The Washington herald., 1908-07-04
DEFICIT EXPLAINED
COrtelyOu Issues a Campaign
Treasury Statement.
CHARGES IT TO BOOKKEEPING
Claims that Ancient Method in
Vogue Here Gives Wrong Under
standing of COuntry's Finances.
Now shows There Is n Surplus Of
Twenty-Five Million Dollars.

If the books Of the United States Treas
ury were kept in the same way as those
Of the leading European nations there
would have been shown at the close of
the fiscal year 1908, on Tuesday last, a
surplus Of more than s25.OOOOOO.
/ Ancient methods Of bookkeeping made
/ II appear there was a deficit OF nearly
$50. 100000. Secretary Cortelyou expects TO
! Introduce reform IN the method of
keeping books. Figures do not lie, the
Secretary admits. but they may be made
4 TO prevaricate. Under the present sys-
TEN Of keeping accounts in the Federal
| Treasury. this prevarication Of figures has
reached an absurd stage. and Mr. Cor
telyou viii introduce a system which VIII
cause the account Of both ordinary and
extraordinary receipts and expenditures
OF the government 90 appear to the pub
/ lie in their true light.
clear statement on the subject was
made by Secretary Cortelyou yesterday.
Warning to the Democrats.
If the Democratic campaign stump ora
/ tors undertake TO make political capital
out Of the apparent deGcit in the Treas
ury. they will probably be referred 10
this statement Of Mr. Cortelyou, which
| is as follows:
Although the Treasury statements
show a deficit in round numbers Of
s69VO,ooo in the operations Of the govern
ment during the fiscal year Just closed.
the deficit is more apparent than real.
| being due 10 an antiquated system Of
/ bookkeeping, which Secretary Cortelyou
| is having overhauled and modernized.
Considering the ordinary receipts OF the
| government there is not only no deficit.
but surplus. The amount Of new debt
created during the year was only S7.O000O0
/ in excess of the amount OF the old debt
redeemed. and $500 600 was expended in
new public works. Of which less than
| half was paid for by the creation Of 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
all the money which is paid out for the
/ purposes for which the bonds are issued
| Is included in cXpeditures. In this respect
I the practice OF the United States Treas
I ury departs from that Of all other i'm
portant governments The latter take
/ care 10 discriminate between ordinary re-
ceipts, which are devoted 70 the actual
running expenses Of the government. and
/ extraordinary receipts which are set
aside for permanent public works or other
/ special purposes. The total amount ex-
pended by this government for various
/ public works, including the Panama
Canal during the past fiscal year was
| $S4. .S25. .32S.
Under n proper method OF book
keeping this amount would be chargeable
\ TO extraordinary expenditures 70 be met
| by loans.
The deficiency in extraordinary re-
ceipts paid from surplus Of ordinary re-
ceipts and from the free balance in the
Treasury was S75,S9o,7SS
The Issue of Bonds.
''The items included under extraor-
dinary expenditures are such as might
properly be covered by the issue OF bonds
instead of paid out Of current revenues.
That they could be paid, even in part.
out 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 Iusti-
fed by the large free balance in the
Treasury. In most European govern
ments the maturity OF an old debt would
bt mt ~ lNA NAullulllEs ltdNluE lle pTlu-
cipal Undimin!shed, or only slightly re-
duCed
How much more careful other gov
ernments are to charge extraordinary
expenditures TO special accounts is in
dicated by a glance at their budgets.
Moreover. in most European govern
ments some control is exercised by the
finance department over the budget
through system Of a responsible min
istry. 1t is rare that an appropriation is
made which does not originate In or that
is not at least approved by the finance
department"
Secretary Cortelyou has had under con-
sideration for some time the thorough
revision OF the Treasury statements, with
view TO making them represent accu-
rately and in easily understood form the
exact condition Of the Scrernment's s
finances.