Omaha daily bee., 1908-07-05
DEFICIT APPARENT. NOT REAL
Secretary CorteIyOu Declares Anti
uuated Methods of Bookkeeping
Are Responsible for 1t.

W 4O@HH SNNs
you today gave out a statement in regard
10 the situation in which he SAYS that
the deficit of $50, 900, 900 shown by the treas
ury statements is more apparent than real
because OF the ~antiuuated bookkeeping
system. which Is being overhauled and con-
tended that considering the ordinary re-
ceipts of the government" there Is really
a surplus. The secretary says that the
items included under ordinary expenditures
are such as might properly be covered ny
the issue of bonds instead of paid out OF
current revenues, the latter method con-
stituting an exhibition of financial
strength, which shows only an imaginary
deficit. The statement cites methods Of
special accounting Of foreign governments
along these lines.
S cretary Cortelyou's statement follows:
although the treasury statements show a
deficit in round numbers OF S60,0OO,0oo in
the operations of the government during
the fiscal year Just closed, the deficit is
more apparent than real, being due to an
antiquated system OF bookkeeping which
Secretary Co%rtelyou' is having overhauled
and modernlzed. Considering the ordinary
receipts of the government there is not
only no deficit, but a surplus. The amount
OF new debt created during the year was
only 100000 in excess of the amount of
the old debt redeemed, and SS5,O0O.OOO was
expended in new public works Of which
less than half was paid for by the creation
CT a funded debt. -
Two of the fundamental errors in the
present system of making up the treasury
statements are that the proceeds of bonds
sold are not counted in the receipts, but
ell the money which is paid out for the
r. .-AHak tlA I@nIa axA gz,,a1
is included in expenditures. In this respect
| the practice of the United States treasury
departs from that of all other important
governments. The latter take care to dis
criminate between ordinary receipts, which
are devoted TO the actual running expenses
Of the government and extraordinary re-
ceipts, which are set aside for permanent
public works or other special purposes, The
total amount expended by this government
for various public works, including the
Panama canal, during the last fiscal year
was $S4,S2 1928.
Under a proper method of bookkeeping
this amount would be chargeaele to ex-
traprdinary expenditures to be met by
loans. Putting our budget on this basis
for the last fiscal year, the account would
stand as follows:
Ordinary receipts and e~xpenditures=5 -,
Receipts ''SS2g'o5S SSS
Expenditures :....''.''''.'. ot4'iSSa5t
Surplus of receipts .......... Go,l6J,33t
Extraordinary receipts and expendi-
Receipts. sale of Panama
! sale Of treasury certificates. l5,i36,9O(
From premiums. .,.......... l'0OO'OOt
Total 4l,9S4,54t
Expenditures
For Panama canal,...''.:.;..S SheS"oZs
For public buildings under
treasury department. .....,. 9,SsS,49t
Tor Qualifications ............ Lb6O,22t
FOR rivers and harbors 49,. 29,yS9,21i
Reduction of the public debt. 100000
Total .$1I7,G&T,32S
THE deficiency in extraordinary re
ceipts paid from surplus of ordinary re-
ceipts and from the free balance in the
treasury was SO, S9O,7ss.
"The items included under extraordinary
expenditures are such as might oe prop
erly covered by the issue Of bonds in
stead of Paid out of current revenues
That they could be paid, even in part, GU
OF current revenues is an exhibition OF
financial strength which shows that there
Is no deficit except an imaginary one
The reduction Of the debt was, Of course
\ only made because II was justified by thu
+large free balances in the treasury. II
most European governments the maturit!
Of an old debt would be met by refunding
leaving the principal undiminished or onl!
slightly reduced.
Secretary Cortelyou has had under coli
sideration for some time the thorough re
vision Of the treasury statements with
view TO making them present accuratel!
and easily understood the exact conditio,
of the governments finances"