The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1909-12-24
BOND ISSUE IS
NOW IN SIGHT
Federal Expenses Above Revenue
and the Government Will
Have to Borrow.
By Ernest q. walker.
(Mail special to the Advertiser

country IS unuer way. 1nese and
other effective steps in financial admin.
istration are now matters of official
recommendation. Congress and the
President have full recognition thereof.
For Secretary of the Treasury Mac
Veagh has stated the case in very
able annual report, which takes rank
as the most important official docu-
ment Of the first week of the session,
saving only the President IS message
1t outlines what is now regarded as in
dispensable in the management of the
finances of the Nation and the secre-
tary's leading recommendations be.
come, in a way, matters of party pol
icy. His report stands out as a re-
markably well written paper-some-
thing that can be said of very few of.
fetal papers in the great mass of them
that is being given to the public at
this period of the official year.
Something about the cost of running
the United States government is shown
by Secretary MacVeagh. He estimates
that it will require $671, ,2ss s,O75.21 but
there are supplemental estimates yet
to come in and it will not be very
wide of the mark to say that the total
estimates will be round 100000 900
during the next fiscal year, known as
1911 but beginning in reality July /,
1910. Congress votes appropriations
several months ahead of the time when
the departments are ready to spend
them. Of course it is well understood
that the government is running on a
basis of billion of dollars year, but
that includes the expenditures of the
postoffice department, and that depart
ment collects it's revenues independents
ly of the treasury. Consequently the
billion dollar status remains
The law requires the secretary of
the treasury to do a vast deal of pure
guessing. Many secretaries of the
treasury have appealed for the elimi-
nation of that requirement, but con-
gress has not consented. Among other
things the secretary of the treasury is
required to tell congress how much the
revenues will amount to for period,
the close of which is eighteen months
ahead of the time he figures. Secre-
tary MacVeagh believes that the re-
ceipts for the current fiscal year, end
ing June 80 next will be $64S, ,000, 900
and for the fiscal year after that
$672,0O0,000. That would leave de-
felt for the year which ends June 80
next of $34,000,000 and more, but
means surplus of almost $49,000,000
for the fiscal year of 1911. AS there
is now none too much money in the
treasury vaults for the necessary
working balance, the deficit between
now and July ! will amount to such
proportions that the secretary says
bonds or certificates. of indebtedness
must be sold soon.
But his report proper, which he wrote
out with his own hand-which is an
exception in such cases with cabinet
officers-is full of other important mat
ters. He urges "retiring pensions
for civil service employees of the de-
partment. While it is true that several
other cabinet ofiicials have made SINH
lar recommendations this year, the word
direction is especially notable. Many
of the old and superannuated clerks are
in that department. Some of them have
served the government since before the
Civil War. He wants a settlement of
the Indebtedness of the Panama Canal
to the general fund of the treasury al
an early date. That Indebtedness now
amounts to over $97 100000, which is
the cost of the canal, minus the pro
ceeds of sales of canal bonds to date
and the indebtedness is growing every
day with the cost of the current oper
ations on the isthmus.
Such a settlement means the pay
ment, at least in part, of the indebt
edness through the sale of more bonds
authority for which has been granted
by congress. But it brings up the
troublesome question of the rate of in
terest on bonds. The secretary says
that the 2 per cent. bonds, upon which
the national banks have already in
Cured a loss of about $25,000,000
should never have been issued. "It
is, in my Judgment" he says, "higf
time for the government to realize that
it does not have per cent. borrow
ing power, and has never had. No gov
ernment, however rich, has pc
cent borrowing power"
The canal bonds are TO be three PEI
cents, but to avoid the depreciation o.
existing two per cents below par, whicl
would be unfortunate for any govern
ment securities, Secretary MacVeagl
asks congress TO authorize the colec
tion of y per cent. taxes on nationa
bank circulation, based upon the three
per cents, where the tax upon cireula
tion based on two per cents IL only one
half Of ! per cent. There is much NOR
of "a technical character regarding re
lief Of the treasury from its presen
plight as 20 government bonds.
The secretary adds that there hay'
been alarming revelations" IN tb
conditions at New York which hay'
permitted such extensive frauds ~
have been praclised IN the importation
of sugar pnd that "0rgnDlzed eornp
iion " has proceeded on an eaeTmou
scale. iie blames politics for this eon
diiion, The innuenee Of the small poll
lleiana in that eonRreiion be- ehaIartpT
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