East Oregonian : E.O. (Pendleton, OR) 1888-current, 1909-12-08
10 Annual Report Secretary of
Treasury Discusses Recent
Sugar Frauds.
POLITICS AND POLITICIANS
ARE LARGELY RESPONSIBLE
Blames Also Returning American
Traveiers-WflI Continue In Pres
ent Investigation. Recommends
Selling of Bonds or Certificates To
Meet Dcfloits-Says Government
Has Not Two Per Cent Borrow

Washington. Dec. Sin vigorous
language. Franklin MacVeagh. sec
retary of the treasury, discusses in his
annual report sont to congress today
the recently exposed frauds of the
sugar trust and other customs house
scandals.
Speaking of the alarming" reve-
lations of the condition OF the Gus
toms service In New York, he says
that the frauds of the American Su-
gar Refining company showed "a
long continuing system OF corrup-
ton" While they were perhaps the
most important instances they we're
symptoms of a diseased condition.
not universal, by any means. but al
most general" Enough facts have
been brought to light. he declares. to
afford a basis for rehabilitation and
numerous prosecutions have been
made and projected
AS for the causes of the dcmoral-
ization, 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 inviting
soil for dishonesty and fraud.
UNLESS the customs service can be
released from the payment of politi-
cal debts and exactions," he contin-
ues, "and from meeting the supposed
exigencies OF political organizations.
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 their disqualification
to the public revenues. to the eff
cheney of the service. and to public
morality. is "A strenuous amount to
pay in mere liquidation of the small
debts of political leaders"
Then he also blames returning
American travellers for not only be-
ing willing to defraud the govern
ment but to corrupt it's employees and
importers to evade duties through un-
dervaluations and corrupt combina-
tions
The secretary says that tho work
of carrying on the revelations. the
prosecutions and the reorganization.
will be continued without pause and
"w,u have, as It has had, the effective
cooperation of the department of
Justice"
Secretary MacVeagh makes no
recommendation on banking and cur
rency reform except to urge that the
change. when it comes. must be fun
damentally right and freed from po-
litical partnership. special interest or
pride Of opinion.
Must sell Bonds.
In pointing out the condition of the
treasury which. he says, has not at
present, either in the banks or in its
vaults. materially more than a work
ing balance. the secretary declares
that it will become necessary in or
der to meet deficits, to sell either
bonds or certificates of Indebtedness.
The ordinary receipts for the cur
rent fiscal year of 1919 he estimates
at S64S.00O0O0 and the disburse-
ments at $6S2.075,620 which leaves a
deficit in ordinary receipts of $34,-
O75,62O. Add to this the Panama ca
nal and public debt disbursements
and the deficit is $73,075,62O.
For the fiscal year 1911 the ordi-
nary appropriations are estimated at
S636.O6S,672.51 including the Sec
retary OF the navy's estimate of Sl2,-
S44122 for new warships, or 2 sur
plus in ordinary receipts of SS5,9S1,-
32749. when the Panama canal es-
Inmates for 1911 are added the sur
plus will be turned into a deficit OF
S12.132, 1921.
The amount already expended upon
the canal, $97,O69,649, has been ia
ken out of the general fund of the
treasury and there is continual
drain upon the general revenues for
this work. 1T is desirable" says the
secretary. that the settlement of this
account should be at least begun;
ana that the expressed policy of the
government to pay the cost of the ca
nal from the proceeds of bonds In or
der that the next generation or two
shall share with this in the cost of
the great enterprise, should be Sc
cured and established"
The Per Cent Interest.
Admitting that sales at par of Uni
ted States bonds bearing only two
per cent interest have been forced
heretofore because 1t was necessary
for national banks to have them in
order to take out circulation upon
them, Secretary MacVeagh says
bluntly: