepayment  on  debt  to  United  States 447 

T 

Tables,  bases  of 501 

Tanker  Hazards,  Committee  on 495 

Tariff  Commission  expenditures 550 

Tariffs.     See  International  financial  and  monetary  developments:  Tariffs 
and  trade. 

Tax  and  loan  accounts.  Treasury,  balances  June  30: 

1961  and  1962 \ 750 

1962 152 

Changes  1952-62,  analysis 751 

Tax  evasion  convictions 163 

Tax  rates: 

Federal  rates,  exemptions  and  credits  1950-62 370-402 

Individual  income  tax  liabilities  and  effective  and  normal  rates  1913- 

62 335-372 

Tax  reduction  and  reform  proposals,  in  1963 4,  11-15,  340 

Taxation  (see  also  Internal  Revenue;  specific  taxes): 

Aviation  fuels 24,  61 

Boats  fuel 24,  61 

Bulletin  F  re\ision 160,  299,  303,  335 

Business  entertainment  expense  deductions,  recommendations 316 

Capital  gains  and  losses,  1963  recommendation 14 

Casualty  loss  deduction  s  after  December  31,  1961 72 

Charitable  contributions  deductions 63,  68,  73 

Claim  of  right,  amended  return,  computation  revision 74 


914  INDEX 

Taxation — Continued  -Page 

Coconut  oils  etc.,  processine;  tax,  suspension 70 

Consumer  finance  companies 72 

Cooperative  housing  tenaat,  stock  depreciation  deduction 68 

Cooperatives  and  patrons: 

Recommendation 307,  318,  337 

Revenue  Act  of  1962 11,  65 

Corporation  income  taxes: 

1 963  recommendations 11-15 

Rate  extension 61,  71 

Depositary  receipts  procedure. 141 

Depreciable  propertv,  gains  from  disposition  of: 

Recommendations 62,  307,  315,  330,  337 

Revenue  Act  of  1962 11,  62 

Depreciation: 

Bulletin  F  revision 305 

Deductions  and  allowances,  foreign  countries  and  United  States,       302, 

305,  310-312,  345 

Guidelines  revision 1,  10.  16,  60,  69,  160,  273,  297,  303,  305,  310, 

335,  337,  340,  349,  418,  427,  432.  442,  446,  454 

History  under  income  tax 297 

Salvage  value  of  industrial  assets: 

Recommendation 307 

Revenue  Act  of  1962 11 

Textile  industry,   allowances  on   machinery,   revisions 160, 

273,  297,  303,  305,  347,  418,  421,  432 
Treasury  studies  and  survevs_..160,  273,  297,  300,  305,  335,  345,  347,  348 

Developments  1962 1,  10,  60-78,  297 

Dividends  and  interest: 

Credit  and  exclusion  repeal,  recommendations 13,  63,  327,  337,  346 

Reporting  requirements 11,  63,  297 

Withholding  recommendations 63,  297,  307,  317,  331,  338 

Drilling  and  development  costs 74 

Excise  taxes,  rate  extension 24,  61,  71 

Excises  (specified)  transfer  to  new  tariff  schedules,  provision  for 75 

Expense  account  deductions,  limitation: 

Recommendation 330,  337 

Revenue  Act  of  1962 11,  63 

Federal-State  cooperation 77,  129 

Fishermen,  tax  treatment 72 

Foreign  income  and  investment: 

Controlled  foreign  corporations: 

Foreign  tax  inclusion  to  obtain  tax  credit: 

Recommendation 322,  337 

Revenue  Act  of  1962 350 

Individuals'  income 334 

Investment  income,  foreign  tax  credit  computation: 

Recommendation 326 

Revenue  Act  of  1962 11,  66,  67,  350 

Less-developed  countries,  recommendation 333 

Losses  recognition 333 

Patents,  gain  from  sales  to: 

Recommendation 332,  350 

Revenue  Act  of  1962 11,  67 

Reporting  and  information  requirements 337,  351 

Stock,  sales  or  liquidation 66,  334 

Tax  deferral  privileges: 

Recommendation 323-325,  332 

Revenue  Act  of  1962 65,  350 

Tax  haven  corporations: 

Recommendation 337,  435,  444 

Revenue  Act  of  1962 350 

Tax  liaven  earnings: 

Recommendation 307,  322-325,  331-334 

Revenue  Act  of  1962 11,  66 


INDEX  915 

Taxation — Continued 

Foreign  income  and  investment — Continued 

Estate  tax  on  foreign  real  estate:  Page 

Recommexic'ation 32i  337 

Revenue  Act  of  1962 llllllll"         67*  350 

.  Foreign  corporate  structure  reorganization "__  '334 

Foreign  corporations,  property  distribution s 11'""""  67 

Foreign  currency  restrictions  and  blocked  income "   ""       334 

Foreign  investment  companies: 

Recommendatior s     321,  334,  337,  430 

Revenue  Act  of  1962 H  gy  350 

l^oreign  trusts,  income  in: 

Recommendation _        _  321  337 

Revenue  Act  of  1962 _  I      "__"__  67350 

Revenue  Act  of  1962,  summary r-r"rii,"60,"65,"297'  349 

U.b.  citizens  living  abroad,  earned  income:  ' 

Recommendation __       320  337 

Revenue  Act  of  1962 _  _      _       ~"  'llfifi'-^fin 

General  Motors  (du  Pont)  stock "-II'IIH".III  72 

Health  insurance  program  for  the  aged,  recommendation ."  "  70 

Imports  increase,  relief  to  firms  for  injury __  _  73  490 

Individual  income  taxes:  ----  ,    ^^ 

1963  recommendation 11-15 

Authority  to  adjust  temporarily,  request  by  President- _"     6i"276  308 

Charitable  contributions,  computation _   '__     '    gg 

Dividends  and  interest  withholding  recommendations __"!_"_"_  63 

T, ...,.+•        ff    .•  ^  .  ,  297,  307,"3i7,"331,  338 

Liiabilities,  efiective  and  normal  rates,  and  exemptions,  1913-62     355-369 

Insurance  companies,  tax  deduction  studv  by  Treasury  Department  73 

International  tax  rules 1 049 

Japanese-Americans  evacuation  claims  awards.  _  "  rc 

Jet  fuel ."."^r^I  24  61 

Land  clearing  expenditures  by  farmers,  deduction-.I-rr-I.  "I".  """   "       '68 
Land  conservation  fund  proposal .."I"!"   62  72 

Latin  America,  tax  administration  and  reform '_'_        "_     ~ __   349  353 

Laws,  administration,  internretation,  and  clarification,..!   I.""!       '  7Q  351 
Legislative  appearances  and  activities,  expense  deductions       -----       > 

Life  insurance  companies _  ~  73 

Lobbying  expenses l-ll.llll   ./.I  320  337 

Manufacturers'  sales,  constructive  price  determination  ].  '_     "'    75 

Medical  expense  deductions "]!.'  74 

Mutual  fire  and  casualty  insurance  companies: 

Recommendation . on?  •:!iq  qq7 

Revenue  Act  of  1962 ."-."--'_"-"."."."::.":.":::: '      11  65 

Mutual  savings  banks  and  savings  and  loan  associations:  ' 

Deduction  limitation 7r 

Recommendation ..      __      _  010  007 

Revenue  Act  of  1962 llllllllllll'l  11  64 

Natural  resources,  income,  1963  recommendation.. 1. 1  "      "".".'       '  14 

Organization  for  Economic  Cooperation  and  Development  (OECD).  78  351 

Pension  plans  providing  medical  benefits _        _   _      _  '74 

Plant  and  equipment  investment  tax  credit: 

Recommendation.   61,  273,  302,  305,  309,  311-315,  330 

336,  337,  342-348,  418,  426,  430  432  433  442,  446  454 

Revenue  Act  of  1962 '....'_...'  10,  16,  60,  62  29?;  349 

President's  recommendations  .  _  .      ,      ,      ,    ^<,o'±» 

Public  utilities ''''''  ''-'''  27«r3"0"8,-30"9,-3"r4","3r5,-3r7-:32-0,-337 


Rates,  exemptions,  and  credits,  1950-62_..  370-402 

Reduction  and  reform  proposals,  1963 .        ___        I   _'  i'Ti-n  340 

Retirement  income  credit  increase _..    .  '  '    7^ 


10,  62,  72 

Reduction  and  reform  proposals,  1963_..I""""r"""II'""]"^y 4"ii' 

Retirement  income  cr"-^-'-^ -■ "   "        ""  "     ' 

Revenue  Act  of  1962: 

As  passed  by  the  House __ 327-32Q 

President,  statement  by lllllll   ll_       -\      I   _         297 

Provisions,  summary "    "    "inln    fin  fi9  fia 

Revenue  estimates.: ---"-"-"-IIIIi::".:::::.. ..:_'.  68 


916  INDEX 

Taxation — Continued  Page 

Revenue  estimates,  basis 24 

Savings  and  loan  associations 75 

Self-employed,  pension  and  profit-sharing  plans,  deduction 61,  69 

Sugar 75,390,  589,598 

Tax  Rate  Extension  Act  of  1962 71 

Tax  treaties 67,  78,  326,  351 

Terminal  railroad  corporations 74 

Trade  Expansion  Act  of  1962 73,  418 

Transportation 24,  61 

Unemplovment  system,  Federal-State,  recommendation 61 

User  charges 61,  62,  72 

Tax-exempt  and  taxable  Government  securities,  terms 647 

Telephone,  general  service,  taxes 24,  61,  71,  389,  589,  597 

Television  tax.     See  Radios,  phonographs,  television  sets,  etc. 
Tennessee  Valley  Authority: 

Borrowing  authority 852 

Earnings  paid  to  Treasury 865 

Expenditures: 

1961  and  1962  and  monthly  1962 550 

Federal  aid  payments,  1962  for  States  and  local  units 810 

Investments 572,  762 

Obligations: 

Held  by  Treasury  June  30,  1952-55 863 

Held  outside  Treasury: 

Outstanding  June  30,  1961  and  1962  and  monthly  1962 623 

Transactions  (net) 574,  592 

Receipts  and  expenditures  1961  and  1962 557 

Terminal  railroad  corporations,  taxes 74 

Territories,  Office  of 536,  556,  861,  862 

Thrift  and  Treasury  savings  stamps 647,  689 

Tires,  tubes,  and  tread  rubber,  taxes 384,  588,  596 

Tobacco  taxes 23,  24,  164,  381,  588,  595 

Toilet  preparations  taxes 390,  588,  597 

Tonnage  taxes 390 

Trade  Expansion  Act  of  1962.     See  International  financial  and  monetary 
developments:  Tariffs  and  trade;  Taxation. 

Transportation  and  commerce  expenditures,  1954^62 579,  582 

Transportation  taxes 24,  26,  61,  71,  390,  589,  597 

Treasurer  of  the  United  States: 
Account  of  the: 

Assets  and  liabilities: 

1961  and  1962,  June  30 750 

Explanation 37,  151 

Balance,  June  30: 

1916-62 724 

1932-62  and  monthly  1962 507 

1961  and  1962 38,  153,  750 

1962 37,  153 

Cash  operating 277,  292,  294 

Increase  or  decrease: 

1916-62  and  cumulative 724 

1932-62  and  monthly  1962 507 

1952-62 608,  615 

1961  and  1962 22 

1962 750 

1962  and  estimate  1963 593 

Deposits,  withdrawals,  and  balances: 

1952-62 609,  610,  615 

1961  and  1962 153 

Tax  and  loan  accounts  1952-62 751 

General  account 750 

Gold 151,  750 


INDEX  917 

Treasurer  of  the  United  States — Continued 
Account  of  the — Continued 

Net  cash  transactions:  Page 

1952-62 615 

1962 38 

Pubhshed  in  Daily  Statement  of  the  United  States  Treasury 37,  501 

Silver 151,  750 

Office  of 149-157,  488,  542,  867 

Postal  Savings  System,  designation  as  Treasurer  of  Board  of  Trustees.        487 
Securities  held  in  custody 156 

Treasury  Bulletin 35,  131,  749,  859 

Treasury,  Department  of: 

Administrative  and  staff  officers,  January  1,  1963 xii 

Advisory  committees 493-498 

Antidumping,  amendment  of  delegation  order  on  findings  of  dumping,       486 

Automatic  data  processing  (ADP) 121,  122,  150,  159,  161,  166,  167 

Awards  program 101,  103,  122,  125,  139,  144,  180,  185 

Circulars,  Department.     See  Circulars,  Department. 

Civil  defense  and  defense  mobilization  planning  assignment 492 

Defense  production  expansion 860 

Deputies,  designation  of 490-491 

Domestic  Gold  and  Silver  operations,  Office  of,  establishment 492 

Economies  in  management 102 

Emergency  Planning,  Steering  Committee  for,  establishment 492 

Employee  training  programs 103,  139,  143,  151,  167,  184,  193 

Employees,  number,  quarterly,  June  30,  1961  and  1962 867 

Expenditures: 

1961  and  1962  and  monthly  1962 542 

1962  and  estimates  1963  and  1964 590 

Foreign  Exchange  Operations  Staff,  estabhshment 493 

Internal  auditing 102,  125,  129,  133,  169,  185 

International  conferences,  participation 92 

Management  improvement  program.     See  Management  improvement 

program. 

Organization  and  procedure  orders 485 

Public  enterprise  revolving  fund  receipts  and  expenditures 542,  557 

Safeguarding  official  information 485 

Seal,  authority  to  affix 485 

Secretary,  Under  Secretaries,  General  Counsel,  and  Assistant  Secre- 
taries    XI 

Space  and  property  improvements 104 

Supervision  of  bureaus 488,  489 

Trust  account  receipts  and  expenditures  1961  and  1962  and  monthly 

1962 560,566 

Treasury  notes  of  1890 153,  750,  752,  753,  755-757,  759 

Treasury  savings  certificates  (matured) 688 

Trust   enterprise  revolving  funds,   receipts   and   expenditures    1961    and 

1962 577 

Trust  funds  and  certain  other  accounts  of  the  Federal  Government  (see 
also  Cash  income  and  outgo;  Government  investment  accounts;  Public 
debt:  Special  issues;  specific  funds): 

Deposit  funds,  receipts  or  expenditures  (net) : 

1940-51 584 

1952-62 586 

1954-62 583 

1962  and  estimates  1963  and  1964 592 

Explanation 505 

Expenditures: 

1952-62 610 

1958-62  and  estimates  for  1963  and  1964 30 

1961  and  1962  and  monthly  1962 564-571 

1962  and  estimates  1963  and  1964 30,  591 


918  INDEX 


Trust  funds  and  certain  other  accounts  of  the  Federal  Government — Con. 

Intertrust  fund  deductions:  Page 

194S-51 585 

1948-62 576 

1952-62 586 

1954-62 582,583 

1958-62  and  estimates  1963  and  1964 29,  30 

1961  and  1962  and  monthly  1962 564,  570 

1962  and  estimates  1963  and  1964 591,  592 

Investments: 

Federal  securities: 

1952-62  (net) 613 

1952-62,  June  30,  holdings 760 

Public  debt  securities,  net: 

1952-62 587 

1961  and  1962  and  monthly  1962 572 

1962 38 

1962  and  estimates  1963  and  1964 592,  593 

Summary  for  1962 32 

Receipts: 

1952-62 609 

1958-62  and  estimates  1963  and  1964 29 

1961  and  1962  and  monthly  1962 558-565 

1962  and  estimates  1963  and  1964 28,  591 

Receipts  and  expenditures: 

1932-62  and  monthly  1962  (net) 506 

1938-51,  major  classifications 584 

1952-62,  major  classifications 586 

1954-62,  sources  and  major  functions 582 

1961  and  1962 22 

1962 21 

1962  and  estimates  1963  and  1964 28-31,  591,  593 

Review  for  1962 28-31 

Sales  and  redemptions  of  obligations  of  Government  agencies  in  market 

(net) : 

1952-62 587,613 

1961  and  1962  and  monthly  1962 574 

1962 38 

1962  and  estimates  1963  and  1964 592,  593 

Summarj'  for  1962 33 

Trust  funds: 

Explanation 505 

Interest  on  uninvested  funds 542,  580,  582,  611 

Refunds  of  receipts 516,  520,  578,  586 

Special  issues  to,  uniformit.y  of  rates 135 

Statements  of  selected  funds 764-798 

Transfers  to 517,  520,  578,  590 

U 

Under  Secretary  of  the  Treasury  Fowler,  addresses: 

October  12,  1961,  before  the  American  Retail  Federation  on  tax  policy 

for  growth  and  productivity 341 

June  20,  1962,  at  the  Commerce  Department  Regional  Conference  on 

business  and  the  balance  of  payments 449 

Under  Secretary  of  the  Treasury  Roosa,  addresses: 

February  7,  1962,  at  the  American  Bankers  Association  Mid-Winter 
Trust  conference  on  the  balance  of  payments  and  international 

financial  cooperation 456 

May  17,   1962,  before  the  American  Bankers  Association  Monetary 

Conference  in  Rome,  Italy 464 

Unemployment  compensation: 

Expenditures 538,592,816 


INDEX  929 

Unemployment  compensation— Continued  Paj^A 

Taxes  1950-62 ^^J^ 

Unemployment  compensation  and   Employment"  Service' "Admi'nistVa'tion 
expenditures __ "uiui^ 

Unemployment  trust  fund:                       "    "~   ~  ^^^ 

Balances,  summary _        _  ^q^, 

Employment  security  administraTion'acco'u'ntV.'rMOrsBerseorsee.'Tgi  795 
Federal  extended  compensation  account  560  5fiS  7Qi    7q? 

Federal  unemployment  account ^^"'  f  ^?'  I?^'  ?^^ 

Investments _____        "   ""_\'""57''"587  592  761    70^ 

Railroad  unemployment  insurance  account"," "562,"56S,  59L  79o'  792  793  tS, 
Railroad  unemployment  insurance  administration  fund  '  56o'  568  790 

Receipts  and  expenditures:  '      °'  '^" 

1938-51 

1952-62 584 

1961  and  1962  and  monthly  1962  ran  tea 

1962  and  cumulative '700 

1962  and  estimates  1963  and  1964  _  ------  ^yu 

Refunds  of  receipts ______  _        I""   --__""520"560~^S6  ^Qi 

State  accounts  receipts,  expenditures,  transfers,"and'balances       '        '  29 

Statement  1962 ^^^'  ^^^'  ^^^'  ^^^'  ^94 

Transfers  to:  ~  ---  790 

1961  and  1962 _^„ 

1961  and  1962  and  monthly  1962  ^/n 
1962__   _                                                                                                ;::-"       ^"'^ 

1962  and"  estimates"  1963'and"r9"6"4  ^^''  ^^^'  lit 
Ireasury  certificates  of  indebtedness  issued  to: 

Description _       _  „._ 

Interest,  computed  rate,  June"3~o7l962  aor 

SsTanSfn''^'™^"^'"' ::::::"6i5,"660,"666,  677 

United  ffingdom.^^ 620,625,645,677 

^  and"4™reiT°  Financial  Agreement  of  1945,  payment  of  principal 

Bank  of  England,  financial  assistance'  to'Can'a'd'a" "I  ^qI 

^  oreign  central  banks,  credits  to  Bank  of  England  iei   471 

International  Monetary  Fund  drawings  and  repaym'e'n't's'  84  460'  462 

J^rxf±!f„^^if"/P^^^  P^P^^ty  obligations -_-.'::::_" 844.'  847!  848 


U.S.  balance  of  payment's. '  "s'ee  'Bal'a'n'c'e'of  pa'yments',"U.Sy  ^^^ 

u:i.%ter°S-:co,;„Vai,w;-^;rc„VpWti„'S 

business-type  activities  of  U.S.  Government. 
U.b.  Government  credits  and  claims  in  foreign  countries  R'iA. 

U.S.  Government  life  insurance  fund     _   _        _  ""  "_'_"" ego 

U.S.  Information  Agenfyf'  ''''  '"''  ''''  '^''  S^a  625;  643,- '6'5'8,-66'6.- 677.' 761,  796 
Expenditures 

Informational  media  guaranty' fund: 

Borrowing  authority ___  _  0^9 

Interest  paid  to  Treasury. _  o?^ 

ul;  SvSSJ'XS™"'  ''"''  ^°w  posTttanTseactVd -yVarL-:::::::.!"'  Ill 

U.S.  notes:  "~  ^^4 

Engraved,  printed,  and  delivered.  _  09c 

In  cu-culation,  Federal  Reserve  Banks,  and  frea's'ury'and'st'oc'k.:::  ]  I      750, 

Issued,  redeemed,  and  outstanding  _  _     _  ^^^'  IS 

Public  d|bMtem  (U.S.  notes  less  gol'd' reserve),  'o'ut'standing' "june"3'o': 

1961  and'l962_V_I":::  ^^1 

Limitation^  statutory,  not  subject  101111111111111111111111";;       652 


920  INDEX 

U.S.  obligations.     See  Federal  securities.  Page 

U.S.  private  investment  abroad.  .  .    352-354,  427,  435,  444,  447,  451,  452,  456,  834 
U.S.  savings  bonds.     See  Bonds,  U.S.  Government. 

U.S.  Savings  Bonds  Division 195-197,  867 

U.S.  Secret  Service 197-202,  542,  867 

Urban  renewal  fund 544,  554,  557,  809,  850,  852,  853,  855,  861,  864 

User  charges 61,  62,  71,  72,  391 


Vehicles,  use  taxes 391,  589,  598 

Venezuela,  Shoup  report  on  tax  policies 354 

Veterans'  Administration: 

Earnings,  interest,  and  profits  paid  to  Treasury 865 

Expenditures  (see  also  Veterans'  benefits  and  services): 

1961  and  1962  and  monthlv  1962 546 

1962  and  estimates  1963  and  1964 590 

Federal  aid  to  States,  1962  payments  by  States  and  programs  for: 

Individuals,  etc 817 

States  and  local  units 810 

General  post  fund  investments 761 

Loans  outstanding 860,  863 

Public    enterprise   revolving  fund  receipts    and    expenditures   1961 

and  1962 546,557 

Veterans'  benefits  and  services,  expenditures: 

1954-62 580,583 

1958-62  and  estimates  1963  and  1964 27,  30 

1901  and  1962  and  monthly  1962 546 

1962  and  estimates  1963  and  1964 28,  31 

Veterans'  direct  loan  program: 

Borrowing  authority 852 

Interest  paid  to  Treasury 865 

Loans  outstanding 860 

Obligations  held  bv  Treasury 851,  852,  853,  856 

Veterans'  life  insurance  funds 562,568,572,  582,584,691,  761 

Veterans'  special  term  insurance  fund: 

Investments 761 

Loans  outstanding 863 

Treasury  certificates  of  indebtedness  issued  to: 

Description 645 

Interest,  computed  rate,  June  30,  1962 625 

Issues  and  redemptions 660,  666,  677 

Outstanding,  June  30,  1962 620,  625,  645,  677 

Victorvnotcs,  outstanding  June  30,  1961  and  1962  and  redemptions  1962_._       678 

Virgin' Islands  Corporation --  538,  556,  851-853,  856,  860,  861,  865 

Vocational  Rehabilitation,  Office  of,  expenditures 534,  807,  815 

W 

Wagering  taxes 391,  589 

War  housing  insurance  fund 255,  620,  622,  643,  650,  676,  760 

Warrants  issued  basis  of  data 502 

Water  Transportation  Facihtation  Committee 112 

Wines  taxes 380,  588,  595 

Withheld  taxes.     See  Individual  income  taxes. 

Working  fund  accounts,  explanation 505 

Workmen's  Compensation  Act  fund 762,  763,  798 


Yields  of  Treasury  securities.     See  Public  debt;  Prices  and  yields. 

Yugoslav  claims  fund 828 

o 


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