The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1909-12-17

Secretary of Treasury Intends
a Policy of Vigorous
RetrenChment.
(By Associated Press.)

| mates of exuendlrures Tor the eAecuIA''
DEPARTMENTS Of the government for the
| fiscal year 1911, embodied in the an
nual report of Franklin MacFeagh as
secretary Of the treasury, made publle
! today This is in line with President
! Taft s declared policy Of greater eeono-
/ my in administering the affairs of the
| government.
The total estimates for 1911 are
$671. 2SS. 075. which are less by 500,
663 .oql than the appropriations for 1910
I and 5g4 .O01 .493 less than the estimates
/ for 1910. The total estimated receipts
| for the current year aggregate $64s,
100000 and for 1911 about 1912 ,00O,O 600,
leaving an ordinary deficit for the cur
rent wear of $34,O75,62o and for 1911
a surplus of $4s, 775,449. Adding the
payments on account of the Panama
| Canal and the public debt, the total
deficit of the present year becomes
S73.075. $40 and for 1911 a surplus of
$711,925.
Secretary MacVeagh, emphasizing
the ''hard rigidity of the present rev.
enne system, with its reeurrent econom-
zeal acitations and its long intervals
of fxity,'' says it will be necessary
to meet these deficits to sell either
| bonds or certificates of indebtedness.
ain due course he adds, 'it would
seem that it must be made practicable
TO both estimate receipts, with close
approximation to the actual, and to
provide for their annual rise or fall by
some flexible factors in our annual
| taxation.
Reductions in the present estimates,
Mr.. MaeVeagh declares, result from
improved handling of the government
| work and the postponement of expendi-
lures which can be delayed in an ef-
fort to adjust immediate expenses and
receipts. He sounds warning, how
| ever, that the reductions in appropria-
tions will be disappointing unless equal
| attention is given to other important
savings.
Secretary MacVeagh reviews the or
| ganization, or rather lack of organiza-
ton, of the fiscal responsibilities of
| the executive and legislative branches
of the government and the reorganiza-
| ton thereof now in progress. He
voices the hope that there viii be
constant progress away from the ex-
treme disorganization of the past" and
| observes that ''even if our country is
rich it can NOT afford to be wholly I'M
| scientific in its appropriations.
Probably the most important recon-
| mendation made by the secretary is that
| the tax on bank circulation secured by
| United States bonds hereafter deposited
bearing interest higher than per cent,
shall be increased in exact proportion
to the increase in the rate of interest
above two per cent. He advises con-
tinuanee of the rate of one-half of one
per cent for circulation based on two
per cent bonds. Mr.. MacVeagh saws
that if the Panama bonds authorized
by the law of August 5, 1909, should
be issued at three per cent, they would
3 iege than the outstanding two per cents
the tax being only one per cent. Mr.
}, MaeVeagh would make the tax on them
IL per cent; otherwise the already
low market value of the per cents
would unduly decline.
At the same time, Mr.. MacVeagI
says it is desirable to complete the leo
islation respecting the new Panama
bonds to make them available so as f,
! begin the settlement. of the indebted
ness to the general fund of the treasur,
of the Panama Canal. He suggests tina
If the sale of any of those bonds should
produce more cash than the treasur,
balance needs, some of the two pc
cents might be bought in the marke
for the sinking fund, thus keeping tn,
: market price of the latter class abov,
= par. Declaring that the government
has not, and never has had, two pc
= cent borrowing power, Mr. MacVeaul
says 1t possibly wouid have been bette
never to have issued two per cent bond
VI bohus at any rate DeIOW the govern
ment S borrowing power in the opel
market. He says that as a basis TO
circulation they have no elasticity; tina
they are practically all held by tn
banks as basis of circulation: an,
that the banks would suffer so heav-
loss in an attempt to dispose of then
- that the influence of the situation i
= consequently decidedly against the re
III tirement of circulation.
The issuance of 3 per cent bonds a
IL says Mr.. MacVeagh, would no
change in any way the net interest re
II suit of its transactions with the bank,
I Then again it would provide bond
! which investors would want and wbic
X would have broad and wholesom
s market, aiding materially in increasin
the elasticity of the currency.
Secretary MaeNeagh, discussing tn
- rehabilitation of the customs service !
progress as 4 result Of the extensiv
frauds discovered at the port of Ne,
- York says:
lit is clear that the influence of l.
cal politics and politicians upon IL
customs service. has been most del
terious, end has promoted that laxit
. and low tone which prepare and furnis
an inviting soil for dishonesty m
frAuA Mess fha .,sstr,,,s ,..,,.,-:.- =.