Perth Amboy evening news., 1909-12-08
MAC VEAGH ON
SUGAR FRAUDS
Animal Report Ct Secretary
Of Treasury Says z Per
Cent Bonds Ridiculous.
CIvIL SERVICE PENSIONS

WaShlnk TOM DeC. Oil NlBol-
ous language, Franklin MacVeagh,
secretary of the treasury, discusses
in his annual report sent to congress
today the recently exposed frauds of
the sugar trust and other customs
house scandals.
Speaking of the alarming" rev.
Citations of the condition Of the Gus
toms service in New York, he says
that the frauds Of the American
Sugar Refining Company showed "a
long-continuing system of corrup-
ton. While they were perhaps the
most important instances they were
! symptoms of a diseased condition,
not universal by any means, but all
most general" Enough facts have
been brought to light, he declares,
to afford basis for rehabilitation
and numerous prosecutions have
been made and projected,
AS for the causes of the demorali-
zation, the secretary regards as most
deleterious "the influence of local
politics and politicians" which "has
promoted that laxity and law tone
which prepare and furnish an invit-
ing soil for dishonesty and fraud.
Unless the customs service can
be released from the payment of
political debts and exactions," he
continues, "and from meeting the
supposed exigencies of political or
ganizations, big and little, it will be
impossible to have an honest service
for any length of time.
ANY considerable share of the
present cost of this decentralization
to the public revenues, to the effic-
iency of the service, and to public
and private morality, is a tremen-
dous amount to pay in mere liquida-
tion of the small debts of political
leaders" ("
sThen he also blames returning
American travellers for not only be-
ing willing to defraud the govern
ment but to corrupt its employees,
and importers to eyade duties
through underyaluations and cor
rupt combinations.
The secretary says that the work
of carrying on the revelations, the
prosecutions and the reorganization,
will be continued without pause and
will have, as 1t has had, the effec-
tive cooperation of the department
OF Justice"
Secretary MacVeagh makes no
recommendation on banking and
currency reform except to urge that
the change, when it comes. must be
fundamentally right and freed from
political partnership, special inter
est, or pride of opinion.
In pointing out the condition of
the treasury, which, he says, has not
at present, either In the banks or In
it's vaults, materially more than 3
working balance, the secretary de
clares that 1t will become necessary
in order to meet deficits, to sell
either bonds or certificates Of i'm
debtedness.
The ordinary receipts for the cur
rent fiscal year of 1910 he estimates
at $648, 100000 and the disburse-
ments at s6S2,075, ,620.12, which
leaves a deficit in ordinary receipts
Of $34,O75,62O.12. Add to this the
Panama canal and public debt dis
bursements and the deficit is $73,-I
'075,620.t2.
For the fiscal year 1911 the ordi-
nary receipts are estimated at $672,-
100000 and the disbursements at
$636, ,672.51, which would leave
a surplus of $35.931.327.49. But
when the estimated Panama canal
appropriations are included for that
year at $48,O63,524. 1t leaves a de-
felt OF $12,132, 1871.
The amount already expended
upon the canal, $97. 7.069,649, has
been taken out of the general fund
of the treasury and there is a con-.
tinual drain upon the general rev.
enues for this work. 1T Is desira-
ble," says the secretary, that the
settlement Of this account should be
at least begun; and that the express
ed policy of the government to pay
the cost of the canal from the pro-
ceeds OF bonds in order that the
next generation or two shall share
with this in the cost of the great
enterprise, should be secured and
established"
Admitting that sales at par of
United States bonds bearing only
two per cent. interest have been
forced heretofore because it was
necessary for national banks to
have them in order to take out cir
culation upon them. Secretary Mac
Veagh says bluntly:
ut is, in my Judgment. high time
for the government to realize that
1t does not have two per cent.
borrowing power and has never had
No government. however rich, has a
two per cent. borrowing power"
No investor, he points out, would
pay 500 for a bond bearing only
two per cent. interest. and the only
reason that the government has
been able to dispose OF It's obliga-
tions at this rate is that the banks
have been compelled to take them
In order to obtain the necessary Sc
curity upon which to issue their cir
culation. Because of competition
the banks paid varying prices above
par, and hold almost all of the two
per cents outstanding. Now the
market value is 30 depressed that
the secretary estimates that the
banks have lost S25, 900, 900 as a re-
suit of their speculation, and, il they
were to attempt to dispose of them,
would lose much more. The result
is against the retirement of circula-
tion and in favor of the maintenance
of a currency rigidity which Is un-
fortunate Recognizing the difficult
ty of selling two per cents at par
congress authorized a further issue
of bonds to bear three per cent. in
terest to cover the cost of the Pana-I
ma canal. But existing law, while |
taxing circulation issued on two per |
cent bonds only one-half of one per |
cent, taxes circulation issued On |
bonds bearing a higher rate of inter- |
est one per cent.
In presenting his estimates for |
the next fiscal year, Secretary Mac +
Veagh points out that the sum. /
ia less by SGT 244 ~