Daily capital journal. (Salem, Oregon) 1903-1919, 1909-12-08

language, Franklin MacVeagh, Sec
retary 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" 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 ga
long-continuing system of corrup-
tion." While they were perhaps the
most important instances they were
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 basis for rehabilitation
and numerous prosecutions have
been made and projected.
AS for the causes of the demoral-
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 sup
posed eXigencies of political .organi-
izations, big and little, it will be
impossible to have an honest SER
vice for any length of time.
ANY considerable share of the
present cost of this decentralization
to the public and private morality,
is a tremendous 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 undervaluations 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 it has had, the effec-
tive cooperation of the Department
of Justice"
Secretary MacVeagh makes no
recommendation on banking and
that the change, when it comes.
must be fundamentally right and
freed from political partnership. |
special interest, 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
its vaults, materially more than a
working balance, the secretary de-
clares that it will become necessary
in order to meet deficits, to sell eth
er bonds or certificates of indebted
ness.
The ordinary receipts for the cur
rent fiscal year of 1910 he estimates
at $648,000,000 and the disburse- |
ments at $682 ,075,6 500 which leaves /
a deficit in ordinary receipts of $34,- /
075,620. Add to this the Panama |.
Canal and public debt disbursements !
and the deficit is $73,075,62O.
For fiscal year 1911 ordinary ap-
at $636, 6,O6S,672.51, in
Guiding the secretary of the navy's |
estimate $12,S44,122, for new war
ships or surplus in ordinary receipts |
of $35, ,931 ,327.49. When Panama !
Canal estimates for 1911 are added |
surplus turned into deficit Of $12,-
1872, 1921.
The amount already expended up
on the canal $97,069,649 has been !
taken out Of the general fund of the
treasury and there is a 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; and that the expressed policy
of the government to pay the cost .
Of the canal from the proceeds of
bonds in order that the next genera
ton 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
for national banks to have
them in order to take out circula-
ton upon them, secretary MacVeagh
says bluntly:
1T is, in my judgment, high time
for the government to realize that
It does not have a two per cent bOr-
rowing power and has never had.
No government, however rich, has
-wo per cent borrowing power"
No investor, he points out, would
pay 500 for a bond bearing only
.wo per cent interest, and the only
'eason that the government has been
lble to dispose of its obligations at
his rate is that the banks have been
10 take them in order TO
,btain the necessary security upon
which to issue their circulation Be
,ause of competition the banks paid
'arying prices above par, and hold
Utmost all of the two per cents ont {
tanding. Now the market value is 1
70 depressed that the secretary esti- ,
mates that the banks have lost
i25 100000 as a result of their
peculation, and, If they were to at Q
empt 20 dispose of them would lose J
much more The result is against $
he retirement of circulation and IN | .
aupr of tho uaafufananaa nF ann =